5 Offer and Acceptance Flashcards
Meeting of the minds
Cant have a contract unless you have two parites come together to have the same state of mind
Nature of Offers
offer is a willingness to be bound on certain terms
Reckoned objectively and not subjextively (hay fever in a an auction house example)
Objective standard is the formal test
Some juristictions: litmus test on whether an offer is a legal matter is dependent on reliance or seriousness
Common law system we inherited from Englad: we settled on a commercial paradigm. Designed by English judges, business before all else.
offerors subjective intention not determinative
reasonable expectations
the whole point of contracts is to ensure reasonable expectations are met
Thus an offer can be a dangerous thing
IE put offer into the world, with no limits. 11 acceptances at once, now have 11 contracts but only ability to fulfill one….10 could sue for expectation interest/ damages
Key point: if i create a williness to be bound, and put out an offer and someone accepts this
Reasonable Persons Test
Serves as the formal test.
Can ask objectively if the offeror can be an expression of a willingness to be bound by certain terms, But the objective test also necessarily imports a fair measure of discretion a fair measure of leeway for a judge.
If you think of yourself if you were to hear a case in contract and both parties stand up and make arguments and both parties induce evidence and it’s very difficult matter You may have this sort of mind that very logically goes through step by step until you reach a conclusion.
It’s fairly broad parameters. It’s a range of possibilities. In any given situation, if you ask a question objectively, there’s not one right answer.
There might be several right answers. Some leaning plaintiff’s way, some leaning the defendants way.
And so by using these objective standards, by using the reasonable person test, at the stage of offer, so true at other stages during the process, we have some measure of flexibility.
So we can sum up this stage by saying, if you want to have a contract in the common law system, you have to have offered acceptance.
An offer is defined
Is defined as an expression of a willingness to be bound by certain terms.
Reckoned objectively rather than subjectively, so we don’t care what went on in your mind (reasonable persons test) - ie Hay fevel in a an auction house- doesn;t matter- just matters what the reasonable person would say
Acceptance of offer
If I make an offer to you, then as soon as you accept, a contract immediately crystallizes and significantly, once the contract comes into existence, it’s too late for me to back out of.
There’s an enormous danger there. And the danger is that anytime I communicate an offer, I might get more acceptance that I can actually handle.
And as a result of that we tend to lean away from recognizing communications as an offer.
So we can start broadly and we can say an offer doesn’t have to take any particular form.
There’s no magic in words. It can be an offer even if I don’t say offer. And likewise, even if I do use the word offer, it’s not necessarily an offer.
In law, generally, we look at the substance and not the form.
What forms can an offer take?
So we say an offer can be any form of communication.
It can be written, it can be oral, it can be in words, it can be in actions, it can be any communication that conveys to the reasonable person that I’m willing to be bound by these certain terms.
Also has to be unequivocal and clear.
The reasonable person has to be able to conclude on the basis of what I said that I’m for sure willing to enter into this contract with you.
Second, we say that the determination isn’t made simply in the basis of the communication itself.
When we’re trying to decide what there’s something as an offer or not an offer, we don’t look just at that limited email or that piece of paper that I step up on the notice board downstairs, we look at all of the circumstances.
We look at things that happened before my communication, we look at things that happened after my communication, we look at absolutely anything that the reasonable person might be influenced by.
A statement of inquiry or a price quotation is not an offer.
No reasonable person in that situation would recognize your communication as an offer of a willingness to be bound by certain terms. You were simply making an inquiry.
You were simply trying to ascertain the facts, determine the circumstances in which you might or might not decide to make an offer.
We’ve illustrated the mischief.
What is the mischeif with an offer?
I say mischief I mean the reason for formulating the rule in the way that we do.
What is the concern? What is the danger? What is the problem that we’ve led the course to lean away from recognizing a communication as an offer?
We said the mischief with an offer, the danger, the problem, the concern is simply that you might get acceptance that you can’t fulfill.
We said therefore on that basis, when we get down to the bottom of the page in a number of different situations, we lean against recognizing communications as offers.
So it’s not an offer if it’s a statement of intention or if it’s a price quotation or if it’s simply an inquiry.
Those are things that are not offers therefore can’t be accepted.
