Summary
Summary Week one contract law
- Module
- Contract Law
week one contract law bpp notes - adapt
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OFFER AND ACCEPTANCE (OANDA) – WEEK ONEREQUIREMENTS FOR A BINDING CONTRACT
Offer and Acceptance + Intention to create legal relations (ICLR) + Consideration
REQUIREMENTS FOR A VALID OFFER
Certainty of offer Intention to be bound
• An offer must be clear and certain • An offer must demonstrate intention to enter into
• Gibson v Manchester City Council (1979): a legal relationship, i.e. to be legally bound
There was no binding contract because there • This will be judged on the party’s words or conduct
was never an offer made by the council. ‘May • Storer v Manchester City Council (1974): “If you
be prepared to sell” = not sufficiently clear and will sign the agreement […] I will send you the
certain – merely first step in negotiations agreement…
Bilateral Contracts (promise) Unilateral Contracts (proposal)
• Each party assumes an obligation to the other • One party makes an offer/proposal in terms,
party by making a promise to do something, which call for an act to be performed by one or
such as sell an item to the other party in more other parties. Only actual performance of
exchange for a payment the required act will constitute acceptance
• E.g. In 10 days time, you will deliver a watch to • A unilateral offer is an offer which is accepted by
me and I will pay you £100 performance of the requirements set out in the
offer
INVITATION TO TREAT
• Offer must be distinguished from a mere
invitation to treat
• ITT = first step in negotiations which
may or may not lead to a firm offer by
one of the parties
• It usually takes the form of an invitation
to make an offer
• An invitation to treat cannot be
accepted to form a binding contract
Invitation to Treat General Rule Exception
Advertisement An advert = ITT, not an • When an advertisement is a unilateral offer –
offer – Patridge v Carlill v Carbolic Smoke Ball Co (1893)
Crittenden (1968) • Twin requirements of a unilateral offer in the
Carlill case – prescribed act and clear intention
to be bound
Display of Goods An advert = ITT, not an offer:
• The display of goods in a shop window = ITT - Fisher v Bell (1961)
• The display of goods on supermarket shelves = ITT - Pharmaceutical Society of
GB v Boots Cash Chemists [1953]
, Invitation to Treat General Rule Exception
Invitations to tender An invitation to tender = Where the invitation to tender expressly contains an
ITT – Spencer v Harding undertaking to accept the highest or the lowest bid –
A request for tenders is (1870) Harvela Investments Ltd v Royal Trust Co. of Canada Ltd
used where a party (1985)
(usually a company) I.e. an invitation to • This is a form of unilateral contract: the required
wishes to purchase a interested parties to make act is making the highest/lowest bid, and when
major item or service. offers to be considered. this is carried out, the other party is bound
The requestor tenders The requestor can
(offers) from those accept/reject any tender Blackpool & Fylde Aero Club Ltd v Blackpool Borough
interested in supplying Council (1990) – it was held that an invitation to tender
the goods or services could give rise to a binding contractual obligation to
required consider tenders in circumstances where:
(1) the tenders had been solicited from specified
parties who were known to the requesting
party;
(2) there was an absolute deadline for submission;
(3) the party requesting tenders had laid
down absolute and non-negotiable
conditions for submission.
Auction Sales The auctioneer’s request AUCTIONS ‘WITHOUT RESERVE’
for bids = ITT – Payne v • Items ‘without reserve’ = unilateral contract,
s7 of the Sale of Cave (1789) the auctioneer promises to sell to the highest
Goods Act 1979 – “a bidder
sale by auction is Offers are made by bidders • The auctioneer cannot withdraw the item
complete when the and are accepted by the use after bidding starts – Barry v Davies (2000)
auctioneer announces of the auctioneer’s hammer.
its completion by the Items can be withdrawn at • Obiter in Warlow v Harrison (1859):
fall of the hammer […] the auctioneer’s or bidder’s • Bilateral contract – bidder makes an offer which
until the discretion at any time is capable of acceptance or rejection by the
announcement is before the hammer falls. auctioneer, this contract determines who gets the
made any bidder may There is a bilateral goods, and
retract his bid” contract at this point • Unilateral contract – based on the promise that
the auction will be without reserve
• If a reserve is not applied and goods are
withdrawn – breach of unilateral contract, thus
highest bidder entitled to damages (not the goods
– these are dictated by the bilateral contract for
sale)
TERMINATION OF AN OFFER
1. REJECTION
• Once an offer is rejected, it cannot then be accepted
• Rejection does not take effect until it
is communicated with the offeror
1(a) Counter Offers
• Where an offeree makes a counter-offer,
the original offer is deemed to have been
rejected and cannot be subsequently
accepted – Hyde v Wrench (1840)
1(b) Request for further information
• When an offeree responds seeking clarification of the extent and terms of the offer, or to ascertain if the
offeror would consent to changing certain ancillary aspects of the offer – the original offer remains open
for acceptance – Stevenson, Jacques & Co. v McLean (1880)
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