What Is Meant by the Statement 'acceptance Must Be Made in Reliance of the offer?

Part 1.

1. What is meant by the statement 'acceptance must be made in reliance of the offer?'

The statement means that an acceptance must be made in accordance to the terms of the offer. This means an agreement occurs as soon as acceptance takes place, thus an offeree must respond to an offer. They must know about it and rely on it. The offer must be in their mind at the time of acceptance. If you return a lost cat to its owner without knowing she has offered a large reward, you do not have any contractual right to that money. You do not respond to or rely on her offer or if there are any new terms in the acceptance then it would amount to a counter-offer. See the case of Hyde v Wrench, where it was held that a counter-offer works to terminate the terms of the original offer.

If an offer was made by post then acceptance by post would normally suffice. See the case of Quenerduaine v Cole (1883) 32 WR 185. Acceptance by post might not satisfy an offer made by fax or e-mail. Unless it was explicitly specified in the offer, acceptance can generally be made via any communication method that is "reasonable" in the circumstances. If mailed, acceptance is effective from time of posting.

2. What is the rational for the 'postal acceptance rule' considering that there may be a binding contract even if the letter of acceptance is never received by the offeror?

The postal acceptance rule is that an offer is deemed acceptable by the offeree on the moment the letter of acceptance was sent to the offeror through post. This rule was established in Adams v Lindsell (1818) 106 ER 250. The rational behind the establishment of the rule is that, sometimes a letter might be misdirected as in the above case and may not reach the person to whom acceptance is expected to be made in time. The rule seeks to avoid the inconveniencies that an offeree may encounter in accepting an offer from the offeror. 'It prevents the offer being revoked whilst acceptance is in transit.'

Another justification of this rule is that parties when communicating by post were not sure at the precise time the acceptance had been communicated. As postal communication is subject to delay, the parties could not be simultaneously aware of the communication. This created a number of reasons and has led to the formation of this rule.

3. When will an advertisement be regarded as an offer rather than an invitation to treat?

An advertisement will be regarded as an offer rather than as an invitation to treat if it contains words that demonstrate a willingness to be bound, it will be construed as constitutes an offer. In relation to unilateral contracts, an advertisement may generally be regarded as an offer because it only needs to be accepted by performance and then a contract would have been formed. Therefore, unilateral contracts are an exception to the general rule relating to invitation to treat and offers, since an advertisement which requests the performance of an act will normally be an offer. See the case of Carlill v Carbolic Smoke Ball Co. (1893) 1 QB 256, where an advertisement was held by the court to constitute an offer. The advertisement contained words which indicated that the defendant were willing to be bound because they have deposited the money readily in the bank and the fact that the plaintiff used the product in response to the advertisement.

4. What is the difference between revocation of the offer and rejection of an offer?

The difference between a revocation and rejection of an offer is that, a revocation is the termination of an offer. It is the withdrawal of an offer by the offeror. Revocation of an offer must be done prior to any acceptance. An illustration is the case of Payne v Cave, where it was held that a bid was a mere offer which could be revoked any time before acceptance. However, once an offer has been accepted, it was irrevocable. This rule was established in the case of Great Northern Railway Co v Witham . In that case the defendant won a tender to supply certain articles of iron during a period of one year in quantities as the company may want from time to time. The defendant supplied for some time but then declined. The court held that the defendant was in breach of contract and that inorder to successfully withdraw the tender it had to be revoked prior to the order being placed. This means that once an offer has been accepted it becomes irrevocable. Furthermore, the revocation of an offer cannot be effective unless it has been communicated to the offeree. Not only that, the offeree must have the knowledge that the offer is withdrawn. This principle was enunciated in Byrne v Van Tienhoven (1880) 5 CD 344, where it was held that a revocation by letter in relation to the offer was not effective until it has been received by the offeree.

On the other hand, a rejection refers to the termination of an offer on the part of an offeree. A rejection can either be expressly stated or it may be done by conduct. It does not have to be said in words, so long as any indication of refusal on the part of the offeree would be sufficient in the circumstances to justify a rejection. That is the reason for which counter-offers can be construed as a rejection of the original offer. The case of Hyde v Wrench (1840) 49 ER 132 is an illustration of this point, where on 6th June 1840, the defendant offered to sell his farm for 1000 pounds. On that same date the purchaser offered 950 pounds which was rejected by the defendant on 27th June. On 29th June, the plaintiff tried to accept the 1000 pounds. It was held that that cannot happen because once a counter-offer of 950 pounds was made, the original offer of 1000 pounds disappeared. Thus, a counter-offer in this sense means a rejection of the first offer.

Part 2

a) Formal Particulars

Name of case: Malaita Development Authority v Ganifiri

Citation: Malaita Development Authority v Ganifiri [2002] SBHC 5; http://paclii.org.vu.

Court jurisdiction: High Court of Solomon Islands

Presiding Judge: Parlmer, CJ.

b) Details of the Case

Relevant facts:

The second defendant offered