Pharmaceutical Society v Boots Cash Chemists 1953
Coming out of World War II, but commerce was changing.
And up until the war time, up until the 1940s, if you went to a store, whether it was a pharmacy or a grocery store or hardware store, it didn’t look like stores looked today. Not self-service. Counter with a clerk (pharmacist standing next to clerk), for most businesses including grocery
Self-service wasn’t the way that the commercial world operated in the pre-war era.
And significantly, that’s true in boots Cash chemists, because the statute at the heart of the case says that certain “Poisons” can only be sold under the supervision of a pharmacist.
Under this model the sale, the offered acceptance, the exchange of consideration would be conducted under supervision of the pharmacist, and there is no problem.
After war: self-service stores, boot- Cash in this is. like London drugs or Shoppers Drug Mart.
Bootscash chemist and pharmaceutical society is essentially a turf war.
The argument by the pharmaceutical society is that the statute could be complied with on the old model of commerce because the pharmacist is always standing there at the front counter when any contract is created, but it can’t be satisfied in the self-service stores because, according to the Pharmaceutical Society, when you walk into a store and you see an item on the shelf cough drops, flu medicine, that’s the store’s offer to sell.
And again, according to the Pharmaceutical society, if the item on the shelf is the store’s offer to sell to you, then according to the Pharmaceutical Society, the acceptance is when you pick up the item and put it into your basket.
And they say, as soon as you’ve got offer, item on the shelf, and acceptance, you put in the thing into your basket, you’ve got a contract created then and there.
And since the pharmacist doesn’t follow you around the store, If that’s the contract, then the contract wasn’t created under the supervision of the pharmacist.
So essentially, the Pharmaceutical Society is trying to carve out special territory for their own business.
They might be willing to say, self-service stores for groceries, for hardware, needs, for other sorts of goods.
But if we’re talking about pharmaceutical goods, and we want to comply with the act, then you can’t have self-service, because when contracts are created, there’s no pharmacist in sight, therefore you’ve contravened the statute.
And so the whole question in pharmaceutical society and boots cash chemists is, whether the pharmaceutical society is right, Is it true to say an item on the shelf is an offer and that offer is accepted as soon as you put it into the basket?
Understand as well in this sort of case, judges aren’t entirely indifferent. judges are also aware of the broader context And they’re aware of the fact that, especially coming out of very difficult war circumstances and still under rationing of goods in England, we would like to get things flowing as smoothly and as frequently as possible.
Obviously, that’s the wave of the future. That’s what customers like. That’s what stores like other than the pharmacists.
So they have some motivation to find that the pharmaceutical society is wrong.
And so again, the question is whether an item on the shelf is the store’s offer to sell and your acceptance comes when you pick up the item and put it in your basket.
And the Court of Appeal in this instance says the analysis is wrong because in fact when a store puts an item on the shelf, even when they put a price tag on the item, that’s not the store’s offer to sell.
Rather, new terminology here, that’s what we call an invitation to treat.
So when a store puts an item on the shelf and puts a price tag on the item, if you were to ask people on the street, they would say that’s an offer.
But in fact, in law, it’s not an offer. It’s what’s called an invitation to treat. And an invitation to treat is basically an invitation to somebody to make an offer to you.
So when the store puts the item on the shelf, the price tag on the item, it’s not making an offer, it’s making an invitation to treat.
It’s effectively saying to each customer, hey, What do you think?
Why don’t you offer to buy this from us? We’re not offering to sell it to you Why don’t you offer to buy this from us?
And when you bring the item up to the cashier then that’s when the store accepts your offer
RATIO: most communications that the layperson would think Constitute offers and law aren’t offers at all They’re actually just invitations to treat and in fact the way that self-service stores operate is that when you see something on a shelf, that’s just an invitation to treat.
That’s the store’s way of saying, why don’t you make an offer to us?
You make the offer when you pick up the item and carry it up to the cashier, And the cashier makes the acceptance when they accept your offer and exchange the goods for the money.
Two points we can make about that analysis. The first point is that it seems a little bit artificial because even if we accept the pharmaceutical society’s initial premise, that’s that an item on the shelf is an offer.
It doesn’t necessarily mean acceptance would come as soon as you pick it up and put it into the basket.
