Case Summary - Re Selectmove Ltd (1993) CA
Except in rare circumstances, silence on the side of the offeree does not constitute acceptance, as stated in Re Selectmove Ltd (1993) CA. In contrast to these cases, see the dicta of Lord Steyn in Vitol v Norelf Facts Under Pay As You Earn, the company owed the Inland Revenue almost £20,000 in taxes. The company promised to pay the debts in £1,000 monthly payments commencing on February 1, 1992, during a meeting. The Tax Collector stated that he would need to get approval from his superiors, but that if the offer was not acceptable, he would return to the corporation. He did not do so, and on March 3, 1992, the corporation paid the first and second instalments. The business had reached a decision. When the Inland Revenue launched winding-up proceedings based on the remaining arrears in September 1992, there were seven such payments. The corporation fought the insolvency on the basis of its payment-by-instalment plan. Decision The Court of Appeal ruled that the company had no substantive grounds to challenge the winding up. (I) The offer to pay in instalments was not accepted. (i)The Inland Revenue's silence did not rule out the prospect of acceptance. After referring to the dicta of Robert Goff LJ in Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA (above), Peter Gibson LJ, with whom Stuart-Smith and Balcombe LJJ agreed, said: ‘When the offeree himself indicates that an offer is to be taken as accepted if he does not indicate to the contrary by an ascertainable time, he is undertaking to speak if he does not want an agreement to be concluded. I see no reason in principle why that should not be an exceptional circumstance such that the offer can be accepted by silence. But, it is unnecessary to express a concluded view on this point.’ (ii) However, because the Collector of Taxes lacked the authority to oblige his superiors to accept the offer, they were not obligated to do so until they did so themselves, which they never did. (II) If the offer had been accepted, the Inland Revenue's acceptance of instalments would not have been sufficient consideration. Williams v Roffey Bros and Nicholls (Contractors) Ltd, is the case where the company asserted, should be applied in this case. Per Peter Gibson LJ: ‘I see the force of the argument, but the difficulty that I feel with it is that if the principle of the Williams case is to be extended to an obligation to make payment, it would in effect leave the principle in Foakes v Beer without any application. When a creditor and a debtor who are at arm’s length reach agreement on the payment of the debt by instalments to accommodate the debtor, the creditor will no doubt always see a practical benefit to himself in so doing. In the absence of authority, there would be much to be said for the enforceability of such a contract. But, that was a matter expressly considered in Foakes v Beer yet held not to constitute good consideration in law. Foakes v Beer was not even referred to in the Williams case, and it is in my judgment impossible, consistently with the doctrine of precedent, for this court to extend the principle of the Williams case to any circumstances governed by the principle of Foakes v Beer.’ (III) The doctrine of promissory estoppel could not apply because: (I) the Inland Revenue did not make the promise to accept instalments because the Collector of Taxes did not have or claim the authority to do so; and (ii) the Inland Revenue's enforcement of the debt was not unfair or inequitable because the company made some of the payments late.
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Case Summary - Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA
Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA: The Leonidas D (1985) CA: Except in rare circumstances, the offeree's silence does not constitute acceptance. Facts In April 1975, the plaintiff owners chartered The Leonidas D to the defendant charterers. Disputes developed in December 1975 and March 1976, prompting the charterers to demand $110,000 from the owners. Arbitrators would determine the dispute under the terms of the time charter (the contract between the parties). In April 1976, the parties each nominated an arbitration, but the arbitrators failed to name a third arbitrator. The time charter was renewed and continued to operate until May 1977. There are no complaints or mentions of the charterers' original dispute. Indeed, until August 1981, when they gave notice of their intention to proceed with the arbitration, the charterers did nothing further to pursue their claim. The owners have now requested an injunction to prevent the charterers from proceeding with the arbitration, citing the lengthy delay as a reason. Decision The charterers could not be prohibited from pursuing their claim, according to the Court of Appeal. (I) In the absence of an offer and acceptance, there was no agreement to terminate the arbitration. Per Robert Goff LJ, giving the judgment of the court: ‘We have all been brought up to believe it axiomatic that acceptance of an offer cannot be inferred from silence, save in the most exceptional circumstances. In the absence of such circumstances, there were too many possible explanations of the silence of both parties to allow the court, adopting an objective test of their behaviour, to infer either an offer or an acceptance of an agreement to abandon the arbitration.’ (II) The owners could not rely on promissory estoppel in the same way. His Lordship said: ‘It is well settled that that principle requires that one party should have made an unequivocal representation that he does not intend to enforce his strict legal rights against another; yet it is difficult to imagine how silence and inaction can be anything but equivocal.’ Case Summary - Bindley vs. Felthouse (1862) CCP
Bindley vs. Felthouse (1862) CCP: The offeree's silence is not an indication of acceptance. Facts The defendant, an auctioneer, planned to sell the plaintiff's nephew's farmed stock, including a particular horse, at an auction to be held in Tamworth. The plaintiff intended to buy the horse and spoke with his nephew orally about it. As a result of a misunderstanding regarding the 'As there may be a mistake about him, I will split the difference – £30 15s – I paying all the expenses from Tamworth,' the plaintiff uncle wrote to his nephew on January 2, 1862. You can send him whenever you want between now and March 25. If I don't hear anything else about him, I'll take the horse for £30 15s.' The nephew did not reply, and the defendant sold the horse at auction for £33 on February 25. The defendant wrote to the plaintiff on February 26th, apologising for his error, and the nephew wrote on February 27th, alluding to the horse 'I sold to you'. The plaintiff filed a conversion action, claiming that the horse belonged to him when the defendant sold it on February 25. Decision The plaintiff did not own the horse, according to the court, and had no genuine claim. '... it is... clear that the uncle had no right to compel the nephew to sell his horse for £30 15s unless he chose to comply with the condition of writing to reject the offer,' writes Willes J. When the horse in question was catalogued among the rest of the herd, the auctioneer (the defendant) was informed that it had already been sold. It is apparent that the nephew wanted for his uncle to have the horse at the price that he (the uncle) had indicated - £30 15s – in his own mind, but he had not expressed this intention to his uncle or done anything to bind himself. Case Summary - Adams v Lindsell (1818) CKB. Where the post is utilised, transmission of acceptance occurs at the time of posting, according to Adams v Lindsell (1818) CKB. Facts The defendants wrote to the plaintiffs on September 2, 1817, offering to sell them "800 tonnes of wether fleeces" and requesting a "response in course of post." The plaintiffs only got the defendants' letter on September 5th because it was misdirected by the defendants. The plaintiffs responded that night, and the defendants received it on September 9th. Assuming there was no deception, the defendants knew they would get a response on September 7, so they sold the wool to someone else on September 8. Decision Contracts by mail would be impossible, according to the court, if acceptance was contingent on the offeror's receipt. Because the defendants were to blame for the delay, 'it must be taken against them that the plaintiffs' answer was received in the mail.' Comment This decision gave rise to the 'postal rule,' which states that if posting is a fair method of accepting an offer, the acceptance takes effect immediately. The postal rule is expressly prohibited in many commercial contracts. |
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