Reveille Independent LCC v Anotech International (UK) Ltd

[2016] EWCA Civ 443

We first reported on this case in Issue 179. The issue for HHJ Mackie QC at first instance had been whether or not a binding contract had been formed. He found that there had. Anotech appealed. The CA outlined the key question in this way: in what circumstances will a contract result when the written offer expressly states that it is not binding until signed by the offeree and the offeree does not sign but performs in the manner contemplated by its terms? Anotech said that the reason for the inclusion of words requiring that the contract was signed was to ensure certainty. HHJ Mackie QC had agreed that Reveille did not communicate their acceptance of the contract by signing and returning it. He then went on to consider the parties’ conduct. He considered that whilst it was “overwhelmingly clear” that the parties had carried out the work envisaged by the contract, that did not of itself mean that there was acceptance by conduct, albeit it went “a long way” to proving that. However, this was a two-way process and Anotech had recognised this acceptance when they acknowledged their obligation to pay. Mr Justice Cranston noted that:

“if signature is the prescribed mode of acceptance an offeror will be bound by the contract if it waives that requirement and acquiesces in a different mode of acceptance. In my view it follows that where signature as the prescribed mode of acceptance is intended for the benefit of the offeree, and the offeree accepts in some other way, that should be treated as effective unless it can be shown that the failure to sign has prejudiced the offeror.”

At the same time, the CA said that such a rule could only take place against the background of a number of established legal policies including the need for certainty in commercial contracts. The CA noted that by not signing the contract, Reveille as offeree was waiving the prescribed mode of acceptance, something which had been set out for its benefit. However, that waiver was only effective so long as there was no prejudice to Anotech. The only prejudice Anotech could point to was the commercial uncertainty as to whether it was bound by the contract. In the view of Mr Justice Cranston, that paled “into insignificance” in circumstances where Anotech was receiving all the benefit of Reveille’s performance of the contract terms. Further, Anotech acted as if it were bound by the contract. For example, it worked and communicated with others on the basis that a deal was in place. This all led to the conclusion that there was a binding contract in place. Also it accorded squarely with another legal policy identified by the CA: in commercial dealings the reasonable expectations of honest, sensible business persons must be protected.

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