Contract Law Questions - What is a Mode of Acceptance?

The contract law questions every student asks - answered.

A mode of acceptance is the method by which the offeree communicates acceptance of an offer.

Common examples include:

• Letter

• Email

• Telephone

• Instant messaging

• Face-to-face communication

• Conduct

As a general rule, the offeree may accept the offer using any method that is no less advantageous than the method suggested by the offeror unless the offeror has clearly prescribed an exclusive method of acceptance.

Why Does the Mode of Acceptance Matter?

A contract is only formed once acceptance becomes effective. It is therefore important to determine:

• Whether a valid mode of acceptance was used; and

• When acceptance becomes effective.

For more information on offer and acceptance, you can read our Revision Sheet here.

The General Rule

The offeror is generally free to determine how acceptance should occur. For example:

"Please confirm your acceptance by email."

If the offeree complies, acceptance is straightforward. However, difficulties arise where the offeree accepts in another way.

Must the Offeree Follow the Specified Method Exactly?

This depends on whether the offeror made that mode of acceptance mandatory or discretionary.

A Mandatory Method

This is where the offeror clearly states that a particular method is the only acceptable method.

For example:

"Acceptance must be sent by registered post only."

In such circumstances, using another method may not create a contract (Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd CA [1975]).

A Suggested Method

This is where the offeror merely suggests a preferred method.

For example:

"Please send acceptance by registered post."

If another equally effective method is used, acceptance may still be valid. The key question is whether the offeror intended the requirement to be mandatory.

Waiver of Method

An offeror can (expressly or impliedly) waive a prescribed mode of acceptance and allow acceptance by another method. For example, where the offeror treats the contract as concluded by starting performance.

This also means that acceptance does not always require words. Conduct may also be sufficient.

The Leading Case: Manchester Diocesan Council for Education v Commercial and General Investments Ltd [1970] 1 WLR 241

Facts

The claimant invited offers for a property. The invitation stated that acceptance was to occur by notification in writing. The claimant later communicated acceptance through a method that did not exactly follow the stated procedure.

The defendant argued that no contract had been formed because the specified method had not been followed.

Decision

The Court of Appeal rejected that argument. A contract had been formed. The court held that:

A specified mode of acceptance will only be mandatory if the offeror clearly indicates that no other mode will suffice.

However, if the prescribed method is simply intended to assist communication, another equally effective method may be used.

Why?

Essentially, the court held that the contract was valid because the offeree stipulated a particular mode of acceptance but did not say that only acceptance by that mode will be accepted. Consequently, acceptance may have been communicated in any other mode not less advantageous to the offeror.

This makes commercial (and logical sense), since it prevents parties trying to avoid contracts on the grounds of a technicality. In other words, that there is some small and technical reason as to why the acceptance was defective.

Example

Imagine the following facts:

Olivia offers to sell her laptop to James for £500 and states: "Please accept by email."

James telephones Olivia and says:

"I accept your offer."

Has a contract been formed? The answer depends on whether the email requirement was intended to be mandatory. If the statement merely expressed a preferred method of communication, the telephone call may constitute valid acceptance. However, if Olivia clearly indicated that only email acceptance would be accepted, the telephone call may be ineffective.

The Relationship Between Mode of Acceptance and Communication

Mode of Acceptance

This concerns how acceptance is communicated.

Examples:

• Email

• Post

• Phone

• Conduct

Communication of Acceptance

This concerns whether and when acceptance becomes effective.

For example:

• Postal acceptance normally becomes effective when posted.

• Telephone acceptance becomes effective when received.

• Email acceptance generally becomes effective when received. See Entores v Miles Far East Co [1955] for more information.

These are separate issues, although they often overlap.

Mode of Acceptance - In Summary

Key Takeaways

• A mode of acceptance is the method used to communicate acceptance.

• The offeror may prescribe a particular mode of acceptance.

• A specified method is not automatically exclusive.

• The court asks whether the offeror intended that method to be mandatory.

• If the prescribed method is merely suggested, another equally effective method may be valid.

• Acceptance can occur through words, writing, electronic communications, or conduct.

• Always distinguish between the method of acceptance and the time at which acceptance becomes effective.