Contract Law1221 Lecture 4
Only when there is offer and acceptance when both are fulfilled, do we have contract. We must have
a positive manifestation of acceptance, Mere inertia, failing to respond is not the acceptance.
Performing can manifest acceptance (Brogden v Metropolitan Rly), “Battle of the forms”, what
happens if both parties put forward their own standard terms and neither explicitly agrees to the
other’s? The logical effect of the rule that a counteroffer kills an earlier offer, the principle that
acceptance can be by conduct is the “last shot” rule. The issue of the case was that both parties were
performing the anticipated deal but each actually had separate contract terms and standards. The
last terms communicated before performance commences will be deemed to be accepted by the
other party: Butler Machine Tool v Ex-Cell-o.
The limits to the “last shot” rule are that performance is required, last shot rule only applies if the party
said to have accepted the other’s terms have started to perform. Even if the parties start to perform,
no contract will arise if it is clear on the facts that they are still negotiating. In that case a restitution or
unjust enrichment solution will be necessary, ie a claim for benefits conferred: British Steel v
Cleveland Bridge (1984).
Express communication of acceptance: controlling mode of acceptance. An offerer can stipulate that
an acceptance should be communicated by a certain method. But unless the wording is very clear
that the requested method is the “sole permitted method”, an acceptance communicated by any “no
less advantageous” method will be valid: Manchester Dicosean Council.
Express communication of acceptance, when effective? When a message is deemed to be a valid
communication of acceptance depends on the mode of communication: Face to face dealings
telephone conversations, postal communications, electronic or instant messaging.
Face-to-face / telephone dealings. In conversation, communication of acceptance does not usually
pose any problem, for obvious reasons. There is no decided case where the problem is that the
offerer does not hear the offeree’s words. But see dicta of Lord Denning in Entores, working through
different possible scenarios.
The postal acceptance rule = an acceptance is deemed communicated when committed to the post =
Adams v Lindsell (1818). The rule means that a posted acceptance letter is valid even if it gets lost in
post and never arrives: Household Fire v Grant. But the postal rule does not apply to a withdrawal of
an offer, hence an acceptance can be valid even if sent after offerer posts withdrawal: Byrne v Van
Tier Hoven, postal rule is arguably a trap as it does not apply to offers or withdrawals and is easy to
displace. If the offerer puts a letter in the post to the other party, it will only be valid if it arrives, so it
does not apply.
Offerer can expressly disapply the rule with clear words by saying eg “an answer by post is only
binding if and when it reaches me”. It does not take much to displace the rule. If offer requires “notice
in writing”, this will be enough: Holwell Securities v Hughes. It can even be displaced by implication if
the context suggests parties did not intend a binding agreement w/o actual receipt of acceptance.
Non-conversational, instant messaging, email, fax etc. Clear at least that the postal rule does not
apply to electronic communications, entores Brinkibon. Therefore an electronic message is not
necessarily effective when sent. It has been said that the point in time when an electronic
communication is deemed effective depends on the “intentions of the parties, sound business
practice and … a judgment where the risks should lie” Brinkibon, Lord Wilberforce. When it
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Only when there is offer and acceptance when both are fulfilled, do we have contract. We must have
a positive manifestation of acceptance, Mere inertia, failing to respond is not the acceptance.
Performing can manifest acceptance (Brogden v Metropolitan Rly), “Battle of the forms”, what
happens if both parties put forward their own standard terms and neither explicitly agrees to the
other’s? The logical effect of the rule that a counteroffer kills an earlier offer, the principle that
acceptance can be by conduct is the “last shot” rule. The issue of the case was that both parties were
performing the anticipated deal but each actually had separate contract terms and standards. The
last terms communicated before performance commences will be deemed to be accepted by the
other party: Butler Machine Tool v Ex-Cell-o.
The limits to the “last shot” rule are that performance is required, last shot rule only applies if the party
said to have accepted the other’s terms have started to perform. Even if the parties start to perform,
no contract will arise if it is clear on the facts that they are still negotiating. In that case a restitution or
unjust enrichment solution will be necessary, ie a claim for benefits conferred: British Steel v
Cleveland Bridge (1984).
Express communication of acceptance: controlling mode of acceptance. An offerer can stipulate that
an acceptance should be communicated by a certain method. But unless the wording is very clear
that the requested method is the “sole permitted method”, an acceptance communicated by any “no
less advantageous” method will be valid: Manchester Dicosean Council.
Express communication of acceptance, when effective? When a message is deemed to be a valid
communication of acceptance depends on the mode of communication: Face to face dealings
telephone conversations, postal communications, electronic or instant messaging.
Face-to-face / telephone dealings. In conversation, communication of acceptance does not usually
pose any problem, for obvious reasons. There is no decided case where the problem is that the
offerer does not hear the offeree’s words. But see dicta of Lord Denning in Entores, working through
different possible scenarios.
The postal acceptance rule = an acceptance is deemed communicated when committed to the post =
Adams v Lindsell (1818). The rule means that a posted acceptance letter is valid even if it gets lost in
post and never arrives: Household Fire v Grant. But the postal rule does not apply to a withdrawal of
an offer, hence an acceptance can be valid even if sent after offerer posts withdrawal: Byrne v Van
Tier Hoven, postal rule is arguably a trap as it does not apply to offers or withdrawals and is easy to
displace. If the offerer puts a letter in the post to the other party, it will only be valid if it arrives, so it
does not apply.
Offerer can expressly disapply the rule with clear words by saying eg “an answer by post is only
binding if and when it reaches me”. It does not take much to displace the rule. If offer requires “notice
in writing”, this will be enough: Holwell Securities v Hughes. It can even be displaced by implication if
the context suggests parties did not intend a binding agreement w/o actual receipt of acceptance.
Non-conversational, instant messaging, email, fax etc. Clear at least that the postal rule does not
apply to electronic communications, entores Brinkibon. Therefore an electronic message is not
necessarily effective when sent. It has been said that the point in time when an electronic
communication is deemed effective depends on the “intentions of the parties, sound business
practice and … a judgment where the risks should lie” Brinkibon, Lord Wilberforce. When it
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