CONTENTS

1.0       Introduction

2.0       Objectives

• Main Content
• Acceptance
• Invalid types of Acceptance
• Communication Acceptance
• Revocation of Acceptance

4.0       Conclusion

5.0       Summary

6.0       Tutor-Marked Assignment

7.0       References/Further Readings

  INTRODUCTION

An offer is defined as a definite undertaking or promise made by one party with the intention that is shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed. It is that “acceptance” by the latter that we are presently concerned with. Acceptance may be defined as a final and unqualified expression of assent to the terms of the offer. Any variation or modification of the offer while accepting, or any acceptance which is dubiously expressed will be invalid.

 OBJECTIVES

To understand the essence of acceptance in a contract When acceptance occur in a contract

To understand the modes of communicating an acceptance between parties to a contract

MAIN CONTENT

 

• Acceptance

Yerokun defined acceptance as an indication, expressed on implied by the offered made while the offer remains open and in the manner requested in the offer of the offeree’s willingness to be bound unconditionally to a Contract with the offer in terms stated in the offer. Also this is an act which signifies the final consent of the offeree to the terms of the offer.

Acceptance is the final expression of assent to the terms of an offer. Acceptance should be without qualification, equivocation or condition. A conditional assent to the term of an offer is not an acceptance. In Odunfunlade v. Ososami (1972) U.I.L.R. 101, it was held that an acceptance expressed as “A tentative agreement without engagement” could not result in contract.

Furthermore, an agreement made “subject to contract” is not binding until that contract is made. See Maja v. UAC (Unreported) High Court, Lagos Suit No. LD/1426/1970 delivered on September 1973 and UBA v. Tejumola & Sons Ltd. (1988) 2 NWLR (pt 79) p. 662. However, where it is expressed as “a provisional agreement,” it becomes binding at once. In Branca v. Cobarro (1947) K.B. 854, it was held that an offer can only be accepted by the person to whom it is made or by his authorized agent. Where it is made to the public at large any member of the public can be accept as was held in 

Carlill  v. Carbolic Smoke Ball (supra).

• Invalid Type Of Acceptance

There are several situations in which there is an apparent acceptance of an offer but which turns out for varying reasons to be invalid and ineffective. The situations are as disparate in nature as the reasons for invalidity. But it is convenient to treat all these situations under one subsection.

1. Counter-offer

A counter offer operates as a rejection of the original offer. In Hyde v. Wrench (1840) 3 Beav. 334, the defendant offered a car for one thousand pounds sterling

£1000 to the plaintiff who replied by a counter offer of nine thousand and fifty (950) sterling pounds. It was held that there was no contract because the counter- offer repudiated the first offer.

For an acceptance to be operative, it must be plain, unequivocal, unconditional and without variance of any sort between it and the offer. The offeree must unreservedly assent to the exact terms proposed by the offeror. In other words, a valid acceptance must be fulfill the following conditions:

1. It must be plain
2. It must be unequivocal
3. It must be unconditional
4. It must be without variance of any sort between it and the offer
5. It must be communicated to the offeror without unreasonable

 

2. Condition of acceptance

A conditional acceptance is not valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or unfulfilled. For example, if in a negotiation for a lease or sale of land, the agreement is made “subject to contract,” the incidence of liability is postponed until a formal document is drawn up and signed. This is a rule of long-standing and has been regularly applied since the nineteenth century. Thus, in Winn v. Bull (1877) 7 Ch. D. 29, the defendant agreed to take a lease of a house “subject to the preparation and approval of a formal contract.” It was held that in the absence of a formal contract the agreement was not binding.

 

3. Cross Offer

Cross offers occur when two offers, identical in terms, are sent by two parties to each other, by post or by any other means, and the offers “cross” in the post. This is easily illustrated hypothetically. Supposing X, who has been negotiating with Y to buy Y’s car for some time, writes to Y, offering to buy the car for N50, 000, and Y, independently and in ignorance of X’s intentions writes to X offering to sell his car to Y for N50, 000, and both letters cross in the post. Is there a contract for the sale of Y’s car to X for N50, 000? The answer to that is “no”. All we have are two identical offers and no acceptance. For a contract to emerge, there must be an offer by one party to the other, and the other, reacting to the offer, indicates his acceptance of it.

 

4. Acceptance in Ignorance of offer

Can an offer be accepted by someone who was unaware of it? The answer to this question may sound rather trite particularly in the light of judicial opinion about cross offers. Although the answer to it should be a straight “no”, the position was not clear for a long time. The problem arises mainly from the “reward” cases. In Gibbons v. Proctor (1891) L.T. 594, the defendant published a handbill offering a reward of 35 pounds to anyone giving to a Superintendent Penn, information that would lead to the arrest of a person who had assaulted a young girl. The plaintiff supplied the information before the handbill was published and, therefore, in ignorance of the offer of reward. Nevertheless, he was held entitled to the reward.

