1. Offer and Acceptance
Offer
- Ads: usually invitations to treat (Partridge) but unilateral contracts like Carlill can be offers- issue of intention to create legal
relations and why it is an offer in this case and when acceptance happens.
- Goods on Display: offer on a website? Usually invitation to treat but suggestion that there is an internet version of Carlill.
- Tenders: invitation to treat but exceptions- (1) Harvela- promise to accept highest offer held contractually binding as a term of
the contract; (2) Blackpool where council invited tenders to operate pleasure flights and said it would not consider anything
after the deadline so it was held that there is a contractual right for every conforming tender to be considered (two-contract
analysis).
Acceptance: generally ‘unqualified assent to the terms of an offer needed’
- Terms of acceptance identical to offer: rigid and criticised in Butler and Gibson by Denning encourages battle of the forms
cases like Butler.
- Must communicate acceptance to offeror: exceptions like unilateral contracts, postal rule, or where lack of communication is
attributable to the fault of the offeror (Entores). Entores held instantaneous communications different to post and acceptance
takes place when it reaches the offeror; if acceptor knows message was not received, he must repeat it or no contract; if he
thinks message received but it was not, offeror is bound as it is his own fault (e.g. if he did not ask to repeat what was said); if
acceptor reasonably believes message received but offeror does not get it through no fault, no contract.
o Brinkibon: Lord Wilberforce affirmed instantaneous communication means acceptance takes place when received:
‘Since 1955 the use of Telex communication has been greatly expanded, and there are many variants on it. The
senders and recipients may not be the principals to the contemplated contract. They may be servants or agents with
limited authority. The message may not reach, or be intended to reach, the designated recipient immediately:
messages may be sent out of office hours, or at night, with the intention, or on the assumption that they will be
read at a later time. There may be some error or default at the recipient’s end which prevents receipt at the time
contemplated and believed in by the sender. The message may have been sent and/or received through machines
operated by third persons. And many other variants may occur. No universal rule can cover all such cases; they
must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a
judgement where the risks should lie.’
- Silent Acceptance: silence generally not acceptable as would be too burdensome but criticised as in Felthouse the nephew
acted as though contract concluded but can amount to acceptance if accepted by conduct (Brogden and Rust).
o Felthouse: A wrote to B stating that if he hears no more, he will consider that he bought the horse for 30L 15s and no reply. 6 weeks
later D auctioneer put the horse on auction by mistake and sold it. Held A had no claim as o contract acceptance by silence. Wiles J
said that on the facts, there was clearly no ‘complete bargain at that time’ and cannot ‘impose’ sale on another; it is clear the
nephew intended his uncle to have the horse at the price A named but he had done nothing to bind himself. Only a proposal was
made without any acceptance.
- Unilateral Contracts: once entering performance of act, could say acceptance doesn’t take place when unilateral contract
started but there is a collateral contract not to revoke in exchange for the other person starting to complete the unilateral
instruction this was the approach in Daulia which is reasonable and avoids asking when acceptance of a unilateral contract
takes place (no one can answer this Q as you can’t say it is only accepted when the terms are completed but also when the
performance just started and can’t tell when the middle is). Daulia shows an implied obligation approach which is better than
a general ‘good faith’ argument and there is precedent for it Bournemouth FC. Could argue once performance of unilateral
contract started, can’t revoke by analogy with White v McGregor which said that once acceptance takes place, can’t then
revoke. But this doesn’t make practical sense.
- Acceptance in ignorance of an offer: generally, cannot accept offer unless knowledge of existence of an offer- difficult is in a
unilateral contract. In Gibbons, party claiming reword did actually have knowledge; cross offers do not establish a contract
(Tinn).
Revocation
- Revocation must be communicated to the offeree prior to his acceptance (Byrne). Where revocation outside business hours, it
will not take place until resumption of normal business hours (The Brimnes- telex message of revocation sent during normal
office hours but D read it next day- held withdrawal effective when Telex message was received, not read as ordinary office
hours and was neglected by D (their fault)). Revocation can be communicated by someone else other than the offeror
(Dickinson) but probably needs to be a reliable source of info- promise to keep an offer open for a period held not binding in
Dickinson; will not be binding unless there was consideration for that promise.
o Dickinson: D offered to sell his house to C and also said he would keep the offer open until Friday; he then sold
house to third party and asked a friend to tell C offer had been withdrawn. On Friday, C went to D’s house and
accepted the offer. Held offer revoked and no contract existed as the promise to keep offer open was not
contractual as no consideration- offeror thus can withdraw at any time before acceptance. James LJ.
