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Summary Offer and Acceptance
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The first stage of creating a contract - offer and acceptance, is considered.
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Chapter 3Notes:
Offer and Acceptance
1. An offer is a statement by one party of a willingness to enter into a contract on stated
terms, provided that these terms are accepted by the party to whom the offer is addressed
As Prof. Atiyah suggested either the court adopts “reasoning forward” i.e.
the traditional approach of offer and acceptance or “reasoning backward” i.e.
the court will enforce the contract and then look for offer and acceptance from
the conduct of parties.
2. An offer must be distinguished from an invitation to treat.
Distinction between offer and invitation = INTENTION
Invitation to treat = expression of willingness to enter into
negotiations which may lead to conclusion of contract (part of continuing
negotiation process – NOT bound)
Offer = bound by acceptance of terms w/o further negotiation
E.g. Gibson v Man City Council [1978]
Controlled by conservatives – scheme of ‘right to buy’ council flats (selling council flats)
Gibson submits saying he wants to buy his house so completed form but left purchase price blank
because he wanted to know whether the council would repair the path to his house or whether he
could deduct the costs from the property
May 1971 political control changes to Labour
Labour = against idea of ‘right to buy’ therefore abolish scheme
Council refused to sell house - claimed no contract had been concluded
Gibson had to prove he had a contract with council before May 1971 – in order to establish a
binding contract Gibson had to point to a document which contained the offer
CA held that contract HAD been concluded – Lord Denning argued that there was agreement
between the parties on all material points
Decision was reversed by HofL
Diplock argued that the words ‘may be prepared to sell’ did not amount to an actual offer as it didn’t
express a willingness to be bound BUT did express a willingness to enter into
negotiations (Invitation to treat) – Gibson was ‘invited’ to make a formal application
Gibson shows that it is not easy to ascertain when negotiations end and an
offer is made – court tried to ascertain intention of parties
Display of Goods e.g. Pharmaceutical Society v Boots Cash Chemist [1953]
Boots organised shop on self service basis – was in breach of s18 of Pharmacy and
Poisons Act 1933
Required sale of drugs take place under supervision of registered pharmacist
Change in shopping system meant that people could buy medication without pharmacist
No pharmacist present a shelves but there was one at the cashier - were authorised to
stop customer buying drugs if thought was fit to do so
Was held that the display of goods was simply an invitation to treat and therefore
there had been no breach of act and that the sale took place at cash desk NOT at removal
from shelves
E.g. Carlill v Carbolic Smoke Company [1893] – advertisement = offer
3. An acceptance is an unqualified expression of assent to the terms proposed by the
offeror. An acceptance must generally be communicated to the offeror
Acceptance can be made by conduct e.g. Carlill – does not have to be made
by words
Conduct will only amount to acceptance if it is clear that the offeree did act
with the intention (objectively assessed) of accepting the offer
4. A purpoted acceptance which does not mirror the terms of the offer (and introduces new
terms) is NOT an acceptance but a counter offer which kills off the original offer
E.g. Hyde v Wrench [1840]
5. An offer cannot be accepted by someone who is ignorant of the existing offer or by
someone who does not have the offer in his mind when he acts which he alleges constitutes
acceptance
Offer is only effective when it has been communicated to offeree
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