Contract Law - 1 Offer and Acceptance Flashcards
Storer v Manchester City Council [1974] 1 WLR 1403 - importance
Court is not concerned with inward mental intent but rather with what a reasonable man would say was the intention.
Lord Denning “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.
Court not concerned with inward mental state of the parties - rather with what a reasonable man would say was the intention.
Storer v Manchester City Council [1974] 1 WLR 1403
Gibson v Manchester City Council [1979] 1 WLR 294 - case
City Treasurer wrote to tenant saying council may be prepared to sell house to you for £2,725 less 20% - £2,180. If you want to make formal application complete form.
Tenant completed the form.
Council changed its policy and advised the tenant they could not proceed with his application.
Held (by HoL) no binding contract because never an offer - merely first step in negotiation.
Offer must be clear and certain
Gibson v Manchester City Council [1979] 1 WLR 294
Gibson v Manchester City Council [1979] 1 WLR 294 - importance
Offer must be clear and certain
Lacked the intention to be legally bound
Storer v Manchester City Council [1974] 1 WLR 1403 - case
‘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. Did demonstrate intention to be legally bound
Partridge v Crittenden [1968] 1 WLR 1204 - importance
General rule regarding adverts is that they are invitations to treat.
General rule is that adverts are invitations to treat
Partridge v Crittenden [1968] 1 WLR 1204
Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256 - case
Carbolic Smoke Ball issued an advert which offered £100 to any person who used their smoke ball in a specified manner for a specified period and still contracted influenza.
They proclaimed that they had deposited £1,000 in a named bank to show sincerity.
Plantif bought a ball, did as they said and still contracted influenza.
Held: plaintif was entitled to recovered the sum as they were bound to pay. Advert was a unilateral offer with clear prescribed act, performance of which consituted evidence. Defendants intention was clear by the £1000 deposit and certainty of the language.
Advert constituiting unilateral contract
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Fisher v Bell [1961] 1 QB 394
Price-marked goods in a shop window are not an offer for sale but an invitation to treat
Price-marked goods in a shop window are not an offer for sale but an invitation to treat
Fisher v Ball [1961] 1 QB 394
Spencer v Harding (1870) LR 5 CP 591
Inviting parties to tender is considered an invitation to treat
Inviting parties to tender considered invitaton to treat
Spencr v Harding (1870) LR 5 CP 591
Harvela Investments Ltd v Royal Trust Co. of Canada Ltd [1985] Ch 103
Exception to general rule that invitation to tender is invitation to treat is when tender expressly contains an undertaking to accept highest or lowest bidder
Exception to general rule that invitation to tender is invitation to treat is when tender expressly contains an undertaking to accept highest or lowest bidder
Harvela Investments Ltd v Royal Trust Co. of Canada [1985] Ch 103
When tender is unilateral contract
Harvela Investments Ltd V Royal Trust Co. of Canada [1985] Ch 103
Blackpool & Fylde Aero Clouc Ltd v Blackpool Borough Council [1990] 1 WLR 1195 - importance
Held that invitation to tender could give rise to binding contract to consider tenders where:
- tenders been solicited from specified parties known to the requesting party
- there was an absolute deadline for submission
- party requesting tender had lain down and absolute and non-negotiable conditions for submission.
Bingham LJ held: contractual duty to consider those tenders which had complied with conditions for submission
When tender could give rise to binding contract to consider submissions
Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] 1 WLR 1195
Payne v Cave [1789] 3 Durn & E 148
Auctioneer’s request for bids is an invitation to treat. Bidder makes an offer which the auctioneer is free to accept / reject.
Marks acceptance by the fall of his hammer.
The offerer make revoked his offer at any time before acceptance
Auctioneer’s request for bids is an invitation to treat.
Payne v Cave [1789] 3 Durn & E 148
Warlow v Harrison [1859] 1 E&E 309
Obiter dicta:
if sale of an auction item listed without reserve - auctioneer may be sued for breach of contract if do not sell to highest bona fide bidder.
When without a reserve - two contracts;
1) bilateral - usual for an auction and determines who is entitled to the goods
2) unilateral - based on the promise that the auction will be without a reserve.
Auction without a reserve = 2 contracts
obiter dicta:
Warlow v Harrison [1859] 1 E&E 309
Barry v Davies [2000] 1 WLR 1962
Approved the approached in Warlow v Harrison [1759] 1 E&E 309 that an auction without a reserve is two contracts
Approved the approach in Warlow v Harrison
Barry v Davies [2000] 1 WLR 1962
Hyde v Wrench [1840] 3 Beav 334
Where an offeree makes a counter offer the original offer is deemed to have been rejected and is therefore no longer valid.
