Co1 : Offer & Acceptance, Certainty & Intention to Create Legal Relations (cases)

Question 1

O - Carlill v Carbolic Smoke Ball Co (1893) (CA)

Answer 1

Main point (here) : Advertisement = offer made to the public / everyone who reads it
=> anyone can accept it by performing condition stipulated in the offer

Summary: D company selling ‘smoke ball’ (supposed to protect from influenza) offered in advertisement to pay £100 to any person who contracted influenza after using smoke ball – P used smokeball in specified manner for specified period and still got influenza => asked for the money

=> CA held that there was a contract : D had made an offer to anyone reading advertisement, P had accepted the offer by buying and using the smokeball

Question 2

O - Chapleton v Barry UDC (1940) (main point)

Answer 2

Main point = displaying items or notices put up beside them can sometimes constitute an offer, which if accepted creates a legally binding contract

/!\ inconsistent with PSGB v Boots (and other such cases) => shows that courts are willing to be flexible in their interpretation of what constitutes an offer

Question 3

O - PSGB v Boots (1952) (CA) (main point)

Answer 3

Main point: display of goods for sale = an invitation to treat

Question 4

O - PSGB v Boots (1952) (CA) (decision)

Answer 4

Summary: pb of chemist shop displaying articles (w/ price) on shelves that fall under regulation of Pharmacy and Poisons Act 1933 => sale required to be supervised by registered pharmacist

CA held that display not a pb bcs only ITT – offer made and accepted at cashier’s desk so sale effected under supervision of a registered pharmacist

Question 5

O - PSGB v Boots (1952) (CA) (reasoning)

Answer 5

Reasoning: (Lord Goddard) : offer = an offer to buy, “the customer brings the goods to the shopkeeper to see whether he will sell or not”

Bcs otherwise, if picking up good = acceptance of offer to sell (made by displaying goods), impossible for C to change her mind, shopkeeper could force C to buy

Question 6

O - Fisher v Bell (1961)

Answer 6

Main point: reiterates that displaying goods for sale does not constitute an offer

Summary: D = shopkeeper displayed a knife for sale in his shop window  charged w/ ‘offering for sale an offensive weapon’ under s1 of the Restriction of Offensive Weapons Act 1959 – argued that display not offer for sale, only ITT

=> court held that placing an item on display not an offer for sale, merely an invitation to treat so D not lb

Question 7

O - Partridge v Crittenden (1968) (HC) (main point)

Answer 7

Main point: the courts will generally construe advertisements as invitations to treat, not offers

/!\ contrast with Carlill v Carbolic Smoke Ball

Question 8

O - Partridge v Crittenden (1968) (HC) (decision & reasoning)

Answer 8

advertisement + sale of a bramble finch bird (“closed ring bird”) => issue whether advertisement = offer or ITT (bcs offer would be unlawful)

=> HC held that D not lb bcs advertisement was an ITT, not an offer (which becomes a contract on acceptance)

Ashworth J: // with Fisher v Bell : merely placing gun in window w/ price = (legally) invitation to treat ≠ offer of sale => same here (newspaper // window)

Question 9

O - Harris v Nickerson (1872)

Answer 9

Main point: an advertisement of selling objects by auction = an invitation to treat, not an offer (binding on acceptance) to the general public to carry out such a sale

Summary: D issued advertisement to sell furniture at auction over specified 3d, but withdrew all remaining lots on the 3rd day. P attended on 3rd day, intending to buy some of D’s furniture => Sued D to recover damages / expenses in attending

court held : mere advertisement of an auction in newspaper not a binding offer, merely an ITT => D was not legally bound to auction his good = could withdraw them at any time prior to the auction

Question 10

O - Thornton v Shoe Lane Parking Ltd (1971) (CA) (main points)

Answer 10

exemption clause must be brought to attention of other party to be effective

Lord Denning on automated ticket machines: offer contained in notice at the entrance, and accepted by driving into the car park => ticket = receipt => cannot alter the already concluded contract

Question 11

O - Thornton v Shoe Lane Parking Ltd (1971) (CA) (decision)

