Professional Documents
Culture Documents
Lecture 2 Acceptance
Lecture 2 Acceptance
1. Definition of Acceptance
2. Rejected Offer, Counter Offer & Conditional Acceptance
3. Clarification and understanding
4. Standard Forms
5. Communication of Acceptance
A. General Rule
B. Electronic communication
C. Postal acceptance rule and exceptions
D. Waiver of communication
E. Prescribed means of acceptance
6. Acceptance by conduct
7. Acceptance in ignorance of offer
Lecture 2: Acceptance
I. Definition of Acceptance
An indication, either express or implied, by the offeree made whilst the offer remains open
and in the manner requested in that offer of the offeree’s willingness to be bound
unconditionally to a contract with the offeror on terms stated in offer.
B. Counter-offer
Counter-offer occurs where offeree responds to an offer with an offer of his own in
non-identical terms to the original offer
It operates to reject and terminate entirely the original offer so that it is no longer
available to be accepted. The party (original offeror) is free to accept counter-offer
Price Variation
Hyde v Wrench [1840]
Facts: D wrote to P offering to sell his farm for $1000. P replied offering $950 which D need
time to consider. P then wrote to D purporting to accept D’s original offer.
Held: P in making his counter offer of $950, had rejected D’s original offer, causing it to
terminate (no longer be accepted).
Shun Ho Energy Development Co Ltd v Secretary for Justice [2015]
Facts: A landlord’s offer to renew commercial tenancies for monthly rentals of $33000 and
$39000 was met with a request by tenant to pay instead $30000 and $35000. After the
landlord rejected his offer, the tenant purported to accept landlord’s original offer.
Held: There was no contract because the tenant’s request was a counter offer which
amounts to the rejection of an original offer (cannot be later accepted)
A procedure after the contract has made & unnecessary to follow in practice
Combi (Singapore) Pte Ltd v Winston Camera & Radio Co Ltd [1988]
Facts: D sent a telex message to the plaintiff offering to sell a quantity of $2.695 per unit. P
replied by fax purporting to accept the D’s offer but impliedly adding that D must
open a letter of credit.1
Held: HKCA held that because the fax contained a new requirement, it constituted a
counter offer causing the original offer in D’s telex to lapse.
Cathay Pacific Airways Ltd v Hong Kong Air Cargo Terminals Ltd [2002]
Facts: D proposed a draft which contained an arbitration clause while in reply P also
proposed their own draft which contained their own arbitration clause. No formal
agreement was reached but D provided cargo services to P.
Held: D’s offer including obligation to arbitrate was entirely terminated by P’s counter
1
a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time
offer which D had never accepted.
An expectation on the matter without clear & executable detail (e.g. date)
Global Tanker Inc v Amercoat Europa NV [1975]
Facts: D wrote to P in the term: “this is to confirm our offer of $12800 in full and complete
settlement of the claim outstanding for this vessel.” P replied “we accept your offer on
the understanding that payment to us will be promptly effected.”
Held: It was held for P on the basis that his reply was merely setting out P’s
understanding of D’s offer and did not introduce new term.
IV. Precondition
An acceptance may be subject to precondition that does not alter the offered terms.
Acceptance will be effective when precondition is satisfied & offer has not been
withdrawn.
Scenario: The training contract is offered by ONC to Chan on condition that he has
passed PCLL. Chan has received the training contract but is still waiting for the
release of PCLL results. Acceptance made by Chan will be subject to whether he has
satisfied the precondition. ONC can withdraw the contract at any time before
acceptance.
HK Manohar Chugh (t/a Electric & Electronic Industries)v OKA Electronic Ltd [1991]
Facts: Whether the purchaser have actually communicated rejection of seller’s counter offer.
Held: (1) rejection counter offer terminated last shot applied (in terms of
purchaser’s original offer implied accepted by plaintiff in delivery of goods
(2) rejection counter offer prevailed implied accepted terms of counter
offer by accepting the good
General rule also applied when acceptance is transmitted to the offeror’s agent
Suanto-Wing Sun Co Ltd v Yung Chi Hardware Machinery Co Ltd [1989]
An offeror will be estopped from denying timely receipt if he caused the delay
Exception: Offeror may exclude rule & requires actual communication. Court will
infer intention by offeror to exclude by words or circumstance or nature of contract
2
For example, if Chan works in HK but has travelled to North Pole when he received and read the email at a place
outside HK, the acceptance is still actually made in Hong Kong.
3
For example, if you sent an offer via Gmail without designating to send other email server, then it is very likely
that acceptance should be sent to the same place Gmail as well. (Professor’s assertion!!)
4
“Where reasonable persons in the position of the parties would have anticipated that the postal service
would or might be used to communicate acceptance, communication of acceptance is deemed to be effective at
the time and in the place the message of acceptance is placed into the care of the postal service in customary way”
indicated.
Exception: Postal Acceptance Rule will only apply when the posting has observed all
other customary practice (such as pay the correct postage, place a stamp on the
envelop correctly or in HK employ Chinese or English).
E. Silence
The offeror may not impose an agreement on the offeree by prescribing that
silence will be construed as acceptance.
VERY Exceptional case based on special fact of the case in insurance policy document
Rust v Abbey Life Insurance Co Ltd [1979]
Held: P could not take advantage of benefits while reserving right to reject it or recover
price.
A contract will be implied from conduct where a reasonable person, having regard to all facts
and circumstances, will regard parties’ conduct as amounting to communicated offered
followed by communicated acceptance
Aramis [1989]
Judge Says: It must be necessary to identify conduct referable to/consistent with the contract
contended for or at the very least, conduct inconsistent with there being no
contract made between the parties to the effect contended for.
Applied in Whether the conduct of offeror in XXX would be understood (by a reasonable
HK cases person in the offeree’s position) as an offer by offeror to enter into contract?
Exception: If the offeror knew that the offeree did not actually intend by his conduct to
accept the offer, objective test does not apply in favor of a party who knows the truth.
Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd
[2004]
Held: Casil’s conduct did not constitute acceptance of an offer by Tongji because
(1) Casil’s conduct in negotiating letter of credit is objectively ambiguous (she is
merely acting as a financial intermediary to which it was not a party)
(2) Casil has never intended by conduct to be bound to any sale contract with
Tongji and Casil’s state of mind was known to Tongji
Comment: The court is unnecessary to use “subjective qualification” and it would be much
more consistent with the standard test of objectivity.
A reasonable party5 in Tongji position (in position knowing Casil not intended to
contract with Tongji) wouldn’t reasonably interpret Casil’s conduct as
acceptance.
For an unilateral offer, if a person performs requested act without knowing of the
offer, no contract exists between him & offeror because there was no consensus ad
idem
5
Unlike reasonable bystander in tort, the reasonable man in contract is usually conceived as the actual
contracting party endowed with his own actual knowledge or experience but subject to reasonableness
offer
Not only must the claimant have the knowledge of the offer, he must also be aware of
the offer at the time he performs the requested act.
R v Clarke [1927]
Held: In performing an act requested by unilateral offer it is necessary that offer is
present in the offeree’s mind at the time the act is performed.
Comment: “Facts are unusual because it will be difficult for an offeror to establish that a
claimant aware of an offer before performing has ceased to be aware at the time of
performance.”