Acceptance must be unqualified and correspond exactly with the terms of the offer
Counter offer deems original offer rejected and invale
Hyde v Wrench [1840] 3 Beav 334
Stevenson, Jacques & Co v McLean [1880] 5 QBD 346 - case
Defendant offered to sell 3000 tons of iron at 40s net cash per tin, open til Monday. Claimant responds: Please write whether you would accept 40 for delivery over two months, or if not the longest limit you would give. Having received no reply, accepted the original offer.
Court held that claimant’s response was not a counter offer - rather an enquiry which did not serve to reject the original offer
An enquiry does not serve to reject the original offer
Stevenson, Jacques & C v McLean [1880] 5 QBD 346
Financings Ltd v Stimson [1962] 1 WLR 1184
Lapse of an offer: subject to fulfilment of a condition.
Customer offered to take car under a hire purchase agreement (offer being made to a finance company).
Car stolen from dealers & damaged.
Dispute as to whether customer’s offer subject to an implied term that the car remained in same condition.
Held: customer’s offer subject to implied term
Offer makes offer subject to fufilment of a condition
Financings Ltd. v Stimson [1962] 1 WLR 1184
An offerer may revoke his offer at any time before acceptance
Payne v Cave [1789] 3 Durn & E 148
Dickinson v Dodds [1876] 2 Ch D 463
The offeror is not bound to keep an offer open for a set amount of time even if stipulated. Unless, the offeree has given something of value in return. Then, there is a separate binding contract known as an option & revocation within the period will be in breach of that contract
Revocation is effective even if communication by a third party
If offeree gives something of value in return for offer being held open for stipulated amount of time
Then there is a separate binding contract known as an option & revocation
Dickinson v Dodds [1876] 2 Ch D 463
Bryne v Van Tienhoven [1880] 5 CPD 344
When revocation is communicated by post it only takes effect once it is received by the offeree
When revocation is communicated by post it only takes effect once it is received by the offeree
Bryne v Van Tienhoven [1880] 5 CPD 344
Means of communication a revocation do not matter - will be effective even if via a third party
Dickinson v Dodds [1876] 2 Ch D 463
Great Northern Railway Company v Witham [1873]
It remains possible to revoke a unilateral offer at any time before the completion of the required act
Remains possible to revoke a unilateral offer at any time before the completion of the required act
Great Northern Railway Company v Witham [1873]
Errington v Errington & Woods [1952] 1 KB 290
Father agreed to give son and daughter-in-law his house if they paid off the mortgage. The couple had made several payments towards the paying off of the loan when the father revoked the offer. COurt held that the promise could not be revoked after the couple had started to pay the instalments as long as they contieues to be paid
Cannot revoke an offer even if the act is only partly completed
Errington v Errington & Woods [1952] 1 KB 290
- House mortgage
Daulia v Four Mill Bank Nominees Ltd [1978] Ch 231
Lord Justice Goff ‘ the true view of a unilateral contract must.. be that the offeror is entitled to require full performance of the condition which he has imposed… subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied which obligation it seems to me must arise as soon as the offeree starts to perform
Offeror is entitled to require full performance of a condition as long as the offeror does not prevent condition being satisfied
Daulia v Four Mill Bank Nominees ltd. [1978] Ch 231
Offer can be made to the whole world and those embarking have no requirement to communicate their intention to accept the offer
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Shuey v United States [1875] 23 L ed 697
US (no english authority)
When the offeror has no idea of who may be responding to the offer, revocation will be effective if reasonable steps have been taken to bring it to the attention of all those who may have read the offer
If offer is made to the ‘world’ a valid acceptance may be made by any person with notice of the offer
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
R v Clarke [1927] 40 CLR 227 - case
Reward offered for information leading to the arrest and conviction of the persons who committee the murders of two police offers. Clarke had seen this offer but only gave relevant info after he had been arrested for the crime and had forgotten the reward offer.
Held: he had not acted on the faith of or reliance up on the offer.
Act or promise constituting the acceptance must be given in the knowledge of the offer
R V Clarke [1927] 40 CLR 227
Held: had not acted on the faith of or in reliance upon the offer
Williams v Carwardine [1833] 5 C & P 566
If there’s evidence of pre-requisite knowledge, it matters not that the act is performed for an entirely different motive which is quite unconnected with the terms of the offer
Evidence of pre-requisite knowledge then doesn’t matter if act if performed for a different motive
Williams v Carwadine [1833] 5 C & P 566
Acceptance must be unqualified and correspond exactly with the terms of the offer
Hyde v Wrench [1870] 3 Beav 334
Manchester Diocesan Council for Education v Commercial and General Investments [1970] 1 WLR 241
Buckley J explained that it’s open to offeror to prescribe a mode of acceptance ‘in terms insisting that only acceptance in that mode shall be binding’.