 

5. Acceptance of tenders

We have already seen that when the party advertises for tenders from contractors or suppliers, this constitutes an invitation to treat. The tenders from the contractors and suppliers constitute the offer, and acceptance occurs when the advertiser selects one or more of the tenders and communicates this to the  supplier or contractor. However, a distinction has been suggested between a tender for the supply of goods up to a maximum number over the same period of time. Thus, Nigerian Army may advertise for tenders for the supply of 50, 000 pairs of boots between January and December 1998, or it may state that it may require “up to 50, 000 pairs of boots” during the same period. It is said that in the first case there is a firm contract for the supply of 50, 000 boots between the Army and the supplier selected, notwithstanding that supply will be by installment over a period of twelve months. 

   Communication Of Acceptance

1. Communication

An acceptance may be made by words of mouth or by mere conduct, that is, expressly or impliedly. Acceptance must be communicated to the offeror. The general rule is that acceptance of an offer is not complete until it is communicated by actual notification.

There could be various mode of communications:

1. Where the method is prescribed and the offeree used another method, it is See Afolabi v. Polymera industries Ltd. (1967) I All NLR 144.
2. Where no method is stated, the form to be used will depend on the nature of the offer. For example, telephone, telegrams, or prepaid telegram signify urgency. Telegram is effective as soon as it is dropped in the Post Office. Telephone is effective upon the interpersonal conversation on the line.
3. Where acceptance is by post, the rule is that is complete and effective the moment the letter is posted.

In Adams v. Linshell (1818) I B. & Ald. 681, the plaintiff was offered some consignment of wool to purchase. He accepted by replying that full acceptance is in the “course of post”. The defendant sold the wool to another buyer and the plaintiff sued. It was held that an offer is made when it actually reached the offeree. In actual fact, acceptance would take effect as soon as the letter was posted.

Acceptance must be by way of positive conduct, mere mental acceptance is not sufficient while silence is no acceptance as was held in Felthouse v. Bindley (1862) II C.B. (N.S.) 869. Plaintiff offered to buy a horse from defendant. Plaintiff assumed that if he did not hear from defendant, the horse was his already. The horse in fact was with an auctioneer who later sold it to another person. It was held that no contract existed as acceptance had not been communicated.

2. The Moment of Acceptance

At what point in time does acceptance occur in each case? Much light has been thrown on this on this issue of Lord Denning in Entores v. Miles Far East Corporation (1955) 2 QB 327, C.A. In that case an offer was made by telex in London to the defendant in Amsterdam and the defendants replied by telex. When a dispute arose, the plaintiffs brought an action in England and the defendants challenged the jurisdiction of the English court. The question of jurisdiction devolved on where acceptance actually took place.

3. Where method of acceptance is prescribed

An offeror may or may not prescribe the mode of acceptance. Uwaifo, J.C.A., put it succinctly when he said:

It is the law that an offeror may prescribe and direct the method by which an acceptance of an offer may be communicated. Whether some particular mode has been proposed, depends upon the inference to be drawn from the circumstance. Anno Lodge Hotels v. Mercantile Bank, (1993) 3 NWLR (pt. 248) 721 at 730.

Where he states how the acceptance of his offer is to be communicated, the question arises whether precise observance is mandatory. Can the offeree send his acceptance by messenger when required by the offeror to do so by post? It is safe to say that any mode either as fast or faster that prescribed by the offeror is sufficient to create contract. Thus, in Turnn v. Hofmann & Co. (1873) 29 L.T. 271, acceptance was requested by return post. Honeyman, J., observed in his dissenting judgment that “that does not mean exclusively a reply by letter by return post, but that you may reply by telegram or by verbal massage or by any means not later than a letter written by return of post” (1893) 29 L.T. 271

4.  Method of acceptance – not prescribed

Where no form of communication of acceptance is prescribed by the offeror, the form to be adopted by the offeree will depend upon the nature of the offer and the surrounding circumstances. Thus, an oral offer implies an oral acceptance. If the offer is by telegram, fax or e-mail then a prompt reply is indicated and it too should be by telegram, fax or e-mail. In most cases, acceptance does not occur until received by the offeror. The only exception is acceptance by post. This mode of acceptance will now be considered separately.

5.       Acceptance by Post

Acceptance by post is a third exception to the rule that acceptance must be communicated. In regard to acceptance by post, acceptance takes place contract takes effects the moment a letter of acceptance is posted. So, where acceptance by post is requested or it is appropriate as a reasonable means of communication, acceptance is complete immediately the letter of acceptance is posted, even where it was delayed, destroyed or lost in the post that it never reached the offeror.

This rule was laid down by Lord Ellensborough in 1818 in the famous case of Adam v. Lindsell (1818) I B & A 681. In this case, by a letter dated September 2, 181, the defendants offered to sell some quantity of wool to the plaintiff, and required a reply by post. The defendants misdirected their letter and did not reach the plaintiffs until the evening of 5^th September. The same night, the plaintiff posted a letter of acceptance, which reached the defendants on September 9. If the letter had been properly directed, the answer ought to have been received on September 7. Meanwhile, on September 8, not having received a reply, they sold the wool to another person. The plaintiff sued for breach of contract. It was argued that there was no contract until the letter of acceptance was actually received, and at that time, the wool had been sold to a third party. The court held that a contract comes to existence when the letter of acceptance is posted. In this case, the contract comes into existence on September 5 and the defendants committed a breach of contract by selling the wool on September 8. It seems the rule applies to communication of acceptance by cable or inland telex messages, but not instance modes such as telephone, telex or fax machines.

