made while the offer is still open. It must be absolute
and unqualified.
Unconditional acceptance
If the offeree attempts to vary the terms offered, this will
be treated as a counter-offer. As we have already seen in
Hydev Wrench, this has the effect of rejecting the ori-
ginal offer. A similar problem exists in ‘battle of forms’
cases. This is where the offeror makes an offer on his
own pre-printed standard form which contains certain
terms, and the offeree accepts on his own standard form
which contains conflicting terms.
Method of acceptance
An acceptance may take any form. It can be given orally
or in writing but silence cannot normally amount to an
acceptance.Part 3Business transactions
212
Butler Machine Tool Cov Ex-Cell-O
Corp (England)(1979)
The claimants offered to supply a machine tool to the
defendants for £75,535. However, the quotation included
a term which would entitle the sellers to increase this
price (price-variation clause). The defendants accepted
the offer on their own standard terms which did not pro-
vide for any variation of their quoted price. The claimants
acknowledged the order. When the machine was deliv-
ered, the claimants claimed an extra £2,892 which the
defendants refused to pay. The Court of Appeal held that
the defendants had not unconditionally accepted the
original offer. They had made a counter-offer which had
been accepted by the claimants. The defendants’ terms
governed the contract. The claimants’ action to recover
the increase in price, therefore, failed.One form of conditional acceptance is the use of the
phrase ‘subject to contract’ in negotiations involving
the sale of land. These words usually mean that the
parties do not intend to be bound at that stage. How-
ever, if there is clear evidence of a contrary intention, a
court may be prepared to find that a contract has been
concluded despite the use of the customary words ‘sub-
ject to contract’ (Alpenstow Ltdv Regalian Properties
plc(1985)). The advantage of ‘subject to contract’ agree-
ments is that they allow either party to withdraw from
the agreement at any time and for any reason without
facing an action for breach of contract. The problem
is that the parties may incur considerable expense on
negotiations which do not ultimately result in a contract
being formed. Some legal systems overcome this prob-
lem by imposing a duty to negotiate in good faith. Eng-
lish law, however, does not recognise such a duty and an
agreement to negotiate will not be binding.
Walfordv Miles(1992)The defendants owned a photographic processing
business, which they wished to sell. In 1985 there were
unsuccessful negotiations with a company. In 1986, the
claimants heard that the business was for sale for about
£2 million. The claimants were keen to buy at this price
because they thought that the business had been con-
siderably undervalued. In March 1987, the claimants and
defendants reached a ‘subject to contract’ agreement
for the sale of the business. The defendants asked for
a letter, known as a ‘comfort letter’, from the claimants’
bankers confirming that they would provide the finance
for the deal and in return the defendants promised to ter-
minate negotiations with any third parties. The comfort
letter was provided as agreed but the defendants sold the
business to the company which had made the unsuc-
cessful offer in 1985. The claimants sued for breach of
an implied term to negotiate in good faith. The House of
Lords held that an agreement to negotiate is unenforce-
able because it lacks the requirement of certainty. In this
case no time limit was given for exclusive negotiations.
Their Lordships indicated, however, that it would be
possible to enter into a binding ‘lock-out’ agreement, i.e.
an agreement to deal exclusively with one party and not
to consider other offers for a limited period. The Court of
Appeal upheld such an agreement inPittv PHH Asset
Management Ltd(1993) (discussed later in this chapter).Felthousev Bindley(1862)The claimant had been negotiating to buy his nephew’s
horse. He eventually wrote to his nephew: ‘If I hear no
more about him, I shall consider the horse is mine at
£30 15s.’ The nephew did not reply to this letter but he
did ask the auctioneer, who had been engaged to sell all
his farming stock, to keep the horse out of the sale, as
he had sold it to his uncle. The auctioneer by mistake
included the horse in the sale and was sued by the uncle
in the tort of conversion. The basis of the uncle’s claim
was that the auctioneer had sold his property. The court
held that the uncle had no claim. Although the nephew
had mentally accepted the offer, some form of positive
action was required for a valid acceptance. Since there