Chapter 1: Agreement

Question 1

1 Introduction to offer and acceptance

Answer 1

In order for there to be a binding contract, the following must be present:
* Offer and acceptance;
* Intention to create legal relations; and
* Consideration.

Offeror: This is the person making the offer.
Offeree: This is the person to whom the offer is made.

Therefore, for a contract to exist, one party (the offeror) needs to make a clear and certain offer displaying
an intention to be bound and the other party (the offeree) needs to communicate an unequivocal acceptance.

Question 2

1.1 The objective approach to agreement

Answer 2

To determine whether an agreement exists, court is not focused on the inward mental state but rather with what a reasonable
person would say was the intention of the parties, having regard to all the circumstances.

Question 3

In Storer v Manchester City Council [1974] 1 WLR 1403 Lord Denning stated:

The idea of offer and acceptance is that it shows a ‘meeting of minds’: but the law applies an
objective test when it comes to identifying agreement.

Answer 3

In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances a contract. A man cannot get out of a contract by saying: ‘I did not intend to contract’ if by his words he has
done so.

Question 4

Requirements of a valid offer

1. Clarity
2. Certainty

Answer 4

Key case: Gibson v Manchester City Council [1979] 1 WLR 294

Facts: The City Treasurer wrote to a tenant saying that the council ‘may be prepared to sell the house to you at the purchase price of £2,725, less 20 per cent = £2,180 (freehold)’. The letter went
on: ‘If you would like to make a formal application to buy your council house please complete the
form and return it to me as soon as possible’

Held: (By the House of Lords) There was no binding contract because there was never an offer
made by the Council. The Council’s letter stating that it ‘may be prepared to sell’ was not sufficiently clear and certain to be an offer. It was merely the first step in negotiations, lacking the
requisite intention to be legally bound.

Question 5

2.3 Intention to be bound

Answer 5

An offeror must also show an intention to be legally bound.

Look again at the summary in relation to Gibson. It also demonstrates the importance of an intention to be legally bound. The wording ‘may be prepared to sell’ (emphasis added) used by the City Treasurer in Gibson v Manchester City Council was deemed to lack the requisite intention
to be legally bound.

Contrasting with: This can be contrasted with the similar case of Storer v Manchester City Council [1974] 1 WLR 1403 in which the words ‘If you will sign the agreement and return it to me I will send you the agreement signed on behalf of the corporation in exchange’ (emphasis added) did demonstrate an intention to be bound.

Question 6

2.4 Unilateral and bilateral contracts

Answer 6

Bilateral contract: The most common type of contract. Each party assumes an obligation to the other party by making a promise to do something, such as to sell an item to the other party in exchange for a payment.

Unilateral contract: One party makes an offer or proposal in terms which call for an act to be performed by one or more other parties. For instance, the offer may call for specific lost property to be returned in exchange for a reward. A unilateral contract does not involve mutual promises – only the party making the offer assumes an obligation. Only actual performance of the required act will constitute acceptance

Question 7

Example of a Bilateral Contract

Answer 7

In 10 days’ time, you will
deliver a watch to me, and I
will pay you £100.

(a) Both parties make a
promise. One party
promises to pay £100.
The other party promises
to deliver a watch.

(b) The offer can be
accepted by an
unequivocal
communication of
acceptance, at which
point each party would
be bound to do what it
promised to do.

Question 8

Example of a Unilateral Contract

Answer 8

If you deliver a watch to me in the next 10 days, I will
immediately pay you £100.

(a) Only one party makes a
promise – the party
promising to pay £100.
The other party does not
make any promise.
(b) The offer is accepted by
performance of the
required act – by
delivering a watch. At
that point, the other
party becomes bound to
pay the £100.

Question 9

Summary of Agreements

Answer 9

• An offer must be clear and certain.
• An offeror must show an intention to be legally bound: words such as ‘may be prepared to sell’
  do not show this.
• There are two kinds of contract: unilateral and bilateral contracts.
• Bilateral contracts are more common. Each party assumes an obligation to the other party by making a promise to do something, such as to sell an item to the other party in exchange for a
  payment.
• Unilateral contracts are less common. One party makes an offer or proposal in terms which call for an act to be performed by one or more other parties. Only actual performance of the
  required act will constitute acceptance.

Question 10

3 Invitations to treat

Answer 10

An offer must be distinguished from a mere invitation to treat.

