LECTURE 1 Display of goods:
AGREEMENT I. Fisher v Bell (1961) Displays of goods are not offers but merely
invitations to treat.
Assessment: Facts: there was a flick knife that was placed on offer in a shop window
100% of the marks will be given based on one written assessment at the with the price tag attached. It was a criminal offence to offer for sale
end of the year. Six questions. Must answer 2 questions. offensive weapons such as flick knives. So if this was interpreted as an
author that a criminal offence would’ve been committed.
OFFER: Held: The court held, due to the reasons in Partridge, that this is an
invitation to treat and not an offer.
Offeror = person making the offer.
Offeree = person on the receiving end of an offer. Pharmaceutical Society of Great Britain v Boots (1953) In relation to
display of goods, the offer is made by the buyer when they take the
Definition of an offer: goods to the checkout.
Treitel: “An offer is an expression of willingness to contract on specified Facts: there was a situation where it was a criminal offence to sell
terms made with the intention is to become legally binding as soon as certain controlled substances unless the sale was under the supervision
is as it is accepted by the person to whom it is addressed.” of a qualified pharmacist. These substances are on the shelf and the
buyer would put them in the basket and take these to the checkout.
This means:
1. An expression of willingness Held: Was there an acceptance of the offer when the customer put the
2. Communicated to the offeree product in their basket? If that was the case then the goods weren’t
3. That there is an intention to make a contract on specified terms being sold under the supervision of a qualified pharmacist. The court
– eg. setting out what is the contract will be about. decided that no, the offer is made by the customer when the customer
AND takes the goods to the checkout and offers to buy them. Then the
4. That there is an intention for this expression to be binding. – checkout assistant has the ability to choose whether or not to accept
meaning that if the offer will become a valid contract and the offer.
binding as soon as it is accepted so if the contract is not acted
upon, either party may make a claim. Advert:
An offer must: Partridge v Crittenden (1968) Advertisements are not offers but
1. Be certain – the offeror must know what is being offered. merely invitations to treat.
2. Be addressed to the Offeree Facts: there was an advert in the newsagents’ window and the advert
AND said this it said it was offering for sale bramble finches (a type of bird).
3. Show intention to create legal relations – this may be implicit or Importantly these were wild birds and at the time it was illegal to offer
explicit. This will be a separate topic later on in the course. for sale wild birds.
Gibson v Manchester City Council (1979) An offer must be certain and Held: The question was that by putting that advertisement in the
the word “may” in an offer is not sufficiently certain. window hat that person offered the birds for sale. But the court said no,
Facts: Mr Gibson wanted to buy his house. In England, in the 1970s, the generally advertisements are not offers even if they are worded as it
Conservative party had a policy that people who were living in council they were offers. This was held as a matter of policy to maintain
house accommodation, had the ability to buy their house from the local commercial efficacy because people don’t generally expect adverts to
authority so that they can become homeowners. Mr Gibson was living be offers. Also what happens if there is more than one person trying to
in a similar house. So he contacted the council and they wrote to him accept the offer and the offeror runs out of stock and is unable to sell
and said “Please fill in this form and send it back, and we may be the product. In this case, the person purporting to offer something for
prepared to sell you the house for a specified amount”. Mr Gibson did sale would be in breach of contract.
as he was told. He filled in the forms and sent it back. Before he heard
anything else, the local authority changed political hands. So it was Exception 1 – Unilateral offers:
formerly a Conservative run authority and it became a Labour run Unilateral offer = an offer leading to a unilateral contract. This
authority. The Labour party had a policy of not selling off Council houses is an offer that can be accepted by performance of a prescribed
so they refused to sell the house to him. act.
Bilateral contract = typical contract, where one person makes
Held: The question for the House of Lords was whether the local the offer and other person says that they accept.
authority made Mr Gibson and offer when they said “we may be
prepared to sell you the house”. The House of Lords decided no. They Carlill v The Carbolic Smoke Ball Company (1893) If the
said when you say “I may be prepared”, the sentences is lacking advertisement contains a prescribed act and it is sufficiently
sufficient certainty. It is not certain. If they said “we will sell the house” clear, it may be a unilateral offer.
or “we may sell the house” the this can be said to be certain, while “may Facts: there was an advertisement with a £100 reward for
be prepared” just suggest that the council is merely thinking about it. anyone who used the company’s product and caught influenza.
