Offer

Question 1

Offer

Answer 1

An offer is an announcement of a person’s willingness to enter into a contract, either expressly or impliedly. The offeror is the one who makes the offer, and the offeree is the one who receives it.

Question 2

Carlill v

Carbolic Smoke Ball Co.,

Answer 2

The defendants’ advertisement stated that if anyone used their smokeballs and still caught flu, they would pay the person £100, and that they had deposited £1000 to prove they are serious. Carlill used a smokeball and caught a flu. When the defendants refused to pay, the court held that the advertisement was an offer to the general public, which became a contract when it was accepted by Carlill using the smokeball. She was entitled to the £100.

Question 3

Bilateral

Answer 3

A bilateral contract is a contract in which both parties exchange promises to perform. Both parties are agreeing to do something in return for some reciprocal promise from the other. An example of such an offer would be if A promises to sell their car in return for B promising to pay £5,000. The vast majority of offers are of this type.

Question 4

Unilateral

Answer 4

A unilateral offer occurs where one party, the offeror, promises to pay for the act of
another, that is, a conditional promise. The acceptance of the offer takes place when the
offeree performs the act in question.

Question 5

Modern cases With unilateral aspects

Answer 5

O’Brienv MGN Ltd [2001] EWCA Civ 1279. The facts of the case were that the claimant purchased a Sunday newspaper that contained a ‘scratchcard’ game that related to a competition being held during the following week in the Daily Mirror. The claimant’s card
revealed two ‘windows’ displaying £50,000 in each. The next week the claimant bought
a copy of the Daily Mirror and in accordance with the ‘rules’ rang the ‘hotline’ and was
told that the prize for that day was £50,000, and the claimant then believed he had won
that amount. The court considered that the advertisement in the Daily Mirror constituted
an offer which was accepted when those with a winning scratchcard rang up to claim
their prize.

Question 6

Invitation To treat

Answer 6

An invitation to treat is an attempt to stimulate the other’s interest to make an offer without any intention to be bound. Negotiations to enter into a contract can be an invitation to treat but not an offer.

Question 7

Partridge v Crittenden 1968

Answer 7

A person was charged for offering for sale a wild bird under the Protection of Birds Act 1954, but his conviction was quashed on the grounds that the advertisement was not an offer, but an invitation to treat.

Question 8

Harris v Nickerson (1873)( Invitation To treat )

Answer 8

Where an auctioneer advertised that certain goods would be sold at a certain location on a certain date. The plaintiff went to the sale but all the lots he was interested in had been
withdrawn. He sued the auctioneer for his loss of time and expenses. It was held that the claim must fail as the advertisement of the auction was merely a declaration of intent to hold a sale and did not amount to an offer capable of being accepted and thus forming the basis of a binding contract, that is, that the advertisement merely amounted to an invitation
to treat.

Question 9

Grainger and Son v Gough 1896

Answer 9

The defendant wine merchant circulated a catalogue which contained a price list for its products. The claimant ordered a number of bottles of wine from the catalogue and, when the defendant refused to deliver these at the stated price, alleged that a contract had been formed.Held Rejecting the claim, the House of Lords held that the price list must be construed not as an offer, but as an invitation to treat. The list was interpreted an invitation to customers to offer to buy wine at the stated price, which the merchant may then accept or reject. In this case, the defendant was not bound to deliver the wine ordered by the claimant.

Question 10

Though a notice declaring that deckchairs

were for hire was held in Chapelton v Barry UDC [1940] 1 KB 532 as amounting to an offer.

Answer 10

The claimant hired a deck chair from Barry UDC for use on the beach. There was a notice on the beach next to the deck chairs stating that the deck chairs could be hired at 2d for three hours and also ‘respectfully requested’ the public to obtain tickets issued by the chair attendants. The claimant obtained a ticket and put it in his pocket without reading it. In fact there was an exclusion clause printed on the ticket excluding the council’s liability for personal injury caused in using the deck chair. The claimant was injured when he sat on the chair. The fabric of the deck chair split away from the frame. He brought an action against the council and they sought to rely on the exclusion clause contained in the ticket.Held:The exclusion clause was not incorporated into the contract. A reasonable person would regard the ticket as nothing more than a receipt and would not expect it to contain contractual terms. Furthermore, the wording of the notice suggested that a person could obtain the deck chair and get a ticket later. The notice constituted an offer and collecting the chair would amount to acceptance. It would not be open to the council to introduce new terms after the contract had been formed.

