C. The Acceptance
| Author | John D. McCamus |
| Profession | Professor of Law. Osgoode Hall Law School, York University |
| Pages | 52-67 |
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As we have seen, an offer in the requisite sense confers upon the offeree the power of acceptance. To exercise that power effectively the offeree must communicate an unqualified commitment to the terms of the agreement that has been offered. There is no meeting of the minds or consensus ad idem unless the acceptance is a mirror image of the offer. In the simple case, then, where the offeree simply replies, "I accept your offer," in the absence of further negotiations by the parties, the offeree will have exercised the power of acceptance and created a contractual relationship with the offeror. If the purported acceptance, however, varies in any respect the terms of the offer, it will be treated as a proposal of new terms and classified as a counteroffer rather than an acceptance.63The counteroffer obviously confers the power of accept-
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ance on the initial offeror. If the counteroffer is not accepted, however, no agreement has been entered into by the parties. Importantly, it must be noted that the effect of the counteroffer is to remove the initial offer from the bargaining table. As is sometimes said, "the counteroffer kills the original offer."64Thus, an offeree who responds with a counteroffer that is rejected by the initial offeror cannot respond by accepting the initial offer. A simple illustration is provided by Hyde v. Wrench,65in
which the defendant offers to sell certain property to the plaintiff for £1,000. The plaintiff replied that he would be willing to pay a price of £950. This was held to be a rejection of the initial offer with a result that the plaintiff was no longer in a position to accept the initial offer at £1,000. It is presumed, in effect, that if the initial offeree replies by way of a counteroffer, the initial offer has been rejected and can only be revived with the consent of the initial offeror.
Where, however, notwithstanding the rejection of the counteroffer, the initial offeror signals an interest in continuing the negotiations with the offeree, it may be held that the offeror’s conduct has the effect of reviving the initial offer. In Livingston v. Evans,66for example, the defendant, an owner of land, offered to sell the land to the plaintiff for eighteen hundred dollars. The plaintiff replied: "Send lowest cash price. Will give $1,600 cash. Wire." The owner’s agent replied: "Cannot reduce price." The plaintiff immediately responded and purported to accept the initial offer at eighteen hundred dollars. The court easily concluded that the plaintiff’s initial response, suggesting a lower price, amounted to a counteroffer, which would bring to an end the initial offer for sale at eighteen hundred dollars. The difficult question, in the court’s view, however, was whether the reply "Cannot reduce price" had the effect of reviving the initial offer. With some hesitation, the court concluded that this communication intimated a willingness to stand by the initial offer and accordingly that it was still open for acceptance.67
In cases where the original offer cannot be said to survive, however, the
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sharp distinction between acceptance and counteroffer may produce surprising results for the offeree who, intending to accept the offer, nonetheless makes inquiries about possible changes to the terms of the offer. In circumstances where it can fairly be said, however, that the offeree is accepting the offer but merely making a further inquiry68or a proposal for modification of the agreement that has been concluded by acceptance,69the acceptance remains effective. Similarly, a request for a meaningless70or trivial71addition to the terms of the agreement will not undermine the effectiveness of a purported acceptance. The line to be drawn between counteroffers and acceptances is, however, one that can only be drawn with some difficulty.
