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Contract law introduction
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Notes on the formation of a contract with case law
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The formation of a contract● Offeror: one who makes the offer
● Offeree: one to whom the offer is addressed to/and who eventually sets the offer
and that's when the contract is made
Offer and invitation to treat
Offer:
● An offer is an indication of a person's willingness to enter into a contract.
● An offer could be made to the whole world (unilateral offer). An example is carlill
v carbolic smoke ball co. it could also be made to just one specific person, as
well as several people
● It's a clear definite propositions that is made to someone which shows a
willingness to be bound under specific terms, which may lead to acceptance.
● An offer requires specificity (Carlill)
carlill v carbolic smoke ball co
The carbolic smoke ball company put an advertisement in the newspaper saying that
anyone that used their product and still caught the flu would be given a 100 pounds (as
a reward).
Arguments that the smoke ball company used:
1.We didn't make an offer, anyhow it's not possible to make an offer to the whole world
Court: the court said that yes you did make an offer to the whole world (unilateral offer),
therefore their argument is invalid. Argument debunked
2. She didn't notify us of her acceptance, so we don't have a contract
Court: her purchase and use of the product is her acceptance. In the case of unilateral
contracts, the offer waves his right to be notified of acceptance
3. She didn't provide us with any consideration.
Court: the fact that she bought the product and used it for several weeks is
consideration
4. It was just an advertising puff. We didn't intend to create legal relations.
Court: you deposited money in the bank which shows your seriousness
Bowerman V Abta
This confirms it's possible to make a unilateral contract. Abta tried to argue that an
advert was an ITT, but failed. This case confirms Carlill.
Leonard v pepsico
Advertisement case (American), where it was held that an advertisement by pepsi to
offer a fighter jet in return for some pepsi points. It was an advertisement puff with no
legal effect. Persuasive precedent but not legally binding. Held: the claimant lost.
, Offer distinguished from invitation to treat
Invitation to treat:
● An invitation to treat is not an offer. It's rather a statement of a person's
willingness to receive offers.
● They are statements that arouse interests (would you be interested in buying my
motorbike?)
● An example of an invitation to treat is: shop windows, price indications, price lists,
supermarket shelves, catalogues, company prospectuses)
● IN INVITATION TO TREAT, THE CUSTOMER IS MAKING THE OFFER, not the
shop keeper!
● An offer contains specific terms!
● A non specific negotiation stage
● An ITT exists when all the elements of an offer don't exist (intent, specificity)
Rationale behind an invitation to treat:
● A shop is a place of bargaining
● A shopkeeper has the right to pick and chose his customers
● A customer cannot demand to buy a particular good which is on display
● Subject to some exceptions, the shopkeeper isn't bound to sell the goods at the
price advertised
auctions:
● An advertisement for an auction isn't an offer. It's an invitation to treat. The bid is
the offer. The acceptance of the offer is when the auctioneer’s hammer falls
(payne v cave)
● Harris v nickerson: the defendant auctioneer advertised in a newspaper that he
would be holding an auction for the sale of office furniture. In the end, the sale of
furniture did not take place at the auction. The plaintiff sued for loss of time
(which failed). An auction is only an invitation to treat!
Shop windows and supermarket shelves:
● A coat at euro 50 standing in a shop window is not an offer but an invitation to
treat. It's the buyer of the coat who makes the offer.
● Fisher v bell: inclusion of a flick knife in a shop window is an invitation to treat,
not an offer. (this is the same for anything on a shop window)
Price lists and catalogues:
Items on display are an invitation to treat. It's the buyer who makes the offer
Boots case (items on display in a shop) , and partridge v crittenden (advertisements)
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