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December 7, 2016

Offer and acceptance beware of the counter-offer

The High Court has recently held that an acceptance of an offer was a counter-offer. 

For an agreement to be formed there must be an offer, acceptance, consideration and an intention to form a legal contract. When an offer is made, it is not uncommon for a counteroffer to be followed, however the parties must be clear when an acceptance is made, as can be seen from this case. 

In this case the A made a settlement offer to B on the condition that the offer was accepted by the 9 March 2016 and the payment was made by 16 March 2016, by letter. 

B replied to this offer by email 'accepting the offer'. However, attached to the email was a consent order stating it was to be paid by 8 April 2016. 

A responded stating that it was not accepted due to the different date and that there was no agreement unless it was paid by 16 March 2016. B responded that they were to proceed with an appeal hearing. 

However, A then stated that the offer had been accepted and that there was clear acceptance in the email. 

The court explained that when this issue of acceptance arises all correspondence must be looked as a whole. Therefore, A’s original offer was made up of two parts; the amount and the date for it to be paid. So when B replied there was an acceptance of the sum, but the date was disputed. B had not accepted both parts of the offer, thus creating a counter-offer. 

When making an offer the parties must be aware of what counts as a counter-offer and must also be aware that by attaching different terms to an 'acceptance' does not amount to an acceptance, it is a further negotiation by counter-offer. 

The commercial team at Greenaway Scott are more than happy to discuss in more detail the process of contracts and what to look out for when forming a contract. Please contact us at commercial@greenawayscott.com

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