ACCEPTANCE

Definition

a final expression of assent to the terms of a proposal.

An unconditional assent, communicated by the offeree to the

offeror, to all terms of the offer, made with the intention of
accepting.

The exercise of the power by the person to whom the offer has
been made, to enter into a contract by manifesting assent in
return. (Visu)

S. 2 (b) CA 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.

Relevant provisions

S 3 : the communication of proposals, the acceptance of

proposals, and the revocation of proposals and acceptances,
respectively, are deemed to be made by any act or omission of
the party proposing, accepting, or revoking, by which he intends
to communicate the proposal, acceptance, or revocation, or
which has the effect of communicating it.

S 4 Communication, when complete

(2) the communication of an acceptance is complete-

(a) as against the proposer, when it is put in the course of

transmission to him, so as to be out of the power of the acceptor;
and

(b) as against the acceptor, when it comes to the knowledge of

the proposer

S5&7

S 5 (2) an acceptance may be revoked at any time

before the communication of the acceptance is
complete as against the acceptor, but not afterwards

S 7 In order to convert a proposal into a promise the

acceptance must-

(a) be absolute and unqualified

(b) be expressed in some usual and reasonable manner,
unless the proposal prescribes the manner in which,
the proposer may, within a reasonable time after the
acceptance is communicated to him, insist that his
proposal shall be accepted in the prescribed manner,
and not otherwise; but if he fails to do so, he accepts
the acceptance.

s8

S 8 : performance of the conditions of a proposal, or the

acceptance of any consideration for a reciprocal promise which
may be offered with a proposal, is an acceptance of the proposal.

S 9: so far as the proposal or acceptance of any promise is made

in words, the promise is said to be express. So far as the proposal
or acceptance is made otherwise than in words, the promise is
said to be implied.

Requisites of a Valid Acceptance

S. 7(a) CA must be absolute & unqualified.

i.e. must correspond with the exact terms proposed by the offeror
in his offer.

the mirror image rule

The mirror image rule

a contract is only formed when the acceptance matches the offer

exactly

absolute acceptance requirement states that an offer must be

accepted exactly with no modifications.

The offeror is the master of one's own offer.

An attempt to accept the offer on different terms instead creates

a counter-offer, and this constitutes a rejection of the original
offer.

An unconditional acceptance of a tender forms a contract & binds

both parties.

Case : Cheng Keng Hong v Government of the Federation

of Malaya [1966]

Government issued a notice inviting tenders for the erection and

completion of a school.

The applicant tendered for the work and his tender was
accepted. A contract was entered into between the applicant and
the Government.

There was discrepancy between the specification and the

drawings at the time of tendering but put in an unqualified
tender in the expectation that the applicant would be paid extra
for the electrical work shown in the drawings but not mentioned
in the specification;

After acceptance of his tender he wrote to the Chief Architect

(Govt) drawing the above attention to the discrepancy and he
received a letter in reply, agreeing to pay extra for electrical
fittings shown on the drawings but not mentioned in the
specification.

The law with regard to acceptance of a tender is perfectly clear.

The unconditional acceptance of a tender by the employer binds
both parties, and a contract is thereby formed, the terms of
which are ascertainable from the invitation to tender, the tender,
the acceptance, and any other relevant documents..

In the instant case the contract documents mean all

documents forming the tender and acceptance together with the
documents referred to therein, that is the drawings mentioned
and annexed to the form of tender, the summary of tender
including the tender table documents, the conditions of contract,
the specification, schedule of rates and drawings, "and all these
documents taken together shall be deemed to form the contract
and shall be complementary to one another".

Q : What if an acceptance is not

absolute?

the acceptance could only amount to a counter-offer which

kills the offer.

Cases

Hyde v Wrench (1840)

Malayan Flour Mills Bhd v Saw Eng Chee

Jones v Daniel [1894]

A offered 1,450 for a property belonging to B. In accepting the

offer B enclosed with the letter of acceptance a contract for the
signature of A.

This document contained various terms as to payment of deposit,

date of completion, and requirement of title which had never
been suggested in the offer.

