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Summary obligations & contract law book
Summary of the whole contract law book
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H3. Offer and acceptanceThree main requirements that need to be met before a contract is validly concluded:
1. Agreement of the parties, usually consisting of an offer by one party (the offeror)
and acceptance of this offer by the other party (the offeree)
2. An intention to create legal relations; under English law supplemented by the
requirement of consideration to be provided by each party, and in the French legal
tradition by the requirement of causa.
3. Legal capacity of the parties
Although a contract is in principle binding without any form, sometimes certain formalities
have to be fulfilled in addition to these requirements.
Art. 1101 CC: ‘A contract is an agreement of wills among two or more persons intended to
create, modify, transfer or extinguish obligations.’
When exactly the necessary agreement exists = consensus ad idem.
A contract only exists of one party (the offeror) has made an offer and the other party (the
offeree) has accepted this offer by way of an acceptance.
Article 2:201(1) PECL: ‘A proposal amounts to an offer if:
a) It is intended to result in a contract if the other party accepts it, and
b) It contains sufficiently definite terms to form a contract.’
requires that the offer indicates both the intention of the offeror to be bound and the
terms by which the offeror is willing to be bound.
If both these requirements are not met, there is not offer at all, but at best an invitation to
the other party to enter into negotiations.
- Invitation to treat (English law)
- Invitation ad offerendum (German law)
- Offre de pourparlers (French law)
- Uitnodiging om in onderhandeling te treden (Dutch law)
Not difficult to tell an offer from an invitation if the proposal itself indicates that is is to be
seen as a ‘binding offer’.
If statements are more vague could such a reasonable person believe that an offer was
made? (Needs to be substantiated by reference to case law)
- Gibson v Manchester City Council (1979): A reasonable person in the position of Mr.
Gibson could not have believed that the Council’s letter, only containing the price of
the house, was an offer that only needed to be accepted by the offeree in order to
form a contract. (p. 44 cb)
offer must contain sufficiently definite terms.
- Art. 1583 CC: in case of sales contract, this will include the good to be sold and the
price.
- Art. 6:227 DCC: ‘The obligations the parties take upon them, must be determinable.’
(Agree on price and anything else they find essential)
,Offers to the public: advertisement
An offer does not have to be directed towards a specific person. It can also be addressed to
the general audience.
although all jurisdictions concur that in case of such a proposal to the public the rule also
applies that it only amounts to an offer if the offeree could reasonably believe that an offer
was made, the outcome of this test differs from one jurisdiction to another. Some
jurisdictions regard an advertisement as an offer, others only as an invitation to threat.
- French law: offer to the public is binding the same way as if it had been made to a
particular person. (Maltzkorn v Braquet 1969: Cour de Cassation considered it
possible that an advertisement is a binding offer to the public that binds the offeror
to the first person who accepts it.)
o This does not mean that all advertisements are offers. If the personal
qualities of the other party are of interest to the offeror (employment
contracts and credit agreements, or rent out an apartment of buy a plot of
land) these are usually contracts intuitu personae.
o An offer will automatically lapse when the stock is finished. The offeree
cannot reasonably expect that the offeror is still willing to sell if the products
are sold out.
Art. 2:201(3) PECL: A proposal to supply goods or services at stated
prices made by a professional supplier in a public advertisement or a
catalogue, or by a display of goods, is presumed to be an offer to sell
or supply at that price until the stock of goods, or the supplier’s
capacity to supply the service, is exhausted.
o Advertising goods on a website are considered as offers.
- Dutch law: offer to the public is binding the same way as if it had been made to a
particular person.
o This does not mean that all advertisements are offers. If the personal
qualities of the other party are of interest to the offeror (employment
contracts and credit agreements, or rent out an apartment of buy a plot of
land) these are usually contracts intuitu personae.
Hofland v Hennis 1981: Hoge Raad denied that an offer had been
made: ‘’an advertisement offering to sell a specific property at a
certain price does in principle not qualify to be interpreted by potential
offerees as anything else than an invitation to enter into negotiations,
whereby matters such as the price, additional conditions of the
purchase and the prospective buyer may be of importance.’’
o An offer will automatically lapse when the stock is finished. The offeree
cannot reasonably expect that the offeror is still willing to sell if the products
are sold out.
Art. 2:201(3) PECL: A proposal to supply goods or services at stated
prices made by a professional supplier in a public advertisement or a
catalogue, or by a display of goods, is presumed to be an offer to sell
or supply at that price until the stock of goods, or the supplier’s
capacity to supply the service, is exhausted.
o Advertising goods on a website are considered as offers.
, Stichting Postwanorder v Otto BV 2008: offer was made by Otto, but
no valid contract had come into being. Consumer could not
reasonably assume in the circumstances of the case that this offer was
correct.
