Agreement

Question 1

To whom can an offer be made?

Answer 1

To one person, a group and the whole world

Question 2

Express offer?

Answer 2

Either oral or writte

Question 3

Implied offer?

Answer 3

From conduct or circumstances

Question 4

How do you figure out if the proposal is an offer or a mere invitation to treat?

Answer 4

By looking at the apparent intentions of the parties based on the facts, such as words used, conduct of the parties, trade practice and previous dealings

Question 5

Display of goods in shop windows and in supermarkets

Answer 5

Invitations to treat
Timothy v Simpson
Pharmaceutical Society of GB v Boots

Question 6

Timothy v Simpson

Answer 6

Window displays are not offers to sell but are merely invitations to treat

Question 7

Pharmaceutical Society of GB v Boots

Answer 7

Contract is formed at the counter and the items on the shelves are invitations to treat

Question 8

Advertisements

Answer 8

Presumed to be invitations to treat
Partridge v Crittenden
Carlill v Carbolic Smoke Ball Co
Lefkewitz v Great Minniapolis Stores

Question 9

Partridge v Crittenden

Answer 9

The Protection of Wild Birds Act 1954 made “offering for sale” certain wild birds a criminal offence. Partridge placed an advert for these kinds of birds for 25s each. The advert was an invitation to treat not an offer.

Question 10

Carlill v Carbolic Smoke Ball Co

Answer 10

There was clear intention therefore the advert was an offer

Question 11

Lefkewitz v Great Minniapolis Stores

Answer 11

The defendant advertised 3 fur coats worth £100 that had been reduced to £1 adding “first come first served”. Mr L was the first one into the shop and tried getting on of the coats for £1 and the shop refused. The court held that there was in the conduct of the parties a sufficient mutuality of obligation to constitute a contract of sale, also an offer

Question 12

Auction sales

Answer 12

Harris v Nickerson

Warlow v Harrison

Question 13

Harris v Nickerson

Answer 13

The defendant placed an advert for an auction to be held for furniture and building materials. Harris went to the auction but the goods referred to in the ad were withdrawn, he then sued for his wasted time and expanse in attending the auction. He argued that there was a contract to hold the auction for items advertised. It was held that the advertisement was not an offer. Advertisement of an auction is not an offer to hold it

Question 14

Warlow v Harrison

Answer 14

This case concerns an advert for an auction without reverse. The ad referred to a range of horses. The claimant attended the auction and submitted the highest bona fide bid for one of the horses. The auctioneer sold the horse to its owner who had submitted a bid that was higher than the claimant’s but not a bona fide bid. The courts stated (orbiter) that the ad of an auction without reverse is regarded as an offer to sell to the highest bona fide bidder.

Question 15

Tenders

Answer 15

Spencer v Harding

Harvela Investments v Royal Trust Co of Canada

Question 16

Spencer v Harding

Answer 16

The defendants advertised a sale by tender of the stock in trade. The advertisement specified where the goods could be viewed, the time of opening for tenders and that the goods must be paid for in cash. No reserve was stated. The claimant submitted the highest tender but the defendant refused to sell to him. Unless the advertisement specifies that the highest tender would be accepted there was no obligation to sell to the person submitting the highest tender. The advert amounted to an invitation to treat, the tender was an offer, the defendant could choose whether to accept the offer or not

Question 17

Harvela Investments v Royal Trust Co of Canada

Answer 17

The RTC invited tenders for the purchase of a bundle of shares and it stated that it would accept the highest bidder. The claimants submitted a fixed price bid for shares in the defendant’s company. Another party made a referential bid. It was held that as the defendants were bound to accept the highest bid, the referential bid did not have a fixed amount attached to it and as such could not be accepted or even submitted.

Question 18

Offers and earlier statements in negotiations

Answer 18

Clifton v Palumbo

Gibson v Manchester

Question 19

Clifton v Palumbo

Answer 19

During the negotiations about the sale of a large estate the claimant wrote to the defendant that he was “prepared” to offer the state for £600 000. The courts had to decide whether this was on offer or not. They held that the letter was too informal and there for it was merely an invitation to treat. Objectively the defendant could not have intended to have made an offer.

Question 20

Gibson v Manchester

Answer 20

This case concerned a letter from the Council to the tenants stating it “may be prepared to sell” the council houses for £2180 each. It was held that this was not an offer, the language in the letter did not show intention.

Question 21

When can an offer be accepted?

Answer 21

Offers must be communicated before they can be accepted. Where a person does the specified act without being aware of the offer it is not acceptance
R v Clarke
Williams v Carwardine

Question 22

R v Clarke

Answer 22

After the murder of 2 police officers the government offered a reward for information leading to the arrest and conviction of the murders. Clarke was arrested and charged with the murders, he then gave information which led to the conviction of murderers. He then claimed the reward but was refused. He did accept that he gave the information without thinking about the reward. The court held the was not entitled to the reward because his performance was not acceptance. The acceptance must be in response to the offer.

