Contracts Unit 4: Offer and Acceptance

• The text outlines unit 4 of a contracts course, focusing on offer and acceptance
• It provides slides which are designed to provide a basic outline of the lecture and the prescribed material

Formation of an Agreement

• A valid contract requires expressed agreement and concensus between parties
• An agreement may be enforceable if one party reasonably relied on the appearance of consensus
• "Offer and acceptance" helps determine if consensus was reached, and when/where the contract was concluded

Offer Requirements

• An offer is a proposal to contract
• Offers must be expressed in the prescribed form
• Offers must be complete, including all essential terms
• Offers must be certain and ascertainable, meaning they can be made certain
• Offers must be communicated to the offeree, whether an individual, class, or the public
• Offers must be made with animus contrahendi, an intention that acceptance results in a binding contract
• Offers must be firm, to be concluded at a specific time
• Invitations to negotiate are not valid offers because valid offers must be firm
• Invitations to submit tenders are invitations to do business rather than offers
• A quote generally constitutes a valid offer

Auctions

• In a simple auction, the bidder makes the offer and the auctioneer accepts or rejects
• In auctions with conditions, the auctioneer makes the offer based on announced conditions

Offers to the Public

• Offers can be made to the public if all requirements for a valid offer are met
• How language is used in the offer can determine whether it constitutes an invitation or an offer
• Generally, advertisements are invitations to do business
• "While stocks last" protect against more customers accepting than available stock

Consumer Protection Act 68 of 2008

• Retailers must display prices for goods
• Consumers cannot be forced to pay more than the displayed price
• If multiple prices are displayed, consumers only need to pay the lowest price
• Offers must be in plain, understandable language
• "Bait marketing" and "negative option marketing" are not allowed
• Consumers have a cooling-off period
• Special rules apply to auctions

Termination of an Offer

• An offer is terminated during revocation, if the offeror withdraws prior to acceptance
• An offer is terminated during rejection
• An offer is terminated during a counter-offer
• An offer is terminated after elapse of time or expiry
• An offer is terminated if death occurs before acceptance
• An offer is terminated during initial impossibly
• An offer is terminated after acceptance
• An offer is terminated after loss of capacity

Acceptance

• Acceptance requires affirmation (unconditional) to the offer which creates legally binding obligations
• Acceptance must be made with animus contrahendi
• Acceptance must be made to the offeror
• Acceptance must correspond with the offer
• Acceptance must be in the manner prescribed
• Acceptance must be communicated to the offeror unless it is waived
• Acceptance must be done before the offer terminates

Tacit and Silent Acceptance

• Acceptance can be done in writing, tacitly, or verbally
• Positive conduct demonstrating acceptance describes tacit acceptance
• Silence or inaction is generally not an indication of consent, however long term relationships are exceptions to the rule
• Failure to respond in electronic contracts will not be a valid acceptance as per section 45 of the ECTA act
• Failure to respond in credit agreements will not amount to acceptance according to the National Credit Act 34 of 2005
• Consumer contracts prohibit negative-option marketing, section 31 of the consumer protection act 68 of 2008

Time and Place of a Contract

• The time and place a contract concluded is relevant for prescription and jurisdiction purposes
• Inter praesentes means there is no time lag between offer and acceptance
• Inter absentes means there is a time lag between a person’s acceptance and when the offeror learns of the acceptance
• Declaration Theory: The place and time that the offeree expresses / declares their acceptance
• Expedition Theory: The place and time that the offeree transmits / posts the acceptance
• Reception Theory: The place and time acceptance reaches / receives the address of the offeror
• Information Theory: The place and time that the offeror learns of the acceptance
• Informational theory applies as the default position unless the exceptions apply
• This applies to telephone contracts and applies to contracts concluded by fax

Stipulated Method of Acceptance

• There are three exceptions to the information theory, one being when the offeror stipulates a specific method of acceptance
• If there are particular rules that applies to the chosen method, then the contract will be formed by those rules
• If there are no particular rules to the chosen method, then where the place and when the time a contract is concluded will be in terms of the offeror’s instructions

Postal Contracts

• The expedition theory determines the whereabouts and timing of when postal contracts are concluded
• This law only applies to where four requirements are met
• Both the offer and acceptance were made by mail post/ offeror prescribed or authorized acceptance by post
• Acceptance was correctly addressed
• The postal services are functioning normally at the time
• The offeror is not indicating a different intention or specifying a particular method
• Supreme court of appeals treats faxes as telephone contracts not postal contracts

Electronic Contracts

• Electronic contracts are regulated by the ECTA act 25 of 2002
• The ECTA Act stems from the definition of Data which means electronic representations of information in any form
• The ECTA is used on the basis that contracts are concluded partly or as a whole through data messages
• The ECTA dictates that reception theory applies to electronic contracts unless parties agree otherwise
• Data messages are concluded at the time when and place where acceptance of the offer was received by the offeror
• Section 23 of the ECTA determines the time and place of communication
• The ECTA act determines when an email is considered “received” by the offeror