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Case law: No contract existed because one party did not clearly accept each condition in the offer

Parties purporting to accept an offer to enter into a contract containing more than one condition should make sure they accept each condition unequivocally and unambiguously. If they don't, their response may amount to a counter-offer rather than an acceptance, therefore no legally binding contract would exist, a recent ruling makes clear.

Legal Alert

This update was published in Legal Alert - November 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

One party in a dispute offered to settle by paying £90,000 by a certain date. The other party emailed to say it accepted the offer but referred to a consent order attached to the email. The date of payment in the consent order was different from the date in the offer.

A contract can only be formed in law if one of the parties to the proposed contract makes an offer and the other party accepts it. If the other party replies with an alteration to the offer, that is not an acceptance but a counter-offer. In those circumstances, the general rule is that the original offer lapses and there is no contract unless the original party accepts the counter-offer (or, for instance, a counter-counter offer is accepted).

The court ruled that the offer of settlement contained two conditions, both of which had to be accepted for the whole offer to be accepted. However, the other party had only accepted one of them, despite the language it had used in its email. Therefore, it had not accepted the offer and there was no legally binding contract.

Operative date

  • Now

Recommendation

  • Parties purporting to accept an offer to enter into a contract which contains more than one condition should make sure they accept each condition unequivocally and unambiguously - otherwise their response is likely to amount to a counter-offer rather than an acceptance

Case ref: Gibbs v Lakeside Developments Ltd [2016] EWHC 2203

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.