Question 23

Williams v Carwardine

Answer 23

This case concerns an offer of a reward in return for information leading to the arrest and conviction of a murderer. Mrs C gave the info in response to the offer even though she says she did it to “ease her conscience in the hope of divine forgiveness”. It doesn’t matter why a person is performing acceptance of an offer if they are doing it being aware of the offer.

Question 24

What does termination of offer mean?

Answer 24

Ending the offer which means there is no contract

Question 25

Lapse of time

Answer 25

Ramsgate Hotel Co v Montefiore

Manchester Diocesan Council for Education v Commercial & General Investments

Question 26

Ramsgate Hotel Co v Montefiore

Answer 26

M offered to buy shares from R in June 1864. In November, R attempted to accept the offer by allotting the shares to M. M then refused to accept the shares and pay for them. The offer was no longer open as due to the nature of the subject matter of the contract the offer lapsed after a reasonable period of time. Therefore, there was no contract and the claimant’s action for specific performance was unsuccessful.

Question 27

Manchester Diocesan Council for Education v Commercial & General Investments

Answer 27

In this case the basis of offers terminating for lapse was explained. After a reasonable amount of time, the offeree is regarded as having rejected the offer.

Question 28

Revocation

Answer 28

An offer can be revoked before it is accepted and is only effective when communicated to the offeree
Byrne v Van Tienhoven
Dickinson v Dodds
Errington v Errington

Question 29

Byrne v Van Tienhoven

Answer 29

VT posted an offer to sell 1000 boxes of tin plates to B on 1st of October. On the 8th of October VT posted a revocation to B. On the 11th of October, B received the offer and telegraphed an acceptance. On the 20th of October, the letter of revocation as received by B. It was held that the revocation was too late and there was already a contract.

Question 30

Dickinson v Dodds

Answer 30

On the 10th of June Dodds delivered to Dickinson a written offer to sell a property. The letter stated that the offer would remain open until 9am on the 12th of June. In the afternoon on the 11th Dickinson was informed by his agent that Dodds was offering the property to another seller, which was true since that afternoon the property was sold to Mr Allan. At 7am on the 12th Dickinson had a letter of acceptance and tried handing it to Dodds who refused to take it and informed him that the property was already sold. Dickinson sued for breach of contract. It was held that the offer was already revoked and was communicated by a third party.

Question 31

Errington v Errington

Answer 31

In this case, a father had bought a house for his son and daughter-in-law. His promise was that if they payed of the mortgage, he would sign the house over to them. The couple stated to make the payments and the father later died. In his will, he left the house to his widow. The wife was entitled to remain in the house. The father had made the couple a unilateral offer. Under normal contract principles an offer may be revoked at any time before acceptance takes place, however, with unilateral contracts acceptance takes place only on full performance. Double offer theory

Question 32

Rejection

Answer 32

Hyde v Wrench

Stevenson v McLean

Question 33

Hyde v Wrench

Answer 33

W offered to sell his farm to H for £1000. H responded by saying he would give £950 for the farm. W refused. H then said that he accepted the original offer of £1000 for the farm. When W refused to carry out the transaction, H brought an action to force the sale. The courts held that he put forward new terms, terminating the original offer. The counter offer terminated the offer.

Question 34

Stevenson v McLean

Answer 34

M offered a quantity of iron for 40s per ton, S telegraphed “please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give”. When this was received, M sold the iron to another party and sent a telegram to inform S of the sale. Before this telegram from S was received, S telegraphed their acceptance. Since his response wasn’t a counter-offer it was only an enquiry. Therefore, it was held that there was a contract.

Question 35

Acceptance by conduct

Answer 35

Brogden v Metropolitan Railway Co

Question 36

Brogden v Metropolitan Railway Co

Answer 36

B had supplied the MR coal for two years without a formal contract. They decided to formalise their arrangement and so MR sent a draft contract to B. B filled in the contract, marked it as ‘approved’ and sent it to MR. The contract was simply placed in a drawer by MR and was not formalised. MR then made orders for the coal, and were supplied the coal based on the terms of the draft for two years. When there was a disagreement, B denied that a contract existed since the draft was not formalised. The courts held that there was a contract since acceptance had been made by conduct.

Question 37

Explain battle of the forms

Answer 37

It is common practice for businesses to have printed standard forms for the contracts they are likely to enter. When a particular contract is proposed the specific details are added to the standard terms which are already printed on the standard form. If the other party signs the standard form without altering it then there would be no doubt that a contract had been formed based on the terms contained in the offeror’s standard form. However, it frequently happens that the offeree signifies his ‘acceptance’ by returning his own standard form. If the terms on this standard form differ from the offeror’s standard form, on a conventional analysis of the transaction, there would be no contract because the purported acceptance must be treated as a counter-offer. However, in such cases the parties often behave as if a contract has been formed and both parties carry on and perform the contract.
British Road Services v Arthur Crutchley
Butler Machine Tools v Exello
Tekdata Interconnections Ltd v Amphenol Ltd

Question 38

British Road Services v Arthur Crutchley

Answer 38

B’s driver, under a longstanding agreement, delivered 200 cases of whisky to AVC’s warehouse. This was in the care of AVC until later when it would be taken to a dock for further transportation. When the goods were delivered as usual B’s driver handed a delivery note with terms and conditions. This note was then given back stamped ‘received on AVC conditions’. The driver then left with the stamped delivery note. On the occasion in question, the goods were stolen due to the negligence of AVC’s employees. When sued, AVC argued that a clause in their terms limited their liability. It was held that AVC terms prevailed and so the limitation clause was part of the contract. The delivery note was an offer, when it was stamped which was a counter offer by AVC. The counter offer was then accepted by conduct of B’s driving and leaving the goods.