This is not sufficient to constitute an offer. Mr Gibson was unable to The smoke ball was advertised as being able to prevent several
argue that he accepted the offer because there was nothing to accept, different diseases including influenza and they included a
thus, there was no contract and he didn’t get his house. reward to ensure that people bought the product. They have
even claimed to have deposited the £100 in a bank account for
Storer v Manchester City Council (1974) Contrasting case. An offer people to collect if they caught influenza. Mrs Carlill bought the
must be certain and the word “will” in an offer is certain. product, used it correctly, and still managed to catch influenza.
Facts: The facts are broadly the same, but this time when the local She then gone ahead and claimed her £100 reward. Company
authority wrote to Mr Storer, they said “Please return the completed then refused to pay and the company argued that this was
form and we will sell you the house”. The authority changed hands and merely an advertisement and adverts are not offers.
new Labour council refused to sell him the house.
Held: The court held, that in some situations, they recognize
Held: it was very clear in this case that if Mr Storer returned the form, unilateral offers where the offer was sufficiently clear.
the offer was valid and they must sell the house to him. So Mr Storer Unilateral offers are offers where the offer is accepted by the
did manage to compel the sale of the house. performance of a prescribed act. For a usual offer accepted, you
need to communicate acceptance however for a unilateral offer
INVITATIONS TO TREAT: excepted all you need to do is perform the prescribed act. There
is no requirement for the offeror to communicate acceptance
in this case.
If you have an expression that might be an offer but it doesn’t fit the
criteria of an offer, it is an invitation to treat. Lefkowitz v Great Minneapolis Surplus Store (1957) Where an
advertisement shows intention to create legal relations, it can
An invitation to treat has no legal status. It is merely the opening step amount to unilateral offer.
in negotiations and because it’s not an offer, it cannot be accepted. Facts: a US case. There was an advertisement for a black fur
scarf for $139.50. The advertisement said that the fur scarf will
be sold to the first person in the queue on Monday morning for
Invitations to treat: $1. Mr Lefkowitz was the first one in the queue and the
1. Advertisements company refused to sell him the scarf.
2. Displays of goods
Held: This was a unilateral offer that has been accepted by
Lefkowitz. It is rare that the court will hold that an
advertisement is a unilateral offer, the wording must be
sufficiently serious.
Contract law – All lectures – Notes | Page 1 of 39
,Leonard v Pepsico (1999) The advertisement does not amount Harvella Investments v Royal Trust Company of Canada If the
to a unilateral offer if it is an obvious joke. invitation to tender sets out that they would accept the
Facts: Pepsi was advertising various different products that you highest bid, then they must do so.
could claim if you sent in a certain number of tokens that you
could get from making a purchase. So it said something like 50 Facts: Here, invitation to tender set out that they would accept
tokens will get you a t-shirt, 100 tokens will get you a baseball the highest bid. Bids were to be made in sealed envelopes and
cap. It said 7 million tokens will get you a harrier fighter jet. one company sent in a referencial bid. This stated that they will
Leonard wanted a harrier fighter jet. Unfortunately, he only bid £100,000 or £100,000 more than any other bid.
collected 15 of them but the terms said that one could buy
points for 10 cents each. He wrote a cheque for $700,008.50 to Held: This idea did not comply with the actual rule as the bid
get his airplane. Pepsi refused to sell him the airplane and had to be £100,000 more than any actual bid.
Leonard sued Pepsi saying that this was a unilateral offer.
Exception 4 – Auctions:
Held: The court disagreed and ruled that this was not a An auctioneer inviting bids is an invitation to treat and the
unilateral offer. There were several reasons for this and one of bidders make the offer. The acceptance at the auction is made
them was that the court did not want a 15-year old to own a once the auctioneer drops the hammer.
fighter jet. The actual reasoning of the court was that this was
clearly meant to be something funny and something that was Payne v Cave (1789) If a person has made an offer that person
not meant to be serious was clearly a joke for advertisement’s is also entitled to revoke that offer. But, the offer can only be
sake. This was different from what happened in Carlill because revoked as long as it has not been accepted. Once the offer is
it was obvious from the advert that it was not meant to be accepted the contract is formed.
legally binding.
Barry v Davies (2000) In case of without reserve auctions the
Offer to the world: offer of the highest bidder will be automatically accepted.
Don’t confuse unilateral offers with an offer to the world. Facts: Without reserve auction, whereby it did not matter to the
Offer to the world = when you make an offer that anyone can seller if the item is to be sold for no minimum price. This means
accept. that the item will be sold to weather is the highest bidder even
A unilateral offer can be made to a single specific person. if the highest bid is a very low price for that particular item.
