Summary
Contract Law: Offer and Acceptance Summary
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- Contract Law
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- University Of Law (ULaw)
A 7-page summary developing an understanding of offer and acceptance - Contract law.
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Contract Law- Unit 1: Offer & AcceptancePreparatory Tasks
TASK: Reading: Contract Law Textbook (Ch1, Pt1) (Ch1, Pt2, S9: Capacity)
PART 1: Agreement and Contractual Intention (Notes)
1. Agreement (Offer and Acceptance)
Offer: ‘an expression of willingness to contract on certain terms, made with the intention
that it shall become binding as soon as it is accepted by the person to whom it is
addressed’ (Trietel).
‘Intention’: Courts adopt an ‘objective’ approach in determining whether there was an
agreement between parties (Smith v Hughes [1871])- assess what was done/said from
the POV of a ‘reasonable person’.
Allied Marine Transport v Vale de Rio Doce Navegacao SA (The Leonidas) [1985] (Goff LJ)
- ‘If the offeror so acts that his conduct, objectively considered, constitutes an offer,
and the offeree, believing that the conduct of the offeror represents his actual
intention, accepts the offer, then a contract will come into existence’
‘…to whom it is addressed’- You can only accept an offer addressed to you. Further, an
offer can be made to one person, a group or the whole world.
2. Offer or Invitation to Treat?
An ‘invitation to treat’ is an invite into negotiation as opposed to an ‘offer’. E.g., ‘I am
thinking of selling my car, I have been told £7000 would be realistic, would you be
interested?’- Terms are not certain and there would not be intention for it to become
legally binding upon acceptance.
(i) Self-Service and Shop Window Displays
Goods on display are normally an ITT. Offer made by customer at payment point and
acceptance made when monies accepted (at this point = legally binding contract).
(ii) Advertisements
Generally, advertisements are ITTs.
- Partridge v Crittenden [1968]: D charged with ‘offering for sale’ wild bird contrary
to s6(1) Protection of Birds Act [1954].
- D had advertised ‘*Birds* 25s each’
- HELD: Not guilty- ITT (i.e., Inviting the public to offer 25s for the Birds)
If generally, adverts = offers- anyone asking for the advertised goods would be accepting
(run out of stock?).
Advertisement of a REWARD: Offer as intention to be bound as soon as desired (info)
given (Williams v Carwardine [1833])- POLICY: This needs to be upheld, without
negotiation, as it encourages people who have information to come forward.
N.b., Each case depends on what the court interprets as the objective intention behind
the advert.
(iii) Unilateral and Bilateral Contracts
Bilateral Contract: ‘An exchange of promises’ e.g., Offer (promise) to sell car for £7000
and you agreed (promise to) pay £7000 for it. Both parties immediately bound.
, Unilateral Contract: A promise in return for an act. Promisor bound to perform if the
person(s) to whom the promise was made performs the specified act. E.g., Offer of
Reward (Williams v Carwardine).
(iv) Auctions
S 57(2) Sale of Goods Act [1979]: Sale by auction complete on the fall of the auctioneer’s
hammer (acceptance)- at this point there is a binding contract between the bidder and
the product owner (auctioneer = agent of the owner).
- Bids = offers, can be withdrawn at any time before acceptance.
- Calling for bids = ITT (Inviting offers for good(s)).
S57(3) refers to ‘reserve price’- if bidding does not reach this RP (agreed prior between
auctioneer and seller), the lot will be withdrawn from the sale.
AUCTIONS ADVERTISED AS ‘WITHOUT RESERVE’
- Barry v Davies (t/a Heathcote Ball & Co) [2000]: Auctioneer to sell two machines
(worth £14000 each)- Barry (Bidder) told by auctioneer sale was to be ‘without
reserve’.
- Barry bid £200 each- only bidder, auctioneer refused to accept bid and withdrew
the sale, Barry sued auctioneer for breach of contract.
HELD: If auction advertised ‘without reserve’, auctioneer effectively promising to sell to
highest bidder. Such a promise amounts to an offer of a unilateral contract (i.e., Promise
inviting an act- highest bid).
- Auctioneer held to be in breach of contract, Barry awarded damages.
Note: Barry could NOT have sued the owner as there was no contract between these
parties- Hammer had not fallen (s 57(2) SoGA [1979]).
(v) Tenders
Businesses outsource functions (e.g. Cleaning) to external contractors for commercial
viability reasons.
- A business will invite several contractors to submit written tenders for job = ITT.
- Written tenders will constitute offers, which may or may not be accepted (going
for best price etc).
HOWEVER, (Certain circs., invitation to tender = offer)
Harvela Investments Ltd v Royal Trust Company of Canada Ltd [1986]
- Two parties (C and 2nd D) invited to tender for 1st D’s shares in a company.
- Both received communication ‘If any offer made by you is the highest offer
received by us, we bind ourselves to accept such offer…’ (Held: Offers of
unilateral contract to sell to highest bidder- followed by bilateral contract for the
sale of shares).
Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990]
- BBC sent out invitations to tender (deadline: Noon, 17/03/1983) (for concessions
to operate pleasure flights) to the C and 6 other parties.
- Aero club posted tender in Town hall letterbox at 11am 17/03/1983- supposed to
be emptied at noon but was not on this day due to oversight.
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