Chapter 2: The Offer

Question 1

What is an offer?

Answer 1

An offer is a definite promise to be bound on specific terms made by the offeror to the offeree.
The offer can be made in any form but must be communicated to the offeree. The offeree can be a particular person, a class of persons or even the whole world.

Carlill v Carbolic Smoke Ball (1893)

Question 2

Facts of ‘Carlill v Carbolic Smoke Ball (1893)’

Answer 2

The manufacturers of a medicinal ‘smoke ball’ advertised in a newspaper that anyone who bought and used the ball as directed and still contracted influenza would be paid a £100 reward. Mrs. Carlill used the ball in accordance
with the instructions and still caught flu. The manufacturers said there was no contract with Mrs. Carlill because an offer could not be made to the whole world.

Question 3

Held in ‘Carlill v Carbolic Smoke Ball (1893)’?

Answer 3

An offer could be made to the whole world, the wording of the advert
showed a definite intention to be bound and as such it amounted to an offer.
Mrs. Carlill had accepted the offer by using the ball correctly and as such was
entitled to payment of the £100.

Question 4

What is not an offer?

Answer 4

If an individual has not made an offer there can be no binding contracts. There are a
number of items which have been held to not be an offer.

Question 5

What is an invitation to treat?

Answer 5

An invitation to treat is an invitation to someone else to make an offer to you.

Question 6

What are examples of invitations to treat?

Answer 6

Most adverts (but remember Carlill mentioned earlier – an advert can be an
offer only if it makes it clear no further negotiations are required)

Shop window displays

Goods on shop shelves

Company prospectus

Circulation of a price list or displays on a website

Tenders (a person asking for tenders is making an invitation to treat, the
person submitting the tender is making the offer).

Question 7

A supply of information or a statement of intention

Answer 7

A statement made early in the negotiations is unlikely to be held to be a valid offer
and a statement of an intention to sell is not an offer. This would cover when a
possible selling price is given during initial discussions.

Harvey v Facey (1893)
Harris v Nickerson (1873)

Question 8

Facts of ‘Harvey v Facey (1893)’

Answer 8

The claimants were interested in buying some land, which was not
advertised for sale. They sent a telegram asking the owners to state the lowest
price they would accept. The owners replied with a price and the claimants tried
to accept.

Question 9

Held in ‘Harvey v Facey (1893)’

Answer 9

The statement of price was merely an early stage in negotiations and not
an offer

Question 10

Facts of ‘Harris v Nickerson (1873)’

Answer 10

An auction was advertised in a newspaper. A broker saw the advert and
travelled some distance to attend. The items he was particularly interested in had
been withdrawn from the sale. The broker claimed the advert was an offer for
sale of the various items and his attendance was an acceptance of that offer.

Question 11

Held in ‘Harris v Nickerson (1873)’

Answer 11

The advert was not an offer as it was not clear and definite that the auctioneers wanted to sell the items.
If the auction is held without reserve, once the lot is put up by the auctioneer, it is an offer to sell to the highest bidder and if withdrawn after the bid has been made there will have been a breach of contract.

Question 12

What is a vague statement?

Answer 12

A statement cannot constitute an offer if it is not sufficiently specific. For example, an
offer to sell someone a car for £5,000 is valid, but a statement that a person will sell
‘…one of my cars for about £5,000’ is not an offer: it is vague and uncertain

Question 13

How can an offer be terminated?

Answer 13

Rejection and counter offer

Revocation

Lapse of time

Failure of a pre-condition

Once an offer has been terminated it cannot be accepted.

Question 14

What is a rejection of an offer?

Answer 14

Rejection occurs when the offeree turns down the original offer. It can be express or by way of a counter offer. A counter offer is a new offer on different terms.

A request for more information about the original offer is not a rejection of the offer.

Hyde v Wrench (1840)
Stevenson v Mclean (1880)

Question 15

Facts of ‘Hyde v Wrench (1840)’

Answer 15

Wrench offered to sell Hyde a farm for £1,000. Hyde made a counter offer
by offering £900
Wrench rejected this counter offer. Later, Hyde came back to Wrench and said
that he now accepted the offer at £1,000.

Question 16

Held in ‘Hyde v Wrench (1840)’

Answer 16

Hyde could no longer accept the original offer as it no longer existed and
as such was not capable of acceptance. Hyde’s statement that he would pay the
original £1,000 was a new offer, which Wrench did not accept.

Question 17

Facts of ‘Stevenson v Mclean (1880)’

Answer 17

M offered, in writing, to sell a quantity of iron to S at a given price. S replied querying the time for delivery but, before receiving a reply, sent a further letter accepting the offer. This acceptance crossed in the post with a letter of
revocation from M. M refused to supply the iron to S saying the enquiry about delivery times was a counter offer.

Question 18

Held in ‘Stevenson v Mclean (1880)’

Answer 18

The query was not a counter offer; it was merely an enquiry as to whether the terms might be varied. It did not destroy the original offer which was still open
when S wrote accepting it.

Question 19

What is revocation?

Answer 19

Revocation occurs when the offeror withdraws his or her offer.

Question 20

When and how can revocation be made?

Answer 20

Revocation can be made at any time before acceptance.

Revocation can be made even if the offeror has agreed to keep the offer open.

Revocation must be communicated to the offeree by the offeror or by a reliable
third party.

Question 21

What are two exceptions to the general rules of revocation?

Answer 21

If the offeree pays the offeror to keep the offer open this creates a collateral
contract and a revocation of the original offer would be a breach of that
collateral contract. The offeree could claim damages (the most usual remedy for
a breach of contract) for the loss of the opportunity to accept the original offer.

In a unilateral contract.

Question 22

What is a unilateral contract?

Answer 22

A unilateral contract is one in which an offer is made to the whole world and as such
it would be virtually impossible to notify everyone who saw the offer of the revocation.
In addition, acceptance of a unilateral contract always involves the performance of an
act (such as using the carbolic smoke ball in Carlill v Carbolic Smoke Ball) and if an
offeree has begun the act but not completed it a revocation would be unjust.
Revocation is not, therefore, effective if the offeree is in the process of accepting a
unilateral offer (i.e. has begun performance).

Question 23

What is a lapse of time?

Answer 23

An offer ceases to exist if not accepted within a specified time limit and, if no time
limit is specified, then it will lapse after a reasonable time.

An offer will also lapse on the death of the offeree or of the offeror unless the offeree
accepts in ignorance of the death.

Question 24

Case facts demonstrating request for information about an offer.

Answer 24

Aoife breeds Kerry Blue Terriers. She offers a puppy to both Mandeep and
Nagina for a cost of £800 each, stating the offer is open until Friday.
Mandeep asks her whether the £800 covers the cost of all initial vaccinations.
He does not hear back from Aoife and on Thursday accepts the original offer.
Nagina replies to Aoife on Tuesday stating she will take one for £750. Again,
Aoife does not reply and on Wednesday Nagina writes accepting the original
offer.
Mandeep’s enquiry is requesting further information about the original offer. It
does not change the original offer so this is still open for acceptance until
Friday. Mandeep’s acceptance can form a binding contract with Aoife.
Nagina has made a counter offer at £750. This ends the original offer to sell at
£800. When Nagina replies saying she will pay £800 this is a new offer which
Aoife can accept or reject.

Question 25

What is a failure of a pre-condition?

Answer 25

A ‘conditional’ offer is one which is dependent on a specified event or change in
circumstances. A conditional offer may not be accepted unless and until the condition
or change of circumstances is met.