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What is Acceptance in Contract Law?

Updated: Oct 7, 2021

Acceptance is one of the essential ingredients of a contract; without it there is no legally binding contract. But how does Australian law define acceptance? Let's take a look.

Acceptance occurs when a person who has received an offer, unequivocally agrees to the offer.

Here are some legal rules about acceptance under Australian contract law:

  1. An offer can only be accepted by the person to whom an offer was directed

  2. Acceptance is only valid where the acceptance (by words or conduct) occurs in response to the offer given

  3. A person's thought to accept an offer is insufficient; the acceptance must be communicated to the person who made the offer

  4. Acceptance will have occurred even if the offer was not the only reason for the words or conduct that's said to be 'acceptance', but the offer was a dominant reason for the acceptance

  5. Acceptance can be explicit ("I accept your offer") or implied from the way a person behaves (see Empirnall Holdings v Machon Paull Partners)

  6. Acceptance will not have occurred simply because a person was silent or didn't take any action (see Felthouse v Bindley)

  7. If a person is unaware of an offer, there can be no acceptance (see R v Clarke)

  8. Acceptance must comply with the conditions of the offer (see Gilbert J McCaul v Pitt Club)

  9. Acceptance must be completed by the time set out in the offer and if no time is set out, acceptance must occur within a reasonable period of time

  10. Acceptance communicated by post takes effect when the acceptance is posted (see Holwell Securities v Hughes)

  11. If it is commercially impractical to communicate acceptance of an offer, the person who has received the offer may in some circumstances be taken to have waived their right to acceptance (see Carlill v Carbolic Smoke Ball Co)

  12. Acceptance communicated by email, electronically or through any other form of instantaneous communication is valid once acceptance is received by the person who made the offer (see Brinkibon v Stahag Stahl)

Acceptance in Contract Law
Acceptance in Contract Law

Author: Farrah Motley, Legal Principal of Prosper Law and an Australian contract lawyer.

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