Case : Hyde v Wrench (1840)

6 June W offered to sell his estate to H for 1000; H offered 950

27 June W rejected H's offer

29 June H offered 1000.

W refused to sell and H sued for breach of contract.

Held :

plaintiff made an offer of his own of 950, and thereby rejected

the offer previously made by the defendant.

It was not afterwards competent for the plaintiff to revive the

proposal of the defendant, by tendering an acceptance of it; and
that, therefore, there existed no obligation of any sort between
the parties.

Case : Malayan Flour Mills Bhd v

Saw Eng Chee & Anor [2001]

S&P of land

Resp co-proprietors/vendors

Appellant purchaser

Offer via telex from resp to app.

Re-negotiations, another draft of letter of offer was prepared [but

not produced in court]. Resp did not accept as they need time to
reconsider.

Held

There was no contract; B had not accepted As offer but made a

counter-offer of his own, which was never accepted by A.

CA: no concluded agreement because the telex offer was nothing

more than an invitation to treat in view of the conditions
imposed, and that the app had failed to fulfill the conditions
imposed in the telex offer

Acceptance by act or omission

Q : Is it possible to accept by an act/conduct?

Y : Yes

An offer may invite acceptance by an act or conduct. In such a

situation, the requirement that the acceptance must be
communicated to the offeror may be waived.

S. 3 CA

S.8 CA

Cases :

Carlills

Daulia Ltd v Four Millbank Nominees [1978]

Errington v Errington & Woods [1952]

Asia Corporation Ltd v ST Ramakrishnan & Lim Kean Seng [1949]

- consignment of betel-nuts

Asia Corporation Ltd v ST Ramakrishnan and

Lim Kean Seng [1949] MLJ 206

An order for goods sent to a supplier is an offer to purchase. The

sending of the goods by the supplier to the person who made the
order is an acceptance of the offer.

The res co is in Penang, the app is in Negapatam, India.

In response to some correspondence between them, in Dec 1947,

the res shipped a consignment of betel nuts to the app.

App refused to accept them when the consignment arrived at

Negepatnam

Res filed for breach of contract and dif in price

Willan CJ

the two telegrams constitute an order for goods by the app

and this was an offer by them to purchase specific goods from
the res. They specifically asked in both telegrams that goods be
shippedthe act of the shipping constituted an acceptance by
the res of the offer made by the appellants

By omission

Theres no case law to directly illustrate this.

Failure to reply may or may not amount to consent.

MANNER OF ACCEPTANCE

S.3 & 7(b) CA

Prescribed manner of acceptance must be followed;

If not prescribed the usual/reasonable manner of acceptance.

Common law:

An acceptance communicated by any other mode which is no

less advantageous will conclude a contract.

E.g : an acceptance requested by return of post may be made by

telegram or by verbal message.

Case : Tinn v Hoffman & Co (1873)

It was said that if the offeree was requested to reply by return of

post, then any method which would arrive no later than return of
post would do, e.g. by telegram or by verbal message.

COMMUNICATION OF ACCEPTANCE

S.3 CA

Acceptance must be communicated by the offeree or any person

authorised by him.

Case : Powell v Lee (1809)

Powell having applied for the position of headmaster, was told by

one of the school board members that he had been successful in
his application. The board however changed its mind and
appointed another to the position.

Issue: Was there a contract between Powell and the school

board?

Held: The passing of information by one of the board members

to Powell that he was the successful applicant did not amount to
the acceptance of an offer either by the offeree or its authorised
agent.

The individual board members had acted prematurely and

without authority. Thus there was no acceptance by the board of
Powell's 'offer' and therefore no contract formed.

Communication of acceptance :

instantaneous means

postal acceptance rule

email/e-commerce

(1) Acceptance by instantaneous

means of communication

immediate communication of acceptance, akin to the face-toface communication.

General rule : an acceptance is communicated when it is actually

brought to the notice of the proposer.

E.g of instantaneous means : telephone, telex , facsimiles.

Completion of comunication

communication is complete when and where it is received.

Case : Entores Ltd v Miles Far East Corp. [1955]

an offer was sent by telex from London.

an acceptance was sent by telex from Amsterdam to London.

the telex service is an instantaneous means of communication. It

enables a message to be dispatched by a teleprinter operated
like a typewriter in one country and almost instantaneously
received and typed in another.

plaintiff wished to claim damages against the defendant for

breach of contract and wished to start an action in London.

this it could do if the contract was made in England.