That seems a rather strange analysis. I would have thought, even if the item on the shelf is an offer, your acceptance that immediately creates the contract doesn’t happen when you pick up the item and put it into the basket.
I would think it makes more sense to say the acceptance comes when you pick up the item, put it in your basket, and proceed up to the cashier.
That’s when you accept. Nevertheless, the practical analysis is that the item on the shelf isn’t an offer, just an invitation to treat, so the offer comes from the customer and the acceptance comes from the store.
The real explanation as to why we recognize items on the shelf as invitations rather than offers is that if it all possible you would like two things You would like to promote this sort of business, but secondly you also want a fairly broad clear rule You would like to be able to say in most initial communications whether it’s an item on the shelf whether it’s an advertisement in the newspaper, whether it’s an email I sent out to you, whether it’s a notice that I posted on the board, because of the mischiefs involved with making offers.
We would like to reduce the number of offers made.
We want to restrict the recognition of communications as offers.
So in all those situations, we simply say that they’re not really offers their invitations to treat (RATIO of the case)
So for example, if we go back and think about the notice that I posted, Wattum’s for sale at $25, acceptance by McKennis, by letters McKennis, I might be able to argue that that’s not really an offer it’s an invitation to treat.
And a court might be inclined to go along with me, simply because it recognizes that there’s that mischief.
That if my initial communication is an offer, I might be open to more acceptances that I can fulfill.
In any event, whether you agree with it or not, this is a rule that works, that works across the board.
Fisher v Bell 1961
So Fisher and Bell was an English case from 1960. There was a vendor who was in the business of selling switch blades.
There was a statute that said it’s illegal to sell or offer to sell switch blades.
This vendor puts some switch blades in his window and he puts a price tag on them, he’s trying to sell switch blades.
And the police officer walks by, sees their presentation, walks into the store and says, you’ve broken the law.
There’s a statute that says you can’t offer to sell or sell switch blades, and clearly that’s what you’re doing.
And moreover, the vendor himself said something like, it’s a fair cop governor, of course I’m guilty.
But when they actually got the court, the judge decided the vendor wasn’t guilty.
Because even though subjectively, he thought he was making an offer, objectively, the reasonable person would have said the switchblade with a price tag in the front window isn’t an offer, it’s just an invitation to treat.
So he dodged the charge.
Similar, a Canadian face, Ray David, outside situation.
You have a single mother who desperately needs some clothing for her infant.
She would like the really good quality clothing, but she would like to pay the price for the really poor quality clothing.
So she does what I suspect many people do in that situation.
You simply switch the price tags. You take the price tag off very inferior quality clothes for your child and you put it on the very good quality clothes and she takes it up to the cashier and she buys the high quality clothing for a very low price.
And the story detective noticed this. To my partner, surely. She was thoroughly prosecuted and once again the court says, you didn’t do anything wrong because the initial price tag on the items wasn’t an offer.
The only offer comes from the customer. And the customer simply idiosyncratically was offering to buy very high quality goods for a very low price.
And if the store wants to accept that sort of offer, that’s their business.
A lot of subsequently changed in the criminal context, but that’s another manifestation, somewhat surprising manifestation of the rule that says most initial communications, even though they look like offers, aren’t offers.
Because of the mischief, because of the danger associated with offers, we simply call it an invitation to treat, so that the offer comes from the other side.
That’s good for today. The next lecture we take up will Start with an exercise where there’s an offer that somewhat duplicitously tricks somebody into coming to the store.
And when you go through the exercises, you really should try to work them out for yourself beforehand.
Ask yourself, again, what’s really going on here.
And more importantly, ask yourself whether the presumptive rule, item on the shelf, advertisement in the newspaper, is simply an invitation to treat, should really apply in that situation.
Because we say it’s presumptively true that an advertisement or an item on the shelf is an invitation to treat but not an offer.
But that’s just a presumptive rule. See if you can come up with ways in which you can get around that presumptive rule.
See if you can come up with a way in which you can hold wild ed to the terms of the advertisement.
Is there some way in which you can argue that the advertisement the wild ed makes in that exercise is really an offer and not just an invitation to treat as it normally would be?
We’ll come to that next day. That’s good for today.
