It frequently happens that parties fall into disagreement about the terms of a contract where there are multiple offers and counter-offers and there is no formal or written acceptance of terms.

In Forte Sydney Construction Pty Ltd v N Moit & Sons (NSW) Pty Ltd [2022] NSWCA 186, a dispute arose in the context of building and construction earthworks as to which of 2 contracts as to work and payment should apply, and the existence of a contract and the amount of money owed for works performed under it.

Central to this dispute was the question of whether an offer made to perform works under a revised tender submission was accepted by the conduct of a party in performing those certain works and if so, the rates of payment for those works.

The Court reviewed the relevant principles and authorities, and in particular Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd 14 NSWLR 523 which can be summarised as follows:

  • While an offeror may not stipulate that silence will be taken as acceptance of the offer acceptance may be tacit, or implied from conduct, as opposed to express
  • The silence of an offeree in conjunction with the other circumstances of the case may indicate that he has accepted the offer
  • An offeree who has omitted to accept an offer, but has nonetheless taken the benefit of that offer will be bound by the contract :
  • 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 determining whether a party to a putative contract has accepted the offer by its conduct, the ultimate issue is whether a reasonable and objective bystander would regard the conduct of the offeree, including his or her silence, as signalling to the offeror that the offer has been accepted
  • The conduct of parties may indicate, that although the parties' negotiations did not proceed in the manner contemplated to the point of contract formation, the parties did intend to contract in the circumstances which had occurred.
  • Where an offer is neither expressly accepted nor expressly rejected, the subsequent conduct of the offeree in performing in accordance with the terms of the contract which was contemplated in the offer will generally indicate to a reasonable person in the position of the offeror an intention to accept that offer.

In considering the facts and evidence in the matter, the Ward P (with whom the other members of the Court agreed) found that the "Revised Tender Quote" had not been accepted by the performance of works, observing,

"Both, it seems to me, would be readily explicable by a misunderstanding as to the strict contractual position or an inattention to detail."

The case is an excellent example of why parties engaged in commercial negotiations involving offers and counter-offers should take great care before proceeding to perform any works or deliver and goods or services, to clarify, detail and make certain of the terms of their contracts to avoid misunderstandings, arguments and dispute about whether terms have been accepted by conduct including the terms for payment.

Consulting with a lawyer to send a carefully drafted letter or note to confirm and clarify terms are in fact agreed upon before any potential confirming conduct is taken, can usually resolve any subsequent uncertainty and dispute for most cases.