The first potential step to an offer: An invitation to treat is a first step in negotiations which may or may not lead to a firm offer by
one of the parties. It usually takes the form of an invitation to make an offer.

Question 11

Contractual Binding

Answer 11

Offer = Contractually Bound
Invitation to Treat = Not Contractually Bound and cannot be accepted in the form of a binding contract

Question 12

Invitation to Treat: Advertisements

Answer 12

The general rule regarding advertisements is that they are regarded as statements inviting further negotiations or invitations to treat (Partridge v Crittenden [1968] 1 WLR 1204).

Question 13

3.1.1 Advertisements – exception to the general rule

Answer 13

It should be noted that the general rule concerning advertisements does not apply where the advertisement amounts to a unilateral offer.

Question 14

Key case: Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256

Answer 14

Facts: The defendants, the proprietors of a medical preparation called ‘The Carbolic Smoke Ball’, issued an advertisement in which they offered to pay £100 to any person who used one of their smoke balls in a
specified manner for a specified period but who nevertheless still contracted influenza. The defendants also proclaimed that they had deposited £1,000 in a named bank ‘shewing our sincerity in the matter’. The plaintiff, on the faith of the advertisement, bought one of the balls and used it in the manner and for the period prescribed. Nevertheless, she contracted influenza.

Question 15

Key case: Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256 Judgement

Answer 15

Held: the facts established a contract under which the defendants were bound to pay the plaintiff £100 in relation to the event which had happened, and so the plaintiff was entitled to recover that sum

Question 16

Key case: Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256 classified as a Unilateral Offer

Answer 16

The advertisement in this case was held to be a unilateral offer because there was a clear
prescribed act (using the smoke balls in a specified manner for a specified period but nevertheless
contracting influenza) performance of which constituted acceptance.

Further, the defendant’s
intention to be bound was clearly demonstrated by their deposit of the £1,000 and the certainty of the language used in the advertisement. Similar reasoning would be applicable to an advertisement offering a reward for the return of lost property where there is clearly a conditional
promise which will be turned into a binding contract when the property is returned to the rightful owner.

Question 17

Key Case: Carlill v Carbolic Smoke Ball Conclusion

Answer 17

(a) A prescribed act; and
(b) A clear intention to be bound.

Question 18

3.2 Display of goods for sale as an invitation to treat

Answer 18

The general rule is that price-marked goods displayed in a shop window are not an offer for sale but an invitation to treat (Fisher v Bell [1961] 1 QB 394). This is regardless of whether the shop actually expressly designates that the goods are an offer; a shop’s ‘special offer’ usually amounts
to no more than an invitation to treat.

Question 19

Why is Display of Goods an invitation to treat: Obligation to Sell & Age Concerns

Answer 19

In particular that a trader would be obliged to
sell the goods to anyone who accepted the offer (the act of acceptance might be taking items off the shelves or presenting them at the cash desk for payment) before any judgment could be
made in relation to the particular customer concerned.

Question 20

In Pharmaceutical Society of GB v Boots Cash Chemists [1953] 1 QB 401

Answer 20

The same general principle applies equally to goods displayed on the shelves of a self-service store. In Pharmaceutical Society of GB v Boots Cash Chemists [1953] 1 QB 401 the display of goods on the shelves was held to be an invitation to treat. Websites are regarded as equivalent to a display of goods, and so, an invitation to treat.

Question 21

3.3 Invitations to tender

Answer 21

A request for tenders is used where a party (usually a company or public body) wishes to purchase a major item or service. The requestor invites tenders (ie offers) from those interested in supplying the goods or the services required

Question 22

Spencer v Harding (1870) LR 5 CP 561)

Answer 22

This action of inviting parties to tender is, as a general rule, deemed an invitation to treat (Spencer v Harding (1870) LR 5 CP 561) ie an invitation to interested parties to make offers to be considered. The requestor can accept or reject any
tender, even if it is the most competitive.

Question 23

Displacement of the General Principle:( Harvela Investments Ltd v Royal Trust Co. of Canada (CI) Ltd [1985] Ch 103

Answer 23

In such a case, the party requesting tenders has made an offer to enter into a contract with the party submitting the highest/lowest
bid. This is a form of unilateral contract: the required act is making the highest/lowest bid, and
when this is carried out, the other party is bound.