Barry was the only bidder for the item in this case and he bid
Exception 2 – Limitless supply: £200 and was successful as the highest bidder. The seller,
Grainger v Gough (1896) Obiter comments: if an advert is however, refused to sell.
clear, certain and shows and intention to be bound and there
is no problem with supply the normal rule would not apply. Held: In case of a without reserve auction the offer of the
Held: these comments were obiter meaning that the comments highest bidder will be accepted. The seller cannot refuse to sell
are not binding on subsequent courts but it is a good indication the item as they agreed to participate in the auction without
of future decisions. Part of the reason why the original rule that the reserve. Barry in this case did not receive the item as the
adverts cannot constitute an offer was a problem with the hammer has not fallen. Had the hammer fallen, Barry would
supply of the goods. If there is not such problem, eg. the seller have received the item.
is also the manufacturer or there is limitless supply, the adverts
may constitute to offers. The court, in the normal circumstances
would not want sellers to be in breach of contract where there
THE OFFER MUST BE COMMUNICATED:
is not enough supply, however, in these circumstances, this is Communication can be done:
not going to be an issue. - In writing
- Orally
Exception 3 – Invitations to tender: - By conduct
Spencer v Harding By inviting tenders, you are not making an
offer. Taylor v Lair (1856) The accepting party must also communicate
Invitation to tender = situations where you need to get some acceptance in response to the offer by conduct.
work done and you contact a number of people who may be Facts: There was a sailor on a ship who had a contract with the owner
interested, you give them the details of what needs to be done. of the ship. One day the sailor resigned. Not long after, the sailor went
They will then reach out to you again with the price. back on the ship again and started working but he has not
communicated this to the ship owner. Later he claimed that the ship
Facts: the defendant, Harding sent out a number of notes for owner owed him his wages.
various companies inviting tenders for the work to be done. The
claimant, Spencer offered the best price and unexpectedly Held: The sailor made an offer to continue working but this has not
Harding did not accept that offer but rather went for a less been accepted. While the sailor could claim that he made an offer by
competitive one. In this case you would naturally expect that conduct, the ship owner did not know of this and therefore could not
the best offer would be accepted but this was not the case here. accept the offer.
Spencer sued Harding arguing that they have accepted his offer
and offer the best price and therefore he was in breach of
contract. TERMINATING AN OFFER:
Held: the court held that there was no obligation on the person An offer will stay open until terminated by rejection of the offer,
sending out the invitation notes that he must accept any of the revocation or lapse.
tenders. Although this does depend on the wording because in
cases where you did promise to accept the highest bid then you Rejection:
would need to comply with the terms of the contract would’ve 1. Counter-offer – Rejecting the original offer and making a new
formed. offer.
Hyde v Wrench Facts: There was an offer for the sale of land,
Blackpool Aero Club v Blackpool Borough Council (1990) If the for £1,000. The buyer said that he will pay £995. The seller then
invitation to tender is also a unilateral offer, there will be a sold the land for someone else. When the buyer wanted to
unilateral contract formed if the prescribed act is performed. force the buyer to sell the land to him for £1,000, the court
disagreed as he has already rejected that offer.
Facts: the Aero club had the right to run the pleasure flights
around the Blackpool area. The contract was up for renewal and 2. Battle of the forms – Two companies, both wanting to contract
the council wrote to different aero clubs asking them to send on their standard terms. None of them ever agreeing.
them tenders and it said that would only consider tenders Butler Machine Tool v Ex-Cell-O Corp Held: In this case, the last
arriving by midday on a particular day. The Aero club hand- shot approach will apply. Whoever will finally accept
delivered their tender to the postbox of the council office unequivocally, that will be the agreed final contract.
before 12 on the appropriate day. Unfortunately, they failed to
check the mail and therefore they did not consider Blackpool 3. BUT! Requests for further information – This is not a rejection,
aeroclub and awarded the contract to someone else. The Aero simply asking for clarification of the terms on which the offer
club made a claim. is made.
Stevenson, Jacques v McLean Facts: There was an offer to sell
Held: the council had no obligation to award the contract to 3,800 tons of iron. The buyer responded by an enquiry about
anyone specifically. However, the council did make a promise the payment. The seller ignored the question and sold the iron
that they would consider all bids, so they have breached the to someone else. The court found that this was not a rejection,
unilateral contract whereby they should have considered their merely a question about the offer.
tender so the Aero club did get some damages from the council.
They didn’t get the contract awarded but they got damages.
Contract law – All lectures – Notes | Page 2 of 39
,Lapse:
1. Passage of time – Offers only stay open for a reasonable time.
Ramsgate Victoria Hotel v Montefiore Held: What is
reasonable will depend on the circumstances. – Eg. if someone
makes an offer to you to sell a newspaper for 50p this offer is
not going to be open for a whole year. But the offer for a house
will likely be reasonable to stay open for longer.
