Laws2111 Lecture3a 2011

Methods of Acceptance

  • Where one method is explicitly prescribed, any ‘not less advantageous’ method (any one just good from the offeror’s perspective) is valid (Machester Diocese case)
  • Depends on various considerations of the offeror – security, speed, having a hard copy of the acceptance to refer to, etc.

General Rule

  • Where no method is stipulated, acceptance is communicated WHEN and WHERE it is received (Brinkibon)
  • Instantaneous communication methods ONLY apply if they’re actually heard/received (Entores)
  • Email probably only applies when it’s actually READ, however posted acceptance CAN be considered final when sent, rather than received (Postal rule)
  • Theoretically instantaneous communication can be delayed by numerous means – tech faults, nobody present at the other end, not read for some time, etc. (Brinkibon)
  • Wilberforce in Brinkibon identified the key factors were:
    • The intent of the parties
    • “sound business practices”
    • Who should bear the risk

Postal Rule (narrow exception to the general rule)

  • Acceptance occurs when POSTED, not received (Adams v Lindsell)
  • Only applies in Australia if post is an acceptable/contemplated reply method (Dixon in Tallerman)
  • Once posted, it does NOT matter if the letter is lost (Grant)
  • Can specify “received in writing” in the offer to mandate receipt (Howell)
  • Acceptance declared to have occurred when message DELIVERED (Vienna Convention, Article 24)
  • Theories: Declaration (no actual communication required) vs Information (Requires the offeror to actually be aware of acceptance)
  • Fax treated as ‘instantaneous’, not as ‘posted’ – rule does not apply (Reese)
  • Postal rule fairly narrow – normally requires receipt (or reasonable expectation of receipt) as per Brinkibon

E-Commerce

  • UN managed to convince Australia to adopt the UNCITRAL Model Law
  • Adopted by Queensland in 2001 – s24 is not clear on which rule to apply, only that it looks at ‘time receipt’ not ‘time of contractual acceptance’, and it’s purpose is NOT to override national law – at best persuasive

Acceptance via Agent

  • Only valid if the agent has the authority to accept offers.

Battle of the Forms

  • A response to another offer accepting it subject to different conditions is a counter-offer
  • You are unable to pre-emptively ‘stop’ or prevail over counter-offers, as they extinguish the original offer
  • Buyer cannot ‘accept’ their own offer (Butler v Ex-Cello)
  • Returning an acknowledgement slip from their counter-offer is objectively an acceptance of that counter-offer (Butler)
  • Australian cases tend to look at the conduct (eg. Empirnall)
  • Vienna convention (International Sales) – any response purporting acceptance is generally treated as acceptance of original terms – unless the new terms include ‘material’ changes
  • Parties conduct can objectively reveal an acceptance – even if that conduct is subsequent (Kriketos, Empirnall)

Termination of an Offer

  • General rule – can revoke an offer at any time before acceptance is effective (Byrne v Van Tienhoven)
  • Revocation is not complete until offeree is notified of the revocation – only effective on receipt (Byrne)
  • Knowledge of revocation (explicit or implicit) may be sufficient, rather than actual receipt (Dickinson v Dodds)
  • Timed offer CAN be withdrawn earlier (Dickinson)
  • Offer to keep the offer open can be held as an ancilliary contract, if it meets all the requirements (Blackpool)
  • An “option” can be a contract in and of itself
  • Vienna Convention – cannot revoke an ‘irrevocable’ or timed offer acted on in reliance

Options

  • The right to purchase, if exercised in a specific time period (O’Halloran)
  • A contract of sale now with an optional condition allowing it to be cancelled within a specific time period (Laybutt)
  • Alternatively, “Lock Out” agreements to exclude one party from negotiating with anyone else can be valid, but only if for a specified time period (Walford) – may not be needed in Australia if a requirement to negotiate in good faith is specified

Unilateral Contracts (aka Carlill)

  • Need to be revoked with the same LEVEL of notoriety – eg. publish revocations in the same place as the original offers
  • Can an offer be revoked after performance has commenced?
    • Probably not (Abbot v Lance, Daulia)
    • Discussed in detail by the Federal Court (Mobil v Wellcome)
    • Held some detriment need to have been suffered BY the performance (Mobil)
    • Potential for injunction to stop interference, or equitable estoppel

Lapse of an Offer

  • Can stipulate an express time limit at which an offer will lapse automatically
  • If no express time limit specified, a “reasonable time” implied (Manchester Diocese)
  • Can be a “here and now offer” that must be accepted immediately (Bartolo)
  • Can be subject to continuing or pre-existing conditions
  • Death of offeree does not prevent their representatives from accepting (unless a “personal” contract requiring the deceased’s skills) (Carter)
  • Death of offeror does not terminate outstanding options (but probably stops general acceptance, due to difficult of notifying deceased of acceptance) (Leyton)

Restitutionary Remedy

  • Can potentially make a restitutionary claim for requested expenses (a reasonable sum to compensate for specifically requested work) (British Steel)
  • Prevents ‘Unjust Enrichment’

Learning Guide Cases

*Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp E
Relevant To: Acceptance/Counter-Offer
Issue: When multiple parties attempt to accept on their own terms, which terms prevail?
Held: Majority held that standard offer/acceptance rules prevail (and found acceptance in the form of a tear off slip used), but Lord Denning favoured a synthesis of terms to achieve the material agreement, with the court able to ignore irreconcilable terms.

Kriketos v Livschitz
Relevant To: Acceptance
Cited For: The idea that only a manifestation of mutual assent is required – no need for a technical offer/acceptance if facts don’t support it.

Dickinson v. Dodds E
Relevant To: Revocation of Offer
Issue: Is a promise to hold an offer open binding even after the other party learns through third parties that it has been revoked?
Held: No, it is not – once the offeree becomes aware of revocation, regardless of the means, they can no longer accept it.

UN Convention on Contracts for the International Sale of Goods (the Vienna Convention) enacted in the Sale of Goods (Vienna Convention) Act 1986 (Qld)
States that: Revocation is only effective if received before dispatch of acceptance.

Walford v. Miles E
Relevant To: Revocation of Offer, Lock-out agreements
Issue: Is a ‘lock-out agreement’ to not negotiate with anyone else legally enforceable?
Held: Yes, as long as it is for a reasonable period and made under a deed or for good consideration.

*Mobil Oil Australia Ltd v Wellcome
Relevant To: Revocation of Offer
Issue: Was Mobil able to withdraw the offer of a long-term unilateral contract (over 7 years) mid-way through?
Held: Yes, they were entitled to withdraw their offer, as it not yet been accepted. If the parties attempting to accept it had suffered real detriment, they could sue for that – but in this instance, the conditions were merely good business practices that they were obligated to do anyway under other contracts.

Bartolo v Hancock
Relevant To: Revocation of Offer
Issue: Was an offer to ‘walk away’ at the start of court proceedings still available for acceptance 5 days later?
Held: No, the offer was a ‘here and now’ offer, made for the purpose of avoiding the proceedings. It could not be accepted after they had commenced.

Carter v Hyde
Relevant To: Revocation of Offer
Issue: Was an offer made to a (now deceased) party still available to his executors?
Held: Yes, it was. There was nothing in the offer/circumstances identifying it as open ONLY to the deceased party.

British Steel v Cleveland Bridge E
Relevant To: Revocation of Offer, Costs of Requested Work
Issue: Is there a restitutionary obligation to pay for work requested prior to the completion of a contract that ultimately fails during negotiations?
Held: Yes, but only a reasonable restitutionary sum (quantum merit) for the work done – no actual contract was formed.