Home | Cases | Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd

 

Key information

Court
Court of Appeal (NSW)

Issues
Acceptance (waiver)

Australia

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd

(1988) 14 NSWLR 527

 

Quick summary

Facts

E engaged MP to redevelop a site it owned.  After work commenced MP submitted a written contract to E.  E never signed the document, but MP continued to carry out work and E continued to make payments in accordance with the document.  E went bankrupt owing MP considerable sums. Was there a contract between the parties?

 

Held

Kirby P

The general rule is that ‘an offeror may not impose a contractual obligation upon an offeree by stating, that if the latter does not expressly reject the offer as made, it will be taken to have accepted it.’ 

McHugh JA (Samuels JA concurring)

‘… silent acceptance of an offer is generally insufficient to create any contract.’  Despite this, ‘communication of acceptance is not always necessary’. 

Waiver is possible but

‘an offeror cannot erect a contract between himself and the offeree by the device of stating that unless he hears from the offeree he will consider the offeree bound.’

However, when silence is combined with other circumstances, together they may constitute a valid acceptance. 

‘… more often than not the offeree will be bound because, knowing of the terms of the offer and the offeror’s intention to enter into a contract, he has exercised a choice and taken the benefit of the offer’. 

Further,

‘where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms. …’

In this case E’s acceptance of the work should be taken as acceptance on the terms offered by Machon; this was not mere silence, but included conduct in taking the benefit of an offer, knowing the terms.

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