If an offerer intends that he shall be bound only if his offer is acctped in some particular manner, it must be for him to make this clear
Buckley J:
Manchester Diocesan Council for Education v Commercial and General Investments [1970] 1 WLR 241
Tinn v Hoffman [1873] 29 LT 271
Unless prescribed mode of acceptance is made mandatory, another mode of acceptance which is no less advantageous to the offerer will bind him
Unless specified mode of acceptance is mandatory, other modes no less advantageous to offerer will be accepted
Tinn v Hoffman [1873] 29 LT 271
Yates Building Co. Ltd v Pulleyn & Sons (York) Ltd [1975] 119 SJ 370 - significance
If method of acceptance is for the benefit of the offeree, the offeree can waive a stipulation and use an alternative mode if it doesn’t not disadvantage the offere
Yates Building Co. Ltd v Pulleyn & Sons (York) Ltd [1975] 119 Sj 370 - case
Acceptance was to be sent registered or recorded delivery. This was for the benefite of the offeree as provided proof of acceptnace. Offeree was therefore abvle to waive this requirement
If mode of acceptance is chosen to benefite oferee, offerree can waive this benefit
Yates Building Co. Ltd v Pulleyn & Sons (York) Ltd [1975] 119 SJ 370
Felthouse v Bindley [1862] 11 CB (NS) - case
F offered to buy his nephews horse for £30 15s. In the letter with the offer F wrote ‘ If i hear no more I consider him mine for £30 15s”
Nephew didn’t reply, sold the horse to someone else.
F alleged there was a binding contract. Court help that the nephew had not communicated his intention to sell the horse to F and so no contract
Felthouse v Bindley [1862] 11 CB (NS) - importance
Acceptance has to be communicated
Acceptance has to be communicated
Felthouse v Bindley [1862] 11 CB (NS)
Powell v Lee [1908] 99 LT 284 - case
P applied to a commitee of school managers for post of headmaster.
Committee decided to appoint P but did not inform him.
One member, without authorisation, informed P had been selected.
Committee change of mind and selected a different person. P contended breach of contract.
Held: No contract because committee had not communicated an acceptance.
Purported acceptance, made with authority is not binding
Powell v Lee [1908] 99 LT 284 - case
Adams v Lindsell [1818] 1 B & Ald 681
Laid down the postal rule.
Further acceptance to the rule that acceptance has to be communicated to the offereor.
Where post is deemed proper means of acceptance, the acceptance takes effect from the moment the letter is properly posted. This is when it is put into an official letter box or into the hands of an employee of the PO authorised to receive letters
Postal rule - acceptance in effect once properly posted
Adams v Lindsell [1818] 1 B & Ald 681
London and Northern Bank, ex p. Jones [1900] 1 Ch 220
Letter not properly posted by putting into the hands of a postman only authorised to deliver letters
Letter not properly posted by putting into the hands of a postman only authorised to deliver letters
London and Northern Bank, ex p. Jones [1900] 1 Ch 220
Household Fire and Carriage Accident Insurance Co. V Grant (1879) 4 Ex D 216 - relevance
Postal 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 - case
G applied for shares of the plaintiff company. Company accepts via letter but it never arrived.
Company into liquidation, liquidator on behalf of the company sued for the balance outstanding.
G contented not bound to pay since he had not received a reply.
Held: contract was made at the moment the letter was posted
Contact made at the moment the letter was posted
Household Fire and Carriage Accident Insurance Co. V Grant (1879) 4 Ex D 216
Henthorn v Fraser [1892] 2 Ch 27
Postal rule only applicable where reasonable for the offeree to use post.
Held to be unreasonable to use the post when im[lied condition that prompt acceptance required
unreasonable to use the post when implied condition that prompt acceptance required
Henthorn v Fraser [1892] 2 Ch 27
Postal rule only applicable where reasonable for the offeree to use post.
