CHAPTER 2
OFFER AND ACCEPTANCE
1. "An Offer may be conditional but acceptance must always be
unconditional."
This statement means that an offer can be made with certain conditions, but the
acceptance of that offer must be straightforward and without any conditions or
qualifications. If the acceptance introduces any new terms or conditions, it becomes a
counteroffer, not an acceptance of the original offer.
Case Study: Hyde v. Wrench (1840)
In this landmark case, the defendant, Wrench, offered to sell his farm to the plaintiff,
Hyde, for £1,000. Hyde responded with a counteroffer of £950. Wrench rejected this
counteroffer. Hyde then tried to accept the original offer of £1,000, but the court ruled
that Hyde could not accept the offer anymore, as he had already made a counteroffer,
which had replaced the original offer. The case established that an offer can be made
with specific terms, but for it to be valid, acceptance must be unconditional. Once Hyde
made a counteroffer, the original offer was no longer available for acceptance.
Thus, this case highlights the concept that while offers can be conditional, any
acceptance must be unqualified to form a valid contract.
2. "An offer lapses by subsequent illegality or destruction of subject
matter."
This statement suggests that if the subject matter of the offer becomes illegal or is
destroyed before acceptance, the offer is considered void. The offeror cannot be
expected to honor the offer under such circumstances.
Case Study: Taylor v. Caldwell (1863)
In this case, the defendants, Caldwell, rented a music hall to the plaintiffs, Taylor, for a
series of concerts. Before the concerts could take place, the music hall was destroyed
by fire. The plaintiffs sought to claim damages, but the court ruled that the contract was
no longer valid because the subject matter (the music hall) had been destroyed before
the concerts could take place.
The court applied the principle that the destruction of the subject matter of an
agreement (in this case, the music hall) made the performance of the contract
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impossible, and thus, the offer and contract lapsed. It became a case of "impossibility of
performance" due to the destruction of the subject matter, and the offer was no longer
valid.
Case Study: Rehman v. New Zealand Shipping Co Ltd (1957)
This case involved an offer to ship goods, but before acceptance, the goods were
destroyed in a fire. The court held that the offer lapsed because the subject matter (the
goods to be shipped) was destroyed, making the offer void. The key takeaway here is
that the subsequent illegality or destruction of the subject matter nullifies the offer, as it
becomes impossible to perform the contract.
Conclusion:
Unconditional Acceptance: As seen in Hyde v. Wrench, an offer can have
conditions, but any acceptance must be unconditional for it to be legally valid.
Lapse by Illegality or Destruction: As demonstrated in Taylor v. Caldwell and
Rehman v. New Zealand Shipping Co Ltd, if the subject matter of an offer is
destroyed or made illegal after the offer is made but before acceptance, the offer
lapses and cannot be accepted.
3. "The offerer is responsible for communicating his offer to the offeree. On the
other hand, Offeree is responsible for communicating his acceptance to the
offerer." Explain this statement with an example of a case study.
This statement highlights the fundamental principle in contract law that an offer must be
communicated by the offeror to the offeree, and acceptance must be communicated by
the offeree to the offeror for a contract to be legally binding.
Explanation:
In contract formation, communication plays a crucial role:
1. Offer Communication – The offeror (the person making the offer) must
effectively communicate the offer to the offeree (the person to whom the offer is
made). If the offeree is unaware of the offer, they cannot accept it.
2. Acceptance Communication – The offeree must communicate their acceptance
back to the offeror for the contract to be valid. Silence or an unexpressed
intention to accept is not sufficient.
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Case Study: Adams v Lindsell (1818):
This case illustrates the importance of proper communication in contract formation.
Facts:
Lindsell (the defendant) offered to sell wool to Adams (the plaintiff) via a letter
sent on September 2nd.
Due to postal delays, Adams received the letter on September 5th and
immediately sent a letter of acceptance on the same day.
However, Lindsell, assuming there was no response, sold the wool to a third
party on September 8th before receiving Adams’ acceptance on September 9th.
Adams sued Lindsell for breach of contract.
