Offer

Question 1

What is an offer? (Cheshire, Fifoot and Furmstone)

Answer 1

An offer, capable of being converted into an agreement by acceptance, must consist of a definite promise to be bound provided that certain specified terms are accepted.

Question 2

Who can an offer be made to?

Answer 2

An individual, a particular group of individuals, or to the world at large

Question 3

What is an offer often distinguished from?

Answer 3

Mere invitation to treat

• Harvey v Facey (1893)
• Gibson v Manchester City Council (1979)
• Boulder Consolidated Ltd v Tangaere (1980)

Question 4

what is meant by an invitation to treat not constituting an offer?

Answer 4

• No offer is made when a party communicates his proposed terms unless he also communicates his commitment to be bound on the other’s acceptance of the terms.
• A communication may possibly be only a request for or supply of information or an invitation to treat, not an offer.

Question 5

What were the four legal principles outlined in Boulder Consolidated Ltd v Tangaere?

Answer 5

1. Whether the existence of an agreement can be inferred from an offer and acceptance depends on whether one party may be assumed to have made a firm offer and the other party to have accepted it
2. An offer to treat is distinguished from a binding offer primarily on the ground that it is not made with the intention that it shall become binding as soon as the person to whom it is addressed simply communicates his assent to its sterms
3. In deciding whether there has been a defined offer by the one party and an acceptance by the other the Courts must apply an objective test (as in Smith v Hughes). An apparent meeting of minds is sufficient to establish a consensus
4. McMullin J: No acceptance of any offer can constitute a contract unless there is first a contractual offer available for acceptance (Gibson v MCC)

Question 6

What are the two approaches of interpretation?

Answer 6

Global and conventional

Question 7

What is the global approach?

Answer 7

Question of fact. Advocated by Denning MR in Gibson v MCC - sought to “look at the correspondence as a whole and at the conduct of the parties and see therefrom whether the parties have come to an agreement on everything that was material”

Question 8

Carilill v Carbolic Smoke Ball Company [1893] 1 QB 256

Answer 8

Offer can be made to the world at large. Also, a unilateral contract can constitute an offer if there is sufficient detail, and an intention to be bound can be inferred from the circumstances.

Question 9

Partridge v Crittenden (1968)

Answer 9

Significance : Advertisements are generally invitations to treat

Facts : Appellant ad in classifieds “Bramblefinch cocks and hens, 25s each” – words “offer for sale” not used. Charged with offering for sale live wild birds contrary to Protection of Birds Act 1954.

Held : Lord Parker noted :

“I think that when one is dealing with advertisements and circulars, unless they indeed come from manufacturers, there is business sense in their being construed as invitations to treat and not offers for sale.”

Question 10

Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)

Answer 10

Significance : Priced goods on display merely invitations to treat

Facts : Defendants “self-service” shop. Selected goods were brought to counter. Registered pharmacist at counter restricted the sale of certain items. Under s18 UK Pharmacy and Poisons Act 1933, it was unlawful to sell unless under the supervision of registered pharmacist. Thus, question of when sale took place.

Held : Goddard J at first instance held that display of goods were only invitation to treat. CA upheld decision stating that “it is an offer by the customer to buy, and there is no sale effected until the buyer’s offer to buy is accepted by the acceptance of the price.”

Quare : What if shops falsely display low prices in an attempt to attract customers?

Alternative Analysis : Goods displayed are an offer, but acceptance is only when goods are brought to cashier.

Question 11

Payne v Cave (1789)

Answer 11

An auctioneer’s request for bids is not an offer. The bid itself is an offer which the auctioneer is free to accept or reject.

Question 12

UK Sale of Goods Act 1979

Answer 12

The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner, and that until such announcement is made, any bid may be retracted

Question 13

Does an advertisement that the sale would be without reserve constitute a definite offer to sell to the highest bidder?

Answer 13

Scottish Court in Fenwick v MacDonald, Fraser & Co (1904) 6 F (Court of Sess) 850 held this was not so. But in the English case of Warlow v Harrison (1859) 1 E&E 309 (Court of Exchequer Chambers), although the action failed on other grounds, 3 of the judges stated (strictly obiter), that Plaintiff would have succeeded if he had argued that the advertisement on sale without reserve constituted an implicit promise to sell to the highest bidder

This dicta has come under academic criticism, eg. When was the contract of sale formed?

