Acceptance Lecture

Overview of Basic Principles

The purpose of this chapter is to grasp the concept of acceptance, which is in simple
terms the acceptance of the offer. This is of course a deceptively simplistic overview of
acceptance, as there are many different forms of acceptance, and a variety of scenarios
within which acceptance may be found. However, in brief terms: in order for a contract
to be formed, the offer must be accepted, e.g. I accept your offer of £1,000 in exchange
for my car. Acceptance represents the meeting of the minds of the parties to the
contract - both agree to exchange something for the other (payment, services, goods,
etc.). it is important that you are able to distinguish between the different rules and
principles governing acceptance, and under which circumstances each rule will apply.

Principle 1: Acceptance must be unequivocal

This essentially means that there must be nothing left to be negotiated by the parties.
This is a simple principle, which in fact ties in with Principle 2 below.

Principle 2: Acceptance must mirror the offer

The acceptance must correspond exactly with the offer in order to be valid and form a
binding contract. The offeree cannot accept an offer and add further terms while accepting. For
example, A offers to sell 100 books to B for £1000. B accepts the offer but adds that A must
deliver the books at no extra cost. This does not mirror the offer because it did not
initially include the free delivery. This is not valid acceptance because it does not mirror
the offer. It is a counter offer which can then be accepted or rejected by the original
offeror, or met with a further counter offer. The parties can continue to make counter
offers until a consensus has been reached.

Hyde v Wrench [1840] 3 Beav 334 - Wrench offered to sell a farm to Hyde for £1000.
Hyde responded that he would pay £950 for the farm. Wrench rejected. Hyde later
accepted Wrench’s original offer of £1000. Wrench rejected again. It was held that
there was no agreement between the parties, as Hyde had rejected the original offer by
submitting the counter offer of £950.

A mere request for information is not a counter offer. If the offeree asks the offeror for
more information, the original offer stands and the offeree has neither accepted or
rejected the offer. Referring back to the above example, if B merely asks A if the £1000
includes delivery of the books, this would be classed as a mere request for information,
not a counter offer.

Stevenson Jacques & Co. v McLean (1880) 5 QBD 346 - Mclean (M) offered to sell
Stevenson (S) iron. S asked whether he would accept delivery over 2 months, and if not, what
his longest time limit for delivery would be. M did not respond and later claimed
that the original offer had not been accepted because S’s telegram was a counter offer.
It was held that the telegram was a mere request for information, not a counter offer, or
a rejection of the original offer.

It is important to understand the difference between a request for information and a

counter offer. If you compare Hyde v Wrench and Stevenson Jaques & Co v Mclean, you
will be able to observe that, while in Hyde the offeree responded with a completely
different price, the offeree in Stevenson simply requested information on delivery terms.
A counter offer is the offeree’s adding of terms (“I accept but you must also deliver the
books for free” or “I will pay £900 rather than £1000”) whereas a request for information
is simply a question about the original offer (“does the price include delivery?” or “will
the goods be ready for collection in one week?”).

Consider the justifications that underlie the distinction between a counter offer and a
request for information. Would it be fair for an offeree to try to negotiate better terms,
and then to revert back to the original offer? Think about the aim of the courts. Does it
create certainty? For whom? Should an offeror be required to negotiate with one party
when another is ready to accept the original offer? The attempt here is to achieve both
certainty and an equal playing field for both offeror and offeree. The same applies to a
request for information, which protects the offeree’s position. In the book example,
imagine that C has approached A, accepting his offer. If A is in the middle of
negotiations with B and is required to continue such negotiations, would it be fair?
You may be given a scenario in which the parties make a cross offer. An example of
this could be when A sends B a letter offering him 100 books for £1000 and B sends A
the same offer. If the letters cross in the post, then there is no agreement - Tinn v
Hoffman (1873) 29 LT 271.

Exam Considerations
You may be given a scenario in which you will be required to not only identify whether a
counter offer or a request for information has been made, but also to explain why it is
one but not the other. Be careful to address this in your answer. Do not simply state “X
made a counter offer”. Explore in more detail why it is not a request for information.
Address both sides of the debate, and state “X made a counter offer because……..it
could be argued that it is a request for information but it is unlikely that this is the case
because…..” Support your answer with evidence from the scenario.
Principle 3: Acceptance must be communicated to the offeror
This is a logical requirement, and should not be too difficult to grasp because the offeror
must be aware that the contract has been formed. If B accepts A’s offer to buy 100
books for £1000, but does not communicate his acceptance, A cannot fulfil his part of
the bargain and give the books to B.

