Acceptance is one of the essentials of a valid contract. When an offer has been made, for a contractual relationship to arise, the offer as long as it is still subsisting must be accepted. In law, the term acceptance is used in its strictest sense.
Acceptance occurs when an offeree unconditionally and unequivocally expresses his assent to the terms of an offer. Simply put; acceptance is a final agreement to the terms of an offer.
The acts constituting acceptance to an offer must be unambiguous; it must be so clear that there should be no doubt that the offer has been accepted. The acceptance, to be valid, must clearly relate to the offer or the transaction in question.
Acceptance may arise by oral communication by the offeree to the offerror or his authorized agent to that effect. It can as well arise by conduct of the parties, by passage of documents or in writing, and by electronic means to that effect.
Silence does not constitute a valid acceptance of an offer. This principle was illustrated in the case of FELTHOUSE V BINDLEY. In this case, the plaintiff made an offer to his nephew asking to purchase the plaintiff’s horse at 30 pounds 15 shillings. He added that he would consider the horde to be his if he gets no reply from his nephew. His nephew did not reply, though he intended to accept the offer. He rather asked the auctioneer to reserve the horse during auction sales.
The auctioneer forgot to do so and sold the horse. In an action for conversion against the auctioneer, the court held that as at the time of the sale the plaintiff’s nephew had not accepted the plaintiff’s offer; therefore a valid contract was yet to arise between them.
The common law principle is that for an acceptance to be valid, it must be communicated. This common law principle has now been encoded in the various state contract laws. For instance, the Enugu State Contract Law, Laws of Enugu State 2004, cap 26 clearly provides in its section 107 that acceptance of an offer shall not be valid unless it is communicated to the offerror.
Communication of acceptance need not be made by the offeree himself; it can as well be made by the offeree’s authorized agent. Where the offeree relates his intention to accept the offer, or in fact communicates his acceptance to his agent, it is not yet a valid communication until the agent communicates same to the offeror. Thus, communication must reach the offeror.
The rationale for this rule of clear and unequivocal communication of acceptance is that it would work hardship against the offeror to be bound by his offer when he is unaware that his offer has been accepted. The law therefore places this burden of communication of acceptance on the offeree.
Exception To The Rule That Acceptance Must Be Communicated
The rule that acceptance of an offer must be communicated by the offeree to the offeror does not apply absolutely. There are instances that exclude its application:
1. Waiver by the offeror: Section 7 of the Enugu State Contract Law Cap 26 provides in its proviso that the communication of acceptance shall not apply where the offeror indicates that communication of acceptance is not required by him.
Here, the offeror clearly waives the need for the offeree to communicate his acceptance to him expressly or impliedly. The offeror can only bind himself under this principle. He cannot therefore bind the offeree to the same effect, for instance, he cannot bind the offeree that his own silence shall amount to acceptance.
2. Unilateral Contract: this is an agreement in which an offeror’s offer can be accepted only by the performance of an act by the offeree. In such a contract, there is an implied waiver of communication of acceptance. Acceptance in such a case runs contemporaneously with the performance of the contract. Thus, once the act performed, the contract is complete.
This is seen in the case of Carlil V Carbolic Smoke Ball. In this case, the smoke ball company made an offer to the whole world that anybody who uses their smoke ball product in line with the directives and contracts influenza would be given 100l. The plaintiff used the product as directed and still contracted influenza. The company was held liable and bound by the contract, even when there was no prior clear acceptance of the offer by the plaintiff. The performance of the contract ran contemporaneously with communication of acceptance.
3. Acceptance by Post (The Rule IN Adams V Lindsell): where the offeror sends his acceptance by post, the acceptance is deemed to be complete and valid at the moment of posting the letter, even though the offeror was yet to receive the notification. This rule was laid down in the case of ADAMS V LINDSELL. In this case, the defendant offered in writing via post to sell wool to the plaintiff. When the defendant did not get a reply, he sold the wool to another person. Meanwhile, the plaintiff had already sent his acceptance letter by post. The plaintiff consequently brought an action for breach of contract against the defendant. It was held that there was a valid contract between them. In consequence of the breach, the defendant was held liable.
The rule in Adams V Lindsell was also applied in the case o DrEages Ltd V Quan.
The rule established in Adams V Lindsell applies even if the acceptance letter was delayed or lost. This was the situation in the case of HOUSEHOLD FIRE INSURANCE CO LTD V GRANT.
The rule in Adams V Lindsell was departed from in the United State’s case of RHODE ISLAND TOOL CO V US. In this case, the plaintiffs made an offer to the defendants for the sale of bolts via post. The defendants posted their acceptance via post. It was after then that the plaintiffs noticed that there was miscalculation of price in their offer. The plaintiffs then withdrew their offer immediately by contacting the defendants via telegram.
Their revocation of offer had got to the defendants before the plaintiffs received their letter of acceptance. The court held the revocation to be effective. Same was held in the similar case of DICK V US.
Exceptions to the Rule In Adams V Lindsell
The rule in Adams V Lindsell will not apply in the following cases:
1. Where there is express or impled provision in the contract to the effect that the offeror must get the actual notification of the acceptance. Here, the terms of the contract extinguished the application of the rule in Adams V Lindsell.
This is in recognition of the rule of sanctity of contract, Pacta Sunt Savanda – Freedom of Contract. Parties are free to make their contracts in their own terms and exclude or modify the application of some principles.
2. Where the application of the rule would occasion inconvenience and absurdity.
3. Where the acceptance letter is posted wrongly. In the case of RE LONDON AND NORTHERN BANK, the acceptance letter was handed over to a Postman who was outside the General Post Office.
This was held to be a wrong posting. It was therefore held not to constitute a valid acceptance.
4. Where the acceptance letter is not correctly addressed or where it is not appropriately stamped.
5. Where the use of postal service as a means of communication is unreasonable.
6. Where from all indications, it could be implied that the parties did not intend the agreement to crystallize into a binding contract until acceptance is actually communicated to the offeror.
Mode of Communication of Acceptance
Where the terms of the contract provides for a mode through which acceptance is to be communicated, acceptance must be communicated through that mode so prescribed, if done otherwise a valid contract would not arise.
Where however, the terms of the contract did not provide for the mode of communication of acceptance, it follows that the mode of acceptance will depend on the nature of the offer.
Acceptance is the requirement that gives life to an offer. When acceptance has been made, the requirement for the validity of a contract is almost completed. The element is so substantial that a valid contract cannot be said to have crystallized if acceptance is not communicated. As has been discussed, the requirement of communication has instances where it does not apply. Asides those instances, acceptance must always be communicated.