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Offer and Acceptance

Basic Principles:

pp 51 - 61

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Basis of a Contract

• Agreement on the terms: “meeting of the minds” (consensus ad idem)

• Another ground: reasonable reliance

– Cf. Standard form contracts with banks

• How do courts determine existence of a contract?

– Offer and acceptance

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Requirements for a valid offer

• Offer must be complete, clear and unambiguous

– Offer must contain all material terms

– Eg. Sale: price and subject matter required

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Offer made with intention of creating legally binding

obligations

• The following are not considered binding proposals:

– “Offers” made in jest

– Social arrangements

– Gentlemen’s agreements

– Most advertisements

• Whether an “offer” is one of the above is a question of fact – determine from circumstances

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Advertisements

• Does an ad constitute an offer?

– Crawley v Rex 1909 TS 1105

– Pharmaceutical Society of Great Britain v Boots Cash Chemists [1952] 2 All ER 456

• What about an offer for reward?

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Offer must still be valid at time of acceptance

• An offer ceases to exist when it has been rejected, revoked or has lapsed.

• Rejection may be outright or coupled with counter-offer

• Offeror may revoke his offer until he learns of acceptance.

– Odendaal v Norbert 1973 (2) SA 749 (R)

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Offer must still be valid…

• Offer will lapse if not accepted timeously.

• Offer will expire:

– At a time stipulated in the contract, or

– After a reasonable time

– Dietrichsen v Dietrichsen 1911 TPD 486

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Requirements for a valid acceptance

• Acceptance by person to whom offer addressed

– If offer addressed to a particular person, may only be accepted by him

– Bird v Summerville 1961 (3) SA 194 (A)

– Offers may be addressed to more than one person, or to a category of persons:

• Eg. “X, his nominee, trustee or executor”

– Offers for reward are addressed to public, but may only be accepted once.

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Acceptance must be made deliberately/ consciously

• Offeree must know of offer when accepting:

– Bloom v American Swiss Watch Co 1915 AD 100

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Acceptance must be clear, unambiguous and unconditional

• Van Jaarsveld v Ackermann 1975 (2) SA 753 (A)

• A conditional acceptance is not an acceptance, but a rejection + counter offer

• Can silence constitute acceptance?

– Silence and something more required: positive conduct indicating intention to be bound.

– Past conduct may make silence = acceptance

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Terms of Acceptance must correspond with terms of offer

• Referred to as the “mirror-image” rule

• Any variation = rejection + counter offer

• Distinguish: partial acceptance

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Acceptance must have been communicated to offeror

• General rule: acceptance only valid once offeror learns of it

– The information theory of acceptance

• 3 exceptions to this rule:

a) Offeror has expressly/ impliedly dispensed with need for explicit prior acceptance.

• Orders placed for goods

• Postal delivery of acceptance authorised

• Telephone, fax and email acceptances

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Exceptions to general rule contd…

b) Offeror instructs that acceptance be made at a particular place in a particular manner.

– Acceptance valid if offeree follows instruction, even if not received by offeror

c) Date for acceptance given, but not place or manner:

– Acceptance valid if delivered to last known address of offeror.

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Options

• An agreement to keep an offer open for a certain period of time.

– Within time given the offer is irrevocable

• Consists of 2 offers:

– Main offer

– Offer to keep main offer open

• If right of option is cedable, it may be sold:

– Gives rise to futures market

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Rights of first refusal

• Referred to as a “pre-emption” agreement

• If grantor should ever want to sell the property, he must first offer to grantee before he can sell to a third party.

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Online Contracting

• Governed by the Electronic Communications and Transactions Act 25 of 2002 (the ECT Act)

• Contracts may now be concluded over the internet

• Where signature is required by law, an “advanced electronic signature” must be used.

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Online contracting contd…

• An agreement concluded by data messages is concluded at time and place where acceptance of offer was received by offeror

– The reception theory of acceptance

– This rule may be varied by agreement

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Online contracting: consumer protection

• Onerous conditions placed on supplier of goods over the internet.

– The ECT Act lists info which must be supplied (see Basic Principles at p 427)

– If the supplier does not comply with these disclosure requirements, buyer may cancel contract within 14 days of receipt of goods.

• “Cooling off” period applies: buyer may cancel contract without reason within 7 days of receiving goods.

– Does not apply to all products, eg. fresh produce.

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Consumer protection contd…

• Spam:

– Allowed, provided there is an opportunity to unsubscribe.

– May inquire how they got your details

• No one may exclude consumer protection provisions by contract.

– Complaint may be made to Consumer Affairs Committee