Question 24

Invitation to Tender becomes a binding contract: Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195

Answer 24

(1) the tenders had been solicited from specified parties who were known to
the requesting party;
(2) there was an absolute deadline for submission;
(3) the party requesting
tenders had laid down absolute and non-negotiable conditions for submission

Question 25

3.4 Auction sales: (Payne v Cave (1789) 3 Durn & E 148).

Answer 25

The auctioneer’s request for bids is an invitation
to treat. The bidder makes an offer which the auctioneer is then free to accept or reject. Acceptance of the bidder’s offer will be indicated by the fall of the
auctioneer’s hammer. This is consistent with the rules of revocation of an offer ie the bidder may revoke their offer at any time before the hammer falls.

Question 26

Section: 57 of the Sale of
Goods Act 1979

Answer 26

A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may
retract his bid.

Question 27

3.4.1 Auctions ‘without reserve’

Answer 27

Many auction sales have a ‘reserve’ price: if no bid above this price is received, the seller keeps the
goods. However, in an auction without reserve the seller promises to sell to the highest bidder whatever that bid turns out to be.

Question 28

Sale of Item without Reserve

Answer 28

If the sale of the item in question is expressed to be ‘without reserve’ the auctioneer may be sued
for breach of contract if they refuse to sell to the highest bona fide bidder.

Question 29

Warlow v Harrison (1859) 1 E & E 309.

Answer 29

The analysis of this case suggests that, where the sale is expressed to be without reserve, there are in fact two contracts. The first bilateral contract proceeds on the usual analysis of an auction sale whereby the bidder makes an offer which is capable of acceptance or rejection by the auctioneer.

Question 30

The Second Contract

Answer 30

The second contract is a unilateral contract based on the promise that the
auction will be without reserve. If a reserve is not applied and the goods are withdrawn from sale
there is a breach of this unilateral contract and the highest bona fide bidder is entitled to be compensated by the payment of damages

Question 31

The Higher Bidder: Barry v Davies [2000] 1 WLR 1962.

Answer 31

The highest bidder is not, however, entitled to the
goods since this is dictated by the bilateral contract for sale. This approach has been approved by the Court of Appeal in Barry v Davies [2000] 1 WLR 1962.

Question 32

Summary: Invitation to Treat

Answer 32

• An invitation to treat is not an offer.
• An invitation to treat is a first step in negotiations.
• An offeror must show an intention to be legally bound: words such as ‘may be prepared to sell’
  do not show this.
• An invitation to treat cannot be accepted to form a binding contract.
• Advertisements are generally invitations to treat, unless they relate to unilateral contracts. So
  are displays of goods for sale and websites.
• Invitations to tender are generally invitations to treat, unless they commit to accept the highest or lowest bid (in which case they are, in fact, unilateral offers).
• In most auctions, the bid is the offer, which is accepted by the fall of the auctioneer’s hammer. In an auction sale without reserve, the auctioneer can be sued if they refuse to sell to the
  highest bidder.

Question 33

4 Termination of an offer

Answer 33

An offer can come to an end by rejection, lapse or revocation. In each case, the offer loses its legal effect and becomes incapable of acceptance.

Question 34

4.1 Rejection

Answer 34

An offer is terminated by rejection. Once an offer is rejected, it cannot then be accepted (unless the offeror makes the same offer again). A rejection does not take effect until it is actually communicated to the offeror as only then will the offeror know that they are free from the offer.

Question 35

4.1.1 Rejection and counter-offers

Answer 35

An attempt to accept an offer on new terms may be a rejection of the offer accompanied by a
counter-offer. Where an offeree makes a counter-offer, the original offer is deemed to have been
rejected and cannot be subsequently accepted (Hyde v Wrench (1840) 3 Beav 334).

Question 36

Accepting a Counter offer

Answer 36

Where a counter-offer is accepted, its terms and not the terms of the original offer become the
terms of the contract.

Question 37

Offeree making a counter offer

Answer 37

If these terms are different in any way, the offeree has in fact made a counter-offer. It is sometimes said that the person who fires the last shot wins the battle, in the sense that the person who last asserts that their own terms and conditions should apply is likely to prevail (although if each side simply continues to assert that its own terms and conditions prevail, and the parties do not move past this, then no
contract will be formed).