Answer 11

P parked his car in automated carpark belonging to D – small print of ticket stated that ‘issued subject to terms and conditions’ = found on sign on other side of the car park (need to look for it + long read), incl that garage not lb for injury to C while car on premises – C was injured when collecting his car

=> CA held that P did not know of exemption clause + not brought to his notice so not enough to exempt D from lb
+ Lord Denning on offer and acceptance : offer contained in notice w/ prices by entrance of car park, accepted & contract concluded when P drove in / put money in the machine => contract could not be altered by anything on the ticket

Question 12

O - *Gibson v Manchester CC (1979) (HL) (main point)

Answer 12

HL affirming conventional formº of contract : there must be an offer and acceptance of that offer => rejected Lord Denning’s attempt to depart from it by looking at the conduct of the parties and the “correspondence as a whole”

Question 13

O - Gibson v Manchester CC (1979) (HL) (decision)

Answer 13

negotiations to sell a house : V (council) wrote to B saying ‘may be prepared to sell’ at a certain price, B completed and returned attached forms BUT left price blank and asked it be lowered to account for defects in the property, V replied price set already took into account defects, B wrote back asking to carry on w/ application – Labour got control of council in elections and reversed policy, Q = whether bound by contract yet

=> HL : in the correspondence, no offer which could constitute a legally binding contract upon acceptance (bcs too much uncertainty, ntb about price)

Question 14

O - Storer v Manchester CC (1974) (CA)

Answer 14

Main point = contract w/ Gibson :
* In Gibson : no offer bcs uncertainty on price = material term => never actually confirmed / stated clearly by one of the parties
* Vs here : alleged ‘uncertainty’ = date not filled in (not v significant), full agreement on material terms (enough in context “of a scheme designed to dispense with legal formalities”)

Summary : same house selling scheme as in Gibson – P applied to buy his home, D ag to lend him the money (mortgage) + sent ag of sale & forms to fill in, P sent back the forms but forgot to fill in date = what new council used to claim no binding contract
=> CA held that there was a binding contract, entered into when P returned completed form, filling in date = ‘mere matter of administrative convenience’

Question 15

O - Harvela Investments v Royal Trust Co of Canada (1986) (HL)

Answer 15

Main point = case where invitation to tender treated as offer of a unilateral contract

Summary: D = shareholders in company, invited HI (C) and another party (X) to submit tenders to acquire shares  C offered $2 175 000, X offered $2 100 000 or $101 000 more than whatever C would submit, D accepted X’s offer via telext message

=> HL held that X’s 2nd price not acceptable bcs supposed to be a fixed bid sale – D’s 2nd msg induced by mistaken belief that they were bound by existing obligation to accept X’s offer (not intending to create new oblº / indep contract)

=> Lord Diplock: invitation to tender here not a mere invitation to treat, but rather two unilateral contracts (1 with C and 1 with X) binding D to sell the shares IN THE EVENT that promisee offers the highest bid

Question 16

O - Blackpool & Fylde Aero Club Ltd v Blackpool BC (1990) (CA)

Answer 16

Main point = invitation to tender normally no more than ITT can give rise to binding obligations and be construed as unilateral contract (acceptance being sending in a tender)

Summary : issue = whether, D owed P a duty to take reasonable care to consider a tender submitted before the expiry of the deadline

=> CA held that an invitation to tender was normally no more than an offer to receive bids (= ITT) but circumstances could exist whereby it gave rise to binding contractual obligation – here, D’s conduct established clear intention to create contractual oblº so D lb

Question 17

O - Barry v Davies (2000) (CA)

Answer 17

Main point = If goods are auctioned without a reserve price (= minimum price V is willing to accept), collateral contract is formed bwt auctioneer & highest bidder that his bid will be accepted

Summary: auction, plaintiff = highest (and only) bidder, auctioneer refused to sell him machines because deemed bid was too low (although no reserve price)  CA held in favour of P: since no reserve price, collateral contract btw P (highest bidder) & auctioneer that bid would be accepted  A in breach

Question 18

A - Felthouse v Bindley (1862)

