BetterLawNotes-5 (2)

CONTRACT LAW

Generally, silence will not constitute acceptance. ‘We have all been brought up to believe it to be axiomatic that acceptance of an offer cannot be inferred from silence, save in the most exceptional circumstances . . .’1 This is because silence will generally be equivocal. Silence on the part of the offeree might be consistent with an intention to accept the offer, but it might also be consistent with an intention not to accept the offer, or simply with the offeree having forgotten about the matter altogether. Without more, it is not possible to discern what, if anything, the offeree’s silence signifies.

1 Allied Marine Transport Ltd v Vale do Rio Doce Navegaco SA, The Leonidas D [1985] 1 WLR 925, 937 (Robert Goff LJ).

Nevertheless, it remains possible, in principle, for acceptance to be inferred from an offeree’s silence. This was recognised in Re Selectmove

Re Selectmove Ltd [1995] 2 All ER 531

A company offered to pay off the substantial arrears of tax which it owed the Inland Revenue in instalments and to discharge its future liabilities as and when they fell due if the Revenue would refrain from taking proceedings against it. One issue for the court was whether the Revenue had accepted the company’s offer. The Court of Appeal held while in principle it might be possible to infer acceptance of an offer from the offeree’s silence, acceptance by the Revenue could not be inferred on the facts of the case.


‘Where the offeree himself indicates that an offer is to be taken as accepted if he does not indicate to the contrary by an ascertainable time, he is undertaking to speak if he does not want an agreement to be concluded. I see no reason in principle why that should not be an exceptional circumstance such that the offer can be accepted by silence’ (Peter Gibson LJ at 535-536).

Two cases in which it might be said that acceptance was inferred from silence are Roberts v Hayward and Rust v Abbey Life.

Roberts v Hayward (1828) 3 C & P 432

A tenant occupied a property under a three-year term at an annual rent of £45. The term having expired, the landlord wrote to the tenant giving him notice to quit the premises or to pay rent of £50 per year. The landlord added that if the tenant continued to occupy the premises, he would be considered by the landlord as having agreed to pay the increased rent. The tenant remained in occupation but refused to pay more than £45 in rent. Best CJ held that the tenant was bound to pay the increased rent: the tenant’s silence was tantamount to him saying that he would continue to occupy the premises on the terms which the landlord had proposed.

Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd’s Rep 334

In October 1973 Mrs Rust applied for a single premium property bond policy issued by Abbey Life. The bond was in the form of a life assurance policy under which a single premium was paid and invested in property. The terms of the policy allowed the holder to withdraw part of the investment from time to time. The policy was signed on behalf of the company and sent to Mrs Rust a few days later. In May 1974 Mrs Rust demanded the return of her investment and refused to accept a surrender value. The judge found that there was a contract between Mrs Rust and Abbey Life on two alternative grounds. First, that Mrs Rust had made an offer by submitting the form together with her cheque and that that offer had been accepted by Abbey Life. The alternative ground was that Abbey Life had made an offer which Mrs Rust had impliedly accepted by making no objection for some seven months after receiving the policy. The Court of Appeal upheld both grounds. As for the second, Brandon LJ, with whom Cumming Bruce and Orr LJJ agreed, said:


‘The plaintiff had the policy in her possession at the end of October, 1973. She raised no objection to it of any kind until some seven months later. While it may well be that in many cases silence or inactivity is not evidence of acceptance, having regard to the facts of this case and the history of the transaction between the parties as previously set out, it seems to me to be an inevitable inference from the conduct of the plaintiff in doing and saying nothing for seven months that she accepted the policy as a valid contract between herself and the first defendants.’

A contract is an agreement, to the terms of which both parties have consented to be bound. While the offer comes from the offeror, acceptance is the act of the offeree. It follows that acceptance cannot be imposed upon the offeree. Authority for this principle is often attributed to Felthouse v Bindley.

Felthouse v Bindley (1862) 11 CB NS 869

Paul Felthouse wrote to his nephew, John Felthouse, offering to buy his nephew’s horse, stating: ‘If I hear no more about him I shall consider the horse is mine at £30.15s’. The nephew did not respond to the letter but, intending that the uncle should have the horse at that price, told William Bindley, an auctioneer, to exclude the horse from a sale of the nephew’s stock. By mistake, Bindley included the horse in the auction, and it was sold. The uncle brought a claim against the auctioneer, but the Court of Common Pleas held that the claim failed. The uncle had had no right to the horse when it was sold at auction. The nephew had not communicated to his uncle his intention to accept the uncle’s offer nor done anything to bind himself.


‘[I]t is . . . clear that the uncle had no right to impose upon the nephew a sale of his horse for £30.15s unless he chose to comply with the condition of writing to repudiate the offer.’ (Willes J at 875).

Felthouse v Bindley is not an entirely straightforward case. It must be right that Felthouse could not create for himself the power to bind his nephew to a contract without the latter’s consent. But it may be argued that the nephew here did consent and that he manifested that consent by directing Bindley to withdraw the horse from the auction. In other words, notwithstanding that the nephew did not write to his uncle rejecting the uncle’s offer, it might be said that the contract came into being because the nephew intended to and did accept the offer by what he said to Bindley. As will be explained below (see para [x]), it may also be argued that there was no need for the nephew to communicate to Felthouse the fact of his acceptance: by saying ‘[i]f I hear no more about him I shall consider the horse is mine’, the uncle had clearly waived his right to insist on his nephew doing so.

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