Friday, March 12, 2021

Ethiopian Contract Law- Effect of Acceptance

Effect of Acceptance

In general, it can be inferred from Art 1679 and 1693(2) that once an offer is accepted the offeree is bound by his word. Once we know that acceptance is binding the question that comes to our mind is “the moment at which acceptance begins to be binding.”

In other words “does acceptance begin to be binding at the time the offeree says “yes!” to the offer or at the time such “Yes” answer is received by the offeror”. Such question becomes relevant when acceptance is communicated in writing or by conduct since in such case the time the offeree writes the acceptance or begins to perform the obligation stipulated in the offer may differ from the time the offer knows such fact. For example, Alemu offered to Abebe to buy his villa for birr 500,000 and Abebe wrote letter of acceptance on January 26, 2008 but such letter reached Alemu on March 20, 2008.

Art 1692(1) of the code has answer for this. It provides that acceptance becomes effective from the moment the offeree sends it to the offeror. Here it is not from the moment an offeree writes a letter of acceptance but from the moment he put it in a post office or if it is email, from the moment he clicks the “send” button of his email box. Therefore; the consent element of contract is fulfilled at the moment the offeree accepts the offer regardless of the knowledge of the offeror. This means an offer can be accepted even after the death of the offeror unless the heirs withdraw such offer in accordance Art. 1693(1)

However; the acceptance must reach the offeror or his heirs before expiry of time limit specified in the offer (Art. 1690) or reasonable per (Art.1691 (1). If the acceptance does not reach the offeror cannot know whether or not contract is concluded between him and offeree. If he has not received acceptance within Art. 1690(1), 1691(2) he can presume that his offer was rejected. In short acceptance begins to produce effect from the moment the offeree sends it to the offeror provided it reaches the offeror within time specified under Art. 1690(1) or 1691(2)

The offeree may abort the contract by withdrawing his acceptance (Art.1693 (2). He can freely withdraw his acceptance before the offeror knows  such acceptance through the medium the offeree uses to communicate the acceptance to him i.e. if the offeror knows the acceptance earlier than the offeree expects from a friend or other sources; the offeree can still withdraw his acceptance regardless of the knowledge of the offeror. For example, in response to an offer made to him by Bacha, Alemu wrote a letter of acceptance to him and send it through post office. While sending the letter, Alemu got Gifawosen, a friend of Bacha, and told him that he (Alemu) is sending letter of acceptance to Bacha’s offer… Gifawosen told to Bacha that Alemu accepted the offer. Alemu can withdraw his acceptance until Bacha receives the letter unless it is proved that Alemu requested Gifawosen to inform such acceptance.(see also Art. 1687(a) which provides that declaration of intention is considered an offer only if the offeree knows it from the sources the offeror uses to reach the offeree). For more detail discussion on this point please see our discussion on effects of offer (Art 1693(1).

General Terms of Business   No party can be assumed to be bound by general terms of business which he did not agree to be bound with (Art 1685).  General terms of business are internal rules of a party that may have direct relevance to the obligation of the other parties. Such general terms are frequent in employment contract and other big institution which are monopoly suppliers if goods or service. The University Senate legislations are best examples of these general terms of business. Denying legal effect to general terms of business is one means of customer protection. However if these general terms of business are proclamation, regulation or directives issued by competent authority they are treated as law as far as they do not contradict with superior law (Art 1986). 

To be bound by an obligation one has to know it and agree to be bound (Art 1679). So any annexes to main contract never bind a party who has not known its content and not agreed to be bound. Knowledge about the existence of the annex is not enough. For example, an instructor might have known the existence of senate legislation which provides more obligations than in the contract he signs. Such knowledge is not sufficient to be bound by such senate legislation. He must be informed that such senate legislations are part of the contract before he signed such contract. Otherwise he can treat the senate legislation as a morally binding instrument with no legal effect. Moreover, if the instructor accepts such legislation without knowing its content, he should not be bound since he did not participate in defining the object of such subordinate contract (Art 1679). 

Negotiation vs. Consent (Art.1695) Negotiation is when one party proposes to the other some of the contents of would be contract leaving the remaining to be completed or proposed by the latter. The latter may also propose some and still leave others undetermined and sends them back. Here both parties may use all possible moral and legal techniques to persuade the other party to accept the proposal or to come up with more favorable offer. So in short negotiation is a discussion made between parties intending to shape the content of would be contract. Therefore any proposal made during negotiation is not binding on the party making the proposal i.e. a party may withdraw from the negotiation at any time (Art 1695 (1). However; if the negotiation is completed (content of the contract is determined) and both parties agree to be bound by the negotiation then it ends up becoming a contract (Art 1695 (1). In negotiation, it is very difficult to know the party who made an offer. However; we may take as an offeror the party who proposes the content of the contract last. 

Parties need not reach agreement on all contents of the contract. They may expressly agree to be bound by contents of the negotiation there by leaving detail to be completed by the law (Art 1695 (2). For example, parties may negotiate sale of 500 quintals of coffee and agree to deliver on Oct. 25 but fail to reach agreement on price but the coffee is delivered. The delivery will be taken as implied consent and the price will be determined by law (see Art. 2306).

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