What have we agreed? Replying to an offer

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In order for the acceptance of an offer to be legally binding, it must be accepted in its entirety and the acceptance must not vary the terms of the original offer. This is the ruling of the High Court in their recent decision in Gibbs v Lakeside Developments Ltd [2016] EWHC 2203 (Ch).

Background

The dispute between the parties in this case relates to an offer that was made in relation to an unrelated matter that was due to be heard at an appeal hearing. Prior to the hearing, the parties corresponded with one another to determine whether a compromise could be reached between them.

They agreed that £90,000 would be accepted as full and final settlement of the claim; however, upon the appellant accepting the offer, they also attached a consent order which contained a different payment date, some 23 days later than that proposed in the original offer. At first instance, the trial judge held that there had been no contractually binding acceptance of the offer. This was appealed to the High Court by Ms Gibbs.

The High Court’s judgment

Within his judgment Mr Justice Arnold upheld the County Court’s decision – for the offer to be legally binding it must have been accepted in full. In this case, despite the words “the claimant accepts your offer”, it was still found that there was no enforceable acceptance. This is because the offer had two aspects, namely the £90,000 settlement figure, and also the date on which it was to be paid by. As the correspondence contained an alternative date on which the payment would be made, it was classed as a counter-offer as they were not agreeing to the full terms as set out in the original offer.

Comment

This case emphasises that when negotiating on a commercial matter, correspondence needs to demonstrate with certainty your intentions regarding the negotiated matter. The courts will look at the entire communication of the acceptance as a whole. In this instance, even though Ms Gibbs intended to accept the respondent’s offer, this wasn’t transposed properly in her acceptance email.

Forbes Solicitors regularly advises clients on commercial law matters. If you require assistance with the rules relating to offer and acceptance of a contract or with commercial contracts in general, please do not hesitate to contact Ismaeel Waseem by email or on 0800 689 0831.

Ismaeel Waseem

About Ismaeel Waseem

Ismaeel Waseem is a Solicitor in the Corporate & Restructuring team at Forbes Solicitors. Ismaeel’s blogs cover the drafting of commercial contracts including, amongst others, those for the provision of both goods and services (including both business to business and business to consumer contracts); commercial agency and franchisee agreements; manufacturing and distribution; sport and charities. Ismaeel also writes on the identification, protection and exploitation of intellectual property and on a variety of IT issues.
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