Acceptance Of Contract Terms By Conduct

Date Added 27.09.15

A recent High Court case provides for an insightful reminder that conduct alone can lead to the acceptance of a contract and its terms, without observing the requirement of signing a formal document.

The facts

In this particular case the parties had been involved in negotiations for the sale of goods. The Buyer had not signed the contract which included a signature block which was followed by the words “accepted (Buyer)” at the end of it, however the Buyer had provided the Seller with a number of direct instructions through e-mail correspondence requesting that a fixed purchase price for the goods was set by the Seller. The Seller replied setting out fixed price for the goods.

The Judge held that the fact the contract included the word “accepted” on the Buyer’s signature did not result in the offer only being accepted on the signing of that document. He stated that the words simply “express what is implicit in leaving a space for a party to sign a contract by way of acceptance. They do not introduce either prescription or conditionality”. It was held that the Buyer had, through its actions, unequivocally accepted the contractual terms.

What does this mean for you?

The ruling provides for a cautionary note to all contractual parties that the courts are prepared to look past the written contracts between parties and the signature formalities and to consider the parties’ conduct in ascertaining whether a contract has been accepted. Parties must ensure that care is taken when negotiating contractual terms to ensure that legally binding contracts do not take effect until the parties have agreed to all the relevant terms.

It is a common dilemma that many parties are left facing when the actions of an employee or agent constitute acceptance of a contractual offer. Should you have any queries regarding the issues discussed in this article our Corporate and Commercial team can give you all the assistance you need in understanding the implications of acceptance to contractual terms by party conduct. Please contact our Commercial Contracts Partner, Liz Appleyard on 01908 306 950.

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