Answer 18

Main point: silence cannot constitute acceptance of an offer (even where offeree has intention to accept)

Summary: A ag to buy horse from B, B wrote bcs misunderstanding abt price, A replied proposing to split the ≠, B didn’t reply (still had horse in possession) – A wrote ‘if I hear no more about him, I consider him mine at £X’ – B’s agent mistakenly sold horse at auction (B had told him to reserve it)

=> Court rejected A’s claim to the horse: since B did not communicate acceptance, no binding contract so A had no title to the horse

Question 19

A - Household Fire Insurance v Grant (1879) (main point)

Answer 19

Main point: postal rule = acceptance sent by post is effective as soon as it is posted by the offeror, whether or not the offeree receives it

= exception to the general principle that there must be a ‘meeting of the minds’

Question 20

A - justifications for the postal rule (3)

Answer 20

Justifications for the postal rule:

• post office = agent acting for both parties => risk of mistake has to fall on one of them = the offeror
• Doesn’t cause too much hardship bcs offeror can expressly require communication of acceptance in offer
• whereas alternative (applying general rule) would create opportunities for fraud and also delay (bcs acceptor wouldn’t feel safe acting on his acceptance until received letter confirming receipt of acceptance)

Question 21

A - Byrne v Van Tienhoven (1880)

Answer 21

Main point: postal rule on acceptance doesn’t apply to revocation
=> offer cannot be withdrawn simply by posting letter of revocation (which will arrive after the offer has been received & might be accepted) – makes sense bcs would create lots of inconvenience / uncertainty

Summary: D made offer to P by writing letter (10-11 days in the post), later D sent another letter to revoke that offer (sent before P received the 1st) – D failed to deliver goods and P sued => D ag that offer withdrawn before accepted – pb = P notified of withdrawal after having accepted

=> Decision: withdrawal was inoperative, postal rule on acceptance couldn’t apply to revocation bcs would create “extreme injustice and inconvenience” = no certainty upon accepting offer, have to wait to make sure no revocation coming

Question 22

A - Henthorn v Fraser (1892)

Answer 22

Main point: postal rule on acceptance applies where the circumstances make it ‘within the contemplation of the parties’ / reasonable for acceptance to be sent by post (eg parties living in ≠ towns)

Question 23

A - Entores v Miles Far East Corp (1955) (CA) (main point)

Answer 23

Main point = making a contract through instantaneous communication: **contract is made (binding) when and where the offeror receives the acceptance

Question 24

A - Entores v Miles Far East Corp (1955) (CA) (decision)

Answer 24

P (English company in London) made offer to agent of D (American company w/ agents ww) in Amsterdam by telex (± similar to email except msg gets printed at the other end), D’s agent accepted in Amsterdam – issue = when and where exactly was contract made ?

CA : postal rule = an exception to general rule that acceptance must be notified to offeror to make binding contract  contract made by instantaneous commº is complete only when acceptance is received by the offeror + made at place where acceptance is received

Question 25

A - Entores v Miles Far East Corp (1955) (CA) (Lord Denning 3 model cases)

Answer 25

• Shouting across a river and voice drowned out by passing plane : no contract if A doesn’t hear B’s answer, not bound until he does
• Phone failure – acceptor is aware that offeror might not have heard : no contract until B makes sure A has heard
• Phone failure (or other pb) – B not aware A might not have heard / reasonably believes A has heard : debatable – Lord Denning says offeror is bound if his fault he didn’t receive message of acceptance, but no contract if not his fault

Question 26

A - Holwell Securities v Hughes (1974) (CA)

Answer 26

**Main point: postal rule can be expressly excluded in the offer (in which case it will not apply, obviously) **

Summary: D granted C option to purchase land, clause 2 provided that the ‘option shall be exercisable by notice in writing at any time within six months from the date hereof’, C posted letter which never arrived

CA held that no contract, acceptance not effective since D had excluded postal rule, and requirement of ‘notice’ = requirement for D to be made aware of acceptance

Question 27

A - Brinkibon Ltd v. Stahag-Stahl (1983) (HL)

