How does “communication of an offer” differ from “communication of acceptance? Support your answer by reference to leading cases.

Question: How does “communication of an offer” differ from “communication of acceptance? Support your answer by reference to leading cases. [MPJS 2010]

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Answer

The communication of an offer and the communication of acceptance are two distinct concepts in contract law, and they play a crucial role in the formation of a valid contract. Let's examine how they differ and support the explanation with reference to leading cases:

1. Communication of an Offer:

An offer is a proposal made by one party (the offeror) to another (the offeree), indicating a willingness to enter into a contract on specific terms. For the offer to be valid and effective, it must be communicated to the offeree.

Leading Case - Carlill v. Carbolic Smoke Ball Co. (1893):

In this landmark case, the Carbolic Smoke Ball Company advertised a reward of £100 to anyone who contracted influenza after using their smoke ball product as directed. Mrs. Carlill bought and used the smoke ball as per the instructions but still contracted the flu. She claimed the reward as advertised. The company argued that the advertisement was mere puffery and not a legally binding offer. However, the court held that the advertisement constituted a valid offer, and Mrs. Carlill's use of the smoke ball was an acceptance of that offer. The offer was communicated to the public through the advertisement, and acceptance was indicated through the performance of the conditions.

2. Communication of Acceptance:

Acceptance is the unqualified and unconditional assent by the offeree to the terms of the offer, creating a valid contract. For a contract to be formed, the acceptance must be communicated to the offeror.

Leading Case - Felthouse v. Bindley (1862):

In this case, Felthouse wanted to purchase a horse from his nephew, Bindley and sent him a letter offering to buy the horse for a certain price. The letter stated that if Bindley did not reply, his silence would be taken as acceptance. The nephew received the letter but did not reply. Felthouse, thinking his offer was accepted, informed others of the purchase. Later, Bindley decided not to sell the horse. The court held that there was no valid contract as there was no communication of acceptance. Silence, in this case, did not amount to acceptance, and therefore, no contract was formed.

The key difference between the communication of an offer and the communication of acceptance lies in their roles and timing during the contract formation process. The offeror communicates the offer to the offeree, and the offeree communicates their acceptance to the offeror. The acceptance must be clear and communicated, while silence or inaction generally does not constitute acceptance. Both communications of the offer and acceptance are vital for the parties to reach a meeting of minds and form a valid and enforceable contract.