Agreement to take Throughout the foregoing discussion it has been assumed, as shares not being rather a part of than an inference from the notion of conexception- tract, that there can be no contract unless the person accepting ally treated the proposal at least does all he can to communicate the acceptance. It was supposed at one time that the Companies Act, 1862, had introduced a different rule in the case of agreements to take shares, and that an applicant for shares became a shareholder by mere allotment and registration, though nothing were done to give notice to him; but it is now settled that this is not so; the ordinary rules as to the formation of contracts must be applied (a). Accept- We have seen that in general the contract dates from the ance won't relate back acceptance; and though the acceptance be in form an acknowthough re- ledgment of an existing agreement, yet this will not make the trospective contract relate back to the date of the proposal, at all events not so as to affect the rights of third persons (b). in form. Death of semble, an though not known to other party. There is believed to be one positive exception in our law to proposer: the rule that the revocation of a proposal takes effect only when absolute it is communicated to the other party. This exception is in the revocation case of the proposer dying before the proposal is accepted, This event is, of course, in itself a revocation, as it makes the proposed agreement impossible by removing one of the persons whose consent would make it; but we are not aware of any direct authority even for this elementary proposition (c), still less is there any to show whether notice to the other party is material or not; but in the analogous case of agency the death of the principal in our law, though not in the civil law, puts an end ipso facto to the agent's authority, without regard to the time when it becomes known either to the agent or to third parties (d). It would probably be impossible not to follow the analogy of this doctrine. The Indian Act, as we have seen, makes the knowledge of the other party before acceptance a condition of the proposal being revoked by the proposer's death. As for (a) Gunn's ca., 3 Ch. 40. (b) Felthouse v. Bindley, 11 C. B. N. S. 869, 31 L. J. C. P. 204. (c) Mr. Leake is, we believe, the only text-writer who even states it (p. 22); and the cases he cites are merely suggestive. Cp. dicta in Meynell v. Surtees, 1 Jur. N. S. 737. (d) Blades v. Free, 9 B. & C. 167; Campanari v. Woodburn, 15 C. B. 400, 24 L. J. C. P. 13, 2 Kent Comm. 646, D. 46, 3, de solut. et liberat. 32. The Indian Contract Act, s. 208 (c). adopts the rule of the civil law. insanity, which is treated in the same way by the Indian Act, that would not operate as a revocation in any case by the law of England, for we shall see that the contract of a lunatic (not so Insanity no found by inquisition) is only voidable even if his state of mind is known to the other party. The next rule is in principle an exceedingly simple one. It is that revocation. 5. "In order to convert a proposal into a promise the accept- Acceptance must be absolute and unqualified" (a). ance must be unqua For unless and until there is such an acceptance on the one lified. part of terms proposed on the other part, there is no expression of one and the same common intention of the parties, but at most expressions of the more or less different intentions of each party separately-in other words, proposals and counter-proposals. Simple and obvious as the rule is in itself, the application to a given set of facts is not always obvious, inasmuch as contracting parties often use loose and inexact language, even when their communications are in writing and on important matters. It will readily be seen that the question whether the language used on a particular occasion does or does not amount to an acceptance is wholly a question of construction, and generally though not necessarily the construction of a written instrument. The cases in which such questions have been decided are numerous (b), and we shall here give by way of illustration only a few of the most recent ones (c). Recent in stances of insufficient In Honeyman v. Marryat (d), before the House of Lords, a proposal for a sale was accepted "subject to the terms of a contract being arranged" between the vendor's and purchaser's solicitors: this was acceptclearly no contract. In Appleby v. Johnson (e), the plaintiff wrote to the defendant, a calico-printer, and offered his services as salesman on certain terms, among which was this: "a list of the merchants to be regularly called on by me to be made." The defendant wrote in answer: "Yours of yesterday embodies the (a) Indian Contract Act, s. 7, sub-s. 1. (b) For collected authorities see (inter alia) Fry on Specific Performance, c. 2, pp. 75 sqq. (c) Cp. also the French case in the Court of Cassation given in Mr. substance of our conversation and Langdell's selection, and already re- (d) 6 H. L. C. 112, by Lo. (e) L. R. 9 C. P. 158. ance. . terms. If we can define some of the terms a little clearer, it might prevent mistakes; but I think we are quite agreed on all. We shall therefore expect you on Monday. (Signed)-J. Appleby.—P.S.—I have made a list of customers which we can consider together." It was held that on the whole and especially having regard to the postscript, which left an important term open to discussion, there was no complete contract.. "Where a contract is to be made out," said Grove, J., "by an offer on one side and an acceptance on the other, if the answer is equivocal or anything is left to be done, the two do not constitute a binding contract. . . The second letter refers to terms which required to be further considered to make a final agreement. If the acceptance is not clear and certain, but leaves something to be arranged, something for future discussion and decision, the parties are not ad idem (a).” In Crossley v. Maycock (b) an offer to buy certain land was accepted, but with reference to special conditions of sale not before known to the intending purchaser. Held only a conditional accept ance. In Stanley v. Dowdeswell (c) an answer in this form: "I have decided on taking No. 22, Belgrave Road, and have spoken to my agent Mr. C., who will arrange matters with you," was held insufficient to make a contract, as not being complete and unqualified, assuming (which was doubtful) that the letter of which