2. Death – Bradbury v Morgan
3. Non-fulfillment of a condition – Financings v Stimson
Revocation:
1. Auctions – Payne v Cave Revocation is effective if it has been
done before the offer is accepted.
2. Only effective once received – Byrne v Van Tienhoven (1880)
Facts: A Welsh company sent an offer by letter to a US
company. The Welsh company changed its mind and sent a
revocation letter after the offer letter has been sent. However,
once the offer letter has been received, the US company
telegraphed its acceptance.
Held: The acceptance had already arrived when revocation has
been received so the contract has been formed.
3. Third party revocation – Dickinson v Dodds (1876) An offer is
not open to someone who has knowledge that the offeror
intends to terminate the offer.
Facts: in this case there was a sale of property and the offeree
heard from a friend that the offeror wanted to terminate the
offer and sell the property to someone else.
Treitel argues: this doesn’t seem fair on the offeree as the
revocation has only been communicated to him by a third-party
and the authority must then decide whether this person is a
reliable source of information.
4. Revocation of unilateral offers:
A unilateral offer is revoked once the act set out in the offer is
performed.
GNR v Witham A unilateral offer can also be revoked any time
prior to performance. – old law.
Held: If the offer prescribes the act of walking to York and the
performer walks almost until the city gates, the offer can be
revoked until the performance has not yet been completed, so
until they reach York. This means that someone responding to
a unilateral offer may have put in a lot of effort into performing
the act and the offer can be revoked just before performance is
completed.
Errington v Errington Woods Now a unilateral offer may not
be revoked if someone has started performance.
Held: Lord Denning: if someone has started performance and it
thus becomes unfair to revoke the offer, the offeror must give
a chance to the offeree to finish the performance.
Daulia v Four Mill Bank Nominees The offeror cannot prevent
the offeree from performing the prescribed act.
Facts: There was a unilateral offer that if a person has turned up
with a draft contract and a banker’s bill to the offeror, then the
property will be sold to them. The offeror, once this was
performed, then refused to take the bill from the offeree,
thereby preventing them from performing the prescribed act.
This was unfair and the court held that there was a contract.
Shuey v US Offers to the world: for announcing revocation, the
offeror must use a method similar to how the offer was made.
Facts: Difficult to revoke unilateral offers made to the world as
there would be a problem in communicating the revocation. In
this case, revocation will be effective if the offeror uses a
method that is “equally notorious” as the method whereby the
offer was made. – Eg. if the offer was made in a newspaper ad,
the revocation should be made the same way to be effective.
Contract law – All lectures – Notes | Page 3 of 39
, LECTURE 2 In response to an offer:
R v Clarke (1927) The offer must be in the mind of the offeree when
AGREEMENT II. accepting it.
ACCEPTANCE: Facts: The Crown offered a reward for any information in relation to a
murderer. Clarke was a member of the murderer’s gang and he was
Objective test: arrested due to an unrelated incident. During questioning, he gave
away information about the murdered but forgot about the reward.
Whether a contract has formed, will be decided by an objective test.
Held: As Clarke forgot about the offer, he could not have been accepting
Objective test: whether a reasonable person listening to the that offer. There was no contract as acceptance was not in response to
negotiations between the parties agree that a contract has been made? the offer.
– If unsure whether a contract has been formed, think of what a
reasonable person would think. For an objective test it doesn’t matter Williams v Cowardine (1833) The motive for accepting the offer is
what was going on in the minds of the parties. If Adam did not intend irrelevant.
to accept the offer, but said that he accepts, then the reasonable person
will agree that acceptance has taken place. Facts: Someone making a deathbed confession knew that the was a
reward for information on the murderer of Cowardine, so he knowingly
Smith v Hughes (1871) If a man conducts himself in a way that any told who the murderer was on his deathbed.
reasonable man would believe that he was agreeing to the terms,
then he will enter into the contract, even if his real intentions were Held: Even though the primary reason for this confession was to clear
not to be bound. their conscience before they died, the acceptance was in response to
the offer and the motive was irrelevant. They received the reward.
Facts: This case concerned a contract relating to oats for a racehorse.
Nothing has been discussed as the weather the oats were fresh or old Communicated:
oats and the price was more in line with what the price would be for old Felthouse v Bindley (1862) Silence does not constitute acceptance.
oats. The buyer thought the contract was for fresh oats.