Question 38

4.1.2 Rejection – distinguishing a counter-offer from a request for information

Answer 38

Making a counter offer amounts to rejection, after which an offer cannot be accepted.

Seeking of clarification: If an offeree responds seeking clarification of the extent and terms of the offer, or to ascertain if the offeror would consent to changing certain
ancillary aspects of the offer, then the offeree’s request may be construed as a request for further
information

Question 39

Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346: Distinguishing between further information and offer

Answer 39

In Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346 the defendant offered to sell to the claimant 3,800 tons of iron ‘at 40s net cash per ton, open till Monday’

Question 40

Judgement: Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346

Answer 40

The claimant responded: ‘Please wire whether you would accept 40 for delivery
over two months, or, if not, the longest limit you would give’. Having received no reply, at 1:34pm, the claimant despatched a telegram accepting the original offer. The court held that the claimant’s response was not a counter-offer but rather an enquiry which did not serve to reject the offer. Accordingly, a binding contract was made when the claimant sent the telegram
accepting the offer.

Question 41

4.2 Lapse of an offer

Answer 41

An offer may lapse and thus become incapable of acceptance:
(a) By passage of time;
(b) By the death of one of the parties.

Question 42

4.2.1 Passage of time

Answer 42

An offer will lapse through passage of time in the following circumstances

(a) Where acceptance is not made within the period prescribed by the offeror;

(b) Where no period is prescribed and acceptance is not made within a reasonable time. What is
reasonable will depend on the circumstances of the case

Question 43

4.2.2 Death of a party

Answer 43

In relation to the death of the offeror it appears that, if the offeree knows that the offeror has died, the offer will lapse; if the offeree is unaware of the offeror’s death, it probably will not.

Question 44

4.2.2 Death of a party

Answer 44

It seems that the death of the offeree will cause the offer to lapse and so that the offer cannot be accepted after the offeree’s death by the offeree’s representatives.

Question 45

4.3 Revocation

Answer 45

The offeror may withdraw (ie revoke) their offer at any time before acceptance (Payne v Cave (1789) 3 Durn & E 148). However, once a valid acceptance has been made, the offeror is bound by the terms of their offer. An offer cannot be revoked after acceptance

Question 46

4.3.1 Communication essential

Answer 46

Revocation of an offer is effective only upon actual notice of it reaching the offeree. Where revocation is communicated by post it takes effect from the moment it is received by the offeree and not from the time of posting (Byrne v Van Tienhoven (1880) 5 CPD 344).

Question 47

4.3.2 Indirect communication of revocation

Answer 47

Provided the offeror has shown, by words or conduct, a clear intention to revoke their offer and notice has reached the offeree, the revocation is effective. The means of communication do not matter, so the revocation will be effective even if communicated by a third party (Dickinson v Dodds (1876) 2 Ch D 463).

Question 48

Dangers of Indirect Communication: Third Party Reliability

Answer 48

There is a danger arising from this rule: if the offeree receives notice of revocation from a third party, how do they know that the information from the third party is reliable?

Question 49

4.3.3 Revocation of a unilateral offer (Great Northern Railway Company v Witham (1873).

Answer 49

In relation to unilateral contracts, acceptance is perceived as the complete performance of the
act(s) required by the terms of the unilateral offer. Consequently, it remains possible to revoke the
offer at any time prior to the completion of the required act

Question 50

Exception to the General Rule

Answer 50

However, an exception to this rule may apply where the offeree has partly performed the obligation and is willing and able to complete - it would undoubtedly cause hardship to the offeree to allow the offeror to withdraw the offer in this situation. In these circumstances the offeror may be under an implied obligation not to revoke the offer once performance has commenced. The offeree’s acceptance and consideration for this implied promise is starting to
perform the required act.

Question 51

Errington v Errington & Woods [1952] 1 KB 290

Answer 51

A father agreed to give his house to his son and
daughter-in-law if they paid off the mortgage on the house. The act required of the couple was
therefore paying off a building society mortgage loan. The couple had made several payments towards paying of the loan when the father sought to revoke the offer. The court held that the promise could not be revoked after the couple had started to pay the instalments and as long as they continued to be paid.

Question 52

Communication of revocation in unilateral contracts made to the whole world: Carlill v Carbolic Smoke Ball Co (1893).

