Lecture notes
Contract Law Tutorial Answers
- Module
- Contract Law
- Institution
- Queen Mary, University Of London (QMUL)
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Tutorial 1: Offer and AcceptanceThe purpose of the first two tutorials is to introduce you to offer and acceptance. It is said that
the law requires the presence of both to form a contract binding in law. This tutorial explores
what is meant by an offer. The object of this tutorial is to determine what is and what is not an
offer, how the offer of a unilateral contract differs from the offer of a bilateral contract, and
what the requirements are to make an offer effective.
Reading: Textbook: Casebook:
Anson, pp. 31-42 McKendrick, 42-78 Chen-Wishart, pp. 44-65
Questions:
1. Compare the cases of Pharmaceutical Society v Boots and Thornton v Shoe Lane Parking. In
which case did the Court find that there was an offer? Why did they find that there was an
offer? Why was there not an offer in the other case? What 'danger' was Somervell LJ trying to
avoid in Pharmaceutical Society v Boots? Should the display of goods for sale constitute an
offer? What about an advertisement for the sale of goods?
Pharmaceutical Society v Boots Thornton v Shoe Lane Parking
Facts: The defendant ran a self-service shop in which Facts: Thornton drove his car to a car park. Outside
non-prescription drugs and medicines, many of which the car park, the prices were displayed and a notice
were listed in the Poisons List provided in stated cars were parked at their owner’s risk. An
the Pharmacy and Poisons Act 1933, were sold. These automatic ticket machine provided a ticket, a barrier
items were displayed in open shelves from which they was raised and Thornton parked his car. In small print
could be selected by the customer, placed in a on the ticket it was stated to be issued subject to
shopping basket, and taken to the till where they conditions displayed on the premises. On a pillar
would be paid for. The till was operated by a opposite the machine was a notice stating the owners
registered pharmacist. However, the claimant brought would not be liable for any injuries occurring on their
proceedings against the defendant for breach of premises. Thornton had an accident and sought
section 18(1) of the Pharmacy and Poisons Act 1933, damages from Shoe Lane Parking (SLP).
which requires the supervision of a registered
pharmacist for the sale of any item in the Poisons List. Issue: SLP contended the contract was made when
Thornton received the ticket and parked his car. The
Issue: The question was whether the contract of sale ticket amounted to a contractual document which
was concluded when the customer selected the effectively referred to the terms which were clearly
product from the shelves (in which case the defendant visible on the premises. They had taken reasonable
was in breach of the Act due to the lack of supervision steps to bring them to Thornton’s attention, and they
at this point) or when the items were paid for (in could rely on the exclusion clause and were not liable.
which case there was no breach due to the presence Thornton argued the notice outside the car park
of the pharmacist at the till). amounted to the offer and the ticket machine could
not then seek to introduce new terms because the
Held: The Court of Appeal held that the defendant was contract was already formed. He contended if terms
not in breach of the Act, as the contract was are to be successfully incorporated, they should be
completed on payment under the supervision of the communicated before money is placed into the
pharmacist. The display of the goods on the shelves machine, or before the machine is operated.
were not an offer which was accepted when the
customer selected the item; rather, the proper Held: The exclusion clause had not been successfully
, construction was that the customer made an offer to incorporated into the contract. SLP had not done
the cashier upon arriving at the till, which was enough to bring the existence of the terms to
accepted when payment was taken. This analysis was Thornton’s attention prior to the contract formation.
supported by the fact that the customer would have The offer was contained within the notice at the
been free to return any of the items to the shelves entrance, and Thornton accepted the offer on those
before a payment had been made. terms when he drove in. It was too late to seek to
incorporate further terms after he had driven into the
Store was making an invitation to treat. car park.
2. Compare the cases of Storer v Manchester Corp and Gibson v Manchester Corp. Why were
these cases decided differently? Should they have been decided differently?
Storer v Manchester Corp Gibson v Manchester Corp.
