PIÑAS O REMATES

As soon as an acceptance takes effect, then a contract is made, and both parties are bound. It would seem, then, that in the normal course of events, retraction, or revocation, of an acceptance will be impossible. This general rule has been modified, however, in relation to certain types of consumer contracts, where it has been deemed desirable that the consumer should have a ‘cooling-off’ period following the formation of the contract, during which a change of mind is permitted. In these cases, a valid contract, in which offer and acceptance have been exchanged, can be set aside purely at the discretion of the consumer contractor. Examples of this type of provision may be found in s 67 of the Consumer Credit Act 1974, ss 5 and 6 of the Timeshare Act 1992, and the Consumer Protection (Cancellation of Contracts Concluded Away From Business Premises) Regulations 1987. A much broader-based exception is now to be found in the Consumer Protection (Distance Selling) Regulations 2000,175 implementing the European Distance Selling Directive.176

The Regulations apply to contracts for the supply of goods or services to a consumer, made under an ‘organised distance sales service or service provision scheme’,177 and concluded exclusively by the means of ‘distance communication’. This includes contracts made by telephone, post, or via the internet. The requirement of an ‘organised service’ means that the occasional making of contracts without face to face contact will not come within the Regulations.

172 There are some American cases, but they are conflicting: see James Baird Co v Gimble Bros Inc (1933) 64 F 2d 344 (2d Cir 1933); Drennan v Star Paving Company (1958) 333 P 2d 757.

173 Law Commission Working Paper No 60, ‘Firm Offers’. 174 Lewis, 1982.

175 SI 2000/2334. 176 97/7/EC.

Schedule 1 to the Regulations makes it clear that they cover contracts made by responding to direct mail, catalogues, and advertisements in the press which include an order form. The Schedule also refers to ‘radio’ and ‘television (teleshopping)’. This would cover not only the dedicated shopping channels available on cable and satellite television, but also ordinary radio or television adverts which include a telephone number, or website address. Adverts or catalogues which require you to go to a shop to conclude your purchase would not, of course, be within the regulations, because in these transactions there is an element of face to face contact. The list in the Schedule is stated to be ‘indicative’ only, so the courts are free to interpret ‘distance communication’ to cover situations other than those listed, as might be necessary if retailers develop other means of selling at a distance which have not yet been considered.

A number of contracts are excepted from the Regulations.178 These include most contracts involving the sale or disposition of interests in land; contracts relating to financial services;179sales via an automated vending machine; and auction sales.

In addition to the general exceptions in reg 5, certain other contracts are exempted from the Regulations’ ‘cancellation’ provisions by virtue of reg 6. These include ‘timeshare agreements’;180 contracts for the supply of food, etc, ‘intended for everyday consumption supplied to the consumer’s residence or to his workplace by regular roundsmen’; and ‘contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes … to provide these services on a specific date or within a specified period’. This final category means, for example, that booking a train ticket over the internet, a hotel room by telephone, or ordering a pizza to be delivered, are not within the scope of the cancellation provisions.

Where the contract is within the scope of the Regulations, the cancellation provisions contained in regs 10–12 apply. These mean that the consumer will generally be able to cancel the contract by giving notice within seven working days of receiving goods,181 or within seven days of the conclusion of a contract for services.182 If the supplier has not complied with the requirements for the supply of information contained in reg 8, the period will not start to run until the day after such information is received.183 If the information is not given within three months then the cancellation period extends to three months and seven days.184

The Regulations also contain provisions as to the manner in which notice can be given, so that, for example, a letter posted to the supplier’s last known address is effective on posting, and an email sent to the supplier’s last known email address is effective as soon as it is sent.185

The effect of these Regulations is that there is now a wide range of consumer contracts where the traditional contractual rule that an acceptance cannot be withdrawn no longer applies. Does this pose a threat to the continuation of the traditional rule? Probably not. The rationale for the regulations is the avoidance of the risk of consumers being treated unfairly. Although it is possible that a similar approach could be adopted in a business

178 Ibid, reg 5(1).

179 A non-exhaustive list of ‘financial services’ is given in Schedule 2. 180 It has been noted above that these are covered by separate regulations. 181 Time starts to run on the day after the day of delivery – reg 11(2).

182 Time starts to run on the day after the conclusion of the contract – reg 12(2). 183 Regulations 11(3), 12(3).

184 Regulations 11(4), 12(4). 185 Regulation 10.

context, in situations of unequal bargaining power, it seems unlikely that this will happen. Indeed, the English courts may well be less likely to consider doing this now that specific provision has been made to protect consumers. The argument would probably be that now that Parliament has intervened to deal with this area, the courts should not rush to depart from established principle in those areas not covered by such intervention. The assumption will be that Parliament intended that the normal rules should continue to apply outside the specified areas.