Answer 27

Main points:
- Instantaneous communications are not subject to the postal rule
- where the risk of non-delivery of acceptance lies w/ offeror (eg msg sent out of office hours), he is bound by the acceptance even if it wasn’t received

Question 28

A - Hyde v Wrench (1840) (HC)

Answer 28

**Main point: counter offer ≠ acceptance, kills off the original offer (therefore cannot be accepted later) **

Summary: D offered to sell C his farm for £1000, C counter-offered £950 but D refused. C offered £1000 again but D refused => C sued for breach of contract

HC held that no contract bcs original offer (£1000) killed off by counter offer (£950), none accepted

Question 29

A - Brogden v Metropolitan Railway (1877) (HL)

Answer 29

Main point : a contract can be accepted / made binding by conduct (where draft has been passed btw parties but not formally entered)

Summary: D supplied rail company (C) w/ coal for 2y without formal contract – C sent draft contract to D but no formal contract entered, C’s manager ordered coal acc to terms for 2y – D sought to stop supplying coal and C sued for breach

HL held that D was in breach of contract, having accepted / entered into it by conduct

Question 30

A- Manchester Diocesan Council for Education v. Commercial and General Investments Ltd (1970) (HC)

Answer 30

Main point: Where an offer states a method of acceptance without insisting that it is binding, acceptance by any other method that is no less advantageous is effective

Question 31

A - Gibbons v Proctor (1891)

Answer 31

Main point: Acceptance can be made without knowledge of the offer (/!\ uncertain)

Summary: reward of £25 offered for information leading to arrest of a criminal – police officer (who was then unaware of reward) asked colleague to pass on some useful information, became aware of the reward before information reached relevant person

=> Court held that officer nonetheless entitled to the reward

Question 32

A - Carlill v Carbolic Smoke Ball (1893) (CA) (main point on A)

Answer 32

Main point (here) : acceptance doesn’t need to be notified in a unilateral contract

general rule = acceptance needs to be notified, but not a problem that it wasn’t here :
* Exception or continuing offer (notification doesn’t have to be before performance, performance = notification) acc to Lyndley LJ
* He who makes the offer can chose method of acceptance, incl ‘acting on the proposal’ = most common in advertisement cases (Bowel LJ)

Question 32

A - Errington v Errington (1952) (CA) (main point)

Answer 32

Main point: acceptance in a unilateral contract binds the offeror (and his estate in case of death) BUT does not bind the acceptor, not obliged to continue performance (however if they stop performing, the offeror is released from his obligation)

Question 33

A - Daulia v Four Millbank Nominees Ltd (1978) (CA) (main point)

Answer 33

Main point = Goff LJ on unilateral contracts: in general, the offeror is entitled to require full performance of the condition which he has imposed => short of that he is not bound, BUT once offeree starts to perform, offeror is under oblº not to prevent condition of offer being satisfied

Question 34

A - Daulia v Four Millbank Nominees Ltd (1978) (CA) (decision)

Answer 34

C wanted to buy properties from D, made oral ag that they would exchange contracts if C brought draft to D’s office, and banker’s draft for terms of deposit, C did so and D refused to sign, C sued for breach

CA: had the ag been in signed writing (formality requirement under LPA 1925), it would’ve been a unilateral contract binding on D, who, once C had began to perform, could not have stood in the way

Question 35

A - Butler Machines v Ex-Cello Corp (1979) (CA)

Answer 35

Main point = battle of forms cases should be resolved applying the traditional ‘mirror’ approach (= finding offer & acceptance)

Summary: C offered to sell a machine to D, offer subj to C’s standard terms & conditions, incl variation clause – D submitted order w/ their own terms & conditions attached (not including variation clause), order included tear off slip stating ‘we accept your order on the terms and conditions stated therein’, C signed and returned tear off slip together w/ letter stating offer was accepted on C’s terms – when delivering the machine, C sought to rely on variation clause, D refused to pay

CA held in favour of D, contract had been formed on D’s terms bcs ‘last shot fired’ = final set of terms offered without objection : C’s original offer had been killed off by D’s counteroffer – C’s return of tear off slip = acceptance of D’s offer – C’s attached letter not a counter offer (/!\ slightly stained interpretation of the facts)

