Contracts Law - Acceptance

Acceptance - The 2nd Element

• Section 2(b) of the Contracts Act (CA) defines acceptance. When the person to whom a proposal is made (the offeree) agrees to the offer, the proposal is considered accepted.
• An accepted proposal becomes a promise.
• Acceptance can be communicated in a number of ways (writing, orally, or implied by conduct).
• If a specific method is prescribed by the offeror for acceptance, the offeree must complete acceptance in this stipulated manner.

Requirements of Acceptance

• For a valid acceptance, specific requirements must be met.
• The offeree must be aware of the offer being made to them.
• Acceptance must be communicated to the offeror to be valid. (general rule)

Exceptions to the Communication Requirement

• Situation 1: The offeror may waive the need for communication. This means the offeror has explicitly stated or implied that the offeree's actions are sufficient for acceptance without a formal communication.

• Situation 2: Acceptance can be signified by performance. This typically occurs in unilateral contracts, where the terms of the offer stipulate that the offeree performs an act to accept the offer (e.g., Carlill v Carbolic Smoke Ball Co.).

• Situation 3 (Postal Rule): Acceptance occurs when the letter of acceptance is posted, not when it is received by the offeror. This applies only to letters of acceptance, and only if it's reasonable to post a letter of acceptance.

Rules of Acceptance

• Section 4(2)(a): The acceptance is considered complete when it's transmitted to the offeror, and is out of the offeree's control. The issue arises when the acceptance doesn't reach the offeror (e.g., the letter gets lost). This will differ based on where the letter of acceptance is sent.

• Absolute and Unqualified Acceptance (Section 7(a)): Acceptance needs to be absolute and unconditional. Any change or addition to the original offer will be treated as a counter-offer, rejecting the original offer.

• Acceptance within Reasonable Time: Acceptance must happen within a reasonable timeframe, based on the specifics of the situation.

• Acceptance in Prescribed Manner (Section 7(b)): If the offer stipulates how acceptance should happen, it must be completed in that way.

• Silence as Acceptance: Silence can not be used as a form of acceptance, unless already prescribed or implied.

Revocation of Acceptance

• Section 5(2): Acceptance can be revoked before the communication of acceptance comes to the offeror's attention.

Counter-Offers

• A counteroffer is a new offer in itself. Rejection of the original proposal is equivalent to a refusal. This effectively ends the previous offer.
• Examples, like Hyde v Wrench, demonstrate how counteroffers terminate the original offer.