James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…View Profile View all
A recent decision of the High Court has served as a useful reminder that contract terms can be accepted by conduct, even if the party challenging the contract has not signed it.
In this case the Court decided that the wording of a signature block and other wording in a draft contract for the supply of cotton was not a prescribed mode of acceptance. The draft contracts had contained a signature block which included the words "accepted [buyer]" and a requirement that the buyer return a signed copy to the seller. The buyer did not sign the contracts, but did give several instructions to the seller, asking it to set the purchase price of the cotton, in accordance with the contract, which the seller did. The buyer argued that there was a method for communicating acceptance specified by the contracts and consequently there was no valid acceptance of the seller's offers and no contract was formed.
The judge decided that the presence of the word "accepted" above the space for signature combined with the reference to the signed copy to be returned did not "introduce either prescription or conditionality".
In addition, a prescribed method of acceptance is for the benefit of the offeror and he is therefore entitled to waive those requirements. The buyer's operation of the price fixation mechanism was an unequivocal acceptance of the offer. The judge added that even if the buyer's acceptance was not in the prescribed form, the seller had unequivocally waived that requirement by sending the fixation confirmations. He also added that if the buyer's price fixation instructions were ineffective as an acceptance of the contract terms, the seller was entitled to treat them as a counter-offer to contract on those terms, which it accepted by confirming the price fixations.
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