Q : When acceptance was completed and where the contract was

made?

Held : communication of acceptance was completed in London

where the proposer received it. Hence the contract was made in
London ie at the place where the acceptance was received.

Case : Brinkibon Ltd v Stahag

Stahl [1982]

HOL confirmed the rule in Entores.

Buyers had communicated their acceptance by
sending a telex from London to the sellers in Vienna.
later the buyers issued a writ in London claiming
damages for breach of contract.
Held : the contract was made in Vienna where
acceptance was received and set aside the writ of
service for want of jurisdiction.
court observed that the rule however would not cover
all the many variations that may occur with telex
messages.

Bhagwandas Goverdhandas Kedia v M/s

Girdharlal Parshottamdas and Co and Ors
AIR 1966

The nature of conversation by telephone is instantaneous

communication of speech. The postal rule, which is an exception
to the rule imposed on grounds of commercial expediency, is not
applicable.

Bhagwandas

22 July 1959: the P (at Ahmedabad) and the def 9at Khamgaon)
entered into an oral contract by telephone to supply cotton seed
cake.

P allegd that the def failed to supply as agreed.

Where does the cause of action arise?

Trial judge: P made the offer at Ahmadebad and acceptance at

Khamgoan) thus the contract is made where the acceptance is
intimated to the offeror i.e. Ahmadebad

Endorsed at the Supreme Court.

(2) Acceptance by Post : The Postal

Rule

postal rule is an exception to the general rule that acceptance

must actually be communicated to the offeror.

The rule is that : where acceptance by post has been

requested/prescribed as a means of communication or where it is
an appropriate and reasonable means of communication between
the parties, then acceptance is complete immediately once
the letter of acceptance is posted; even if the letter is
delayed, destroyed or lost in the post so that it never reaches the
offeror.

Postal rule under CA 1950

S.4(2)(a) &(b) :

provides for the communication of acceptance where there is a

gap of time between the communication of acceptance by the
acceptor and the receiving of that communication by the
proposer.

this includes communication by post & telegraph

S.4(2)(a) as against the proposer

S.4(2)(b) as against the acceptor

2 legal effects when acceptor posts the letter of acceptance :

communication of acceptance is complete as against the

proposer

as a result, the proposer cannot revoke his proposal, as

acceptance is now complete as against him.

=>the acceptor is in advantageous position :

Illustration to S. 5
Why? It appears that the acceptor has the best of both
worlds.

he can post the letter of acceptance and thus stop the

proposer from withdrawing or revoking his proposal,

he may in the meantime, withdraw or revoke the

acceptance by using a speedier means of communication
before the letter of acceptance reaches the proposer

Case : Adams v Lindsell (1818)

defendant (offeror) wrote to the plaintiff proposing to sell wool on

certain terms.

defendant misdirected the letter and it reached the plaintiff later

than usual.

not receiving a reply, the defendant sold the wool to a third party.

plaintiff, upon receiving the proposal letter, immediately posted

acceptance.

Held : the acceptance was complete upon posting, and there was
a valid contract between the parties.

Case : Ignatius v Bell (1913)

the defendant, Bell, gave an option to the plaintiff to

purchase a piece of land on the condition that the option
must be exercised on or before 20 Aug 1912 by a notice in
writing.
plaintiff exercised the option by posting a letter on 16 Aug.
defendant only received the letter on 25 Aug.
plaintiff sued defendant for specific performance.
Held : the parties had contemplated the use of the post as
a means of communication. The acceptance was complete
as against the proposer, Bell, when it was put in the
course of transmission to plaintiff ie on 16 Aug.

Household Fire & Carriage Accident

Insurance Co. v. Grant (1879)

This case was one of the first to establish the postal rule. For
contracts formed by correspondence through the post, the judge
said that the "post office (is) the agent of both parties. If the post
office be such common agent, then it seems to me to follow that,
as soon as the letter of acceptance is delivered to the post office,
the contract is made complete and final and absolutely binding
as if the acceptor had put his letter into the hands of a
messenger sent by the offerer himself as his agent to deliver the
offer and receive the acceptance."