Question 11

Displays of goods for sale

Answer 11

By far the most common example of the occurrence of invitations to treat is in the case of goods displayed either in shop windows or within a shop itself.

Question 12

Fisher v Bell(Displays of goods for sale)

Answer 12

A shopkeeper displayed a flick knife in his window. The Offensive Weapons Act 1959 prohibited the ‘offering for sale’ of various offensive weapons, including flick knives. The shopkeeper was prosecuted under the Act. The prosecution failed. The court held that the display of the knife in the window was an
invitation to treat rather than an offer. Therefore, the shopkeeper was not offering it for sale.

Question 13

Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd

Answer 13

The defendants changed the format of their shop from counter service to self-service.Section 18 of the Pharmacy and Poisons Act 1933 provided that the sale of certain drugs should not occur ‘other than under the supervision of a registered pharmacist’.The court, however, decided that the goods on the shelves were only invitations to treat and that it was the customer who made an offer to buy when he presented the goods for payment at the cash desk. At this point the person at the cash desk or the registered pharmacist could accept or reject that offer. The effect of this reasoning was that the sale did take place under the supervision of the registered pharmacist and no criminal offence had
been committed.

Question 14

Auction sales

Answer 14

For auction sales, under s.57(2) Sale of Goods Act 1979, the general rule is that the auctioneer’s request for bids is an invitation to treat, and each bid is an offer. An advertisement of an auction is a mere declaration of intention.

Question 15

British Car Auctions v Wright(Auction sales)

Answer 15

The defendants were prosecuted for offering an unroadworthy vehicle for sale. The prosecution failed.The car had not been offered for sale; there had only been an invitation to treat (bid).

Question 16

Sale of Goods Act 1979, section 57(2)

Answer 16

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 17

Payne v Cave(1789)(Auction sales)

Answer 17

Mr Cave had made the highest bid for a good in an auction. But then, Mr Cave changed his mind and he withdrew his bid before the auctioneer brought down his hammer.It was held that Mr. Cave, the defendant, was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer. Note: The common law rule laid down in this case has now been codified in many countries in variations of the Sale of Goods Act, e.g. UK 1979 s57(2)

Question 18

McManus v Fortescue [1907] (Auction sales)

Answer 18

that no contract results if the auctioneer purports to accept a bid
that is lower than the reserve price.it was stated, obiter dicta, that in such a case there is a collateral contract
between the auctioneer and the highest bidder, whereby the auctioneer in calling for bids is offering to accept the highest bid and that this offer is accepted by bidding. Thus if the auctioneer refuses to sell to the highest bidder, the auctioneer may be sued for breach of contract.

Question 19

in Barry v Heathcote Ball & Co.(Davies)

Answer 19

The claimant had submitted the highest (and only) bids at an auction stated to be without reserve. The items were two Alan Smart engine analysers which were worth £14,000. The claimant had submitted bids of £200 each. The auctioneer refused to sell them at that price. The claimant brought an action for breach of contract claiming damages of £27,600 Held:The claimant was entitled to damages. Where an auction takes place without reserve the auctioneer makes a unilateral offer which is accepted by submitting the highest bid. There was thus a binding contract and the claimant entitled to damages covering the loss of bargain.

Question 20

Tenders

Answer 20

That a statement that goods are to be
sold by tender is not normally an offer, and that thus no obligation is created to sell to the person making the highest tender. Similarly, an invitation for tenders for the supply of goods or services is not generally an offer but an invitation for offers to be submitted which can be accepted or rejected as the case may be.In some circumstances, however, an invitation to tender may be held to be an offer.

