Acceptance PDF

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Summary

Acceptance Definition 1. Section 2(B) thereto, the proposal is said to be accepted: a proposal- when the person to whom the proposal is made signifies, when accepted, becomes a his assent promise; 2. Final unqualified expression of assent to the terms of the offer Significance 1. Upon the agreement ...

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Acceptance Definition 1. Section 2(B)- when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise; 2. Final unqualified expression of assent to the terms of the offer Significance 1. Upon the agreement by accepting the offer, then there will be a binding contract between those parties The rules that are governing the acceptance: 1. Section 7(a)- Absolute and unqualified a. It means that the offer must be accepted as it is b. 3 situations that the acceptance is not absolute and unqualified i.

A counter-offer by offeree 

Where A writes to B proposing to sell his Proton Saga for $15000 and at about the same time, B writes to A proposing to buy the same care at the same price, and their letters crossed in the post, there is no binding contract

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Read: Hyde v Wrench & Tinn v Hoffman

ii. Acceptance made subject to contract 

Usual to find commercial documents containing phrases such as ‘subject to contract’, ‘without prejudice’, ‘a formal agreement would be prepared and executed’

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The question: whether these qualified statements constitute a valid acceptance bringing forth legal obligations to the parties

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There are two approaches to this matter -

Read: Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor Appeal- there is no contract and the court will construe such words so as to postpone liability until the formal agreement is signed

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Read: Prism Leisure Sdn Bhd v Lumut Marine Resort Sdn Bhdthe parties have already entered into a legally binding contract and the execution and signing of the document is a mere formality

The offeree is agreeable to the terms of the offer but proposes that the parties should negotiate a formal usually written contract on the basis of the offer (first approach) -

These expressions meant that the parties are still in a state of negotiations, do not intend to be bound, until & unless a formal contract is exchanged

iii. Terms of offer amended at the time of acceptance 

if the acceptance contains clauses adding on or amending the terms of the offer, it is not absolute and unconditional and there is no valid acceptance

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Read: Jones V Daniel

2. Section 7(b)- communicated in usual and reasonable manner a. There must be some act on the part of the offeree to indicate his proposal b. Mere passive indication/ inaction does not amount to acceptance c. The offeree must signify his acceptance d. How can an acceptance be made? i.

By a conduct 

An offeree may by his conduct indicate his intention whether he has or has not accepted an offer

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Read: Woon Yoke Lin v United Estate Projects Berhad

ii. Performing the conditions in the offer 

This mode of acceptance is recognised in Section 8 of Contracts Act“performance of the conditions of a proposal….is an acceptance of the proposal”

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Read: Carlil v Carbolic Smoke Ball Co

iii. By silence (not acceptance) 

Whether silence amount to an acceptance

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Read: Felthouse v Bindley

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3 reasons why silence cannot amount to the acceptance -

Silence is ambiguous and it is difficult to infer from it an intention to accept

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Acceptance must be communicated to the offeror so that he knows when a contract binds both parties

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To prevent an offeror from exploiting an offeree’s inertia by making him contractually liable

The communication of acceptance 1. Section 3- The communication of acceptance may be through an act or omission 2. When the communication of acceptance is complete? a. General Rule- an acceptance is communicated when it is actually brought to the knowledge notice of proposer -

The general rule is instantaneous means of communication

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This includes face-to-face communication and the use of telephones, telex and fax machine

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There is no statutory provision in the Contracts Act 1950 concerning acceptance by way of instantaneous means of communication

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The reason for this lacuna is quite obvious- at the time the Contracts Act 1950 was first introduced into Malaysia through Contracts Enactment 1899, the instantaneous means of communication were not in existence

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Read: Entores Ltd V Miles Far East Corp

b. Exception- course of transmission/ postal rule -

Section 4(a) & (b)- provides there is a gap of time between the communication of acceptance by acceptor and the receiving of that communication by the proposer

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With regard to postal rules, acceptance is complete upon posting or dispatch of the telegram

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Read: Adams v Lindsell & Ignatius v Bell

The revocation of acceptance 1. Section 5(2)- when the acceptor can revoke the acceptance? an acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor but not afterwards a. Illustration to Section 5 -

B accepts A’s proposal by a letter sent by post; and

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B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards

b. B can revoke his acceptance at any time before/ at the moment when the letter of acceptance reaches the proposer A c. Read: Dunmore (Countess of) v Alexander -

Where the letter of acceptance and the letter revoking the acceptance, which was sent by express, were received by the offeror simultaneously, the court held that the acceptance had been effectively withdrawn and there was no contract

2. Section 4(3)- when is the revocation complete? there is a difference in time when the communication of acceptance is complete as against the proposer and the acceptance -

Section 4(3)(a)- as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it

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Section 4(3)(b)- as against the person to whom it is made, when it comes to his knowledge

a. The revocation of acceptance is only effective when it is brought to the knowledge of the proposer (can be seen in Illustration (b) & (d) to section 4(3)) -

(b) B accepts A’s proposal by a letter sent by post

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(d) B revokes his acceptance by telegram

b. From these illustrations, B’s revocation is complete as against B when the telegram is despatched, and as against A, when it reaches him -

Thus, once the acceptor B puts his revocation into a course of transmission, he cannot withdraw his revocation because the communication of revocation of acceptance is complete as against him upon despatching it and as against the proposer when it reaches the proposer....