Question 39

Butler Machine Tools v Exello

Answer 39

On 23rd of May the claimant using their standard form, offered a machine to the defendants for £75,535. The seller’s terms included a price variation clause so that the price could change according to any increase in the cost of production. The terms also stated that the standard terms prevailed over the buyer’s terms. On the 27th the buyer made an order using its own standard form terms which referred to a fixed price. At the bottom, there was a tear off slip which stated, ‘we accept this order on the terms and conditions stated’. 5th of June, the seller signed the tear off slip and sent it with the note stating the order ‘is being entered in accordance with our revised quotation of 23rd May. The seller then increased the price and the buyer refused to pay. It was held that there was a contract and that the terms of the buyer prevailed. Classic rule-book approach was used. Lord Denning had another approach which is the compromise contract solution.

Question 40

Tekdata Interconnections Ltd v Amphenol Ltd

Answer 40

This case concerned a long-term contractual relationship between the parties. During this relationship, the buyer would send orders with its own terms. The seller would then acknowledge the order, but would also add that the seller’s terms applied. This would be followed by performance by the parties. The court held that the seller’s terms prevailed since they wore accepted by conduct.

Question 41

Is express communication of acceptance required?

Answer 41

Express communication of acceptance is not required

Question 42

Acceptance by condouct

Answer 42

Brogden v Metroploitan Railway

Question 43

Brogden v Metropolitan Railway

Answer 43

The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid. The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.

Question 44

Offeror waiving the need for communication of acceptance

Answer 44

Acceptance by inaction is not allowed

Felthouse v Bindley

Question 45

Felthouse v Bindley

Answer 45

John intended to sell his horse to his uncle Felthouse. There was a query over the price so Felthouse wrote to John ‘if I hear no more about him, I consider the horse mine at £30 15s’. John didn’t reply. 6 weeks later at an auction, the auctioneer accidently sold the horse having been told in a letter to exclude the horse from the auction. Felthouse then sued the auctioneer believing the horse belonged to him. Felthouse couldn’t sue him since the horse was not his. There was never any acceptance from John. The court did not allow acceptance by inaction.

Question 46

Stipulated method of communication of acceptance

Answer 46

Need to see whether the stipulation is mandatory or advisory

Yates Building v Pulleyn

Question 47

Yates Building v Pulleyn

Answer 47

An offer in the form of an option to purchase property was made by P to Y. The option stated it was exercisable by “notice to be sent by registered or recorded post”. However, the buyer Y sent the acceptance by ordinary post. It arrived on time and was in writing but P argued it was not valid acceptance because ordinary post was used. The court decided the method was still valid since the method of acceptance stated by P was not compulsory it was only advisory. Also, the alternative used was no less advantageous for the offeror. The method was only advisory.

Question 48

What is the postal rule ‘presumption’?

Answer 48

Where it is agreed that the parties will use the post as a means of communication the postal rule will apply. The postal rule states that where a letter is properly addressed and stamped the acceptance takes place when the letter is placed in the post box.
Adams v Lindsell

Question 49

Adams v Lindsell

Answer 49

L offered wool to A on 2nd September in a letter stating, ‘receiving your answer in course of post’. This offer was wrongly addressed and was received by A on 5th September. A then posted acceptance the same day. Unaware of the delay, L sold the wool to another party so A sued for breach. It was held that the moment the letter was posted the contract was formed.

Question 50

When does the postal presumption apply?

Answer 50

Only applies if it is reasonable to use the post to send an acceptance and if the postal presumption has not been expressly or impliedly excluded.
Holwell Securities v Hughes

Question 51

Holwell Securities v Hughes

Answer 51

Here there was an option to purchase which was “exercisable by notice in writing”. The letter of acceptance was posted. It was correctly addressed and paid for but never arrived. In this case the postal presumption was excluded since Dr Hughes had specified that he had to actually receive the communication.

Question 52

When is acceptance communicated when using a vending/automated ticket machine?

Answer 52

Lord Denning’s comment from Thornton v Shoe Lane Parking states that acceptance takes place when the customer puts his money into the slot

Question 53

Is offer and acceptance always necessary?

Answer 53

It may be that there can be situations in which there is an agreement despite the fact that it is not possible to identify an offer and an acceptance in the traditional sense.