Henthorn v Fraser [1892]

7 July, 1891: Def. handed plaintiff a letter (in

Liverpool) offering to sell property to him for

750 Pounds.

Plaintiff resided in Birkenhead. He took away

with him to that town the letter of offer.

8 July, 1891: plaintiffs solicitor posted a letter of acceptance (on

behalf of plaintiff) in Birkenhead at 3:50 p.m.

Letter not received at defs office until 8:30

P.M., well after def.s office had closed at

6:00P.M.

On same day, def. addressed a letter to plaintiff revoking the

offer. This letter was posted in Liverpool between 12 and 1:00
P.M. and was received in Birkenhead at 5:30 P.M.

Letter of revocation was thus received by plaintiff after his letter

of acceptance was posted BUT before plaintiffs letter of
acceptance reached def.

8 July: def. sold property to a third party for 760 pounds.

Defendant contended that acceptance was

complete only when they received plaintiffs

letter and not when the letter was posted.

Defendant also argued that the postal rule is inapplicable in this

case because the letter containing the offer was not posted to
the plaintiff but rather handed to him at the defendants office in
Liverpool.

HELD:

Where an offer has been made through the

medium of the post, the contract is complete as

soon as the acceptance of the offer is posted.

An authority to accept by post must be implied given the

circumstances of the present case.

Although plaintiff received the letter of offer at the Defs office in

Liverpool, he resided in

another town, and it must have been in

contemplation that he would take the offer to
his place of residence and the Def. must have
known that if he accepted the offer, plaintiff
would communicate his acceptance by post.

Case : Lee Seng Heng v The Guardian

Assurance Co Ltd [1932]

the main issue was whether the post was properly used as a
means of communication by the insurance company to terminate
the plaintiffs fire policy.

The court held that in the circumstances of the parties, it was

ordinary for them to communicate by post, and they have been
exchanging 34 letters by post.

the parties in this case had contemplated that post might be

used as a means of communicating on all subjects connected
with the contract

An offeror can specifically exclude the postal rule by expressly

stipulating that acceptance of the offer must be received by
me. ie actual notification is required.

In such a case, acceptance takes effect upon

actual receipt of the letter / notification of

acceptance.

Case : Holwell Securities Ltd v Hughes

[1974]

Hughes, in an agreement dated 19 Oct 1971 granted Holwell an

option to purchase premises.

The agreement said that the option could be exercised by notice

in writing addressed to the vendor at any time within 6 months
from that date.

It was accepted that Holwell posted a letter to Hughes on 14

April 1972 but this was not received.

Holwell sought specific performance.

notice in writing to the vendor meant that he was to be fixed with

this information - but he never was because it never got to him.

It was argued that the parties must have contemplated the use of
the post, and this is enough to bring in Henthorn. But that rule
does not apply where the express terms of the offer specify that
acceptance must reach the offeror.

Also, the rule does not apply if it would lead to manifest absurdity
or inconvenience. This means that having regard to all the
circumstances, including the subject matter being considered,
the rule does not apply where the parties cannot have intended
that there should be a binding agreement until the acceptance
has been communicated to the other.

Q : When is a letter posted?

A letter is posted when it is in the control of the Post Office, or of

one of its employees authorised to receive letters : handing a
letter to a postman authorised to deliver letters is not posting.

Case : Re London & Northern Bank [1900]

(3) Acceptance by email/e-commerce

no case which has addressed the question of whether the

general rule applies to contract made over the internet.

there are arguments in favour of both the general rule and the
postal rule applying to acceptance of offers in an electronic
contract.

2 views :

1] if the postal acceptance rules were applied to email contracts

by analogy with ordinary snail mail, an email contract would be
formed when the acceptor sent an acceptance by pushing the
send button on his/her computer.

2] if the general rule applies, the contract will be formed when

the offeror actually receives the acceptance via email.

Arguments supporting first

view

* emails are more similar to the postal system because they are
forwarded a number of times in the network before they are
forwarded to the recipient.

