Contract law I – Formation and Vitiation
All tutorial notes
CONTRACT LAW:
Tutorial 1 – Offer and
Acceptance
Questions for discussion
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?
Tutorial 1 – Offer and Acceptance
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: The regulations (under the Pharmacy and Poisons Act
1933) require a registered pharmacist to supervise the sale of certain drugs: boots does
not offer this – medicinal is put on shelves for sale, and the customer is free to buy the
product, without the supervision of a registered pharmacist, as Boots offers a self
,service. - In Boots, the customers select items from shelves and take it to checkout to
purchase: even though there is not a pharmacists supervising the sell of medicinal, it
does have suitably qualified persons at the pay point in the stores: the person standing
at the check out is a pharmacist and prevents people from taking the drugs outside of
the premises. Issue: when was the contract of sale concluded? Ratio decidendi: The
contract was not concluded until the customer brought the medicinal to the check out
point, where there was a suitable qualified person – this means that the contract was
not breached and Boots did not commit an offence, as the display of good was merely
an invitation to customer to make offers to buy.
- SIMILAR TO THE FISHER V BELL CASE Thornton v Show Lane Parking: The claimant was
injured in a car park, partly due to its own negligence: the claimant was given a ticket
upon entering the car park, after putting money into a machine. The ticket itself meant
that the contract of parking was subject to terms and conditions, which were displayed
inside the car park: one of the terms excluded liability to personal injuries. Issue: was the
term incorporated into the contract: was this term brought to the attention of the
claimant before or at time of the time the contract was made?
- This depends upon where the offer and acceptance took place, in relation to the
machine. Ratio Decidendi: The machine constitutes the offer itself, while the acceptance
is made when the money is put into the machine. - The ticket was dispensed after the
acceptance took place (money was put into the machine), and therefore the term was
not incorporated in the contract: vending machines (hence the parking lot machine)
constituted a standing offer – this means that s soon as the machine was activated,
there was no possibility of negotiation.
- Clear notice as to the terms of the proposed contract must be provided by the offeror
and the offeree for a contract to arise. - The court found that an offer was being made in
the second case: the vending machine constitutes a “standing offer” – this means that
when the machine is activated, there is no possibility of negotiation as the offer that is
being made by the machine itself has been accepted. - On the contrary an offer was not
made in the Boots case, because the display of goods in a shop and a self service shop
only constitute a mere invitation to treat, and not an offer itself. The offer, and
acceptance of such in this case, is made when the product is brought at the cashier
point, where a licensed pharmacist terminates the offer by accepting the offer of the
customer to buy the product.
- This is done to protect both the shop keeper’s freedom of contract, and avoid the
practical inconveniences which would be the consequence that would follow from the
conclusion that a displayed constituted an offer (nonetheless, limitation of supplies and
stocks). - Somervell LJ agrees with Lord Goddard CJ in both sustaining that the display of
goods does not constitute an offer. Both believe this, because both sustain that self-
service shops (and ordinary shops) expose a product with the intention of this being an
invitation to treat rather than an offer.
- This is believed also because if the product did constitute an offer, then once the client
has picked it up, he could sustain that the shopkeeper lets him go with the product, as
with the action of picking up the product, the property has passed to him.
- Furthermore, if the product did constitute an offer, then once the customer has picked
up the product, he would not be able to change his mind and put it back (the shop
keeper could say that the property has passed to the client and that therefore he has
the obligation to pay).
, 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 City Council (1974)
This case involved the council tenant’s right to buy his property – the council had
sent a letter entitled “Agreement to sale”, which promised to have the agreement
signed by the council if Storer signed it and returned it before.
- all the legal ingredients were there, but the date was missing - Storer complied and
signed the agreement, returning it to the council – however, the labour party had
been elected and refused to return a council signed copy, hence refusing to sell the
property: Storer sued the council for breaching of the contract. Ratio Decidendi: The
court of appeal found that there was a binding obligation on behalf of the council to
sell the property, at the condition that a “reasonable man” signed and returned the
letter to the council: Storer had done so, and therefore, as the action by the offeree
had been made (return a signed copy of the letter), then a legal binding contract had
been made, and the council was legally bound to respect it (so sell the house to Mr
Storer). Gibson v Manchester City Council (1979)
- “May be prepared to sell” – no intention of selling, effectively the council had not
made an offer (the House of Lords in fact decided that an offer had not been made).
- the price was also missing, this further highlighted that it was not an offer, but
rather an invitation to treat.
- Gibson had received a letter by the council with an application to be completed and
sent again to the council in order to be able to purchase the house: Gibson
completely the application and sent it back.
- The council was then re-elected and it was decided that they no longer wanted to
sell the house to Mr Gibson: the plaintiff sued the council for the breaching of the
contract. Ratio Decidendi: The court decided that no contract had been breached, as
the letter sent, with the application, was not an offer. HOWEVER; the application
sent by Mr Gibson was itself an offer that the council refused to accept.
- Intention of the council changed in both cases: In the Gibson v Manchester City
Council (1979) there was no intention to sell on behalf of the council: the council had
not made an offer, therefore no contract had been breached
- In the Storer v Manchester city council, the council did initially make an offer, only to later
be refused: the labour party changed idea and no longer wanted to sell the council house to
Mr Storer, even though Mr Storer had accepted the offer and followed the terms of the
contract – he had sent the signed copy of the “ Agreement of Sale”, only this was not sent
back to him signed by the council. Difference: the council worded the letters differently –
not an offer in the case of Mr Gibson – the intention of selling the property was unclear and
an offer had not been properly worded and made.
3. What is the difference between an offer and a statement of intention? Between an
offer and the supply of information? - To make an offer, the offeror must make a clear,
unequivocal statement, which them legally bounds him to his said offer (so to fulfil it), IF
the offeree accepts the offer.