Thus, in Household Fire Insurance Co. v. Grant (1879) 4 Ex. D 216, the defendant applied for shares in the defendant company and the company posted a reply accepting the offer that a number of shares were allotted to him. The letter was lost in post. Subsequently, when the company went into liquidation the defendant who was up to then was not aware that he was a shareholder in the company but was allotted some shares and suddenly was called upon to pay for his shares into the company, the action was resisted. The court held that he was liable to pay for the shares. The contract was formed the moment the company posted the letter. Some justifications have been advanced for postal rule as constituting acceptance. It is essentially a rule of convenience and is usually justified on the grounds that if the offeror chooses the post as a means of communication, he must accept the inherent risks, and it is not important he does not received the letter of allotment. Other reasons given by the court are:

1. the post office is the common agent of both parties and any letter put in the post is technically acceptance communicated to the offeror;
2. with the posting, a contract is

• An offeror is free to stipulate the means of communication of the terms of his offer.

1. The rule is most convenient of all possible alternatives. However, the postal rule will not
   1. where the letter of acceptance has been properly posted. In Re London and Northern Bank (1900) I Ch. 220, the letter of acceptance was handed to a postman, who took it to a district office to post and was delivered after the letter of withdrawal had been written
   2. Where the letter is not properly addressed: This appears to be further that it must lead to misdirection. In this instance, letter not properly addressed may be misdirected to someone else not to the offeror. It will not be fair to say that a letter of acceptance sent by post and wrongly addressed by the offer should fall within the postal
   3. Where the express terms of the offer exclude the postal rule see Holwell Securities v. Hughes (1974) 1 WLR 154,
   4. Where it is unreasonable to use the post. For instance to reply by second- class post to a verbal or cabled

The rule in Adams v. Lindsell (1818) 1 B & Aid. 681 is obviously arbitrary and this could unjust as well. This was manifestly clear in Household Fire Insurance v. Grant (1879) 4 Ex. D 216 (1874 – 1880) All ER 919. As was rightly stated the post office is just a carrier of mail nothing else. It cannot be regarded in the law of agency as an agent of parties. It is just a middle way or device for providing a service. It knows nothing of the bargain of the parties.

  Revocation Of Acceptance

Acceptance is the final act in the conclusion of an agreement between an offeror and offeree. As a matter of principle, acceptance once made cannot be revoked especially in the case of face to face contract. However, it is not simple in the case of acceptance made by post but it seems certain that an offeree can withdraw his postal acceptance by a faster means. The position of the law seemed to have changed. It may now be possible to recover postal letters before they are delivered. Therefore acceptance by post will only be effective when delivered as was held by the United States Courts in Rhode Island Co. v. U.S. F. Supp. 417 (1955). Plaintiff offered to supply bolts to the defendants who had accepted by post. Plaintiff later discovered that they had miscalculated and under quoted thus short-changing themselves. They withdrew the offer by telegram before the letter was delivered. It was held that the offer had been validly withdrawn before acceptance. See also Dick v. Us. F. Supp. 326 (1949).

CONCLUSION

In this unit, you learnt about acceptance. Your attention was drawn to situation and cases that will enable you to decide whether: a particular  statement  is   offer   or   invitation   to  treat,  or  whether   a communication is a counter offer or an inquiry.   You also   learnt about the Postal Rule and exceptions to it. You can now thrill yourself with the implication  of  telephone  calls  and  E-mail  communication  for contract formation. Well done. Now we have to move on to consider a very fundamental concept of consideration. Let’s go.

SUMMARY

We must now move away from the complexities of acceptance as it is now time to analyse another fundamental essential element of the contracting process Consideration

 

TUTOR MARKED ASSIGNMENT

1. State the rules relating to offer and acceptance which apply to contract made by
2. Consideration may be executory or executed, but it must not be Explain this statement with reference to decided cases.

 

REFERENCES/FURTHER READINGS

BELL, MALCOLIN W: The Law of Contract: Elements and Terms in Corporate Law. The open University of Hong Kong 2001

BLACK’S LAW DICTIONARY 7thEd.

CURZON. B Dictionary of Law 3rd Ed.

FOGAN. P. Law of Contract malthouse Press Ltd. Lagos 1997.

OYAKCHIROMEN &ANOR: Compendium of Business Law in Nigeria, 2004 MACMILLAN C. & STORE R: Elements of the law of Contract Univ. Glondon Extenal Programme, 2003SAGAY, Nigeria Law of Contract , 2^nd Ed., Spectrum Books Limited, Ibadan 2001 OLUWASEGUN YEROKUN, Modern Law of Contract, 2^nd ed, Nigeria Revenue Projects Publication, Lagos State University, Ojo, Lagos 2004

T.O. DADA, General principles of Law 3^rd Ed., Published by T.O. Dada & Co. Lagos. 2006

EWAN MACINTYRE, Business Law, 1^st ed., Pearson Education Limited (2008)