Answer 52

It has been stated that a unilateral offer can be made to the ‘whole world’ and that there is no requirement that those embarking on performance should communicate their intention to accept to the offeror

Question 53

Communication of revocation in unilateral contracts made to the whole world

Answer 53

Consequently, where such an offer has been made, the offeror may well have no knowledge of who or, indeed, how many, potential
offerees may be responding to the offer. In such circumstances, communication of revocation is
almost impossible, and it seems likely that revocation will be effective if the offeror takes
reasonable steps to bring the revocation to the attention of all those who may have read the offer.

Question 54

4.4 Summary

Answer 54

• An offer can come to an end, and cease to be available for acceptance, if rejected, if it lapses, or if it is revoked.
• Once an offer is rejected, it cannot then be accepted. Rejection takes effect when communicated to the offeror. A counter-offer has the effect of rejecting the original offer.
• In contrast, a request for further information about an offer is not a counter-offer and does not
  amount to a rejection of the original offer.
• An offer will lapse if the offeror indicates that it can only be accepted in a particular time period. Otherwise, it will lapse after ‘a reasonable time’. It will also lapse on the offeree’s death,
  and if the offeree knows of the offeror’s death.
• An offer can be revoked at any time prior to acceptance.
• In relation to a unilateral contract, there is an implied obligation on the part of the offeror not
  to prevent the offeree from competing the required act, once the offeree starts to perform that
  act.

Question 55

5. Four rules in relation to acceptance

Answer 55

There are four aspects to identifying whether there has been the communication of an
unequivocal acceptance needed to form a contract.
(a) Acceptance must be in response to the offer.
(b) Acceptance must be unqualified.
(c) It may be necessary to follow a prescribed mode of acceptance.
(d) Acceptance must be communicated.

Question 56

5.1 Acceptance must be in response to the offer

Answer 56

Only the person/people to whom an offer is made (the offerees) can accept the offer. For example, it would not be possible to accept an offer you overheard that was not addressed to you.

Where an offer is made generally to the world at large then everyone with notice of the offer is an
‘offeree’, and a valid acceptance may be made by any person with notice of the offer: Carlill v Carbolic Smoke Ball Co. (1893)

Question 57

5.2 Acceptance must be unqualified: respond exactly to the offer

Answer 57

Acceptance must be unqualified and must correspond exactly with the terms of the offer: Hyde v
Wrench (1840) 3 Beav 334. This is sometimes called ‘the mirror image rule’. Not all transactions
lend themselves to an easy analysis in terms of ‘offer’ and ‘acceptance’. Yet the court will always examine the communication between the parties to discover whether, at any one time, one party may be deemed to have assented to all the terms, express and implied, of a firm offer by the other party. An assent which is qualified in any way does not take effect as an acceptance.

Question 58

5.3 Prescribed mode of acceptance

Answer 58

Acceptance may be communicated in any manner whatsoever. Generally, the offeree may decide for themselves the manner of acceptance but if the offeror prescribes the mode of acceptance,
the question arises as to whether communication of acceptance in any other manner will suffice.

Question 59

In Manchester Diocesan Council for Education v Commercial and General Investments [1970]

Answer 59

In Manchester Diocesan Council for Education v Commercial and General Investments [1970] 1
WLR 241, Buckley J explained that it is open to the offeror to prescribe a mode of acceptance ‘in
terms insisting that only acceptance in that mode shall be binding’. Buckley J made it clear that particularly clear words would be required of the offeror to make their chosen mode mandatory:

Question 60

Tinn v Hoffman (1873) 29 LT 271

Answer 60

If the offeror makes it clear that they will not be bound unless acceptance is communicated in
that precise way and by no other then only acceptance by that mode will suffice. However, unless the prescribed mode of acceptance is made mandatory, another mode of acceptance which is no less advantageous to the offeror will bind them

Question 61

5.4 Acceptance must be communicated

Answer 61

The general rule is that acceptance must be communicated to the offeror. Acceptance applies from the moment it is communicated. Where the offeree merely intended to accept, but did not communicate that intention to the offeror, there is no contract, ie mere mental assent is not
sufficient. Moreover, the offeror may not stipulate that they will take silence to be acceptance and
thus bind the offeree.

Question 62

The Rule of Silence cannot amount to acceptance

Answer 62

As a general proposition, the rule that silence cannot amount to acceptance seems a sensible one. Unless the offeror clearly waives the need for acceptance to be communicated, the offeror
will want to know when they are bound. Furthermore, if silence in the face of an offer could
amount to acceptance, this would place an unnecessary burden on the offeree to respond.