Facts: An uncle made an offer to his nephew to buy his horse. He made
Held: The court found that there was no deception here the buyer has an offer and said that if he hears nothing, he will ‘consider it mine’. The
simply made an assumption that was incorrect. The buyer was made to horse was already put up for auction but this contract would have
keep the oats. stopped the horse from going to auction. The auctioneer went ahead
and auctioned the horse unknowingly.
Hartog v Colin & Shields (1939) But the court will not allow buyers to Held: Silence does not mean acceptance under any circumstances. The
‘snatch a bargain’. action of communicating the acceptance is required for a contract to
form. Acceptance must have been communicated to the other party
Facts: Negotiations in relation to the sale of Argentine hare skins. meaning that they must have received the communication.
Mistakenly the final offer stated the wrong price and the buyer
accepted the offer as it was five times more lucrative for him than the Powell v Lee (1908) Acceptance could be communicated by an
original price. authorised third-party and still be valid.
Held: If the seller has made the offer incorrectly and the error is obvious Facts: in a school there was a vacancy available for headmaster and the
then no buyer is entitled to take advantage of this error. If this would school decided to appoint Powell to the position. Someone from the
be allowed that would mean that buyers would be able to bind sellers school told Powell that he was to be appointed and Powell then went
knowing that the sellers never intended to enter into a contract on to the board and made an offer to them. One of the governor’s
these terms. accepted the offer who did not have authorization to accept the offer.
In the end the board decided to go with someone else and Powell
Requirements: wanted to see if a contract has been formed by the acceptance of the
governor.
Acceptance must be:
1. A mirror image to the offer – Hyde v Wrench Held: the court decided that there was no acceptance as the third-party
2. Made by the offeree – Boulton v Jones who accepted the offer was an authorised to do so.
3. Made in response to an offer – R v Clarke
4. Communicated – Felthouse v Bindley Taylor v Allen (1966) Acceptance could happen by conduct, even
though this did not happen in this case due to no intention to accept.
Mirror image rule:
Hyde v Wrench (1840) The content of what the offeree is going to Facts: this case was in relation to an insurance company and a
accept must be the mirror image of the content of the offer. motorbike. The rider of the bike received a letter from the insurance
company saying that his insurance would be renewed. The rider then
Facts: There was an offer for the sale of land, for £1,000. The buyer said went out on the road with his bike and argued that this constituted an
that he will pay £995. The seller then sold the land for someone else. acceptance of the renewal offer by conduct.
When the buyer wanted to force the buyer to sell the land to him for
£1,000. Held: In theory, acceptance could happen by conduct. However, on the
facts, it was clear that this biker did not intend to reinsure with this
Held: The court disagreed as the new offer for £995 was not the mirror company. But if he did intend to reinsure with the same company, this
image of the £1,000 price that the land was offered for. Thus, this could would have been sufficient.
not constitute an acceptance and meant that the original offer was
rejected. Acceptance is the mirror image of the offer if the acceptance Intense Investments v Development Ventures (2006) Acceptance
is unqualified and shows a clear acceptance of what has been offered could happen by conduct.
and on the same terms.
Facts: a company was looking for a loan and the company made an offer
Made by the offeree: to one of the lenders. The lenders then deposited the money in the
Boulton v Jones (1857) The content of what the offeree is going to company’s bank account. Then they changed their mind.
accept must be the mirror image of the content of the offer.
Held: Depositing the loan amount in their bank account constituted
Facts: Boulton purchased a shop from Brockenhurst. Jones was a acceptance as this was the only interpretation of this conduct.
regular customer, and he wrote to Brockenhurst and made an offer to
the shop for the sale of goods. Boulton opened the letter, accepted the Exception to the rule on communication:
offer and sent out the goods. Jones then refused to pay the invoice and • Unilateral offers – Carlill v Carbolic Smoke Ball
Boulton made a claim for the money. Unilateral offers are accepted by performance. No need
to state: ‘I accept the offer.’
Held: Jones argued that because he did not know that the shop was sold
to Boulton, he was not the intended recipient of the offer, and he could • Offeror’s fault – Entores v Miles Far East Corp
not accept it. The court agreed as the offer was made to Brockenhurst, The person accepting has a responsibility to ensure that
the old owner, not to Boulton. their message goes through. Lord Denning: Imagine two
people standing on two sides of the river. One of them
is shouting ‘I accept.’ but planes fly by, and the
acceptance cannot be heard. The person accepting has
a responsibility to wait until the planes leave and repeat
the acceptance.
Contract law – All lectures – Notes | Page 4 of 39
