Intricacies of the Time of Acceptance in Contract Law
[Year] [Topic] Paper
Intricacies of the Time of Acceptance in Contract Law
Section Leader: [First Last Name
The Rejection of David’s Offer .. 05
Andrew’s Acceptance . 06
Conclusion .. 10
Beatty, Samuelson and Bredeson (2013: 252-235) identified seven elements for the creation of a valid contract between two principals: offer, acceptance, consideration, legality, capacity, consent, and writing. The offer must be of serious intent, reasonably definite, and communicated to the offeree (Ashcroft and Ashcroft, 1999: 57-58). The acceptance must unconditionally agree to the terms and communicated (Beatty, Samuelson and Bredeson, 2013: 252, 231). A consideration must be received by both parties (Ashcroft and Ashcroft, 1999: 50). The contract must be of lawful purpose (Beatty, Samuelson and Bredeson, 2013: 231; Ashcroft and Ashcroft, 1999: 50). The parties must have legal capacity to enter into contract (Beatty, Samuelson and Bredeson, 2013: 231; Ashcroft and Ashcroft, 1999: 49). Mutual consent must prevail (Beatty, Samuelson and Bredeson, 2013: 231; Ashcroft and Ashcroft, 1999: 50). And, finally, sale of goods valued at more than £500 must be in writing (Beatty, Samuelson and Bredeson, 2013: 232).
The case of Brenda passed the requirements of legality, capacity, consent, and consideration. The discounted price of £450 offered to does not require a written contract; while the £500 offered to Claire and David require none either as it presumed a an exchange of goods and cash upon delivery. The complexity of the case rests upon certain contentious issues surrounding the offer and the acceptance made, which centers primarily with David’s premium offer and Andrew’s acceptance of the discounted offer and the notice of termination that Brenda sent to each of them by email.
The essay will discuss first the David’s demand for explanation in the termination of the originally advertised offer; then, followed with the issues surrounding the termination of offer to Andrew despite his acceptance such offer in writing before the promised deadline.
The Rejection of David’s Offer
The more urgent action that Brenda has to make is to answer David’s demand for an explanation for her rejection of what appeared as the best offer for 1984 Fiat X/19: “match whatever else was offered for the car plus 10%.” Based on the highest bid of £500 that Claire made, David’s offer amounted to £550. However, payment will happen a month later when David will “pick up the car.” Still two issues needs to be clarified: (1) should an explanation be necessary in the first place? (2) Had Brenda acted lawfully in rejecting David’s offer when both his and Claire’s offer via email reached Brenda around the same time on Wednesday?
In the first issue, there is nothing in the Contract Law that requires a seller to explain to the unsuccessful bid. While courtesy may dictate it, prudence does not. It appeared that Brenda preferred a quicker payoff for her car at £500 from Claire over David’s £550 and only a month later. Brenda has the right to choose the party she wants to deal with (Ashcroft and Ashcroft, 1999: 58). That also includes the right to give an explanation or not.
In the second issue, the argument rests on whether David’s ‘offer’ of any offer plus 10 percent was (a) an acceptance of an offer to sell or (b) a positive response for an invitation to make an offer. If David’s offer was an acceptance of an offer to sell, then Brenda can no longer terminate the offer to sale on Thursday as the acceptance had been sent to Brenda on Wednesday. Based on the Mailbox Rule, at the specific time the acceptance was emailed, the contract to sell would be sealed (Soldau v. Organon, Inc., 1988; Beatty, Samuelson and Bredeson, 2013: 268) even if the emailed acceptance was never received (Ashcroft and Ashcroft, 1999: 63), and the vehicle cannot be sold anymore. However, the advertisement in Brenda’s website was an invitation not an offer (Beatty, Samuelson and Bredeson, 2013: 254, 255).
Being so, Brenda is free to reject the offer, or specifically terminate the offer by rejection (Beatty, Samuelson and Bredeson, 2013: 261; Ashcroft and Ashcroft, 1999: 61), whether or not it has higher monetary value to other offers. An exception to this rule on advertisements as invitations, and not offers, is when the offeror promises to pay a certain amount of money when a performance condition is fulfilled (Carlill v. Carbolic Smoke Ball Company, 1892). But this case was not exceptional.
Unlike David who made a promise to purchase at 10 percent premium over all offers that Brenda may receive for the 1984 Fiat X/19, Andrew’s action was an outright acceptance of Brenda’s offer for only £450. This issue also already went beyond any question of misunderstanding the advertisement as the interaction between Brenda and Andrew had moved beyond that stage to the point where Brenda actually made a discounted offer to Andrew and promised in writing (by email) to keep that offer open on Friday at 12:00 p.m. And, true to the deadline, he mailed his acceptance letter in the morning of Friday, and never saw the termination of offer that Brenda emailed to him on Thursday evening. While Andrew still has not raised legal question on the outcome of his acceptance, Brenda may have to contend with the legal issues involved before Andrew takes any legal action. There are two issues that need to be clarified ahead of time: (1) Was Brenda’s termination of her offer to Andrew valid considering Andrew did not know about it, or ‘received’ it, before he sent his letter of acceptance? (2) Would Andrew’s acceptance hold on the basis of Brenda’s promise to keep the offer open until Friday at noontime and/or of the time of acceptance occurring within the promised period?
There are four ways that a valid offer may be terminated by the offeror: revocation, rejection, expiration, and operation of law (Beatty, Samuelson and Bredeson, 2013: 260-262; Ashcroft and Ashcroft, 1999: 59-62). The case with Andrew’s offer was of termination by revocation, which Brenda performed before the deadline of Friday and before Andrew’s acceptance letter was sent.