Henthorn v Fraser [1892] 2 Ch 27
Quenerduaine v Cole [1883] 32 WR 185
Fact that counter-offer was made by telegraph indicated implied condition that prompt acceptance was required. Purported acceptance by letter, which reached the counter-offer after the counter-offer had lapsed, was ineffective
Counter-offer was made by telegraph indicated an implied condition that prompt acceptance was required
Quenerduaine v Cole [1883] 32 WR 185
Holwell Securities v Hughes [1974] 1 WLR 155
Lawton LJ stated that postal rule will not apply where it would lead to ‘a manifest inconvenience or absurdity’
Postal rule does not apply when would lead to inconvenience or absurdity
Lawton LJ
Holwell Securities v Hughes [1974] 1 WLR 155
Bryne v Van Tienhoven [1880] 5 CPD 344
Postal rule only applies to letters of acceptance not revocation
Postal rule only applies to letters of acceptance not revocation
Bryne v Van Tienhoven [1880] 5 CPD 344
Henthorn v Fraser [1892] 2 Ch 27
Henthorn v Fraser [1892] 2 Ch 27
Postal rule only applies to letters of acceptance not revocation
Henthorn v Fraser [1892] 2 Ch 27
Day 1: F makes offer and H recieves to seel certain giuse with the offer to remain open for 14 days. H recieves the offer in person.
Day 2: F posts revocation
Day 2 (later): H posts acceptance
Day 3: H receives revocation
Day 3 (later) F receuves acceptance
Held: contract was made when H posted his letter of accepteptance
Revocation not valid until received, acceptance valid once posted
Henthorn v Fraser [1892] 2 Ch 27
Gertreide-Import Gesellschaft v Contimar [1953] 1 WLR 207
Postal rule does not apply if incorrectly addressed
Postal rule does not apply if incorrectly addressed
Gertreide-Import Gesellschaft v Contimar [1953] 1 WLR 207
Holwell Securities v Hughes [1974] 1 WLR 155
Postal rule does not apply if disaplied by the offereor
Postal rule does not apply if disaplied by the offeror
Holwell Securities v Highes [1974] 1 WLR 155
Holwell Securities v Hughes [1974] 1 WLR 155 - case
Plaintiffs granted option by defendant ‘excersiable by notice inw riting’ an any time within 6 months of the date herof.
6 months later plaintiff wrote to defendant giving notice to exercise the option but letter didn’t arrive
Hled: option had not been validly exercised because actual communication was required by the use of the phrase ‘by notice….to’
Dunmore v Alexander [1830] 9 Shaw 190
Postal rule suggests B cannot retract acceptance by telephone of an offer he made by post the day before
Postal rule suggests B cannot retract acceptance by telephone of an offer he made by post the day before
Dunmore v Alexander [1830] 9 Shaw 190
Wenkheim v Arndt (NZ) [ 1861]
Entores v Miles Far East Corporation [1955] 2 QB 327 confirmed by
Brinkibon v Stahag Stahl [1983] 2 AC 34
Brinkibon v Stahag Stahl [1983] 2 AC 34 confirms
Entores v Miles Far East Corporation [1955] 2 QB 327
Brinkibon v Stahag Stahl [1983] 2 AC 34
General rule - when acceptance received by instantaneous mode of communication, acceptance takes place at moment acceptance received
General rule - when acceptance received by instantaneous mode of communication, acceptance takes place at moment acceptance received
Brinkibon v Stahag Stahl [1983] 2 AC 34
confirms
Entores v Miles Far East Corporation [1955] 2 QB 327
Entores v Miles Far East Corporation [1955] 2 QB 327
General rule - when acceptance received by instantaneous mode of communication, acceptance takes place at moment acceptance received
The Brimnes [1975] QB 929
concerns communication sent during office hours.
CoA concluded that a telex had been sent during ordinary office hours on a Friday but not been seen until following Monday . It was effective when it was received
Telex received in usual working hours - effective when received
The Brimnes [1975] QB 929
Mondial Shipping and Chartering BV b Astarte Shipping Ltd [1995] CLC 1011
Telex sent outside ordinary hours.
Telex sent 23:41 Friday by ship owners to charterers informing them of their intention to withdraw vessel for non-payment of hire.
They had until Friday midnight to pay
Deemed that the telex was sent out of office hours so only came into effect the following Monday at which point charterers in breach of their contract.
Telex sent outside ordinary hours.
Mondial Shipping and Chartering BV b Astarte Shipping Ltd [1995] CLC 1011
Thomas v BPE Solicitors [2010] All ER (D) 306
What is office hours will depend on the particular context of the communications. Blair J expressed view that the postal rule is inapplicable to email communication. Email acceptance only effective when recieved.
What is office hours will depend on the particular context of the communications.
Thomas v BPE Solicitors [2010] All ER (D) 306