Question 21

Spencer v Harding (1870)(Tenders)

Answer 21

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

Question 22

Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council(Tenders) Parties issuing invitations to tender are bound to consider (though not necessarily to accept)
a tender properly submitted before any deadline

Answer 22

In this case, the Council owned and managed an airport, raising money by granting a concession to an operator to run pleasure flights from the airport. Shortly before the concession was about to expire in 1983 the Council invited tenders for the right to run the concession, invitations being sent to the plaintiffs and six other interested parties. The terms of submission of bids were that they were to be submitted in an envelope provided, which was to bear no mark which could identify the sender. Furthermore, the tender had to be submitted no later than 12 noon on 17 March 1983. The plaintiffs’ tender was put in the Town Hall letter-box at 11 am on 17 March. However, although the box should have been cleared at noon, this did not occur. The plaintiffs’ tender was subsequently marked down as being submitted late and was therefore not considered. The plaintiffs sued the Council for breach of contract on the basis that it had warranted that had a tender been submitted by the deadline it would be considered and that the Council had acted in breach of that warranty. It was held, on appeal, that in certain circumstances an invitation to tender could give rise to binding obligations. This was such an instance since tenders had been sought from a number of parties, all of them known to the Council, which had also imposed strict rules of compliance on them. It was thus implied that a person submitting a tender in compliance with those rules had the right to have their tender opened and considered
along with the others.

Question 23

Specific tenders

Answer 23

specify that a particular quantity of goods is required on a particular date. Agreeing to the tender will be acceptance of offer, thus creating a contract.

Question 24

Standing-offer tenders.

Answer 24

simply state that certain goods may be required, up to a particular quantity, with deliveries to be made ‘if and when’ requested. Once approved, it becomes a standing offer

Question 25

Great Northern Railway | Co. vWitham (1873)

Answer 25

Where the plaintiffs invited tenders for the supply of goods, including iron, for a period of 12 months. The defendant submitted a tender to supply the goods over the period at a fixed price in such quantities as may be ordered from time to time. The tender was accepted, but before the expiry of 12 months the defendant refused to supply any more goods and was sued for breach of contract. It was held that just as the plaintiffs were not bound to order goods, the defendant was only bound to supply goods actually ordered and that he could revoke his standing offer at any time provided that revocation was communicated to the other party.

Question 26

Referential bid

Answer 26

A referential bid occurs in a competitive tender situation where one party attempts to win the order by reference to a bid submitted by another party.

Question 27

Harvela Investments v Royal Trust Co of Canada

Answer 27

The first defendant held shares in company. By means of a telex communication they invited the claimant and the second defendant to make an offer to purchase shares by sealed tender. They stated in this invitation that they bound themselves to accept the highest offer. The claimant made a bid for a fixed sum; the second defendant made a bid for a fixed sum or alternatively for ‘$101,000 in excess of any other offer’, whichever was to be higher. The first defendant accepted the bid made by the second defendant, despite the fact that the fixed sum which they offered was lower than that offered by the claimant.The House of Lords held that the referential bid was invalid, and as such, the first defendant was bound to accept the claimant’s offer. It reasoned that to allow a referential bid would create the possibility of conflicting obligations for the first defendant (had both parties made a bid offering a certain sum in excess of any other offer), in which case the offeror would be bound by the terms of its own promise to accept both offers. This would therefore be an unreasonable construction of the invitation to tender. It would also undermine the purpose of a sealed tender, which is to prevent a bid being made based on the sum offered by the competitor.

Question 28

Ticket case

Answer 28

The problem revolves around whether the ticket is a contractual document, thereby rendering the parties subject to the terms and conditions printed or referred to on the ticket, or not. Two factors can influence the role of tickets in contracts: first, whether it was intended that the ticket should amount to a contractual document; and, second, the mode and timing of the issue of the ticket.

Question 29

Ticket case

Answer 29

Chapelton v Barry UDC [1940] 1 KB 532In this case, the Court of Appeal considered that a sign by some deckchairs for hire constituted an offer,which the plaintiff accepted when he took two of the chairs. The tickets amounted to no more than mere receipts with the result that the terms and conditions on them formed no part of the contract since they were handed out after the contract was concluded.

