This recent decision in Gibbs v Lakeside Developments Ltd
 EWHC 2203 (Ch), 12 July 2016 reiterates the age-old
principle that an offer must be accepted in its entirety for
acceptance to be legally binding. The judgement also brings to
light some interesting practical points in the modern age of
The substantive issue in Gibbs v Lakeside Developments
was whether a communication by one side constituted genuine
acceptance of an offer, or whether it was actually a counter-offer.
Party A made an offer to settle a dispute to Party B, the terms of
which were payment to Party A of the sum of £90,000 by a
specified date. Party B responded with an email stating that Party
A's offer was accepted and directed Party A to an attached
draft consent order. The attached draft consent order specified a
later payment date than the one which had formed part of Party
A's original offer.
The court was asked to decide whether Party B's email, which
on the face of it accepted Party A's offer, was legally binding
acceptance or whether the attachment made the communication a
Party B argued that it had accepted the offer and that the
attached draft consent order was 'merely a proposed formal
document to give effect to the agreement' and that 'if it
did not accurately reflect the agreement which had been reached, it
could be varied or rectified as necessary so as to accurately
reflect the agreement that had been reached'. Mr Justice Arnold
rejected this argument. He said that it was clear that Party
A's offer contained two conditions both of which were required
to be accepted for there to be legally binding acceptance. The
first condition being the agreement to pay the £90,000 and
the second condition being to agree to pay this by the date
specified – i.e. the date that the attached draft order had
varied. The judge decided that given the clear lack of consensus on
the second point, by virtue of attaching a conflicting draft order,
Party B's email and attachment constituted a counter-offer.
Thus reiterating the point that acceptance must unequivocally cover
every part of the other party's offer.
An additional point to note from this case is that Mr Justice
Arnold reiterated Lloyd LJ's principle in Pagnan SPA v Feed
Products Ltd  2 Lloyd's Rep 601 at 619:-
"In order to determine whether a contract has been
concluded in the course of correspondence, one must first look to
the correspondence as a whole ... ".
Thus, in Gibbs v Lakeside Developments, Mr Justice
Arnold looked at later correspondence between the parties to
reinforce the fact that Party B's email and attachment had in
fact constituted a counter-offer rather than acceptance. The later
correspondence had clearly discussed the fact that acceptance of
the original offer had not taken place.
Practical Implications of the Decision
In order to be legally binding, acceptance must unequivocally
encompass every part of the other party's offer. You cannot
accept an offer on the face of it and at the same time include
draft documents stating differing terms – this will amount to
further negotiation and therefore constitute a counter-offer.
It does not matter whether the main body of a communication,
such as the text of an email, states that the offer is accepted, if
attachments say something contrary then acceptance will not be
binding. The attachments hold no less weight than the email itself.
The entire communication is to be taken as a whole and must not
vary the terms of the original offer in any way, otherwise a
counter-offer will be held to have been made.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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