OFFER AND ACCEPTANCE
In order for a contract to be made there needs a valid offer from the offeror and valid acceptance from the offeree. An
offer is the statement of terms upon which someone is prepared to be bound by contract. (Writing, verbal or conduct).
Acceptance must be a positive act so that contracts are accepted with the offeree being aware of what they are committing
to and is a mirror image of the terms of the offer.
Explain if there has been an offer:
Bilateral- offeror makes a promise to the offeree (Gibson v Manchester City Council)
Unilateral- a promise in return for an action, to the world at large (Carlill v Carbolic Smoke Ball)
Explain if the offer has been terminated(not accepted):
Rejection- Counter offer(Hyde v Wrench) vs Request for more information(Stevenson v McLean)
Revocation- length of time stated can change their mind(Routledge v Grant), Reliable Third Party(Dickinson v Dodds),
before acceptance(Byrne v Van Tienhoven) and can’t revoke uni whilst performing(Errington v Errington)
Lapse of time: Only open for specific time or reasonable time has passed(Ramsgate Hotel v Montiefiore)
Death: notice must be given to the offeree(Bradbury v Morgan)
Explain if the offer has been accepted:
Method
Offer cannot be accepted by silence or inactivity (Felthouse v Bindley)
Last communication takes precedence, although can be through conduct (Reveille v Anotech)
Must be in the particular form required by the offeror where mandatory and not just directory (Yates v Pulleyn)
Communication
Acceptance must be communicated to the offeror
Postal rule- acceptance effective immediately upon posting (Adams v Lindsell)
Free to say specifically postal rule won’t apply (Holwell Securities v Hughes)
Postal rule doesn’t apply to instantaneous methods of acceptance (Entores v Miles)
Out of hours messaging is only effective once the office is open (Brinkibon v Stahag Stahl) yet may be immediate due to
the parties intentions (Thomas v BPE)
Electronic Trading
Consumer Protection Distance Selling Regulations
- Clear information about goods or services offered before sale
- Written confirmation after sale
- Consumer can cancel before seven working days, ‘cooling off’ period
Electronic Commerce Regulations
- Contact made when buyer receives acknowledgment of receipt from seller, only valid when buyer can access it
Dealing with a machine
The owners of the machine is said to hold it in readiness for use and thus form an offer. The buyer except by activating in
the machine in someway (Thornton v Shoe Lane parking)
Explain if there has been an I2T: An indication a person is willing to negotiate a contract but not yet willing to make a legal
offer.
Catalogues, Advertisements and Brochures (Partridge v Crittenden)
Goods on display on a shop window (Fisher v Bell)
Goods on display on shop shelves (Pharmaceutical Society v Boots)
Auctions- bids are the actual offer (Payne v Cave)
Request for more information (Harvey v Facey)
INTENTION
In order for there to be a binding agreement found by the courts it must be proved that there is intention for a legally
binding agreement. The courts decided this by following two presumptions. In Social/Domestic agreements it is presumed
that there is no intention to create legal relations, ‘To offer a friend a meal is not to invite litigation’(Cheshire v Fifoot). In
Commercial agreements it is presumed that there is intention to be legally bound (Esso Petroleum).
Difficult to differentiate BoP falls on party relying on the agreement to be commercial (Sadler v Reynolds)
Explain if it is a Social/Domestic agreement:
Husband and Wife living together (Balfour v Balfour)
Parent and Child (Jones v Padavatton)
Explain if this can be rebutted:
Business relationship exists (Snelling v Snelling)
Domestic relationship has broken down (Merritt v Merritt) or anticipated (Grantatino v Radmacher)
Reliance on contract (Simpkins v Pays) (Parker v Clarke)
, Explain if it is a Commercial agreement:
Gaining more business (Esso Petroleum)
Explain if this can be rebutted:
Binding in honour only can rebut presumption (Jones v Vernon Pools)
Onus of rebuttal is a heavy one (Edwards v Skyways) further developed for prizes in competitions (McGowan v Radio
Buxton)
Pre-contractual statement that does not contain a clear promise will rebut presumption (Kleinwort Benson)
CONSIDERATION
In order for there to be consideration in a contract there must be some right, interest, profit or benefit accruing to one
party or some forbearance, detriment, loss or responsibility suffered or undertaken by the other (Currie v Misa). In the
more recent case of Dunlop v Selfridge ‘Quid Pro Quo’ was said to be something that passes from both parties, in other
words proof that a bargain exists.
1. Consideration need not be adequate but must be sufficient
Sufficiency means that it must be real, tangible and have some value. Need not be adequate means that the value given
doesn’t have to be market value. (Thomas v Thomas)
Emotional concepts are not valid consideration. (White v Bluett)
Courts are likely to find emotional concepts valid consideration where there is payment from one parent to the other for a
child. (Ward v Byham)
Even things of no apparent worth have been classed as valid consideration. (Chappell v Nestle)
Lord Somerville- A peppercorn does not cease to be good consideration if it is established the promise does not like
pepper and will throw away the corn.
2. Consideration must not be in the past
Consideration must be given in return for the promise or act, where one party has already performed an act before the
party’s promise was made this is not valid consideration. (Re McArdle)
Exceptions to the rule:
Where the act was requested by the other party. (Lampleigh v Braithwait)
Where a reward was in the minds of the parties. (Re Casey’s Patent)
Where the act would have good consideration. (Pao On v Lau Yiu Long)
3. Consideration must move from the promisee
A person cannot enforce a promise if they did not provide consideration for it. (Tweddle v Atkinson)
4. Performing an existing duty cannot be the consideration for a fresh promise
Performance of an existing public duty is not good consideration. (Collins v Godefroy), yet where more is given than
normally expected the extra element is the consideration for the new promise. (Glassbrook Bros v Glamorgan)
Performance of an existing obligation does not amount to consideration. (Stilk v Myrick), yet where the obligation has
changed to become more difficult this is consideration for the new promise. (Hartley v Ponsonby)
Party making the promise to pay more receive an extra benefit or avoids a detriment is good consideration . (Williams v
Roffey)
Performance of an existing contractual duty owed to a 3rd party can be good consideration. (Shadwell v Shadwell), it is
acceptable to offer the same consideration to two different parties. (Scotson v Pegg)
PRIVITY
Privity states that only the person who is a party to the agreement is bound to it and can benefit from it. This is based on
the rule that consideration must move from the promisee. (Tweddle v Atkinson)
Explain Dunlop v Selfridge
In order to enforce a contract, a party must show the following: that they are a party to the contract and that they
provided consideration
Courts sometimes avoid harsh rule of privity. (Jackson v Horizon Holidays)
Explain exceptions:
Agency.
Collateral contracts. (Shanklin pier v Detel)
Restrictive covenants. (Tulk v Moxhay)
Explain the contract rights of third parties act: they can enforce the contract
S.1(1)a -expressly says they can
S.1(1)b- they confer a benefit from the term
Beswick v Beswick
S.1(2)- will not apply where the parties didn’t intend the term to be enforceable
S.3(2)- the same defences against a contracting party apply to third parties
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