Question 30

Request for more information( mere statement)

Answer 30

During the period of negotiation one of the parties may simply require further information before they can place themselves in the position of being able to enter the contract. Such a situation is very common where negotiations for the sale of land take place since there may be many questions of detail to be investigated before a formal contract can be entered into.

Question 31

mere statement case Harvey v Facey

Answer 31

The appellants sent a telegram to the respondent which read, ‘Will you sell us Bumper Hall Pen? Telegraph lowest cash price’; the respondent replied, ‘Lowest price for Bumper Hall Pen, £900.’ The appellants then telegraphed, ‘We agree to buy Bumper Hall Pen for £900 asked by you. Please send us your title deeds in order that we may get early possession.’ The appellants received no reply and thereupon brought an action for specific performance. It was held that the action must fail since the respondent’s reply was not an offer to sell but simply a statement as to the minimum price required should he decide to sell; his reply was a mere response to a request for information. The appellants’ final telegram amounted to the offer to buy, which was not accepted by the respondent.

Question 32

mere statement case where the claimant one Bigg v Boyd [1971]Gibbons

Answer 32

In this case, negotiations were taking place for the sale of some freehold property belonging to the plaintiffs. The plaintiffs wrote to the defendants, stating: ‘As you are aware that I paid £25,000 for this property, your offer of £20,000 would appear to be at least a little optimistic. For a quick sale I would accept £26,000.’ The defendants replied: ‘I accept your offer’ and asked the plaintiffs to contact the defendants’ solicitors. In their final letter the plaintiffs said: ‘I am putting the matter in the hands of my solicitors . . . my wife and I are both pleased you are purchasing the property.’ The plaintiffs alleged that this exchange of correspondence constituted an agreement for the sale of the property and sought specific performance. The Court of Appeal stated that an agreement on price did not necessarily mean an agreement for sale and purchase, nor did the use of the word ‘offer’ always amount to an offer in law; however, on the facts it was clear from the correspondence that the plaintiffs’ first letter constituted an offer, the acceptance of which by the defendants constituted a binding contract. In this case the parties had gone so far down the road of negotiations that a binding agreement had resulted.

Question 33

Stevenson Jaques & | Co v McLean (1880)

Answer 33

the defendant made an offer on a Saturday to sell iron to the claimants at a cash-on-delivery price of 40 shillings, and stated that the offer would remain available until the following Monday. The claimants replied by asking if they could buy the goods on credit. They received no answer. On Monday afternoon they contacted the defendant to accept the offer, but the iron had already been sold to someone else. When the claimants sued for breach of contract, it was held that their reply to the offer had been merely a request for information, not a counter-offer, so the original offer still stood and there was a binding contract.

Question 34

Communication of offers

Answer 34

Clearly an offer cannot take effect until it has been received by the offeree, since they cannot accept something of which they are not aware.

Question 35

Taylor v Laird (1856) | Communication of offers

Answer 35

where the plaintiff, the captain of a ship, wasemployed to command a steamer ‘for an exploring and trading voyage up the river Niger . . . at a rate of £50 per month’. The plaintiff took this ship as far as Dagbo, but refused to go further and resigned his command. He later helped to work the ship home and he claimed his wages for this work. It was held that the owners of the vessel were entitled to refuse payment as the plaintiff’s offer to help to bring the ship back to its home port was not communicated to them. In other words, they were given no opportunity to either accept or reject his offer.

Question 36

Inland vRevenue Commissioners v Fry [2001]

Answer 36

The Commissioners chased a liability to tax of over andpound;100,000. The taxpayer’s husband sent a cheque, expressed to be in full and final satisfaction for a much lower sum. It was cashed, and the Commissioners now sought payment of the balance.Held: The claim succeeded. There had been no meeting of minds such as would operate to reduce the overall sum due. The cheque had been paid in after being separated from the letter containing the terms suggested. A tax payer’s liability to tax was not satisfied when the Revenue encashed a cheque accompanied by a letter saying it had been sent in full and final settlement of a larger sum and was to be encashed only in settlement. The cashing of the cheque gave rise only to a rebuttable presumption of acceptance. That presumption had been rebutted