Formation: acceptance

An offer is accepted when, in an objective sense, the offeree gives a final and unqualified ‘yes’ to the offer. This requires:

  • Mirror-image rule: the response corresponds with the exact terms in the offer. For example, if the offer is to buy the red car for £1,000 then the following responses are not acceptances (but are counter-offers):
  • ‘I’ll buy the red car for £999’
  • ‘I’ll buy the red car for £1,000 but can only to pay in 28 days’.
  • No, counter-offer: in the above examples the offeree has made a counter-offer, which has the effect of destroying the offer and replacing it with a fresh counter-offer. Although the original offer has been destroyed:
  • the original offer may be re-issued by the seller: ‘I’m only prepared to sell you the red car for £1,000, and not a penny less.’
  • the counter-offer may be accepted: ‘It’s a deal then, with payment in 28 days.’
  • Communication: there can only be an acceptance when it has been communicated to the offeror. This is a further illustration of the objective approach, in that it does not matter what is in the parties’ heads, what counts is objective facts namely, that the offeree has communicated his acceptance to the offeror. However, communication can be by words of conduct, such as when the parties smile approvingly and shake hands in such a way as to signify that that is the offeree’s intention.

Counter-offers & requests for further information

A counter-offer must be distinguished from a request for further information, such as: ‘does the red car come with a full tank of petrol?’ or ‘I’ll buy the red care for £ 1,000 but would you accept payment in 28 days?’ A request for further information does not destroy the original offer.

Communication & the postal rule

An acceptance is normally treated as actually communicated to the offeror when that communication is received. However, this general rule yields to the postal rule, under which a letter of acceptance

will be effective when posted, even if the letter is lost in the post. However, the postal rule will only apply if:

  • Reasonableness: it was reasonable in all the circumstances to use the post. For example, if there is a reasonable need for an offer to be accepted quickly or urgently, the postal rule is unlikely to apply.
  • Formalities: the letter was properly addressed, stamped and posted; and
  • Exclusions: the postal rule had not been excluded by the offeror. For example, where an offer is stated as being ‘exercisable by notice in writing to the offeror’ the postal rule is excluded. (1)

(1) Holwell Securities Ltd v Hughes [1974] 1 WLR 155, CA.