Judgment:
The court ruled in favor of Adams, establishing the "postal rule," which states that an
acceptance is deemed communicated when it is posted, not when it is received by the
offeror. Since Adams posted his acceptance before Lindsell revoked the offer, a valid
contract had been formed.
Conclusion:
This case highlights that:
1. The offeror (Lindsell) was responsible for properly communicating the offer to
Adams.
2. The offeree (Adams) effectively communicated his acceptance, and since it was
sent via a reasonable means (postal service), it was considered valid upon
posting.
Thus, in contract law, communication of an offer and its acceptance is essential for a
binding agreement.
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Explain about Lapse and Revocation of an Offer by an example of a case study.
Lapse and Revocation of an Offer
An offer does not remain open indefinitely. It can be terminated in several ways,
including lapse and revocation:
1. Lapse of an Offer:
o An offer lapses if it is not accepted within the specified time or within a
reasonable time if no time is specified.
o An offer also lapses if the offeror or offeree dies before acceptance.
o It lapses if the subject matter of the contract becomes illegal or impossible
before acceptance.
2. Revocation of an Offer:
o The offeror can revoke (withdraw) the offer before it is accepted.
o However, revocation must be communicated to the offeree before they
accept the offer.
o Once accepted, an offer cannot be revoked.
Case Study: Dickinson v Dodds (1876)
Facts:
Dodds (the defendant) offered to sell his house to Dickinson (the plaintiff) and
promised to keep the offer open until Friday, June 12.
Before Dickinson could accept, Dodds sold the house to a third party on June 11.
Dickinson, upon learning about the sale from a third party, tried to accept the
offer before June 12.
Dodds refused to sell the property to Dickinson.
Dickinson sued Dodds, claiming that the offer should have remained open until
June 12 as promised.
Judgment:
The court ruled in favor of Dodds, stating:
1. There was no binding contract because Dickinson had not accepted the offer
before revocation.
2. Even though Dodds promised to keep the offer open until June 12, he was free to
revoke it any time before acceptance, as there was no consideration (payment)
to keep the offer open.
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3. The revocation was effective because Dickinson was aware of it before
attempting to accept the offer.
Conclusion:
This case demonstrates two key principles:
Revocation of an Offer: An offer can be revoked anytime before acceptance,
even if the offeror initially promised to keep it open.
Lapse of an Offer: If an offer is revoked before acceptance, it lapses and can no
longer be accepted.
Thus, an offeree must accept an offer promptly to avoid the risk of lapse or revocation.
"Mental acceptance is not an acceptance, so silence cannot amount of
acceptance." Explain this statement with an example of a case study.
"Mental acceptance is not an acceptance, so silence cannot amount to
acceptance."
This statement highlights a fundamental principle of contract law: acceptance must be
communicated to the offeror to be valid. Mere mental acceptance (intending to
accept without expressing it) or remaining silent does not create a binding contract.
Explanation
For a contract to be valid:
1. The offeree must clearly express their acceptance through words or actions.
2. Silence or failure to respond does not constitute acceptance unless there is a
prior agreement stating otherwise.
If mere silence were considered acceptance, people could be unfairly bound by offers
they never intended to accept.
Case Study: Felthouse v Bindley (1862)
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Facts:
Felthouse (the plaintiff) discussed buying a horse from his nephew.
He wrote a letter to his nephew stating: "If I hear no more about it, I consider
the horse mine at £30."
The nephew intended to sell the horse to Felthouse but never explicitly
communicated acceptance.
Later, the horse was mistakenly sold at an auction by Bindley, the auctioneer.
Felthouse sued Bindley, arguing that the horse already belonged to him due to
the agreement with his nephew.
Judgment:
The court ruled against Felthouse, stating:
1. No acceptance was communicated – The nephew never explicitly accepted
the offer.
2. Silence does not amount to acceptance – Just because the nephew did not
respond, it did not mean he had agreed to the sale.
Conclusion
This case establishes that mental acceptance is not enough—acceptance must be
clearly communicated to the offeror. It also reinforces that silence cannot be imposed
as acceptance unless there is a prior agreement or conduct indicating acceptance.
