Concept of Offer and Acceptance in Law

of Contract

By
Simon Amos Usman
Student of the Department of Public Law,
Faculty of Law,
University of Maiduguri.

INTRODUCTION

All valid contracts must consist of offer, acceptance, consideration

and intention to enter into a legal relation.

For a contract to be binding between parties there must be the

meeting of the body and mind known as consensus ad idem . The
court held in Bilante International Ltd. v Nigeria Deposit Insurance
Corporation (2011) that “to constitute a binding contract between
parties there must be a meeting of the mind often referred to as
consensus ad idem…” Therefore if the offer stipulates the mode of
acceptance, the offeree must comply with that.

A contract is formed once there is an offer by the offeror to the

offeree which is accepted by the offeree backed by consideration
(Yaro v Arewa Construction Ltd. 2008)
OFFER

Apart from Invitation to treat, an offer is the first element of a valid

contract. An offer is an undertaken made by the offeror to offeree
with the intention that it will be binding as soon as it is accepted
by offeree. An offer is an open call to the general public and
anyone contract according to the terms of the offer. (Carllil v
Carbolic Smoke Ball Co. 1893). Every offer made must be clear,
definite and precise leaving no room for speculations and double
mindedness. To Aboki J.C.A in Amana Suits Hotels Ltd v P.D.P 2007,
“an offer is a definite indication by one person to another that he
is willing to conclude a contract on the terms proposed, which when
accepted, will create a binding legal obligation..”

An offer can be verbal, written or implied depending on the nature

of the contract. For example, an applicant whose name appears on
University of Maiduguri admission list is made an offer and he
accepts by collecting his admission letter and proceeding for
clearance.

In Brogden v Metropolitan Railway Co. 1877, an offer was made to

the defendant in writing, requesting that he sign and return a form
containing the terms of the offer. The defendant did not comply to
that, nevertheless, they carried out the contact. The court held the
contracting is binding by their conduct.

ACCEPTANCE

Generally, acceptance is said to occur when the offeree consent to

the offer made by the offeror. An acceptance must be unconditional.
In Amana Suits Hotels Ltd. v PDP supra, the court viewed
acceptance as the “reciprocal act of action of the offeree to the
offeror in which he indicates his agreement to the terms of the
offer as conveyed to him by the offeror… it is an act of compliance
on the part of the offeree with the terms of the offer. Similarly, the
court ruled in Akinyemi v Odu’a Investment co. Ltd 2012 that
acceptance is “the agreement of the offeree to enter into a legally
binding contract with the offeror in the terms of the offeror’s offer.”

An acceptance of an offer can be made by

a. The conduct of the parties

b. Their words or
c. Documents that have passed between them (Amana Suits
Hotels Ltd v P.D.P. supra, B.F.I.G. v B.P.E 2008)

It is pertinent to note not that silence does not constitute an

acceptance. The offer cannot conclude an acceptance by silence
clause. In Felthouse v Bindley 1862, Paul Felthouse wanted to buy
his nephew’s horse, John Felthouse. After a letter from the nephew
concerning a discussion about the subject matter, the uncle replied
“if I hear no more about him, I consider the horse mine.” The
nephew never replied however in his mind intended to sell the horse
to his uncle. He asked an auctioneer to auction his property which
the auctioneer accidentally included the horse. It was decided by
the court that there could not be acceptance by silence. Giving
more emphasis on this exception, Achike J.C.A in Orient Bank v
Bilante International 1997 stated “the reason for this stipulation is
that if acceptance were based on silence or mental assent, then its
ascertainment is bound to be illusory and at best, a guess work,
unless the Judge was a super human who would be bound to
unfold the innermost recesses of the heart of the party making the
mental assent. That obviously is an invidious exercise; consequently,
mental assent is inoperative.”

An acceptance which purports to introduce terms by the offeree

constitute an invalid acceptance which leads to counter offer. By the
strict law of contract, a counter offer is in fact a rejection of the
offer, which thereby destroys the initial offer and cannot therefore
be subsequently accepted (Solel Boneh Nigeria Ltd v Canitech
International Company 2006). To Tobi, J.C.A., “the offeree must
unreservedly assent to the exact terms proposed by the offeror.” A
counter offer or a qualified acceptance of an offer cannot give rise
to a binding agreement between the parties. (Akinyemi v Odu’a
Investment Co. Ltd. supra, Bilante International Ltd. v Nigeria Deposit
Insurance Corporation 2011, Major General George Innih RTD & Ors
v Ferado Agro and Consortium Ltd 1990)

Another invalid type of acceptance is acceptance “subject to

contract” and provisional acceptance. In Best (Nigeria) Ltd v
Blackwood Hodges (Nig.) Ltd. 2011, the court held that a conditional
acceptance of an offer does not in law constitute an acceptance of
the offer in question.

A qualified acceptance of an offer cannot give rise to a binding

agreement between the parties and conditional contract would not
become operational and binding until the conditions stipulated
therein are fulfilled (Suberu v. A.I.S & L Ltd. 2007)

Other invalid types of acceptance are Cross Offer (Tinn v Hofman &
Co. 1873), Acceptance in ignorance of offer (Gibbons v Proctor
1891) and acceptance of tenders (Great Northern Railway Co. v
Witam 1873)