Question 63

5.4.1 Third party communication of acceptance

Answer 63

It is possible for a contract to come into existence where a person other than the offeree informs
the offeror of acceptance; in other words, where a third party has informed the offeror of the fact
of acceptance. However, no contract will arise if the communication is made by a third party without the authority of the offeree. in circumstances indicating that the offeree’s decision to accept was not yet regarded by them as irrevocable.

Question 64

5.4.2 The postal rule – Adams v Lindsell

Answer 64

This case laid down the postal rule and can be seen as a further exception to the rule that
acceptance must be communicated to the offeror.

It held that where post is deemed to be a proper means of communication, the acceptance takes effect from the moment the letter of acceptance is properly posted – not from the moment it is received by the offeror. A letter is properly posted when it is put into an official letter box or into the hands of a postal operative who is authorised to receive letters.

Question 65

Rationale of the postal rule

Answer 65

The postal rule is at best an arbitrary one, based on an attempt to do justice as between the offeror and the offeree in circumstances where one party will inevitably be prejudiced in the event of a letter being delayed or lost. Rule places greater burden on the offerer than the offeree. Clearly the rule places a greater burden on the offeror than the offeree – possibly justified by the fact that it is easier to prove posting than it is to prove receipt of
a letter.

Question 66

Applies even if the acceptance is delayed or lost in the post

Answer 66

The rule applies even where the acceptance is delayed or lost in the post: Household Fire and
Carriage Accident Insurance Co. v Grant (1879) 4 Ex D 216.

Question 67

Does not apply if it is not contemplated that post would be used

Answer 67

It must, however, have been contemplated that the post would be used. The case of Henthorn v
Fraser [1892] 2 Ch 27 makes it clear that the postal rule is applicable only where it was reasonable
in all the circumstances for the offeree to have used the post. It has been held to be unreasonable
to use the post when there is an implied condition that prompt acceptance is required.

Question 68

Does not apply to letters revoking offers

Answer 68

The rule applies only to letters of acceptance, not to letters revoking an offer. Revocation of an offer must be received in order to be effective (Byrne v Van Tienhoven (1880) 5 CPD 344).

Question 69

Does not apply if the acceptance is incorrectly addressed

Answer 69

It appears that the rule may be displaced if the acceptance is incorrectly addressed, the rationale
being that the offeree, by their own carelessness, has lost the benefit of the postal rule.

Question 70

Does not apply if disapplied by offeror

Answer 70

It is always open to the offeror to redress the imbalance of the postal rule by requiring actual
communication, for example, the offeror might state in their offer that they require receipt of
acceptance.

The courts have interpreted this quite broadly, and so in
Holwell Securities v Hughes [1974] 1 WLR 155 where the offer stipulated that ‘notice in writing’ was
required the court held that this implied that the acceptance had to be received and the postal
rule was set aside.

Question 71

5.4.3 Communication by instantaneous means

Answer 71

The general rule is
that the acceptance takes place at the moment the acceptance is received by the offeror (Entores v Miles Far East Corporation [1955]). As Denning LJ explained, in cases of instantaneous communication, the person sending the message of acceptance knows, or ought to know,
whether their message has been received.

Question 72

Reasonably believe that they have communicated

Answer 72

On the other hand, if the acceptor reasonably believes that they have communicated their acceptance but this is not so because of the fault of the offeror (e.g. they do not hear the entirety of the acceptance due to their poor mobile reception but do not ask for it to be repeated) then the
offeror may be prevented from saying that they did not receive the acceptance.

Question 73

Thomas v BPE Solicitors [2010] EWHC 306

Answer 73

Blair J expressed the view that the postal rule is inapplicable to email communications, therefore an acceptance by email is not effective when sent, but only when received (ie when the email arrives on the offeror’s email server).

Question 74

The Brimnes [1975] QB 929: Office Hour Communication: Effective when received

Answer 74

A case concerning an instantaneous communication sent during
ordinary office hours. The Court of Appeal concluded that a message that had been sent during
ordinary office hours on Friday, but not been seen by office staff until the following Monday, was
effective when received

Question 75

Position Outside Office Hours + International Communications

Answer 75

The case of Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995] CLC 1011 deals
specifically with this point. A message was sent on 23:41 on Friday, 2 December. It was held that
the message was received at the start of business on Monday, 5 December.

