All entries for November 2010

November 16, 2010

Formation of contract – The acceptance

Writing about web page receipt, silence

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In my opinion, the role of acceptance, concerning the enforcement of contracts, is not to be underestimated, as rights and obligations generally arise at that time when the offer has been validly accepted.
Great importance should be attached to the time concerning the receipt of an acceptance, as well as the form, particularly the silence of the offeree relating to the offer.

In principle, an intention directed to another person, including acceptance, must be received by the person to whom it is addressed, whereupon the time, in which a statement of purpose takes effect, diverges.

According to the Cour de cassation, the dispatch of an acceptance concludes the contract, whereas in German law, under § 130 BGB, an acceptance becomes effective upon receipt, whereat a declaration of intention, coming into the sphere of the intended recipient’s control, would usually suffice.The English legal system requires a communication of acceptance before being valid, although an acceptance by letter becomes effective in the moment the letter is posted.This postal rule only applies when it is reasonable to use the post as a mean of communicating acceptance, though in combination with the receipt rule for the revocation of offers, a limitation of the offeror’s power to revoke is accomplishable.

Since acceptance must be communicated by any means, in all three legal systems, silence, from which explanatory value may be scarcely infer, cannot in principle amount to acceptance.
In my judgement, the very fact of being forced by an offer to take trouble and incur expense in order to avoid a binding effect, represents a decisive argument against any legal effect due to silence.Nevertheless, numerous exceptional cases, in which inactivity suffice to be bound by the alleged obligation, e.g. the commercial letters of confirmation in German law, based on customary right, complicate a consistent application of the basic principle.

Formation of contract – The offer

Writing about web page invitation to treat, revocability

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The English-, French-, as well as the German legal system perceive an offer as a statement of a person’s intention to be legally bound by the sufficiently precised terms of the offer made and thus the intention to contract with the other person.

Surprisingly, disagreements concerning the classification of an invitation to treat, as well as the revocability of an offer exist between the said legal systems.

In English- and German law, advertisements and displays of goods in shops are usually classified as mere invitations to treat/ invitatio ad offerendum.However, the Cour de Cassation considered an offer to the public, including goods displayed on shelves, as a creation of contract, in case of acceptance.Therefore, a customer, whose eye was injured by an exploding bottle at the check-out before it had been paid for, is entitled to sue, as the placing into the purchaser’s basket had been constituted the acceptance.
I take the view that, the “limited stock” argument, as well as the wish of the person, who has placed the advertisement, to keep the final decision whether to conclude a contract, demonstrate reasons against the French opinion.

The Revocability, which is in my opinion inconsistent with the principle of “pacta sunt servanda” and which may implicate insecurity and injustice, can’t be applied in the German System.A violation has no effect to the binding force of an offer.In France an offer in general may be revoked so long as it has not been validly accepted, even though a revocation during a certain period, within the offer should be kept open, (offer avec délai) may give rise to liability in delict.
However, in English law offers are freely revocable before acceptance, which is due to the doctrine of consideration: no binding obligation to keep the offer open can arise without consideration from the offeree.

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