The Concept of Acceptance in Contract Law

You can simply define acceptance as the unqualified concession to the terms of an offer as conveyed by the offeror.

You can also define acceptance as an offeree’s assent, either by express act or by implication from conduct, to the terms of an offer in a manner authorized or requested by the offeror, so that a binding contract is formed.

It is the elements of acceptance that underscores the bilateral nature of a contract. In Orient Bank vs Bilante Intl the court identified three ways by which acceptance can be inferred: By words, by conduct and by correspondence passing between the parties.

Types of Invalid Acceptance

Acceptance without communication

This is a situation in which there is no external manifestation of acceptance.

In this case, the offeree simply doesn’t communicate the acceptance to the offeror. Even if there was an intention to accept, the absence of communication makes it invalid.

In the case of Felthouse vs Bindley, the plaintiff made an offer to his nephew and he stated that if he did not receive a reply he would assume that the offer has been accepted.

His nephew intended to sell him the horse however, it was mistakenly auctioned.

The plaintiff subsequently sued the auctioneer for conversion. The court held that there was no valid contract between the plaintiff and his nephew due to the fact that the acceptance had no external manifestation, thus, it was invalid.

Counter-Offer

A counter offer happens when offeree introduces a new term to the initial offer of the offeror.

The addition of an extra term terminates the initial offer and it thus becomes a new offer which the former offeror is at liberty to accept or reject.

In the case of General George Innih vs Ferado Agro Consortiums Ltd, The appellant offered to sell some properties to the plaintiff provided acceptance was within three days.

The respondent replied that it ‘accepted’ the offer but it asked for an extension of two weeks. The appellant immediately sold the assets to a third party. The respondent sued for breach of contract.

The respondent won in the high court.

On appeal, the court of appeal ruled that the introduction of a new term was a counter offer. This was irrespective of the fact that the respondent said it accepted the offer. The counter offer terminated the initial offer and was a new offer which the appellant could either accept or reject.

Conditional Acceptance

This is a where an acceptance is  subject to the fulfilment of a condition.

An example is if an agreement is subject to a contract. In the case of Winn vs Bull it was decided that this meant that the acceptance is not complete until the drawing up of a formal contract.

In the case of UBA vs Tejumola and Sons, the appellant requested for a lease from the respondent. The request was however headed “subject to contract”. Subsequently, there was an agreement between both parties.

However, the appellant later rescinded from the agreement. The respondent sued for breach of contract.

The respondent won in the High Court and the Court of Appeal.

However, the Supreme Court overturned the judgement.

The court held that the presence of the phrase “Subject to contract” meant that subject to the drawing up of a formal contract, the parties are still in the negotiation stage.

However, Nnaemeka Agu JSC added that if all the basic terms to the contract have been agreed upon, the insertion of ambiguous words was just mere “cosmetic surplussage.”

Cross Offer

This is a situation in which there are two simultaneous offers between both parties which have similar terms but they ‘cross’ at the post.

In the case of Tinn vs Hoffman & co, there were two simultaneous offers by both parties which had identical terms. The offers crossed at the post.

Subsequently, one of the parties contended that there was a valid contract. The court held that this was an impossibility due to the absence of consensus ad idem between both parties.

Acceptance In Ignorance of Offer

In this situation, an act is done which coincides with a unilateral offer of reward. However, the performer of the act is ignorant of the offer.

In the case of Fitch vs Snedaker, the court that in this situation the act can’t be said to be a valid acceptance. This is due to the fact that someone can’t accept something which he has no knowledge of.

Communication of Acceptance

As provided in the case of Felthouse vs Bindley, an acceptance is invalid unless it is communicated to the offeror.

However, there are situations in which the communication of acceptance is implicitly done away with. In the case of Carlill vs Carbolic Smokeball Co it was held that in unilateral contracts the communication of acceptance is implicitly done away with.

In order to really understand the meaning of communication of acceptance, we should consider the following:

• Moment of acceptance
• Where method of acceptance is prescribed
• Where method of acceptance is not prescribed.
• Acceptance by post
• Exception to the rule of acceptance by post.
• Revocation of acceptance.

Moment Of Acceptance

A pertinent question to ask is “where does acceptance take place?”. Is it where it was accepted or where it was received?

In the case of Entores vs Miles Far East co, Lord Denning held that an acceptance validly takes place where it is received not where it is posted. Thus, if an acceptance is posted in Nigeria it becomes valid when it is received in America.Therefore acceptance is valid at the moment of acceptance.

Where Method Of Acceptance Is Prescribed

Another issue to be considered is what happens if the method of acceptance is prescribed. The common law provisions are in conflict with Nigerian judicial and legal provisions. The provisions of the English legal system would be considered then the provisions of the Nigerian legal system would also be examined.

In the English case of Manchester Diocesan council vs Commercial and general investments Ltd, it was decided that where the method of acceptance is prescribed, unless that particular method is mandatory, any other method of acceptance that is faster would be valid.

However, in the Nigerian court of appeal case of Orient Bank vs Bilante Intl it was held that whenever a method of acceptance is prescribed, any other method used would be invalid. This was according to the provisions of S.109(1) of the Contract Law of Anambra state.

The burning issue then is which of the decisions is binding. As was tritely stated in the case of Alli vs Okulaja, decisions of courts that are not of Nigerian jurisdiction are not binding but are persuasive on Nigerian courts.

Also, S.32 Interpretation Act provides that rules of common law, doctrines of equity and statutes of general application before 1900 would be applicable in Nigeria only to the extent that the local jurisdiction allows for it.

Thus, it can be safe to conclude that the Nigerian decision overrules the foreign decision.

Where Method Of Acceptance Is Not Prescribed

Where the method of acceptance is not prescribed, the method used should be the method used in making the offer. Thus, if an offer is oral, acceptance should be oral. If offer is written, acceptance should also be written.

Acceptance By Post

As is trite, to every general rule there is an exception.

Acceptance by post is an exception to the rule that acceptance is valid only when it is received. In the case of Adams vs Lindsell it was decided that where acceptance is by post, it becomes valid when it is posted and not when it is received.

This decision was applied in the case of Household Fire insurance Co vs Grant.

In this case, the defendant offered to buy shares in the company and it accepted by post.

However, the defendant didn’t receive the letter of acceptance. When the company got liquidated, the defendant was held liable for some sum of money.

He resisted paying the money and was thus sued to court. The court, in applying the decision in Adams vs Lindsell held that the letter of acceptance was valid even though it didn’t get to the defendant.  Thus, the defendant was held liable.

Exceptions To The Rule of Acceptance By Post

• Where the offer expressly states that acceptance by post has to reach the offeror. In the case of Holwell Securities Ltd vs Hughes, the offer expressly stated that acceptance should be by notice in writing. The court subsequent held that the acceptance was invalid because it did not reach the offeror.
• Where the letter of acceptance is wrongly posted.
• Where it would produce manifest absurdity and inconvenience. An example of this was provided in the case of Holwell Securities ltd vs Hughes, where the court rhetorically asked if a young soldier ordered overseas would be bound by a contract to marry a girl who accepted the proposal by post but it didn’t reach him?

 Revocation of acceptance

Generally, an acceptance which is not by post can be revoked if the revocation reaches the offeror before the acceptance does.

It is not clear if this would be acceptable in an acceptance by post. This is due to the fact that when a letter of acceptance is already posted, there is a binding contract.

However, in the United States case of Dick vs Us there was an acceptance by post that was revoked by telegram. The telegram in this case got to the offeror before the acceptance by post.

It was held that due to this, the acceptance was successfully revoked.