Grant v Bragg & Anor

An offer cannot be accepted after it has been rejected, has lapsed, or has otherwise ceased to be open for acceptance. Whether a statement is a request for information or a refusal depends on its substance and context, including any evident urgency. An offer may also be conditional on execution of a formal document. Communications which initially contemplate a binding agreement followed by documentation can change the position where they make clear that no contract is intended until signature. An attempted acceptance after the offer has been rejected, withdrawn or made subject to formal execution does not create a binding contract.

The claimant and appellant had negotiated the sale of the claimant’s shares in a company. The trial judge rejected the claimant’s pleaded cases based on earlier correspondence and an oral agreement, but found that emails exchanged between 30 January and 2 February 2007 created an enforceable contract. The appellant challenged that conclusion, contending that the offer had been rejected, had lapsed through the imposition of a time limit, and was subject to a requirement that a draft agreement be signed. The central issue was whether the later email constituted a valid acceptance of the earlier email.

1. The appeal was allowed. The judge had erred by considering the first and sixth emails without taking account of the intervening correspondence.
2. An offer which has been rejected cannot subsequently be accepted. Although a request for further information may leave an offer open, the claimant’s indication that he was not ready to transfer his shares on the proposed terms amounted, in the context of the urgent negotiations, to a refusal. His subsequent email also asserted that the appellant was already contractually bound and rejected the proposed signature requirement. The offer was therefore no longer open for acceptance.
3. Independently, the fourth email imposed a deadline of 4 pm on 31 January 2007 for acceptance, or at least made clear that the negotiations would then end. The fifth email confirmed that the intermediary had ended the negotiations. The sixth email, sent on 2 February, was consequently too late to operate as acceptance.
4. The subject-to-contract argument also succeeded. The first email, viewed alone, could have indicated an agreement which was to be recorded in a later document. Read in the context of the fourth email, however, the requirement that the claimant sign the draft agreement showed that there was to be no contract until formal execution. The urgency of the negotiations did not alter that conclusion.
5. Lady Justice Smith and Lord Justice Sullivan agreed with Lord Neuberger’s reasoning. The order was: appeal allowed.

• Court of Appeal (Civil Division): [2009] EWCA Civ 1228 allowed the appeal.
• High Court of Justice, Chancery Division: a deputy judge held that the exchange of emails between 30 January and 2 February 2007 created an enforceable contract for the sale of the shares.