Question 76

5.4.4 Communication waived for unilateral contracts

Answer 76

The communication of acceptance is waived in a unilateral contract. Carlill v Carbolic Smoke Ball Co. (1893) is authority for this general principle. It was held in that case that the advert amounted to an offer, which was open to acceptance by performance of the acts required in the offer. Such
performance was sufficient in itself to amount to acceptance and there was no need for separate notification of acceptance to be given to the offeror

Question 77

Reward Cases

Answer 77

The same principle would apply in reward cases where a reward is offered for the return of lost property. All those who search for the item in question need not inform the offeror of their intention to do so; the acceptance is complete when the finder returns the object to the offeror.

Question 78

5.5 Summary

Answer 78

• Only the person/people to whom an offer is made (the offerees) can accept an offer.
• Acceptance must be of precisely the same terms as offered.
• If a mode of acceptance is prescribed, then unless expressed to be mandatory, the offeree can
  use any alternative mode which is no less advantageous to the offeror.
• Acceptance is effective from when it is communicated to the offeror.
• Silence does not constitute acceptance, even if the offeror indicates it will.
• A third party with authority can effectively communicate acceptance on behalf of the offeree.
• The postal rule is an exception to the rule that acceptance must be communicated:
  acceptance takes effect from the moment the letter of acceptance is properly posted.
• There are exceptions to the postal rule if it is not contemplated that the post would be used, if
  the letter is incorrectly addressed or if the offeror disapplied the postal rule. The rule does not
  apply to letters revoking offers.
• Where acceptance is made by instantaneous communications (such as by telephone) it is
  effective when the communication is received by the offeror, but the offeror may be prevented
  from denying receipt of a communication if they are at fault for the non-receipt. Depending on
  the facts, such a communication might not be deemed received until the start of office hours
  after receipt.

Question 79

6 Certainty

Answer 79

A binding contract requires all material terms to be certain and complete. Only an agreement
which is sufficiently certain can be enforced by a court. To determine whether the parties have reached an agreement on all material terms the court applies an objective test, asking whether, in all the circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations (RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Company KG (UK Production [2010] UKSC 14).

If an agreement is incomplete or uncertain, a court may not be able to enforce it.

Question 80

6.2 Summary

Answer 80

• If an agreement is incomplete or uncertain, a court may not be able to enforce it.
• To determine whether the parties have reached an agreement on all material terms the court
  applies an objective test, asking whether, in all the circumstances of the case, the parties have
  agreed all the terms they considered to be a precondition to creating legal relations

Question 81

The owner of a campervan sends an email to an interested buyer. Her email states, ‘I will sell my campervan to you for £15,000.’ The interested buyer responds, ‘I want to go ahead if your campervan has a full-service history.’

Which one of the following statements best describes the legal position?

Answer 81

A. The campervan owner’s email is an invitation to treat. The interested buyer’s response is an offer.

B. The interested buyer’s response is a request for further information. The campervan owner’s offer is extinguished.

C. The interested buyer’s response is a counter offer. The campervan owner’s offer is extinguished.

D. The interested buyer’s response is a request for further information. The campervan owner’s offer remains open for acceptance.

E. The interested buyer’s response is a conditional acceptance. The parties will have a contract for the sale of the campervan provided it has a full-service history.

Correct Answer: D

Correct
Correct. The statement is a request for further information as the interested buyer is making an enquiry about an ancillary matter. The answer correctly states the legal effect of a request for further information (see Stevenson Jacques v McLean [1880] 5 QBD 346). The other answers seem plausible, but they are not correct. A request for further information does not terminate the offer (see Stevenson Jacques v McLean [1880] 5 QBD 346) A valid acceptance must be unconditional (see Hyde v Wrench 49 ER 132) A counter offer must propose alternative terms for acceptance (see Hyde v Wrench 49 ER 132).

Question 82

An antique collector visits a local auction house. The auction includes a rare antique table like the one the antique collector is looking for and the auction is stated to be ‘without reserve’. The auctioneer invites bids. The antique collector bids £500. Although the antique collector is the only person in the room to bid, the auctioneer refuses to accept his bid, stating that it is too low.

