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Contract: General Introduction
Contract- A legally binding agreement made between two or more people, by which rights are ac-
quired by one or more to the acts of forbearances on the part of the others or others.
Since it is difficult to understands the subjective intentions of the parties, courts refer to outward
objective indications in order to decide whether a legally binding contract exists.
Four elements of a binding contract
• Offer
• Acceptance
• Consideration
• Intention to create legal relations
Offer
An offer is an unconditional expression of willingness bound on specific terms, following its accep-
tance by the person to whom it is addressed.
-An offer which is addressed to the world is known as a unilateral offer
Example case:-
Carlill v Carbolic Smoke Ball Co
During the influenza epidemic, many carbolic smoke balls were sold as preventatives against in-
fluenza. However, in one case, a user contracted influenza anyway.
It was held that it was possible to have a contract with the world, he unilateral offer being restricted
to the limited portion of the public who come forward and perform such conditions as may be stipu-
lated within the advertisement
Invitations to treat
This means that one party is willing to invite an offer. However it isn’t in itself an offer as there is no
intention to legally bound.
Example cases:-
Partridge v. Crittenden (1968)
The defendant placed an advert in a classified section of a magazine offering some bramble
fences for sale. However the Protection of Birds Acts 1954 made it an offence to sell such birds.
He was charged and convicted pf the offence and appealed against his conviction.
Held: His conviction was quashed since the advert was an invitation to treat and not an offer. The
literal rule of statutory interpret ion was applied.
Fisher v Bell
The defendant had a flick knife displayed in his shop window. Law made it so that it was illegal to
offer such knives for sale. However, he was not convicted since it was an invitation to treat and not
an offer.
Shop Displays
The view is that shop displays are invitations to treat and not offers. For example, a customer can
pick up goods at a pharmacy and take them at check out, where the pharmacist could refuse to al-
low the sale if he wanted to.
Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd (1952)
,The Pharmacy and Poisons Act 1933, made it a criminal offence to sell listed poisons unless under
immediate supervision of a pharmacist. The court held however, that the sale too place at the
checkout and since this was at the supervision of the pharmacist, no offence had been committed.
Auctions
At auctions the rule is that it is the bidder who make the offer, he auctioneer concludes the contract
by dropping the hammer, the auctioneer can decide to accept or reject this offer.
Payne v cave (1789)
Plaintiff alleged that the defendant had bought the plaintiff’s goods at an auction. The defendant
had made the highest bid, but had withdrawn before the hammer fell.
Held: The bidder had validly withdrawn since it was made before the hammer fell.
Harris v. Nickerson (1873)
The plaintiff who had travelled to an advertised auction failed to receive compensation when the
item she wanted to buy were not put up for sale. However, the advertisement had merely been a
declaration of intent to sell and didn’t have a binding offer.
Consensus
You must know whether an offer really exists for you to accept it and make it legally binding. IF you
perform a task, not knowing that there was reward for its completion, and later try to claim it, it will
not be given.
Taylor v. Laird (1856)
The captain of a ship resigned, but later voluntarily helped to work the ship home. The owners of
the ship were entitled to refuse payment to him since, by not saying his offer to assist them, he
hadn’t given the owners the chance to accept or reject any offer.
Revocation of the Offer
Revocation- The withdrawal of an offer by he offerer.
• Lapse of time
• Express communication of revocation prior to the point off acceptance being made
• Death
• Failure of a condition precedent
• A valid counter offer
Note:
• Revocation is not effective once a valid acceptance is made
• The postal rule never applied to the revocation of an offer
• Revocation is not possible once the offeree has started to perform a condition stipulated within
the terms of the offer
Lapse of time
If acceptance is requested to made by a certain date, the offer cannot be accepted after that date.
If there’s no time limit given by the terms of the offer, then it will expire by a reasonable time. What
is reasonable is determined by the circumstances.
Ramsgate Victoria Hotel Co. Ltd v. Monteflore
The defendant had offered to buy the plaintiffs shares in June. In November he was informed, that
he had been allocated the shares. Although the offer wasn’t withdrawn, the court decided that it
had lapsed since the acceptance had not been made by a reasonable time.
Express Revocation
Can be communicated by the offeror to the offeree at any time prior to acceptance.
, Example cases:-
• Payne v. Cave (1789)
• Routledge v. Grant (1928)
Be careful for inferences of revocation from the conduct to the offeror
Dickinson v. Dodds (1876)
Dickinson v. Dodds (1876)
The defendant offend to sell his house to the claimant and promised to keep the offer open till Fri-
day. On the Thursday the defendant accepted an offer from a third party. The defendant then
asked a friend to tell the claimant that the offer was withdrawn. The claimant went to the defendant
first thing Friday morning to accept the offer. He then brought action against the defendant seeking
specific performance of the contract.
Held: The offer had been effectively revoked. There was no obligation to keep the offer open till Fri-
day since there had been no consideration in exchange for the promise.
Bryne v. Van Tienhoven
Defendants posted a letter to the plaintiffs on 1st October offering to sell them 1000 boxes of tin-
plates. The plaintiffs received the letter on the 11th and accepted it immediately by telegram. A
second letter was sent by the defendant on the 8th withdrawing their offer, which was received by
the plaintiffs on the 20th.
Held: There was a binding contract, and revocation could only take place on communication
whereas the acceptance by telegram had taken immediate effect when the telegram was sent nine
days before the letter revoking the offer was received. The contract had already been made.
Note: As a general rule, death of the offeree leads to the automatic termination of the offer.
However: Death of the offeror might not end the offer if the offeree knew of the death prior to mak-
ing the acceptance or if the offer contained some element of personal service by the offeror.
Failure of a condition precedent
In other words ‘I will only go ahead with this offer if certain circumstances exist’ (an express pro-
viso)
Or
It goes without saying that I wouldn’t have bought this car, if I had known that its engine was dys-
functional, before I accepted the offer.
A valid counter offer
‘I offer to sell the car for £1000’
‘I accept the offer, but ill only pay £800’
Once a counter offer is made, the original offer cannot be reclaimed.
Hyde v. Wrench (1840)
The defendant wanted to sell a farm for £1000. The claimant offered £950 in return which the de-
fendant refused. The claimant then sought to accept the original offer of £1000, but the defendant
refused to sell it. The claimant brought action for specific performance.
Held: There was no contract, once there’s a counter offer the original offer is destroyed and the of-
feree cannot accept it anymore.
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