Acceptance as an element of a
contract
Acceptance is a reaction to the offer and it is
presumed to be the last step in the process of creating a contract. The offeror
makes an offer and the offeree makes the acceptance hence binding the offeror
to the terms set out in the contract. Under normal circumstances, the offer
needs to be communicated to the offeror for it to be valid[1].
However, there are different forms of contracts where acceptance can be done by
executing a specified task. This means that the offeror would be bound to the
contract even if there was no communication by the offeree to accept the offer
made. Another element of an acceptance is the time aspect. When an offer is
made, acceptance must be made within the specified time and in the specified
form. Where no time limit is provided, it would be expected that the acceptance
be made within a reasonable time. The acceptance must also be unconditional[2].
Being unconditional means that the offeree must accept all the terms and
conditions specified in the offer for the contract to be binding. Any
alterations can be considered to be counter-offers which must then be accepted
by the initial offeror for a contract to be formed.
There is little doubt as to what the
law says about the manner in which acceptance must be done. The law and case
law all present a consistent view that acceptance must be unconditional. This
means that the offeree does not have the liberty to present fresh conditions
with the acceptance. The offeror is therefore insulated against a situation
where they would be bound to conditions that they do not know about[3].
In effect, this requirement inserts certainty. This paper uses past studies and
case laws to demonstrate that a contract is only formed where the offer is
final and unconditional.
Absolutely unconditional acceptance:
case law
The provision requiring that acceptance be
unconditional was provided to protect the people from being bound to terms that
they may not be part of. The absence of this requirement would mean that an
offeror would present an offer upon which the offeree would make alterations
and demand that the offeror delivers based on the new conditions and this would
imply high levels of uncertainty[4].
As a matter of fact, people would be reluctant to make offers in fear of being
bound to conditions they do not know of. One of the properties of contracts is
that they introduce certainty and this certainty must be assured by requiring
that any new terms to the contract be discussed before one can be bound to it. Business
is mainly run through contracts and the insertion of conditions that guarantee
certainty is very useful in promoting vibrancy in trade and other areas of
life. In most cases, the offeror just inserts a statement to be assigned
against by the offeree where the statement dictates that all the terms and
conditions specified in the offer apply[5].
The requirement for the unconditional acceptance makes it necessary that negotiations
be made before the final offer is made. The parties to the contract negotiate
thoroughly on the terms after which the same are put into writing into an offer
to be accepted unconditionally.
Acceptance
must be deliberate in that there must be a clear intention by the offeree to
accept the contract. This condition applies even where there is no direct
communication to the offeror on the intention to make the acceptance. In the
case of Carlill v Carbolic Smoke Ball Co
(1893), acceptance was a direct response to the offer made and even though it
was not communicated to the offeror, it was regarded as a valid and as a
consequence the contract was binding on the offeror[6]. The underlying reason for the
ruling was that the action taken was in response to the offer meaning that it
was absolute. This dimension has also been demonstrated in the case of Crown v Clarke (1927)[7]. In this case, the WA
Government made an offer that if anyone gives information leading to the arrest
of persons that had murdered police officers, they would receive an award. When
Clarke was arrested in connection with the murders, he secured his release by
providing information about the other two suspects. His claim for the reward
was rejected and when he went to court, the decision of the government was
upheld. In making their judgment, the judges held that even though Clarke
provided the information needed, it was not in response to the offer but rather
it was for the purpose of securing his release. This implies that an acceptance
can only be considered when it is in direct response to the offer.
The
requirement on unconditional acceptance can be demonstrated in the case of Hyde
v Wrench (1840)[8]. In this case, the defendant in
the case had offered to sell his farm at £1000. The claimant then responded to
the offer with an acceptance that proposed a price of £950 for the same piece
of land. When the defendant refused to sell his piece of land at the new price,
the claimant sued. The court ruled that there had been no contract formed to
bind the defendant to sell the land. This is because the offer was not accepted
unconditionally and that the change in pricing by the offeree constituted a
counter-offer which could either be accepted or rejected by the initial offeror[9]. A change in the conditions by
the offeree renders the initial offer stale and this implies the need for a new
offer to be made.