Facts: The defendant City Council refused to proceed Facts: The defendant City Council had adopted a policy
with the sale of a council property to the claimant of selling council houses to its tenants. The claimant
under an arrangement which had been agreed with its was a tenant of such a council house, who had applied
predecessor. All of the terms of the contract had been for details of the house he was renting and applicable
agreed but for the date on which the lease was to end mortgage terms, using the printed form designated
and the mortgage payments were to begin, which had and supplied by the defendant for this purpose. In
been left blank on the form returned to the defendant February 1971, the city treasurer responded to this
by the claimant. The claimant alleged that the contract application stating that ‘The [council] may be prepared
was completely concluded and sought specific to sell you the house at the purchase price…’, and
performance of the agreement. providing details of the mortgage. This letter also
stated that it did not amount to a ‘firm offer’ of a
Issue: The question was whether the contract had mortgage, and invited the claimant to make a formal
been concluded, despite the fact that the date on application using an enclosed form. In March 1971,
which the claimant became a purchaser rather than a the claimant returned the completed form to the
tenant was still to be determined. defendant. Following local elections in May of the
same year, control of the Council passed from the
Held: The Court of Appeal held that the contract was Conservatives to Labour. The new Labour Council
complete despite the absence of this term. In policy was that council houses would not be sold
distinguishing between an offer and an invitation to under the previous Conservative policy unless a legally
treat, it is necessary to look. not to the subjective binding contract was already in place. The defendant
intentions or beliefs of the parties, but rather on what refused to sell to the claimant, who brought an action
their words and conduct might reasonably and against them in breach of contract. This action was
objectively be understood to mean. In this case the successful at first instance and the Court of Appeal,
defendant had made clear by their conduct and upon which the defendant appealed to the House of
language that they intended to be bound upon the Lords.
acceptance of the offer despite the fact that some
terms remained to be agreed. In the words of Lord Issue: The issue on appeal was whether the
Denning MR: defendant’s letter of February 1971 was properly
construed as an offer or as an invitation to treat.
“In contracts, you do not look into the actual intent in
a man’s mind. You look at what he said and did. A Held: The House of Lords held that there was no
contract is formed when there is, to all outward concluded contract and the defendant was not legally
appearances, a contract” (p. 827). bound to sell the property, as the council’s letter did
not state the price and was not an offer but an
invitation to treat.
,Gibson subjective intention, ambiguity, the language is not clear
Storer objective intention, unambiguous, the language is clear
3. What is the difference between an offer and a statement of intention? Between an offer and
the supply of information?
Offer: A promise that, according to its terns, is contingent upon a particular act, forbearance, or
promise given in exchange for the original promise or the performance thereof; a
demonstration of the willingness of a party to enter into a bargain, made in such a way that
another individual is justified in understanding that his or her assent tot the bargain is invited
and that such assent will conclude the bargain.
Statement of Intention: Parties sometimes communicate that they intend to do something -
the communication is not intended to be binding and thus there is no offer.
Peripheral information
4. Examine Carlill v Carbolic Smoke Ball Co. With respect to the offer of a unilateral contract,
how does it differ from the offer of a bilateral contract? How can such an offer be valid when
the advertiser does not precisely know who will accept it? Why is the advertisement not mere
puff?
(1) Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 Court of Appeal:
Facts: The defendant, the Carbolic Smoke Ball Company, placed an advertisement in a
newspaper for their products, stating that any person who purchased and used their product
but still contracted influenza despite properly following the instructions would be entitled to a
£100 reward. The advert further stated that the company had demonstrated its sincerity by
placing £1000 in a bank account to act as the reward. The claimant, Mrs Carlill, thus purchased
some smoke balls and, despite proper use, contracted influenza and attempted to claim the
£100 reward from the defendants. The defendants contended that they could not be bound by
the advert as it was an invitation to treat rather than an offer on the grounds that the advert
was: mere ‘puff’ and lacking true intent; that an offer could not be made ‘to the world’; the
claimant had not technically provided acceptance; the wording of the advert was insufficiently
precise; and, that there was no consideration, as necessary for the creation of a binding
contract in law.
Issue: Whether the advert in question constituted an offer or an invitation to treat.
Held: The Court of Appeal found for the claimant, determining that the advert amounted to the
offer for a unilateral contract by the defendants. In completing the conditions stipulated by the
advert, Mrs Carlill provided acceptance. The Court further found that: the advert’s own claim to
sincerity negated the company’s assertion of lacking intent; an offer could indeed be made to
the world; wording need only be reasonably clear to imply terms rather than entirely clear; and
consideration was identifiable in the use of the balls.
, A mere puff is a statement often associated with advertising. Another way of explaining this is
“salesman's hype” or hyperbole. These are statements that plainly exaggerate and are not
intended to be taken seriously. The important point about them is that they have no
contractual effect and no legal consequences.
(2) Performance on one side unilateral outstanding obligation on one side
Performance on both sides bilateral outstanding obligation on both sides
5. With respect to auction sales, is an advertisement of an auction an offer? When the
auctioneer asks for bids, is he making an offer or an invitation to treat? Why? See Warlow v
Harrison and Harris v Nickerson.
An advertisement of an auction is not an offer, but merely an invitation to treat.
6. Must an offer be communicated? See Williams v Carwardine, R v Clarke, and Gibbons v
Proctor. How can these decisions be reconciled?
Not necessarily.
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