Acceptance under Australian Corporate Law - Research Paper Example

? Acceptance under Australian Corporate Law Australian corporate law defines the guiding rules and regulations to be followed by business entities in conducting their business transactions. Drawing up of contracts is a normal and usual practice in the daily running of all business enterprises, and there are laws guiding the creation of these contracts. A contract is an official agreement between parties, and it can be written or oral using formal or informal terms. A contract can also be spoken or entirely verbal where a promise is made between parties. It is formulated in such a way that it allows the courts to make judgments regarding matters laid down in the contract. A contract legally binds the signees of the contract to the terms spelt out in the contract. A breach of the terms spelt out in the contract makes an individual who is party to the contract to be liable to prosecution by law. Acceptance is an element of contracts that should be featured in a contract for it to be legally binding. This paper aims at highlighting acceptance under Australian contractual law and how it impacts on businesses and the judicial system in the country. Contractual acceptance is characterized by a party in the contract agreeing to the terms and conditions of the offer that is proposed by the other party. A contract is not formalized until the party being proposed to, accepts the offer at hand. The contract can then be termed as legally binding after the offer has been accepted. A contract can also not be formalized until all the negotiations regarding the terms and conditions of the contract have been finalized. Acceptance can be defined as an unqualified assent to all terms of the offer for example, when a buyer makes an offer to the seller of which the seller accepts the offer from the buyer (SINGH & KAUR, 2011:120). Acceptance in contract formation includes the arrival at a consensus between the parties involved on the terms and conditions defining the contract. For acceptance to be realized, an offer by one of the parties involved in the contract should be proposed. This creates the opportunity to for the other member analyse the offer and present their judgment by accepting the offer or agreeing in an unqualified way. This means that offeree assents the offer but on condition that some of his terms are also accepted by the offeror (SINGH & KAUR, 2011:185). An offer must be distinguished from an invitation to deal because it involves testing for intent from the party making the statement. It depends on whether the response would result to an agreement or simply translate to further negotiations. An example of this scenario is a court case between the Great Britain Pharmaceutical Society v Boots in which the English court of appeal provided emphasis on the commercial influence and classification of the conduct as an offer (SINGH & KAUR, 2011:190). A contract is formed when an offer by one individual is accepted by the other party involved in the negotiations. An offer can be made to one person, a class of persons or to the whole world as long as the specifics of the terms and conditions of the offer are clearly defined for all parties involved. An offer is part and parcel of acceptance because it determines the realisation of acceptance depending on the terms of the offer. Thus, an offer is a definite promise to be bound to, provided the terms of the offer are accepted. This means that acceptance is realised when the precise terms of the offer have been accepted. If the precise terms of an offer are not accepted, then it means that the offer is still under negotiations, and it cannot be said that the acceptance stage has been reached and finalised. Negotiations indicate that the basic elements of which acceptance is part of, have not been met, and therefore negotiations are ongoing. An offer can be withdrawn before it is accepted, but it requires the offer or to inform the other party about the withdrawal of the offer. This makes it possible to avoid a binding contract because the offeree can embark on fulfilling the terms of the contract without knowing that the offer has been withdrawn. Acceptance is recognised by Australian law when the party answering the offer agrees to the terms of the offer by issuing a statement or acting in manner that can be construed as fulfilling the terms of the contract (SINGHv & KAUR, 2011:208). The Australian corporate law defines acceptance as unequivocal statement that can be written, oral or by way of conduct by an offeree, agreeing to the terms and conditions of an offer. An offer can only be accepted by the person to it is directed to for it to constitute a valid acceptance in a valid contract under the law. Acceptance can be through a verbal or written statement as an indicator of assenting to the terms of an offer. There have been instances where silence upon presentation of an offer has been construed to mean or represent acceptance. This has created grounds for a lot of heated debate in courtrooms all over Australia on the legality and practicality of silence representing acceptance. This is based on the assumption that rejection would be manifested by a more elaborate act or sign. Some legal professional argue that acceptance must be represented by some tangible and discernible response for it to be legally binding in a contract. Others argue that silence upon offer is a sign of acceptance because rejection would be communicated in a more distinctive manner. The appropriateness of silence as a form of acceptance in contracts has been described as having different bearings depending on the nature of the terms involved in the contract. There are some rebuttable presumptions on the bearing of actions that are deemed as a response to an offer. It becomes acceptance if the offer was one of the reasons for the offeree behaving in a manner that construes acceptance even if it was not the dominant reason (SINGH & KAUR, 2011:243). Characteristic of such cases involving silence being misconstrued as a representation of acceptance have had a fair share of time in Australian courts. For example, in the Crown v Clarke case, the Empirnall court stated that if a reasonable person independent of the contractual process would regard actions by the offeree including their silence as a sign of acceptance to the offeror. Then this would mean that the offeree’s silence and actions are representatives of their acceptance of the offer’s terms. In another instance, an Australian court ruled that an offeror cannot stipulate that silence on the part of the oferee is a sign of acceptance. The court imposed on the offeror a positive obligation to reject silence as sign of acceptance (SINGH & KAUR, 2011:322). This was in a case between Empirnall Holdings v Machon Paul. This was because silence does not constitute a viable and tangible communication as to validate acceptance in this case. Acceptances in reward cases where corporations are involved in advertising campaigns, parties to these contracts are not necessarily required by law to communicate their acceptance. This is because advertisements have a different contractual set up with the parties involved because the offer in an advert is one sided. This means that respondents do not have the privilege of offering counter offers as characterized by corporate contracts. Thus, in this case silence of the respondents is construed as acceptance of the advertisement’s offer, and it waits for actionable response from them. In corporate law, the mere acknowledgement of acceptance does not suffice to be recognised by law because the law requires that acceptance be communicated to the offeror who in turn acknowledges this action. Australian law stipulates that an agreement is conclude when communication of acceptance is received and acknowledged by the other party forwarding the offer in the contract (SING & KAUR, 2011:386). In the new age of instantaneous communication between individuals, conditions for acceptance need to be clearly outlined in the contract. This is because the courts base their judgement on actions such as sending of letters, making telephone calls and sending of emails. According to Singh and Kaur, if a particular form of acceptance is made necessary, then for this to be effective, acceptance needs to take this form as stipulated in the language of the contract. An example of this situation is a case between Bressan v Squires where the court was slow to conclude on a stipulated acceptance form because the language used in the contract was not clear enough as to specifically state that the mentioned form of communication should be used to convey acceptance. During the course of negotiations, the passing back and forth of communication between the involved parties can at some point be misconstrued as acceptance. This therefore calls for distinctions to be made between the parties involved on what constitutes acceptances and rejection. This helps the individuals involved to avoid unnecessary litigation that can be costly to both sides. The issue of silence as a mode of communicating acceptance is a very debatable concept in Australian corporate law. From the cases witnessed in Australian law courts, rulings on acceptance depend on the nature of the terms and conditions of each individual contract. Bibliography SINGH, J. & KAUR, G. (2011). Australian Corporate Law. VDN Publishing. Read More