*possibilities of delay or even loss of messages. Email may be

delayed by half a day, a full day, or even a few weeks if
something has gone very wrong

Arguments supporting second

view

even though emails are sometimes more delay than telephone,

but users normally are aware that communication has failed (eg.
returned or bounced email)

there is no identifiable third party to whom communicator is

entrusted. So postal rule should not be applied.

email is almost instantaneous; in terms of speed of transmission,

email generally equates fax, telex & telephone, which are all not
covered by the postal rule.

Electronic Commerce Act 2006

Section 20. Time of dispatch

Unless otherwise agreed between the originator and the addressee, an
electronic message is deemed sent when it enters an information
processing system outside the control of the originator.

Electronic Commerce Act 2006

Section 21. Time of receipt

Unless otherwise agreed between the originator and the

addressee, an electronic message is deemed received
(a) where the addressee has designated an information
processing system for the purpose of receiving electronic
messages, when the electronic message enters the
designated information processing system; or
(b) where the addressee has not designated an
information processing system for the purpose of
receiving electronic messages, when the electronic
message comes to the knowledge of the addressee.

Electronic Commerce Act 2006

Section 23. Place of receipt

Unless otherwise agreed between the originator and the
addressee, an electronic message is deemed received at the
addressee's place of business, and
(a) where the addressee has more than one place of business, at
the place of business that has the closest relationship with the
transaction or where there is no place of business that has the
closest relationship with the underlying transaction, at the
addressee's principal place of business;or
(b) where the addressee does not have a place of business, at
the addressee's ordinary place of residence.

Few issues to be considered:

(1) Whether the delivery of purchase order equals to an offer,

and whether the offer is accepted by the acknowledgement of

the receipt of the purchase order,

or by the act of delivering the goods ordered.

Koshida Trading (S) Pte Ltd v Limco Products

Manufacturing Pte Ltd [1990]
P = suppliers of Mitsubishi RAM Microchips
Def = manufacturers of personal computers. Have been buying ramchips
from the P since 1986.
Normally there would be negotiations on the amount of ramchips to be
supplied, the price and delivery schedule; then def would send a
purchase order containing the agreed terms; then P would return the
duplicate copy of the order endorsed with the seal of the officer in
charge of the order and a binding contract would then be concluded.
(def stated otherwise)
Singapore H Ct: the Ps version was probably nearer to the truth. As a
matter of construction, the form of the purchase order was an offer by
the def to purchase the ramchips..the purchase order was a unilateral
offer to pay the stated price for goods delivered in accordance with its
termssuch offer may be accepted by the P by performance or by return
of promise

(2) In using the highway, the moment a ticket is extracted

at the toll gate, and the highway is used, a contract is
struck between the parties.

Case : Parimala Muthusamy & Ors v PLUS [1997]

The plaintiffs were users of the North-South Highway while the
defendant is the authority responsible for the construction,
management and safety of the said highway. The plaintiffs had
suffered injuries as a result of an accident on the highway when
the car they were traveling in collided into a cow which strayed
on to the highway.

Upon accepting the ticket at the toll gate, the deceased driver
had made a contract with the defendant that the latter was to
provide not only safety to him and his family but also an
unhindered drive all the way to his destination. As the defendant
failed to use the requisite amount of care to ensure the safety of
the deceased and the plaintiffs, pursuant to the contract, it must
be concluded that the warranty implied in the contract was
breached.

Compare car-park case :

Thornton v Shoe Lane Parking [1971]

the offer is made when the proprietor of the machine holds it out
as being ready to receive the money. The acceptance takes place
when the customer puts his money into the slot. The terms of the
offer are contained in the notice placed on or near the machine
stating what is offered for the money. The customer is bound by
those terms

Revocation of Acceptance

ss 4(3) & 5(2)

Illust. to s.5

Once the acceptor 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 the letter/telegram.

Notes : where the postal rule applies, an offeree who has posted
his acceptance is allowed to revoke it by some quicker means of
communication, such as telephone.

This is the rule under English law, although there is no case law
which expressly illustrate this rule.

there is one Scottish case : Countess of Dunmore v Alexander

(1830) which appears to permit such a revocation by speedier
means of communication