- Date of revocation is day it is communicated before offer is accepted or reasonable steps taken to revoke. For emails, date of
revocation is day it arrives or day it is reasonable to be read (e.g. business hours). Always look at the date received or when it
would be reasonable for the offer to be received in PQ. Revocation of offer that was advertised and unilateral, it is impossible
to communicate revocation, but it is sufficient to put up the notices of revocation in the same way within a reasonable period
of time (must be something that would reasonably be expected to reach the acceptor). If someone else tells you of the
revocation, that generally is enough to revoke even if the promisor does not say so but seems that the third party must be
reliable. It is a messy outcome resulting from an untidy rule. In unilateral contract, you cannot revoke at some point when the
, person materially sets on doing the task even though it doesn’t make sense; could say acceptance is when you start to perform
the unilateral task, but the terms of the offer are completion, and no case has said so yet.
Essay Q: Are offer and acceptance rules out of date?
Alternative Approaches:
- Butler v Ex-Cello Corp [1979 CA]: D wished to purchase machine from C; C sent out a quotation of £75 535 along
with copy of standard terms of sale; D put in an order and sent a set of their terms which did not include a price
variation clause (as included in C’s standard terms) and the order contained an acknowledgement slip which
required a signature and stated contract signed on terms overleaf. C signed it and returned it and later C wanted
to enforce the price variation clause. Held, terms were those of D as the counter offer by D destroyed the offer
made by C- contract concluded on D’s terms- in a battle of the forms case, contract concluded on the terms
submitted by the party who is the last to communicate those terms before performance of contract
commences.
- Gibson v Manchester CC [1979 HL]: D run by Conservative Party and operated a policy of selling council houses;
C applied for details of house price and mortgage terms- D said ‘corporation may be prepared to sell the house…’
but invited a ‘formal application’ to be completed. D completed application form and returned it but Labour
returned to power and halted sales. In CA, Lord Denning MR held you should ‘look at the correspondence as a
whole and at the conduct of the parties and see there from whether the parties have come to an agreement
on everything that was material’. But HL overruled and held council’s letter was not an offer since ‘may’ verb
used. Diplock:
o McKendrick: Lord Denning’s remarks in CA have been echoed in Eurymedon where Lord Wilberforce
said that English law, having ‘committed itself to a rather technical and schematic doctrine of contract,
in application takes a practical approach, often at the cost of forcing facts to fit uneasily into marked
slots of offer, acceptance and consideration’. Collins criticises offer-acceptance as it makes the law
formalist- detailed, technical and mysterious’. In Tekdata, certainty emphasised and traditional rules
applied- now same rules applied but courts apply it with greater flexibility (e.g. Blackpool)- courts try
to accommodate new practices in established frameworks (not a mechanical approach.
o Denning’s approach is too uncertain (which inconsistencies are sufficient to say no contract came
into force?); everyone will have to go to court to see whether a contract is made; orthodox rules of
offer-acceptance are rigid + artificial (though are applied flexibly) but way better than unpredictable
mess whatever the abstract merits it’s bad for business. There are pigeonholes for offer and
acceptance that must be filled but that’s best for certainty messiness can be seen in revocation rules
and some offer-acceptance fact pattern but generally it works well.
Certainty: In May v Butcher, held no valid agreement as no basis in evidence for finding that they reached an agreement on
the point at issue or criteria or machinery agreed by the parties that the courts could employ to resolve uncertainty or fill
the gap. Cases where courts held agreements valid: resolving uncertainty using- (1) resolution by one or other of the
parties- e.g. price settled by the buyer is fine; (2) resolution by third party (e.g. Sudbrook had contract with price agreed
by 2 surveyors appointed by tenant and landlord respectively but landlord did not appoint one- held clause not too vague
as to put in place a mechanism to ascertain price; HL held the mechanism was not itself an essential term of the contract
but a way to establish ‘fair price’ which court could do itself; thus contract will be valid if it creates a mechanism for
resolving the aspect left uncertain); (3) intervention of statute (e.g. s 8 Sale of Goods Act 1979); (5) implication of terms.
Intention to Create Legal Relations: (1) Domestic agreements- presumption in Balfour that there is no intent to create legal
relations which can be rebutted (no finite list of ways to rebut). It is a Q of fact if rebutted like when agreement formal
(Radmacher) or relationship is near breakdown, or in writing (Errington), or if parties acted to their detriment in reliance
on it. Rationale is floodgates argument and policy reasons about the role of law in family relationships (Balfour). This is
an additional hurdle for C to clear and is distinct from considerationFreeman has criticised that legal effect not given to
agreements in the family contest or that doctrine rests on a fiction. (2) In social agreements, similar presumption and
rebuttable; (3) commercial agreements- presumption that parties intended to create legal relations and presumption
difficult to displace (Esso Petroleum) but can be rebutted based on ‘binding in honour only clauses’ but very rare.
- Balfour: husband worked overseas and agreed to send maintenance payments to wife; relationship soured and
he stopped. Held, purely social and domestic contract so presumed that no intention to create legal
relations.
