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CONTRACT NOTES – PGDLOFFER AND ACCEPTANCE
In order to have an enforceable contract there must be an offer which has received
unequivocal acceptance. The terms of the offer must mirror the terms of the acceptance,
fulfil the object test of agreement (determine the intention of the parties to be bound) and
must be a consideration ( a promise in exchange of another promise)
AGREEMENT (OFFER AND ACCEPTANCE)
• For parties to reach an agreement, one party must make an offer ( a definite promise
to be bound by specific terms), which is accepted by the other.
• Allied Marine Transport v Vale de Rio Doce Navegacao SA
- If the offeror so acts that his conduct, objectively considered, constitutes an
offer, and the offeree, believing the conduct of the offerer represents his actual
intention, accepts the offer, then a contract will come into existence.
• The test is an objective one predominantly- the offeree must believe that the
offeror actually intended to make an offer. ( Smith v Hughes and The Leonidas)
OFFER OR INVITATION TO TREAT
• An offer must be distinguished from an invitation to treat
• Statements that invite negotiation are an ‘invitation to treat’.
Self-Service/Show Window Displays
• Goods on display in supermarkets and self-service shops are generally considered
invitations to treat and not an offer.
- Pharmaceutical Society of GB v Boots Cash Chemists
- The customer offers to buy the goods when he presents them at the payment
point, and acceptance takes place when the payment is taken for the goods
• In Fisher v Bell, D was charged with offering for sale a flick knife contrary to the
Restriction of Offensive Weapons Act- he had displayed it in his shop window.
- It was held that the display of the knife was an invitation to treat
The display of goods may amount to an offer in very limited circumstances.
Advertisements
• Generally considered as an invitation to treat. (Patridge v Crittenden)
• Authority case- Partridge v Crittenden – D charged with offering for sale a live wild
bird contrary to s 6 of the Protection of Birds Act. Held that D was not guilty, as the
advert was an invitation to treat.
• If such advertisements were offers, it would mean anyone asking for the advertised
goods would be accepting the offer.
• An advertisement of a reward however has been considered to be an offer because
there is an intention to be bound as soon as the information is given (Williams v
Carwardine; R v Clark)
- Williams v Carwardine – The offeree’s motive for accepting is irrelevant.
• If there are special circumstances which show an intention to be bound, an advert
may amount to an offer.
, - Carlill v Carbolic Smoke Ball Co- authority for the proposition that an
advertisement can constitute an offer to ‘the world’.
Unilateral &Bilateral Contracts
• A unilateral contract is effectively a promise in return for an act.
• The commitment is one-sided
• The promisor is bound to perform if, the person to whom the promise is made
performs the specified act.
• A bilateral contract is where one party makes a promise in return for a promise from
the other side.
Auctions
• S. 57(2) Sale of Good Act 1979, a sale by auction is complete on the fall of the
auctioneer’s hammer.
• Bids are offers that can be withdrawn at any time before acceptance.
• If the auctioneer accepts a bid, a contract is formed between the owner of the goods
and the bidder.
• S. 57(3) ‘reserve price’
- The price agreed upon between the auctioneer and the seller as being the lowest
price which the auctioneer may accept. If that price is not reached, the item will
be withdrawn.
- Barry v Davies- told the sale was ‘without reserve’. The items had a list of
machines worth £14,000 each, he bid £200 each. The auctioneer refused.
- The court held that there was a contract- if an auction is advertised as without
reserve, the auctioneer is promising to sell to the highest bidder.
- He could not sue the owner because the contract between the owner and seller
forms when the auctioneer's hammer falls.
Tenders
• When businesses decide to outsource a function they invite contractors to submit
written tenders to the job.
• Such requests are invitations to treat and the tenders will be offers, which
may/may not be accepted by the business who invited them
• Harvela Investments Ltd v Royal Trust Company of Canada – two parties were
invited to tender for the D’s shares in a company. Both received telexes saying that is
any offer made by you is the highest offer received by us we bind ourselves to accept
that offer.
• The House of Lords held the telexes were offers of a unilateral contract to sell to the
highest bidder which would be followed by a bilateral contract for the sale of the
shares.
• Depending on the circumstances, an invitation for tenders may give rise to a
unilateral contract.
• Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council – Aero Club had been
granted concessions to operate pleasure flights from Blackpool airport. When the
last concession expired, the council sent invitations to tender to the claimant and 6
other parties.
, • Said the tenders had to be received by noon 17th March – The Aero Club posted
theirs in the Town Hall letterbox at 11am 17th March. It was supposed to be
emptied at noon every day but it was not.
• The tender was recorded as late and not considered.
• They sued for breach of an implied promise that a tender returned on time would be
considered.
• The council had impliedly offered to consider all tenders which were submitted on
time in the correct form, and the Club had accepted this by submitting a tender. As
they did not consider the tender, the council were liable to the Club for loss of
opportunity
TERMINATION OF OFFER
1. Revocation
• As a general rule, an offer can be withdrawn at any time before acceptance.
(Routledge v Grant) However, once accepted, it is irrevocable.
• Sometimes people make offers to promise to keep them open for a certain period of
time.
• Routledge v Grant –authority for the principle that such promises are not binding if
they are gratuitous ( in the sense that the offeree has not given/promised anything
in return for the promise to keep the offer open).
• Generally, a promise to keep an offer open is not binding.
• The offeror can revoke the offer within the specified time as long as it has not been
accepted.
• However, there is an exception.
• Mountford v Scott - C paid £1 for the option to buy the D’s house
for£10,000. The option was exercisable within 6 months. D purported to revoke the
offer.
• The court held that the offer was irrevocable as the claimant had paid for the
option, and in paying £1 had given consideration for the offeror’s promise
to leave it open for 6 months.
Revocation must be communicated
• Notice of offer withdrawal must be given and communicated to be accepted.
• Byrne & Co v Van Tienhoven & Co – withdrawal of an offer by telegram was held to
take effect only on receipt.
• There are some exceptions such as – where the withdrawal is sent to the offeree’s
last known address without notice of moving, and where the withdrawal reaches
the offeree and they choose not to read it.( Prof. Treitel )
Revocation of Offers made to the Public –
• Example of Carlill v Smoke Ball Company
• They could not notify everyone who had read the advertisements.
• Would put a prominent notice in newspapers etc, as prominent as the original
advert.
, • Confirmed in Shuey v United States
Notice of Revocation Sent to a Business
• The Brimnes – where notices of revocation are sent, the notice will be effective on
receipt where it is reasonable to expect a member of staff to be available to read a
notice of revocation.
• In this case, telex was sent between 5:30-6pm, and was not read until the following
day.
• Where a notice of revocation is sent to a business and arrives within normal office
hours, it is likely effective at that point even if not read until the next day.
The revocation may be communicated by a reliable third party
• Dickinson v Dodds – must be communicated by a reliable third party. He need
not have been authorised by the offeror to communicate the notice, but
must be objectively perceived as reliable.
Revocation of Offers of Unilateral Contracts
• The problem arises in connection with when acceptance takes place.
• Is it with the promise starts to perform or is it on completion? The general view
is that with unilateral contracts no obligations arise until the specified act is
completed; ie. Acceptance only occurs when performance is complete.
• Errington v Errington & Woods – father bought a house in his name and allowed
son& daughter in law to live in it provided they pay the mortgage, on the basis he
would then transfer the house to them.
• When the father died, his widow sought possession of the house.
• Held by the courts that the father’s promise was irrevocable so long as the
couple continued to pay instalments.
2. Rejection by the Offeree
• An offeree may reject an offer either expressly / impliedly.
• Where the response to an offer suggests something different it will not be an
acceptance, but a ‘counter offer’ and as such an implied rejection of the original
offer.
• Hyde v Wrench – D offered to sell his farm for £1,000. C made a counter offer
of£950 but two days later agreed to the £1,000. D refused to complete and C
sued.
• Held that there was no contract since the offer to buy for £950 was an implied
rejection of the original offer and as such had destroyed it.
• Stevenson Jacques & Co v McLean – A simple request for further information
does not affect an offer. It still stands and can be accepted.
3. Lapse of time
• An offer may become incapable of acceptance through lapse in time.
• If the offer contains express conditions that it will lapse after a specified time, any
acceptance outside of that will not create a contract.
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