When acceptance is by post, potential problems arise. For example, B accepts A’s offer,
and communicates such acceptance by post. How does B know when the letter will
arrive? At what point does the posted acceptance form a binding contract? The postal
rule for communication of acceptance is therefore different to the usual rule that posted
communication is legally valid once it has arrived. Therefore, acceptance has been
communicated once the letter has been posted:

Henthorn v Fraser [1892] 2 Ch 27 - Where post is considered to be a main means of

communication within the contemplation of the parties, acceptance is communicated
once it has been posted.
Consider the legal reasoning behind the postal rule. To require that the letter of
acceptance actually arrive at the offeror’s address places a considerable burden on the
offeree to ensure that it arrives, which is not fair. Therefore, in order to balance the
positions of the offeror and offeree, it is accepted that the offeree has fulfilled his
obligation by posting the letter. He can assume that it will arrive and should not be
expected to do anything more. The offeror, in accepting to communicate by post,
therefore accepts responsibility for the potential that the letter may not arrive.
This rule applies even if the letter has been destroyed, delayed or lost.

Adams v Lindsell [1818] 1B & Ald 681 - The postal acceptance rule applies even if the
letter is destroyed, delayed, or lost. A valid contract had been formed at the moment
that the letter of acceptance had been placed in the post box. The rule applies when the
parties have agreed to communicate by post, and when the letters have been correctly
addressed and stamped.
The postal rule can be excluded by the offeror - he can state that acceptance must be
communicated in a specific way (fax, telephone etc.), or that postal acceptance must
arrive in order to be binding. This gives the offeror the freedom to require that
acceptance actually come to his notice. It also relates to the above section on the legal
reasoning behind the postal rule. The fact that the offeror is free to exclude the postal
rule means that it would be unfair to require that the offeree take extra steps to ensure
that the letter has arrived. The offeror, in declining to exclude the postal rule, accepts
that the letter may not arrive.
Household Fire insurance v Grant [1879] 4 Ex D 216 - The acceptance letter was lost in
the post. The postal rule was applied, and hence acceptance was binding once it had
been posted. Thesiger LJ opined that using the postal service as a method of
communicating is the same as putting the letter in the hands of the recipient oneself.
Bramwell LJ most importantly added that the postal rule could have been avoided if the
offeror (G) had stated that acceptance would only be binding when it actually reached
him.

Exam Considerations
It is highly likely that you will be given a question or a scenario that at the very least
addresses the postal rule. Make sure that you not only state whether the postal rule
does or does not apply, but also to address the legal reasoning underlying the postal
rule. Household most prominently illustrates the legal reasoning behind the postal rule
as explained above. Consider the comments of the judges in this decision. Do you
consider them to be logical and/or fair? These are considerations that can be included
in an examination answer on the postal rule. Do not simply apply the rule, explain and
demonstrate that you understand why this rule is being applied above others.
However, should the offeree use a different form of communication to that which was
specified by the offeror, this may be acceptable provided it is no more disadvantageous
than the stipulated method of communicating acceptance.

Holwell Securities v Hughes [1974] 1 WLR 155 - Hughes granted an option to Holwell
Securities (HS) to purchase his house for £45,000. The offer stipulated that acceptance
should be in written form and returned within 6 months. 5 days before the offer was to
expire, HS posted a letter of acceptance to Hughes. Hughes never received the letter
and HS sought to enforce the agreement by relying on the postal rule. It was argued
that, since the letter had been posted before the offer expired, the agreement was valid
and binding. It was held that Hughes, in stipulating that communication of acceptance had to be

in writing, had specified that acceptance would only be communicated upon his receipt of the

letter. He had effectively excluded the postal rule by placing this

requirement in his offer.
The postal acceptance rule is not absolute, however. It only applies in cases in which
the parties could reasonably contemplate that communication would be by post. The
aim is to achieve fairness, as has been addressed. But it could also prove unfair for the
offeror, because the offeree could omit to reveal acceptance if, for example, the prices
of goods they would have bought falls. This illustrates that the law cannot be
completely fair, but only seek to strike a balance between the position of offeror and
offeree.

The postal rule will also apply if the offeror has stipulated that communication of
acceptance is to be by post. Moreover, and quite logically, if the offeree has incorrectly
addressed the letter of acceptance, or been careless in some other manner which
causes delay or failure to communicate, then the postal acceptance rule does not apply.

- Getreide-Import GmbH v Contimar SA Compania Industrial, Comercial y Maritima [1953]

1 WLR 207.

LJ Korbetis v Transgrain Shipping BV [2005] EWHC 1345 - Acceptance letter was sent to
the wrong address. Toulson J held that there was no acceptance because it would be
unfair to bind B to an agreement that he was not aware of due to the fault of A.