The fact
that acceptance must be unconditional was also demonstrated in the case of Jones v David (1894)[10]. In this case, the defender
offered to buy the claimant’s property at £1,450 and he received a reply from
the claimant an acceptance. This acceptance was found to have included further
conditions upon which the counter offer was declined. This led to the legal
suit in which it was held that the contract had not been formed in the first
place. The introduction of new conditions translated into the rejection of the
new offer. However, there must be a distinction between seeking clarification
and rejection of an offer. In the case of Stevenson,
Jacques & Co v McLean (1880) where the defendant presumed that a call
for a clarification amounted to a counter offer[11]. The defendant had offered to
sell iron at 40s per ton and in response the offeree had sought clarification
on the amount of time allowable. Upon lack of clarification sought, the offeree
accepted the offer before the lapse of the offer period. In the meantime, the
offeror had presumed that the offer was rejected and formed a contract with
someone else. When the matter went to court, the court ruled that a contract
had already been formed and that the defendant was liable for breach.
In the
case of Ardente v Horan (1976),
Ardente made a bid to buy a property for $250,000[12]. The bid was accepted and Horan
made an offer to for the sale of the property. In his acceptance, Ardente
signed on the offer but also included a check of $20,000 with a request that
certain furniture be part of the transaction. This latter demand was rejected
and when the matter moved to court, it was held that the additional condition
did not constitute an offer.
Conclusion
Contracts drive business. The sanctity of contracts is
what keeps businesses running. Acceptance is one of the important elements of
contracts. It is always in response to an offer. Acceptance is a very important
part of the contract formation process and without it a contract cannot be
deemed to have been formed. It can either be communicated or by performing an
action specified in a contract. There are certain conditions that must be
fulfilled for an acceptance to lead to the formation of the full contract. Some
of these conditions include timeliness in the provision of the acceptance, form
of acceptance required, absoluteness of acceptance and the requirement that
acceptance ought to be unconditional. These conditions are emphasized both in
the law of contract as well as in jurisprudence as illustrated in numerous
other past cases. The cases cited above consistently indicate the fact
acceptance should be unconditional. An offer ordinarily comes with conditions.
These conditions are part of the offer and an acceptance ought to imply that
each and every condition has been accepted. The introduction of this condition
helps in guaranteeing that an offeror will not be bound to new conditions that
they are not privy to. It is therefore accurate to hold that the law requires
that acceptance be final and unconditional.
Bibliography
Ardente v. Horan (1976) 117 R.I. 254, 366
Australian Contract Law, Terms
of a contract (2012) Australian Law Contract < http://www.australiancontractlaw.com/law/scope-terms.html>
Carlill v Carbolic Smoke Ball Co Court of Appeal
[1893] 1 QB 256
Carter, John W, Cases and
materials on contract law in Australia (LexisNexis Butterworths, 2012)
Chris Willet, “the functions of transparency in regulating contract
terms: UK and Australian Approaches”, The
International and Comparative Law Quarterly, 60/2 (2011): 355-385
Crown v Clarke (1927) 40 CLR 227
Hyde v Wrench
(1840) 49 ER 132
Jones
v. Daniel (1894) 2 Ch. 332
Lindgred, Kevin E, Business law
of Australia (Chatswood, NSW: Lexis Butterworths, 2011)
Stevenson,
Jacques & Co. v McLean (1880) 5 QBD 346
[1] Chris Willet, “the functions of transparency in regulating contract
terms: UK and Australian Approaches”, The
International and Comparative Law Quarterly, 60/2 (2011): 355-385.
[2] Ibid.
[3] Australian Contract Law, Terms
of a contract (2012) Australian Law Contract <
http://www.australiancontractlaw.com/law/scope-terms.html>.
[4] Carter, John W, Cases and
materials on contract law in Australia (LexisNexis Butterworths, 2012).
[5] Ibid.
[10] Ibid.
No comments:
Post a Comment