Failure of a precondition
If a main term of an offer, which is vital to the contract, is not fulfilled or
is substantially altered, then the offer is no longer capable of acceptance.
This arose in the following case.
Acceptance
Acceptance is the second ‘half ’ of a contract. If Bill offers Ben a bag of
sweets for 20p, and Ben says ‘I accept’, clearly a contract has been made.
Similarly, if Ben offers Bill 20p for his bag of sweets, and Bill says ‘I
accept’, that is also a contract. Clearly it does not matter, when dealing one
to one in this way, who starts the negotiations. What the law is really
saying is that there must be evidence from both sides of genuine
agreement between the parties – the old idea of consensus ad idem, or
meeting of minds.
20 Contract law
prevented by the court, who said that the paying of the mortgage by the
couple was an ongoing act of acceptance. When the couple had
completed the mortgage payments they would be entitled to the house,
and while they continued to pay revocation was not possible. This
seems to be a very fair position.
Lord Denning used, as an illustration of the reasonableness of his
decision, the example of an offer of money to walk from London to York.- If acceptance was binding on completion, and revocation was
possible up to the moment of completion, then payment would be
due on arrival in York. It would be unfair on the walker if the offeror
then revoked as the walker was near to York. - If acceptance was binding at the first moment of the act of acceptance,
then payment would be due as the walker left London. This could then
be unfair on the offeror if the walk was not completed. - Lord Denning concluded that acceptance here was a continuing act,
with payment enforceable on completion of the walk. While the walk
was taking place, however, revocation would not be possible. This is
the principle that he applied to the couple in Errington v Errington.
Financings Ltd v Stimson (1962)
Between the defendant’s offer to buy a car and the plaintiff ’s
acceptance, the car was stolen and badly damaged. The plaintiff did not
know and signed an agreement. This was held not to be acceptance,
since the precondition that the car was in a certain state had failed, and
there was therefore no valid contract.