- German law: does not accept that an advertisement to bring about a bilateral
contract can amount to an offer. It merely invites potential customers to make an
offer to the seller to buy the good.
o In cases where the advertiser simply wants to be bound to its proposal by the
mere acceptance of somebody else without the need to negotiate, German
law provides in these cases an advertisement for a reward (Auslobung).
§657 BGB: anoyone offering by means of public announcement a
reward for undertaking an act, including without limitation for
producing an outcome, is obliged to pay the reward to the person
who has undertaken the act, even if that person did not act with a
view to the promise of a reward.
§658(1) BGB: the advertiser may withdraw the offer for the
reward begore the necessary act is performed.
o Advertising goods on a website are non-binding invitations to treat.
- English law: does not accept that an advertisement to bring about a bilateral
contract can amount to an offer. It merely invites potential customers to make an
offer to the seller to buy the good. (Partridge v Crittenden 1968: advertisements are
invitations to treat and not offers for sale.)
o In cases where the advertiser simply wants to be bound to its proposal by the
mere acceptance of somebody else without the need to negotiate, English
law regards these as offers for a unilateral contract.
Thornton v Shoe Lane Parking 1971: the customer pays his money
and gets a ticket. He cannot refuse it. He cannot get his money back.
He is committed beyond recall. The contract was concluded when he
put his money into the machine.
Carlill v Carbolic Smoke Ball 1893: an advertisement containing
certain terms to get a reward constituted a binding unilateral offer
that could be accepted by anyone who performed its terms.
o Advertising goods on a website are non-binding invitations to treat. Orders of
customers are not acceptances but offers to buy, which can easily be rejected
by the retailer. (Argos case, p. 47 cb)
,Offers to the public: goods on display in shops
- French law: considers the display of goods in a shop as an offer.
o Exploding lemonade bottle 1964: the sale takes place as soon as the
customer, seeing an item marked with a price the client is prepared to
accept, places the item in the basket or bag made available to her and which
she is required to use until the goods are checked out by the employee at the
till.
- Dutch law: considers the display of goods in a shop as an offer.
- German law: considers the display of goods in a shop in principle not as an offer.
- English law: considers the display of goods in a shop in principle not as an offer.
o Pharmaceutical Society v Boots 1953: display of goods in a shop could never
qualify as an offer for a bilateral contract. (p. 51 cb)
o Freedom of a business not to accept a customer is limited by anti-
discrimination rules. Not only in UK, but in amy other European country.
,Can an offer be revoked?
Is it possible for the offeror to revoke his offer before the offeree has brought about the
contract by acceptance?
Revocation means that the offeror is no longer bound by his offer.
- An offer is a declaration of intention that naturally needs to reach another person
before it can become effective. If the offeree does not know of the offer – which can
only happen if some means of distance communication such as email or post were
used – no harm is done if the offer is withdrawn by the offeror.
o generally accepted in all jurisdictions that an offer may be retracted if the
withdrawal reaches the offeree before or at the same time as the offer.
Art. 1115 CC
Art. 3:37 (5) DCC
§130 (1) BGB
Art. 1:303 (5) PECL
- German law: §145 BGB: ‘One who has offered to conclude a contract with another is
bound by that offer unless he states that he is not bound ‘. offeror cannot revoke
his offer.
o If a reasonable period has expired during which he does not heard anything
from the offeree, the offeror is again free to offer it to anyone else.
o To avoid the above, the offeror can limit the validity of the offer by telling
the offeree that it is only made freibleibend (subject to change) of that he
reserves the right to revoke it.
- English law: revocation is always allowed: an offer can be revoked at any time
before it has been accepted, even if the offeror included a deadline for acceptance in
the offer.
o Doctrine of consideration: promise can only be enforced if the other party
does or promises something in return. In the case of an offer, the offeree
does not provide any consideration and therefore the offer is not binding.
- French law: any offer is revocable before acceptance, but this revocation is abusive
(and therefore a tort under art. 1240 CC) if it frustrates the legitimate expectation of
the offeree. This is the case if the offer contains a time period within which it is to be
accepted, or if the offeree could reasonably believe that the offer would remain
open for a reasonable time.
o This does not mean that revocation does not have effect in these two cases,
but the offeror must compensate the damage the offeree suffers as a result
(e.g. cost of travel) Art. 1116 CC.
- Art. 2:202 PECL:
1. An offer may be revoked if the revocation reaches the offeree before it has
dispatched its acceptance (…)
2. An offer made to the public can be revoked by the same means as were used to
make the offer.
3. However, a revocation of an offer is ineffective if:
a. The offer indicates that it is irrevocable; or
b. It states a fixed time for its acceptance; or
, c. It was reasonable for the offeree to rely on the offer as being irrevocable
and the offeree has acted in reliance on the offer.
Except in German law, an offer can in principle be revoked, after which it is no longer in
existence.
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