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Offer and Acceptance

Accepting an Offer

An acceptance of an offer is a statement of intention. In order to qualify as such, an acceptance must comply with four requirements.

Firstly, it must be unconditional. There can obviously be no agreement unless the whole offer is accepted. A conditional or qualified “acceptance” of an offer is a rejection of the offer but usually amounts to a counteroffer which the original offeror may then accept or reject.

Secondly, it must be accepted by the person to whom it was made. An offer can be validly accepted by the intended offeree only and by no-one else.

Thirdly, it must be in response to the offer. This requirement embodies the self-evident proposition that it is impossible for a person to accept an offer of which he or she is unaware.

Finally, and importantly for the purposes of this note, it must be in the prescribed manner. Where an offeror makes it clear that he or she will regard an acceptance as valid only if it takes place in a particular manner, acceptance in any other manner will be ineffective.[1]

Bosch Munitech (Pty) Limited v Govan Mbeki Municipality [2015] JOL 34290 (GP)

The manner of acceptance was the question in issue the judgment of Murphy J. in the Pretoria High Court. In April 2013, the Govan Mbeki Municipality ("Municipality") invited tenders for the refurbishment of certain waterworks. Bosch Munitech (Proprietary) Limited ("Bosch") submitted its tender to the Municipality a month later. While it was common cause that Bosch tendered to do the work.

The issue in dispute was whether a contract was settled at the time on the terms proposed by Bosch.

Relying on the contract allegedly entered into between it and the Municipality, Bosch claimed payment of R16 million. The Municipality however, disputed that it entered into a written agreement with Bosch, entitling the latter to payment. According to the Municipality, Bosch relied on the terms and conditions of an agreement not concluded with the requisite animus contrahendi or in accordance with its stipulated formalities.

The crisp question was whether the formalities for the acceptance of Bosch’s offer were complied with in a manner resulting in the conclusion of a contract in accordance with the provisions of the tender process and documents.

Evidence was led to the effect that the tender documents and the documents which, in aggregate, constituted the agreement were not executed in the correct sequence or within the time periods stipulated therefore and certain officials from the Municipality signed the documents in the incorrect places.

The court held that where the mode of acceptance in a proposed contract is stipulated, it is that mode that must be followed before a contract is concluded. If the prescribed formalities imposed by one of the parties are not adhered to, the result is the nullity of the contract.

Where a contract is not concluded between the parties because of non-compliance with the prescribed mode of acceptance, no contractual viriculum juris arises. Accordingly, the parties may not assert the contractual remedies available under the flawed agreement. Bosch found itself at the pointy end of the stick. It sought to rely upon a contract that did not exist.

Performance rendered in terms of a formally defective agreement is regarded as having been made sine causa, that is without legal ground. It follows that the remedies available in relation to the counter parties non-performance is recoverable by means of an enrichment action.

The contractual remedies are simply not available.

Final Thoughts

The effect of the judgement should be read in the context of the 2009 appellate decision in Pillay v Shaik 2009 4 SA 74 (SCA), where it was held at paragraph 53 that, even where acceptance has not taken place in the manner prescribed, the offeror may be held bound if his or her conduct was such as to induce a reasonable belief on the part of the offeree that the offer had been duly accepted.

[1] Laws v Rutherford 1924 AD 261 262; Westinghouse Brake & Equipment (Pty)Ltd v Bilger Engineering (Pty) Ltd 1986 2 SA 555 (A) 573; Amcoal Collieries Ltd v Truter 1990 1 All SA 248 (A); 1990 1 SA 1 (A) 4; De Jager v Burger 1994 3 All SA 391 (C); 1994 1 SA 402 (C) 406; McCain Frozen Foods (Pty) Ltd v Beestepan Boerdery (Pty) Ltd 2003 3 SA 605 (T) 612. Cf Ebrahim v Khan 1979 1 All SA 459 (N); 1979 2 SA 498 (N) 500–503. For offers requiring that notice of acceptance be “given”, “delivered”, or “served”, see Meyer v Neveling 1981 2 All SA 315 (D);1981 3 SA 994 (D); Ficksburg Transport (Edms) Bpk v Rautenbach 1988 1 All SA 259 (A); 1988 1 SA 318 (A); Amcoal Collieries Ltd v Truter supra.

Adam Pike
Author: Adam Pike
Adam Pike holds BA, LLB and LLM degrees from the University of Cape Town. His LLM, attained from the School of Advanced Legal Studies at the University of Cape Town, focused on commercial and corporate law, particularly corporate governance and securities. Adam specialises in the implementation of corporate actions and transactions.

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