2. Offers & Invitation to Treat Flashcards
Difference between offer and invitation to treat
Offer = readiness to sell aka intention to be bound, which is legally binding (offer to sell or offer to purchase)
Invitation to treat = inviting someone to make an offer at the price quoted by the seller, to which the seller must still agree so not legally binding
CANADIAN DYERS ASSOCIATION LTD V BURTON 1920 OCA
Fact: CDA wants to buy Burton’s house. Burton provides a price quotation and says, “the last price I gave you is the lowest I am prepared to accept”. CDA interprets this as an offer, sends a $500 cheque, and Burton returns the cheque and says there was no contract.
1. A quotation of price does not constitute an offer to sell, quotation is an invitation to treat (based on the language and in the light of the circumstances in which it is used)
2. Exception to the rule of invitation to treat: court can treat a price quote as an offer if an objective reasonable person would have objectively interpreted the seller’s actions as providing an offer.
3. Quotation does not constitute an offer to sell, it is to be determined by the language used and considering the circumstances
PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMISTS (SOUTHERN) 1953
Rules:
* Placing goods on a shelf is an invitation to treat and not an offer
* A customer makes an offer to purchase, and the seller still needs to accept that offer
* In a store the shopper is the offeror, and the shopkeeper is the offeree
* In cases where the objective intention is not clear the court will draw on policy considerations whether treating something as an offer would result in absurd consequences
Analysis
* Policy consideration: if all displayed goods were offers would mean shoppers were locked into purchasing the moment it entered their basket (unable to change mind) and seller could not refuse sale.
* Treating goods on shelf as invitation to treat preserves freedom of contract for the seller and the shopper
CARLILL V CARBOLIC SMOKE BALL 1892 QB
Rule:
* Established conceptual difference between a bilateral and a unilateral contract
* Unilateral contract: provide acceptance through the performance of an act, the requirement for communication of acceptance is waived.
* No limit on the number of people you can make an offer to.
Analysis
* A reasonable person would treat the ad as an offer not a puff, evidence = money in bank as a promise
* Argued not serious offer because was said to the whole word but the court will not impose a max on the amount of people, they make an offer to (freedom of contract)
* “Extravagance of a promise is no reason in law why he should not be bound by them”
* Unilateral contract = the offer is the advertisement, purchasing the product is acceptance through performance of an act.
* The rule of acceptance exists for the benefit of the offeror and the offeror implied through the advertisement that they waived the requirement.
GOLDTHORPE V LOGAN 1943 OCA
Rule
* Ads are generally an invitation to treat but can be an offer depending on the language i.e., if they “guarantee” something
* If explicit promise is made then an offer has been made
Analysis
* The word guarantee has an implied promise if the product doesn’t work
* Same as carbolic depends on the objective reasonable person would think it’s an offer, intention found in the circumstances
* By running the ad logan made an offer to anyone willing to accept the terms and conditions as they were written, Goldthorpe did and therefore there was a contract
* Unilateral contract – client accepted offer by fulfilling the necessary condition
Unilateral Contract
- Acceptance through the performance of an act
- Requirement for communication of acceptance is waived
- Acceptance and performance happen simultaneously – Carbolic
- Freedom of the minds – the minds are united conceptually; the offeror is bound by the act of the offeree
Bilateral Contract
- Acceptance occurs through the exchange of promises
- Communication of acceptance is required
- Acceptance and performance do not coincide