Lord Denning dissenting proposed alternative approach : look at correspondence as a whole to determine whether ag on material points, up to court to reconcile differences (implying terms if necessary)

Question 36

A - Tekdata Interconnections Ltd v. Amphenol Ltd (2009) (CA)

Answer 36

Main point = possible to displace the traditional analysis / use alternative to the mirror approach in a battle of the forms case in certain circumstances (eg long term relationship and conduct of the parties) BUT always difficult to do so, generally needs to be a clear course of dealing between the parties

Summary: Conflict btw 2 members of supply chain for Rolls Royce, question = whether binding contract was on terms 1st set out by the buyer (T) or those of the seller (A) when acknowledging purchase order

CA : traditional O&A (mirror) analysis had to be adopted unless the documents passing between the parties and their conduct showed that their common intention was that some other approach was intended to prevail – context of a long-term relº and conduct of parties might be strong enough to displace mirror in some cases but wasn’t here, bcs no clear course of dealing

Question 37

C - Hillas v Arcos (1932) (HL)

Answer 37

Main point: Courts are willing to interpret business contracts “fairly and broadly, without being astute or subtle in finding defects” (per Lord Wright) => possible for them to imply terms based on previous dealings or trade practices in order to cure uncertainty

Question 38

C May & Butcher Ltd v R (1934) (HL)

Answer 38

Main points:
* no contract if material terms (incl price) not agreed upon
* agreement to agree on the price in the future was too uncertain (/!\ may be valid today under s8(2) of SGA 1979 or s15 Supply of Goods Act 1982)

Summary: C agreed to buy tentage left over from WW1 from D (state body), ag provided that price would be ag ‘from time to time’ as tentage was made available for disposal – no price could be ag, C alleged that reasonable price could be implied under SGA 1893 or by arbitration (under arbitration clause in the ag)

HL held that no contract btw the parties bcs no price agreed upon => “vital” term missing = too much uncertainty – arbitration clause didn’t apply bcs no ag in the 1st place, and SGA didn’t apply bcs ag specified that price to be determined by the parties

Question 39

C - Scammell and Nephew Ltd v Ouston (1941) (HL)

Answer 39

Main point: “in order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty” (Viscount Maugham)

Summary: C ag to buy a van from S + stipulated that price should be paid through hire-purchase ag – S refused to perform before HP ag could be set => C sued S for breach of contract to supply van

HL held that no contract bcs clause w/ HP to vague so essential term (price) missing

Question 40

C - British Steel Corp v Cleveland Bridge & Engineering Co Ltd (1984) (HC)

Answer 40

Main point: letters of intent are not binding where negotiations of terms are ongoing

Summary: D purchased steel nodes from C – D sent C ‘letter of intent’ to enter contract on D’s standard terms, negotiations continued (without ag) while work carried out, D refused to pay price – C alleged that no contract but were entitled to ‘quantum meruit’ = restitution for nodes delivered

HC held in favour of C : no contract – letter of intent not binding here (bcs essential terms such as price and quantities left undecided) – but C entitled to quantum meruit

/!\ contrast w/ RTS case where letter of intent was binding (bcs substantial performance and material terms agreed upon)

Question 41

C - Walford v Miles (1992) (HL)

Answer 41

Main point: ‘lock-out’ agreements (ag not to negociate w/ others) are enforceable where they have a definite end date, but ‘lock-in’ agreements (ag to negotiate in good faith) are too uncertain to be enforceable

Question 42

C - Percy Trentham Ltd v Archital Luxfer Ltd (1993)

Answer 42

Main point (from K) : courts are reluctant to conclude that there was no contract where the existence of a contract has been relied upon by one of the parties + possible for contracts to be ± implied from conduct of the parties

Question 43

ITCLR - Balfour v Balfour (1919) (CA)

Answer 43

**Main point: presumption against intention to create legal relations (ITCLR) in the context of marriage*

Summary: H&W living in Ceylon bcs H = civil servant wk there, W had to return to UK for health reasons, H promised to pay her £30/m