Similar analytical difficulties arise in circumstances where the offeree purports to accept the offer in a straightforward manner but the parties nonetheless persist in negotiating the terms of their arrangement. Where the parties continue to negotiate with respect to important aspects of the arrangement, it is possible to infer that they did not understand themselves to have concluded an agreement. On the other hand, it is entirely conceivable that parties could enter into an agreement through a process of offer and acceptance and subsequently negotiate possible changes to that agreement. The inherent difficulty of the distinction is well illustrated by the facts of Bristol, Cardiff and Swansea Aërated Bread Co. v. Maggs.72Maggs had written to the plaintiff offering to sell his business premises and the goodwill of the business for £450. The plaintiff replied in plain language: "I accept your offer for shop and lease, & C ... ."73On the next day, the purchaser’s solicitors forwarded a draft memorandum of agreement that included a non-com-
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petition clause preventing Maggs from carrying on a similar business within a certain area for a period of five years. No such arrangement had been previously discussed by the parties. Upon receipt of the draft, Maggs’ solicitor proposed an amendment to the clause. A few days later, however, without hearing back from the plaintiff with respect to the proposed modification, Maggs indicated that he no longer wished to go through with the sale and asked that it be cancelled. Although the form of the request suggests that Maggs believed that the parties had an agreement, the court held that the plaintiff’s attempt to stipulate a new and very important term the day following the purported acceptance indicated that the parties were still negotiating an agreement that was not yet complete.
Similarly, in Harvey v. Perry,74the Supreme Court of Canada held that negotiations for the sale of eight oil leases were not completed when the intending seller replied to a proposed arrangement by writing "I will accept your proposition"75or further, when, after the exchange of a written draft of the agreement, the purchaser’s solicitor stated that "the terms are acceptable."76The fact that the purchaser forwarded a second draft including some variations on the proposed terms indicated that "[t]here was no consensus ad idem because the [purchaser] was still negotiating for better terms."77Again, the line between continuing negotiations and circumstances in which the parties have reached a binding agreement but subsequently commenced negotiations on variations of the agreement78will be drawn only with difficulty in cases such as these.
To be effective, an acceptance must comply with any instructions issued by the offeror for the manner in which acceptance is to be exercised. Although the offer confers a power of acceptance on the offeree, the offeror, it is often said, is the "master of the offer" and can stipulate the manner in which the power is to be exercised.79Thus, for example, if an offer to sell shares stipulates that it can be accepted only by the provision by the offeree of a certified cheque for the purchase price, a purported acceptance without the required cheque will be ineffective.80
The offeror may require that the offeree communicate the acceptance
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by a particular mode of communication.81Courts are reluctant to assume, however, that the stipulation of a means of communication is intended to mean that only that means of communication can be employed. Thus, in a leading case,82it was said that a requirement that the acceptance be "by return of post" was to be interpreted as a requirement not that only a posted acceptance would be effective but, rather, as an indication that the acceptance, whether by letter, telegram or verbal message must be communicated within the time a letter by return post would have arrived.83Similarly, the offeror may stipulate the place at which acceptance is to be received. Again, however, courts may not interpret such requirements as exclusive in the absence of clear stipulation to that effect by the offeror.84
An offer of a unilateral contract will stipulate some form of conduct as the means of acceptance. Although there may, in a particular case, be some latitude for interpretation of the stipulation in the offeree’s favour - a requirement of payment, for example, may be interpreted as a requirement to tender payment85- strict compliance with the stipulation is normally required. Thus, in R. v. Clarke,86for example, the plaintiff failed to accept an offer of reward when the act performed was similar to but not precisely that required by the offer. The notice of reward had offered a payment in return for "such information as shall lead to the arrest and conviction of the person or persons" who committed certain murders. The plaintiff, an apparent accomplice, provided information that led to the arrest of only one of the two murderers and led to the conviction of the two for only one of the murders committed. On both grounds, the information failed to meet the requirements set out in the notice. Accordingly, the plaintiff was not entitled to collect the reward. In an unusual Canadian decision,87a court asserted a discre-
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tion to apportion the reward in a case in which the condition had not been strictly met. The plaintiff had accurately identified one Bernardo to the police as the likely perpetrator of a series of rapes and slayings and on this basis sought payment of a reward posted by the defendant newspaper for information leading to the "arrest and conviction" of the perpetrator of one of the murders. Although the police did not follow up vigorously on the tip, later discovery of DNA evidence led to an application for a search warrant for the Bernardo residence with respect to which the plaintiff’s assistance was sought and obtained. The information that effectively led to the arrest and...
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