Question 83

A man has lost his dog. He puts up signs around the local neighbourhood with his address and a picture of his dog, reading “£50 reward for anyone who returns this dog to me”. Has the man made an offer capable of acceptance?

Answer 83

A. The man has not made an offer to contract because it is possible that the dog will never be found.

B. The man has not made an offer to contract because a very large number of people might read the notice and search for the dog.

C. The man has made an offer which is accepted by someone finding the dog.

D. The man has made an offer which is accepted by someone returning the dog to the man.

E. The man has made an offer which is accepted by someone looking for the dog.

Correct Answer: D
Correct: this is what the case of Carlill v Carbolic Smoke Ball Company suggests. This is a unilateral contract. Only returning the dog will constitute acceptance – simply finding the dog would be insufficient.

Question 84

On 1 February, a Council places a notice on public display which reads: “For sale, (used) printers, £85 each, contact Council Estates Division”. On 5 February, a woman writes to the Council Estates Division ‘I am happy to pay £85 for one of your printers identified in your notice dated 1 February’. On 11 February, the Council writes back ‘thank you for your letter dated 5 February. We are happy to go ahead. Please contact us by telephone to arrange delivery’. Which one of the following best explains the legal position?

Answer 84

A. The notice constitutes an invitation to treat which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is an acceptance.

B. The notice constitutes an invitation to treat. The woman’s letter dated 5 February is an offer. The Council’s letter of 11 February is an acceptance.

C. The notice constitutes an offer which was accepted by the woman’s letter dated 5 February. The council’s letter of 11 February is a request for further information.

D. The notice constitutes an offer which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is a request for further information.

E. The notice constitutes an offer which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is an acceptance.

Correct Answer: B

Correct: you have correctly identified the invitation to treat, offer and acceptance

Question 85

To promote a new sports club, the venue owner puts an advert in a newspaper advertising an open day for potential members. The advert includes the following statement, ‘Shoot ten netball goals in a row at our open day and you will receive a £50 club token to spend on fitness classes’. A woman sees the advert and immediately phones the club to state that she accepts the challenge and will be attending the fun day. The woman is the first person to shoot ten goals. A man sees the advert and is the second person to shoot ten goals.

Answer 85

A. The advert is a unilateral offer. Consequently, it will be construed to entitle the first person to shoot ten goals to be entitled a token. Only the woman is entitled to a token.

B. The advert is an invitation to treat. By contacting the club, the woman has formed a bilateral contract with the sports club and is entitled to a token.

C. The advert is a unilateral offer. The woman and the man are both entitled to a token as they have completed the act prescribed by the advert.

D. The woman is the only participant who is entitled to a token as she was the only participant who communicated her intention to accept prior to completion of the prescribed act.

E. The advert is an invitation to treat. Consequently, none of the participants are entitled to a token.

Correct Answer: C

Correct. This answer correctly applies the principles relating to unilateral offers.

Question 86

An antique collector visits a local auction house. The auction includes a rare antique table like the one the antique collector is looking for and the auction is stated to be ‘without reserve’. The auctioneer invites bids. The antique collector bids £500. Although the antique collector is the only person in the room to bid, the auctioneer refuses to accept his bid, stating that it is too low.

What advice would you give the antique collector?

Answer 86

A. The auctioneer is in breach of a bilateral contract and the antique collector is entitled to damages.

B. There is no contract between the parties and the antique collector is entitled to nothing.

C. The auctioneer is in breach of a bilateral contract and the antique collector is entitled to buy the table for £500.

D. The auctioneer is in breach of a unilateral contract and the antique collector is entitled to nominal damages.

E. The auctioneer is in breach of a unilateral contract and the antique collector is entitled to damages.

Correct Answer: E

Correct
Although a request for bids at an auction is usually no more than an invitation to treat, a statement that an item will be auctioned ‘without reserve’ constitutes a unilateral offer which is accepted by the act of a bona fide bidder making the highest bid (Warlow v Harrison, confirmed in Barry v Davies). No contract for sale of the table has been concluded between the parties, as the auctioneer’s hammer has not fallen (which would otherwise constitute acceptance of the antique collector’s offer – Payne v Cave). As a result, the antique collector is not entitled to the table. However, the antique collector has accepted the auctioneer’s unilateral offer by making the highest (albeit the only) bid at the auction and is therefore entitled to damages for breach of that separate collateral contract (Barry v Davies).