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4LAW1020-0906-2019 Contract Law 19001145Question 1
This question concerns offer and acceptance; the invitation to treat and auction sale. A valid
offer and acceptance are essential components of a binding contract. For each scenario, it
will be explored whether there is a valid offer or invitation to treat; and if the acceptance has
taken place where there is an offer. An offer is a “proposition made by one party to another
on the terms that are fixed or capable of being fixed with the intention that it will be binding
on him when accepted by another person” (Harvey v Facey 1893). On the other hand, in the
case of Gibson v Manchester City Council (1979), an invitation to treat is defined as, “the
provision of information on the willingness to negotiate further, an invitation to the other party
to make an offer”. Hence, unlike an invitation to treat, an offer leads to a binding contract on
acceptance.
Scenario 1 highlighted the email sent by Clyde & Rowe that can be categorised as an offer.
It appears that the terms are fixed as the party has sent the terms and conditions in the
email. The offer can be accepted by saying “Yes, I accept” since, with the firm quotation, the
particulars of transactions seem to be in place. Finally, the language also suggests that the
party intends to be legally bound as it says that the offer will be valid for 14 days, starting
from 16th March. Offer must be accepted within the lapse of time (Ramsgate Victoria ltd v
Montefiore 1866). At any time before the offer is accepted, it can be withdrawn (Payne v
Cave 1789). However, Clyde & Rowe did not withdraw the offer within 14 days.
The next issue is whether there has been an acceptance by Sadrocor Ltd. Evan McKendrick
defines acceptance as “an unqualified expression of assent to the terms proposed by
offeror”.1 It can be by oral, written, or by conduct as in Carlill v Smoke Ball Co (1893). The
receipt rule says that acceptance must be received by the offeror for a binding contract to
form. (Entores v Ltd v Miles Far East Corporation 1955). The postal rule, which is an
exception to the receipt rule, was established in Adams v Lindsell (1818). It says that
acceptance takes place when a letter is sent (i.e. placed in the letterbox). It is not necessary
1
Evan McKendrick, Contract Law (5th edition) p.34
1
, 4LAW1020-0906-2019 Contract Law 19001145
that the offer made by post must be accepted by post (Henthorn v Fraser 1892). Sadrocor
Ltd may not legally bound to communicate acceptance by post. If the letter sent is never
received by the offeror, or as Russel LJ said, “even if the letter goes astray and is lost”, the
postal acceptance still takes place (Household Fire Insurance v Grant 1987). Therefore, it is
not an issue that Sadrocor’s letter was lost, as a postal rule still makes the acceptance
effective. This does not apply if the letter is ‘incorrectly addressed’ (Gatrei-Import
Gesellschaft v Contimar 1953). It is not known whether the letter sent by Sadrocor Ltd is
properly stamped and addressed. An offeror may prohibit the use of the post to
communicate acceptance. (Holwell Securities Ltd v Hughes 1974). From the given
information, it is not known whether the party specified exclusion of post for acceptance. The
rule also does not apply where it is unreasonable to use a letter as a means of
communication. Hence, if Clyde and Rowe sent an offer by email, they may expect to
receive the acceptance by email, therefore, acceptance by posting a letter may be seen as
an unreasonable act. Finally, using post should not raise ‘inconvenience or absurdity’
(Holwell Securties and Hughes 1974). It may be argued that where there is an offer by an
instantaneous communication such as email, for Sadrocor Ltd to send a letter as acceptance
is also ‘absurd’ in the modern age.
Therefore, as it is unknown whether parties have excluded the use of post, and whether the
letter is properly stamped and addressed, there is little vacant room for analysis there.
However, it is most likely that the contract does not exist between the parties because the
letter is not the best option available for Sacrodor Ltd, and therefore is unreasonable. There
were certainly more reasonable and convenient means of communication such as email and
telephone, especially as the offer has also been made by email which is instantaneous
communication mode.
Scenario 2 concerns the display of goods for the sale. Firstly, it must be revealed whether it
is an offer or invitation to treat. Lord Parker CJ affirmed that the goods on display are
regarded as ‘invitation to treat’. (Fisher v Bell 1961). The Pharmaceutical Society of GB v
2
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