*8CA** held that no enforceable contract formed bcs no intention to create legal relations (such dealings might have led to contract btw strangers but certainly no enforcing all promises btw H&W as contracts – policy ag = ‘domestic tranquillity’ and floodgates)

Question 44

ITCLR - * Jones v Padavatton* (1969) (CA)

Answer 44

Main point : presumption against ITCLR in the family context

Summary: Mother promised to provide daughter w/ house & money for the rent while she studied for the bar, daughter failed to pass after 6y and mother sought possession of the house

CA held in favour of M = there was no enforceable contract bcs family arrangement = no ITCLR so not enforceable following Balfour

Question 45

ITCLR - Trade Union and Labour Relations (Consolidation) Act 1992, s 179

Answer 45

main point of s179(1) : collective ag conclusively presumed not to have been intended to be a legally enforceable contract UNLESS it is in writing AND contains a provision which states that the parties intend it to be legally enforceable

Question 46

ITCLR - Esso Petroleum v Customs & Excise (1976) (HL)

Answer 46

Main points :
* presumption of ITCLR when ag is made in commercial context
* Sales promotion not a ‘mere puff’ (Lord Simon)

Summary: Esso (D) offering world cup coins to buyers of 4 galleons of petrol – Customs (C) sued bcs coins chargeable for purchase tax if there was a contract of sale

HL held that coins exchanged under unilateral contract – act required to accept offer of coins = enter into a separate contract to purchase petrol – so not chargeable for purchase tax bcs not (directly) a contract of sale

/!\ Not a mere ‘puff’ because does create a commercial advantage => see Carlill

/!\ Viscount Dilhorne and Lord Russel alternative reasoning: no contract for sale of coins bcs what customer wants = petrol, coins only smth they get in addº

Question 47

ITCLR - Kleinwort Benson Ltd v Malaysia Mining Corp (1989) (CA)

Answer 47

Main point : in comfort letters, statements of fact on a comforter’s intention or policy are not generally considered to be legally binding (although judgement leaves open possibility that some may be)

=> Statement of fact abt what policy is at a given time ≠ promise that such a policy will continue in the future / promise relating to future conduct – former is not legally binding

Question 48

ITCLR - RTS Flexible Systems Ltd v Molkerei Alois Muller (2010) (SC) (main points)

Answer 48

Main points:
* Whether there is ITCLR is to be inferred objectively = based on the expectations of reasonable honest businessmen
* Possible to waiver ‘subject to contract’ clauses if subsequent communication and conduct of parties shows intention to be bound

Question 49

ITCLR - RTS Flexible Systems Ltd v Molkerei Alois Muller (2010) (SC) (decision)

Answer 49

C supplied D’s factory w/ packing machines for food – D sent C letter of intent setting out draft contract w/ industry standard terms, incl clause providing that terms were ‘subject to contract’ – following delivery, C received 70% of price, but D refused to make further payment bcs dispute abt whether equipment met specifications

SC held in favour of C: standard terms were binding and ‘subject to contract’ clause waived by conduct (substantial performance alr occurred + essential terms had been ag)

Question 50

ITCLR - **Radmacher v Granatino* (2010) (SC) [142]

Answer 50

Lady Hale (dissenting) at [142]: idea that nothing stops husband and wife from making contractual arrangements to regulate their property and affairs – more diff when it comes to ag abt housekeeping or allowances => Balfour v Balfour: “the small courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations.”

Main point of case (lwp) : pre-nuptial and post-nuptial agreements are presumed to be valid contracts where they are freely entered into with informed consent and the circumstances do not make the conclusion otherwise unfair

Question 51

ITCLR - Blue v Ashley (2017) (HC)

Answer 51

Main point: no ITCLR in relation to statements made in a social setting, w/ vague language, in anger or in jest

Summary: D company owner told investment banker (C) in a pub that he would pay him £15m if he could get price of shares in his company to £8 – when shares did reach that value, D refused to pay C

HC held in favour of D : there was no contract – statement using lgg of offer but in vague lgg in a social contect / in anger or jest not enough to create contract even if accepted bcs no ITCLR