There is one area, however, where the possibility of withdrawal from a seemingly binding agreement arises under classical contractual doctrine – that is, in relation to situations where the law deems acceptance to take effect at a point in time before that at which it actually comes to the attention of the offeror. The most obvious example of this is the Adams v Lindsell186 postal rule.187 It may also apply, however, in relation to, for example, acceptances by telex, fax or email, which are received during office hours but not read until some time later, or messages left on a telephone answering machine. As we have seen, the law as yet provides no clear answer to the question of when acceptance takes effect in such cases, but if it is decided that the relevant time is when the acceptance is received on the offeror’s machine, rather than when it is read, there is again a delay between acceptance and actual communication, which may lead to the possibility of a retraction. The rest of this section will discuss the issue in relation to posted acceptances, but the principles should surely apply in the same way to any acceptance where there is a delay between the point in time when the law says that the acceptance takes effect (for example, on posting) and when it is read by the offeror.

2.13.1 Formalist approach

If a ‘formalist’ approach is taken to this issue,188 attempting to apply the established principles ‘logically’, then the answer must be that no retraction of an acceptance is possible. The general rule that a contract is complete on acceptance should be applied. So, even if the acceptor is able, for example, by telephoning the offeror, to indicate that an acceptance which is in the post should be ignored, the offeror should be entitled to say ‘Too bad! Your acceptance took effect on posting, and we have a contract. If you fail to go through with it, you will be in breach’.

2.13.2 Purposive approach

This is not the only possible approach, however. It might also be argued that the purpose of the postal rule is to provide a benefit to the acceptor. As we have seen, the main reason for the decision in Adams v Lindsell was that such a rule allowed the acceptor to proceed on the basis that a contract had been made, and that this promoted business efficiency. If that is the case, it might be argued that it is a little odd to then apply the rule in a way which is to the acceptor’s disadvantage. Moreover, if, as must be the case for there to be any possibility of retraction, we are considering a point in time at which the offeror is as yet unaware of the acceptance, how can there be any harm in allowing the acceptor to withdraw? The offeror cannot in any way have acted on the acceptance, and so can suffer no harm from its retraction. There seems little point in forcing people to go through with

186 (1818) 1 B & Ald 681; 106 ER 250. 187 See above, 2.11.6.

a contract, when one party no longer wishes to proceed, and the other party is unaware of the fact that there is a contract at all.

2.13.3 Unfairness to offeror

This argument is said by some to be too favourable to the acceptor. The example is given of an acceptance of an offer to buy shares, or goods which have a greatly fluctuating market price. If retraction of acceptance is allowed, then it is said that this gives the acceptor the best of both worlds. The offer can be accepted by posting a letter, which will bind the offeror. Then, if before the acceptance is read, the market price falls below the contract price, the acceptor can avoid what has now become a bad bargain, by telephoning a withdrawal.189 This is regarded as unfair. In an argument which is the converse of the one put forward in the last paragraph, it is said that the postal rule exists for the benefit of the acceptor. It is tipping the scales too far in the acceptor’s favour, however, to allow the possibility of retraction as well: a possibility which is not available in any other situation.

2.13.4 Guidance from authority

Attempts to argue the case from first principles, then, may lead to different conclusions. Three possibilities have been outlined above, one in favour of allowing retraction, the other two against. This writer’s preferred view is the pragmatic one of allowing retraction, but this is by no means widely accepted. Unfortunately, there is little help from case law, either.

The only British case to deal with the issue at all is Countess of Dunmore v Alexander.190 This is a Scottish case, which on one reading appears to support the view that a posted acceptance can be retracted by speedier means. The case is not a strong authority, however, since it is not absolutely clear that the court considered that the communication which was withdrawn was an acceptance, rather than an offer. Two cases from other common law jurisdictions suggest the opposite. In Wenckheim v Arndt191 and A to Z

Bazaars (Pty) Ltd v Minister of Agriculture,192it was held that the attempt to withdraw the acceptance was not effective.193

An English court faced with this issue would be free to decide it without any clear guidance from authority. The answer that is given will depend on which of the various possibilities outlined above is the more attractive. It is not unlikely that the court’s decision in a particular case will be influenced by what the court sees as the best way to achieve justice between the parties, rather than on any preference based on general principle.

189 See, for example, Treitel, 1999, at p 28. Hudson, 1966, sets out a variety of reasons why Treitel’s view on this point should not be accepted.

190 (1830) 9 Shaw 190.

191 (1861–1902) 1 JR 73 (New Zealand). 192 (1974) (4) SA 392(C) (South Africa).

193 But cf to the contrary, Dick v United States (1949) 113 Ct Cl 94, 82 F Supp 326, discussed in Evans, 1966.