An acceptance does not usually take effect until it is communicated to the offeror. It was explained in the case of Entores Ltd v Miles Far East Corporation (1955) by Lord Denning that if Mr. A shouts an offer to Mr. B across a river, but just as Mr. B yells back an acceptance, a noisy aircraft flies over, preventing Mr. A from hearing Mr. B’s reply, no contract has been made. Mr. A must be able to hear Mr. B’s acceptance before it can take effect. The same would apply if the contract was made by telephone, and Mr. A failed to catch what Mr. B said because of interference on the line; there is no contract until Mr. A knows that Mr. B is accepting the offer. The principal reason for this rule is that without it, an offeror might find herself bound without knowing that her offer had been accepted, which could obviously create difficulties in all kinds of situations.
Where parties negotiate face to face, communication of the acceptance is unlikely to be a problem; any difficulties tend to arise where the parties are communicating at a distance, for example by post, telephone, telegram, telex, fax, or messenger.
Exceptions to the Communication Rule
There are some circumstances in which an acceptance may take effect without being communicated to the offeror. They are as follows;
- Terms of the offer: An offer may state or imply that acceptance need not be communicated to the offeror, although as Felthouse v Bindley shows, it is not possible to state that the offeree will be bound unless he or she indicates that the offer is not accepted.
- Conduct of the offeror: An offeror who fails to receive an acceptance through their own fault may be prevented from claiming that the non-communication means they should not be bound by the contract.
- The Postal rule: The general rule for acceptances by post is that they take effect when they are posted, rather than when they are communicated.
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