Academic journal article Nottingham Law Journal

Louder Than Words: Acceptance by Conduct of Unilateral Offers

Academic journal article Nottingham Law Journal

Louder Than Words: Acceptance by Conduct of Unilateral Offers

Article excerpt

INTRODUCTION

The role of conduct in contractual formation has been adopted by UNIDROIT in their proposals for an international law of contract. Article 2.1.1. of the UNIDROIT Principles of International Commercial Contracts 2010 provides that a contract may be concluded "by conduct of the parties that is sufficient to show agreement". This reflects Holmes' 19th century observation that "the making of a contract does not depend on the state of the parties' minds [but] on their overt acts". (1) Ever since Mrs Carlill was immortalised in legal history by purchasing her carbolic smoke ball and using it as directed, (2) it has been accepted in English law that, if the terms make it possible, a unilateral offer can be accepted by conduct, even if the offeror is at that moment unaware of the acceptance. Acceptance by conduct therefore forms an exception to the general principle that there must be consensus ad idem (a "meeting of the minds") to form a contractual agreement.

In spite of how long-established a point of law it is, the basis in principle for acceptance by conduct remains remarkably unclear, particularly where the offeree has only partly completed the requested performance, but this is still found to be effective acceptance. The following arguments will be advanced over the course of this article: (i) the point at which part performance amounts to an effective acceptance by conduct is dependent upon factual circumstances; (ii) the existence of an implied term is not a satisfactory explanation for the prevention of an offeror from revoking his or her offer after part performance; (iii) the existence of a collateral contract is likewise an unsatisfactory explanation; (iv) the prevention of revocation can be best rationalised on the grounds of equity. There exist views contrary to those expressed, but these will be addressed in turn.

THE QUESTION OF PART PERFORMANCE

In Great Northern Railway v Witham, (3) the defendant sent a tender to supply the plaintiffs "in such quantities as the company's store-keeper might order from time to time". The Court of Common Pleas held that a contract had arisen as by placing their order, the plaintiffs had "done something which amounted to a consideration for the defendant's promise". (4) In his judgment, Brett J made a now famous example of a unilateral contract to walk to York for 100[pounds sterling]: by the offeree's going to York at the offeror's request, the offeror becomes contractually bound by his or her promise. (5) Whilst this example makes it clear that to undertake the performance requested in the offer is sufficient to create a binding agreement, it does not completely establish the point at which the acceptance becomes effective. It remains uncertain if the offer or is contractually bound once the offeree has begun the requested performance or if the offeree needs to have completed the performance. Put another way, is the offeror bound once the offeree has taken the first step towards York, or is the offeror only bound once the offeree has actually reached York? Brett J believed the offer to be revocable at any point before the offeree's arrival in York. (6) Nonetheless, there is authority to support the view that the mere commencement of performance is sufficient to render the offer irrevocable, providing that the performance is not abandoned.

A prominent case supporting this standpoint is Errington v Errington and Woods. (7) Here a father told his daughter-in-law that the house he had purchased would become hers if she continued to occupy it and pay off the remaining mortgage instalments. Possession proceedings were brought against the daughter-in-law by the father's widow following his death. It was held by Denning LJ that the father's promise amounted to a unilateral offer which could "not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed". …

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