All entries for Wednesday 10 November 2010
November 10, 2010
All three legal systems have been confronted with the issue of the communication of acceptance in contract law, and whether it is necessary for a binding obligation. Whilst this is not problematic for contracts concluded face-to-face or via phone, it is particularly challenging to ascertain communication of acceptance for contracts made at distance. Whilst Community law has had some effect in these areas, the law of the postal rules in each jurisdiction is seen as the root of determining communication of acceptance.
France has seen the conclusion of a contract as matters that are left for the lower courts to decide, as disputes were seen to be based on fact and not law. The Cour de Cassation has held that the lower courts are entitled to generally exercise “unfettered discretion” in this field, yet there have been some judicial hints towards acceptance being allowed on dispatch of a letter. Interestingly, however, academic works such as the Avant-Projet Catala and the Terré Commission have recommended the inverse and stated that acceptance is only valid once received.
Such a position has been adopted in Germany. Communication is needed, as the idea of the irrevocability of offers is of central importance in German law– as highlighted by the Reichsgericht in 1917. The exact moment of acceptance is thus less significant, in comparison with the law of France in this area.
Conversely, English law has held that acceptance by post is binding as soon as it is sent, and regardless of when it is received. As soon as the letter leaves the offeree’s control, the acceptance is seen to be communicated in English law. However, a distinction is made on the communication of the revocation of an offer. Byrne v Van Tienhoven held that an offer is only revoked once notification has been received, with Lindley J highlighting that any other conclusion in this scenario would produce “extreme injustice and inconvenience”. To counter any claims that the English system favours the offeree in this situation, the classical and uniquely English doctrine of consideration must be borne in mind. As a result, it is not the case that offerors would be left at a loss in these contractual arrangements, as the doctrine of consideration provides some protection from total loss.