- RTS Flexible Systems [2010 SC]: parties decided to work on basis of letter of intent and terms of contract would
ultimately be finalised but no final contract ever signed. Lord Clarke- general principles ‘not in doubt’ and
whether there is a contract depends on a ‘consideration of what was communicated between them by words
or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations…
Even if certain terms of economic or other significance to the parties have not been finalised, an objective
, appraisal of their words and conduct may lead to’ a binding contract. On the facts, contract found as clearly
intended legal relations even after expiry of LOI as price agreed and performance started.
- Radmacher [2010 SC]: If agreement freely entered into with info available, should be upheld and factors like
‘contrary to public policy’ (anti-nuptial agreement on the facts) should no longer apply.
2. Consideration + Estoppel
Pre-Existing Contractual Duty to 3rd Party: Eurymedon held shipper of goods had made a promise to D stevedores who
unloaded its goods from a ship that it would not sue them for any damage that was done while they were being unloaded
from the ship. Pao On held that even a promise to perform a contractual duty to a third party is valid consideration.
Pre-Existing Legal Duty: Denning in Ward launched attack on idea that pre-existing duty at law could not be valid
consideration said it is unclear why this unilateral contract of payment to look after the child was unenforceable. But
uneasy to say keeping child happy is going beyond existing duty. Formal position that performance of legal duty is not
valid consideration but it comes under pressure from the Williams ‘practical benefit’ analysis.
Performance of Contractual Duty Owed Already to Promisor:
- Williams and Foakes relationship is difficult due to difference in approaches. Stilk esp. duress analysis difficult as
no developed economic duress at the time but also factual difficulty as no evidence of any real duress but
Campbell report problematic as the sailors would likely have to work harder so additional consideration likely
present.
- Williams emphasised ‘practical benefit’ for consideration rather than rigid approach- factual difficulty in what the
practical benefit was. Unclear relation to existing law- Ward can be a practical benefit case but Glasbrook
doesn’t fit as it would undermine the legal duty not being consideration rule. Wishart argued Williams can be
explained as an original bilateral contract between parties supplemented by a collateral unilateral contract to pay
more for actual performance- D was bargaining for actual performance- but idea that D made 18 separate
unilateral offers does not fit with Williams analysis but avoids idea that C provided consideration for
something already promised.
Part Payment of Debt: payment of part of a debt is not good consideration for a promise to discharge entire debt (Foakes).
Rule easily avoided by chattel or different place (Pinnel’s case). Williams analysis seems to undermine Foakes but latter is
HL; Re Selectmove court applied Foakes and said it was not undermined by Williams- practical benefit analysis rejected.
Not enough practical importance for LC to intervene. MWB SC passed comment.
- O’Sullivan: in favour of Foakes because a practical benefit analysis would mean that court decides something is
more valuable to C than money which is a difficult and uncertain assessment (law cannot concede that 800 has
more value than 1000). Counter argument is that if C agrees, it must be of practical benefit (but duress). Also
could distinguish situation of Williams and Foakes because e.g. mitigation does not apply to a debt situation and
reasonableness of creditor’s actions is irrelevant. 3 reasons to prefer Foakes- (1) certainty (what is practical
benefit); (2) estoppel can be used to cure injustice instead of finding consideration; (3) economic duress
focused on is unclear and uncertain so cannot put a break on Williams analysis.
Past Consideration: past consideration is generally not good consideration- Eastwood v Kenyon. Exception is when the past
consideration is done at the request of the promisor. The exception was restated in Pao On- past consideration to be good
must be done (i) at the request of promisor; (ii) clearly understood/implied when act requested that act would be paid
for; (iii) promise of payment must be one which, had it been made prior to or at the time the promisee would perform
the act, would be enforceable. Case also shows pre-existing contractual obligation to a 3rd party is good consideration.
Chen-Wishart:
- Consideration: ‘eye of the law’ view that re-promise does nothing; ‘eye of the parties’ view that practical benefit
could be even in re-promise; Coote argues this breaks the ‘link between a contract and its performance which is
inherent in the concept of an enforceable legal obligation’. However, until specific performance is the primary
remedy, backed up by cost of cure or account of profits, then contract law must concede that obtaining actual
performance will often be more valuable than having a right to sue for non-performance. Could argue you are
bargaining for actual performance in Williams (pay more/accept less for actual performance). In Antons Trawling
in NZ, proposed to forego consideration when varying contract; some argue for abolishing consideration in
favour of ‘serious intention to contract’- doubtful that requirements of intention to create legal relations can
work better than consideration; consideration is not merely a proxy for serious intention to be bound. Williams
widened consideration; Collier circumvented it; Antons abolished it. Concern over exploitation must be worked
out at the stage of economic duress.
- Reform of Consideration: ideas that some promises need to be binding without consideration- (1) in writing; (2)
promises inducing foreseeable reliance; (3) promises of what one is already bound to do; (4) part payment of
debt promises; (5) promise to keep offer open for definite period. However, seriously intended promises have
never been sufficient for contractual liability and enforcing promises based on writing does not protect