In the first issue (question 1), the action of Brenda followed the rule that the offeror must revoke an offer any time prior to its acceptance (Ashcroft and Ashcroft, 1999: 59). The offeror also can revoke the offer even if the offeror has promised to keep it open unless (a) the offeror received “something of value in return for a promise to hold the offer open and (b) a signed offer included a stated period to keep it open or a reasonable time of not more than three months (Ashcroft and Ashcroft, 19996: 60). Both exceptions did not occur in the action of Brenda.
The Mailbox Rule indicates that, while acceptance is effective upon dispatch, termination of offer is effective when received by the offeree. In this case, Andrew was unable to check his email on Thursday after Brenda sent the revocation notice and before he sent his acceptance letter by mail on Friday morning. In addition, John Gregory (2010: n. p.) argued that the Mailbox Rule does not apply to email as it follows the general rule for instantaneous communication (Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandels-Gesellschaft M.B.H., 1983: Ruling) wherein a contract appears when Brenda received Andrew’s acceptance letter, not he when sent it. It is most likely that when Andrew read the revocation notice, his acceptance letter was still in transit.
This situation leads to three unresolved questions: (1a) was receiving an emailed revocation notice in Andrew’s email account tantamount to him receiving it even without opening it? (1b) what proof receiving or not receiving must be needed to establish that Andrew really was unable to open his email account before he sent his acceptance letter on Friday morning? (1c) since Brenda sold 1984 Fiat X/19 and accepted payment from Claire before she sent the revocation email to Andrew in the evening, is she liable for a breach of her promise to keep the offer open until Friday?
In question 1a, email is technically received and dated so on the date of receipt not on the date of opening the email. In this case, Brenda’s revocation email will be posted in Andrew’s email account as received on Thursday, not on whenever Andrew opened it. However, there is no available ruling clarifying the salient difference between electronic receipt of an email and the actual receipt of the same email by opening it. It is like receiving a mail in the post office box, but having no time to pick up the mail and reading it. If the rule holds that receiving an email on Thursday is the same as receiving the email in person and reading it, then the revocation letter from Brenda had validly terminated the offer as far as the offer to Andrew was concerned.
If, however, the law distinguishes between receiving the email electronically and opening and reading the message, then the revocation notice from Brenda becomes effectively and legally un-received. Such ruling will invalidate the revocation notice, validate the acceptance mail of Andrew based on the Mailbox Rule, and Brenda becomes legally liable for a breach of contract when she sold the 1984 Fiat X/19 to Claire on Thursday.
In question 1b, the more immediate proof of receipt would be the posted date that the revocation letter from Brenda reached the email account of Andrew. Verifying electronic activity requires specific expertise in the technology that is beyond this essay to discuss. In addition, no existing ruling is accessible that can resolve this issue. Moreover, a discussion of the Electronic Commerce (EC Directive) Regulations 2002 cannot help in resolving this due to its non-requirement for this essay. The resolution to this question also would depend largely on the actual ruling derived in question 1a.
In question 1c, Brenda can be vulnerable for bad faith when she sold the car before she revoked her offer to Andrew. She sold and received payment from, and delivered the subject item to, Claire during daytime, and sent the revocation notice to Andrew only at nighttime. Technically, she sold the car before she revoked her offer to Andrew. Although this may appear to be in violation of her promise to Andrew, there is still a point of contention that must be resolved in court: is the basis for revocation effectivity the difference in hours or in days? If the court rules it reasonable to use a day as a period to base the effectivity of any contractual action, then the revocation of the offer occurred on the same day as the sale of the subject car. However, if the ruling is sensitive to hourly differences in the effectivity of contractual acts, then Brenda had sold the subject item to Claire before she revoked her offer to Andrew, breaking her promise to keep the offer open as abovementioned.
Ashcroft and Ashcroft (1999: 59), however, provides an escape with the ‘breaking of promise’ as the law upholds the right of the offeror to revoke an offer any time prior to its acceptance; thus, allowing Brenda to lawfully revoke her Friday promise with proper notice made on the prior day (Thursday). Subject to a ruling on the effectivity of the termination notice, both the revocation of the Andrew offer and the sale to Claire were lawfully valid.
Going back to the second issue (question 2), the validity of Andrew’s mailed acceptance of the £450 offer depends largely upon the invalidity of the revocation notice that Brenda sent via email, and specifically on whether actual opening of the email constitutes receipt of the notice or the posting date of receipt will do regardless on when Andrew eventually opened his email. The ruling in favor of using the posting date of email receipt appears fair and equitable to Brenda as it will not subject her to the uncertainty of when Andrew would be opening the email. However, the court may see the situation differently.
Any valid contract involves a legal responsibility to fulfill. Integrity in contract-fulfillment constitutes a crucial factor that ensures orderly exchange of goods and services between members of the human community. It strengthens the fabric of society and avoids costly and destructive impact in the relationships between peoples. A sound contractual law makes orderly trade and exchange.
The potential disputes in the case of Brenda centers on the rejection of the offers to purchase the 1984 Fiat X/19 in an environment where electronic communication intervenes instantly and factors of missing an email may not be avoided. The issue thus revolves around the time of acceptance. Law, however, clarifies that termination of offer must occur before an acceptance of the offer reached the offeror. Disputes may be avoided when both principals knew of this rule of law, and act accordingly in ensuring that gray areas are avoided and terms of contract completely fulfilled.
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Beatty, J.F., Samuelson, S.S. and Bredeson, D.A. 2013. Business Law and the Legal
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Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandels-Gesellschaft M.B.H. (1983) House of
Carlill v. Carbolic Smoke Ball Company (1892) Court of Appeals
Gregory, J. 2010. When Is Email Received? [Online] Available at:
http://www.slaw.ca/2010/05/12/when-is-email-received/ [Accessed 30 December 2014]
Soldau v. Organon, Inc. (1988) LEXIS 14757