Houriya Ahmed
LL104.A class group 8
Question: ‘The rules of offer and acceptance that govern the formation of contracts are perfectly clear and straightforward, so that they can be applied to new techniques of communication such as faxes, e-mail and the internet without difficulty’. Discuss
The offer and acceptance rule in contractual formations is where there is a clear and ‘unequivocal offer’ that is matched by a clear and ‘unequivocal acceptance’. Courts and legal advisors use this general rule as it provides some degree of certainty. The rules of offer and acceptance that govern the formation of contracts are correspondence, nexus and communication. All three rules can be applied to new forms of communication as they are much quicker and easier to correspond with than post. However, even though the rules can be applied to quicker forms of communication, problems and confusions inevitably arise depending on the nature of the contract. Therefore in some cases, the rules of offer and acceptance may not be as clear and straightforward as it may first appear to be.
One rule of offer and acceptance that determines when a contract is formed is that the offeror has to correspond to the offeree. According to Hugh Collins in his book Law of Contract, an ‘acceptance must correspond exactly to the terms of the offer’ and if the acceptance contains terms that are different to from the original offer then it ‘fails to create contractual responsibility’. This can be seen in the case of Gibson v. Manchester City Council [1978], where the City Council wrote to the tenant that they ‘may’ be prepared to sell the house at £2,180. However, the claimant wrote back asking for a price reduction, but the City Council refused, so the claimant asked them to carry in with the purchase ‘as per my application already in your possession’. This in it itself revokes the original offer presented by the Council, as the claimant counter offered by corresponding that he would like a change in price. Henceforth, the house was removed from the Council’s maintenance list and placed on their house purchase list. However, it is important to note that this information was not exchanged with the claimant, as the control over council houses passed on to the new Labour government, where it discontinued to sales of council houses, except in cases where there were binding contracts. The case was taken to the court of appeal where Lord Diplock says “There was no suggestion that, even if it were, it was ever accepted by the council”. This shows how seriously courts take into account the ‘unequivocal offer’ that is matched by a clear and ‘unequivocal acceptance’. By this meaning a clear stated correspondence that shows the acceptance by the Manchester City Council of the counter offer Gibson made. This prove case proves that the correspondence rule of offer and acceptance may not be as clear and straightforward as it should be. Even if fast and efficient means of communication existed in the 1970s, it is doubtful whether Manchester City Council would have ever communicated its acceptance to the claimant (the fact that they took the house of the council’s maintenance list shows acceptance by conduct). With the benefit of hindsight, it can be concluded that the City Council never meant to hold back its acceptance by communication, because they most probably did not expect to see the Labour party in power. Hence, the rules that govern the formation of contracts are not always straightforward and simple.
