BetterLawNotes-5 (2)

CONTRACT LAW

Alternatively, the offer may lapse before it has been accepted. The offeror may state explicitly the period during which the offer remains open for acceptance. A purported acceptance after this time will be ineffective. Where there is no express limit on the time for acceptance, it is generally thought that the offer must be accepted within a reasonable time for a contract to be formed.

Ramsgate Victoria Hotel Company Limited v Montefiore (1866) LR 1 Ex 109

D applied in June in writing to the C company for an allotment of shares in the company. The shares were allotted to D in November but by this time D no longer wanted them. The Court of Exchequer held that the allotment had not been made within a reasonable time of D’s application and that accordingly D was not bound to take the shares.

In Manchester Diocesan Council of Education v Commercial and General Investments Ltd [1970] 1 WLR 241, 247 Buckley LJ gave two possible explanations for this rule:

‘First, it may be said that by implication the offer is made upon terms that, if it is not accepted within a reasonable time, it must be treated as withdrawn. Alternatively, it may be said that, if the offeree does not accept the offer within a reasonable time, he must be treated as having refused it. On either view the offer would cease to be a live one upon the expiration of what, in the circumstances of the particular case, should be regarded as a reasonable time for acceptance. The first of these alternatives involves implying a term that if the offer is not accepted within a reasonable time, it shall be treated as withdrawn or lapsing at the end of that period, if it has not then been accepted: the second is based upon an inference to be drawn from the conduct of the offeree, that is, that having failed to accept the offer within a reasonable time he has manifested an intention to refuse it.’

Buckley LJ said that he preferred the second explanation as it introduced less uncertainty than the first.

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