it was part did otherwise sufficiently refer to the terms of the proposal. In Addinell's case (d) and Jackson v. Turquand (e), a bank issued a circular offering new shares to existing shareholders in proportion to their interests, and also asking them to say if in the event of any shares remaining they should wish to have any more. Certain shareholders wrote in answer, accepting their proportion of shares, and also desiring to have a certain number of additional shares, if they could, on the terms stated in the circular. In reply to this the directors sent them notices that the additional shares had been allotted to them, and the amount must be paid to the bank by a day named, or the shares would be forfeited. It was held by Kindersley, V. C., and confirmed by the House of Lords, that as to the first or proportional set of shares the shareholder's letter was an acceptance constituting a contract, but as to the extra shares it was only a proposal; and that as the directors' answer introduced a material new term (as to forfeiture of the shares if not paid for within a certain time), there was no binding contract as to these. (a) L. R. 9 C. P. 163-4. (b) 18 Eq. 180. (c) L. R. 10 C. P. 102. (d) 1 Eq. 225. (e) L. R. 4 H. L. 305. In Wynne's case (a) two companies agreed to amalgamate. The agreement was engrossed in two parts, and contained a covenant by the purchasing company to pay the debts of the other. But the purchasing company (which was unlimited) before executing its own part inserted a proviso limiting the liability of its members under this covenant to the amount unpaid on their shares. This being a material new term, the variance between the two parts as executed made the agreement void. In this, and later in Beck's case (b), in the same winding up, a shareholder in the absorbed company applied for shares in the purchasing company credited with a certain sum according to the agreement, and received in answer a letter allotting him shares to be credited with "a proportionate amount of the net assets" of his former company. It was held that, apart from the question whether the allotment was conditional on the amalgamation being valid, there was no contract to take the shares. cient ac On the other hand the following instances will show that the rule of suffi must be cautiously applied: an acceptance may be complete though ceptance. it expresses dissatisfaction at some of the terms, if the dissatisfaction stops short of dissent, so that the whole thing may be described as a "grumbling assent" (c). Again, an acceptance is of course not made conditional by adding words that in truth make no difference; as where the addition is simply immaterial (d), or a more formal memorandum is enclosed for signature, but not shown to contain any new term (e). And further, if the person answering an unambiguous proposal accepts it with the addition of ambiguous words, which are capable of being construed consistently with the rest of the document and so as to leave the acceptance absolute, they will if possible be so construed (ƒ). And perhaps it is in like manner open to the accepting party to disregard an insensible or repugnant qualification annexed to the proposal: as where a man offers to take shares in a company, "if limited," which in contemplation of law he must know to be not limited, and the directors allot shares and notify the allotment to him without taking any notice of the attempted qualification. But in the case referred to this view is not necessary to the result; for the applicant wrote a second letter recognizing the allotment. The letter of allotment might therefore be treated as a counter-proposal,-viz., to allot shares in a company not limited-of which this last was the (a) 8 Ch. 1002. (b) 9 Ch. 392. (c) Joyce v. Swann, 17 C. B. N. S. 84: Cp. per Lord St. Leonards, 6 H. L. C. 277-8 (in a dissenting judgment.) (d) Clive v. Beaumont, 1 De G. & S. 397. (e) Gibbins v. N. E. Metrop. Asylum District, 11 Beav. 1. (f) English & Foreign Credit Co. v. Arduin, L. R. 5 H. L. 64; per Lord Westbury at p. 79. Parties pone con clusion of contract, though agreed on the terms, acceptance (a). And in fact there is one case somewhat against the view here suggested: the letter of allotment was headed "not transferable," apparently through a mere mistake of law, so that on a fair construction it would seem to have been, not a really conditional acceptance, but an acceptance with an imaginary and illusory condition, wrongly supposed to be implied in the nature of the transaction: but it was held that no contract was constituted (b). Again, the unconditional acceptance of a proposal is not deprived of its effect by the existence of a misunderstanding between the parties in the construction of collateral terms which are not part of the agreement itself (c). In connexion with this topic generally Lord Westbury's judgment in Chinnock v. Marchioness of Ely (d) may be consulted with profit, though it does not actually decide any notable point. One further caution is needed. All rules about the formation may post- and interpretation of contracts are subject to the implied proviso, "unless a contrary intention of the parties appears." And it may happen that though the parties are in fact agreed upon the terms-in other words, though there has been a proposal sufficiently accepted to satisfy the general rule-yet they do not mean the agreement to be binding in law till it is put into writing or into a formal writing. If such be the understanding between them, of course they are not to be sooner bound against both their wills. Whether such is in truth the understanding is a question of fact which depends on the circumstances of each particular case (e). till embodied in more formal instrument Agreement must be certain. It is not to be supposed, "because persons wish to have a formal agreement drawn up, that therefore they cannot be bound by a previous agreement, if it is clear that such an agreement has been made; but the circumstance that the parties do intend a subsequent agreement to be made is strong evidence to show that they did not intend the previous negotiations to amount to an agreement" (ƒ). 6. An agreement is not a contract unless its terms are certain or capable of being made certain. (a) Perrett's ca., 15 Eq. 250. (d) 4 D. J. S. 639. (e) See next note. (1) Ridgway v. Wharton, 6 H. L. C. 238, 264, 268, per Lord Cranworth, C., and see per Lord Wensleydale at PP. 305-6. |