If the advertisement was only an invitation to treat, then the Plaintiff’s bid was not acceptance of the offer.
If the advertisement stating the auction was without reserve constituted a binding promise, then the Defendant would not be liable if he never held the sale at all but would be bound to sell to the highest bidder once the auction was started.

Question 14

Spencer v. Harding (1869 - 1870)

Answer 14

Generally, displays or advertisements for goods for sale are only invitations to treat and not offers. This rule may prevail even when the word “offer” is used because it may not have been used in its legal sense.

This protects the party placing the advertisement from incurring a liability contract with every single person who is willing to purchase the goods at the stipulated price.

Question 15

Fisher v. Bell (1961)

Answer 15

Displays of a flick-knife in a shop window were not offers to sell the items in contravention of the legislation restricting the sale of offensive weapons, but were merely an invitation to treat.

Question 16

courts are prepared to treat displays and advertisements as offers when there are good policy reasons for doing so.

Answer 16

Chapelton v Barry UDC (1940)

Carlill v Carbolic Smoke Ball Co (1893)

Chwee Kin Keong v Digilandmall.com Pte Ltd (2005)

Question 17

Chapelton v. Barry UDC (1940)

Answer 17

HELD: Courts held that the display of deck chairs for hire on the beach with a notice of the charges was an offer, which was accepted when the customers picks up the item.
Policy consideration that it would be unfair to leave the claimant without a remedy, thus the need to accelerate the point of contract formation in order to keep out the exclusion clause.

Question 18

Carlill v. Carbolic Smoke Ball Co. (1893)

Answer 18

• Manufacturer advertised carbolic smoke ball and offered to pay £100 to anyone who catches influenza after using their smoke balls in a specified manner. To show sincerity, the manufacturer deposited £1,000 into a bank. P contracted influenza and sued for £100.
• HELD: Offer was made to the whole world at the advertisement stage and accepted when the customer buys and uses the product in the specific manner.
• Policy consideration does not want to allow traders to make wild claims to sell quack remedies

Question 19

Chwee Kin Keong v Digilandmall.com Pte Ltd (2005)

Answer 19

applies principle from Carlill to an online platform (recall - mistake in pricing of printers, which plaintiffs clearly knew about and took advantage of)

Question 20

Harvey v. Facey (1893)

Answer 20

P sent D a telegram asking if D will sell them the goods and what was the lowest cash price. D replied with the lowest price and P purported to accept the offer.
HELD: D merely supplied information to P’s and expressed no clear intentions to be bound, no contract.

Question 21

Storer v. Manchester City Council (1974)

cf: Gibson v Manchester City Council (1978)

Answer 21

• Council advertised for the sale of houses, P ascertained the price and sent a formal application of purchase. Council responded with a letter and included an agreement for sale that P signed and returned.
• HELD: This was a contract that was concluded (went beyond the stage of Gibson). The letter evinced intention to be bound as soon as S accepted.

Question 22

Gibson v. Manchester City Council (1978)

Answer 22

• Council wrote letter informing P of the price at which the council may be prepared to sell the house, but explicitly stated that the letter is not an offer of a mortgage. P filled in formal application and made repairs to the house.
• HELD: No contract because P has to make the offer by his formal application. While the council had indicated an intention to accept the offer, it had not completed the acceptance by communicating it back.

Question 23

Thornton v. Shoe Lane Parking Ltd (1971)

Answer 23

• HELD: Automatic machines stating chare rates are a standing offer that the motorist accepts by driving in and prompting the machine to issue a ticket.
• Therefore, there is an exclusion of liability contained on a notice placed inside the car park since it is not part of the contract and comes to the motorist’s notice after contract has been made. (same as Chapelton v. Barry UDC)

Question 24

quotations

Answer 24

Mere quotation of a price is not an offer. Neither is a mere inquiry

Question 25

The Barranduna (1985)

Answer 25

* P negotiated a shipping deal with D. D sent a telegram containing details about the costs and the duration of the freight. P failed to pay, D sold the cargo and P alleged breach of contract. * Court held that quotations of freight rates (by telex) was not an offer but an invitation to treat. Material terms were not clearly stated, hence quote was too vague to amount to offer.

Question 26

request for tenders

Answer 26

* Invitation to tender – invitation to treat * Person submitting the tenders – offer * Person inviting the tender accepting one of the offered tender – acceptance * Courts will use a 2-contract analysis where justice demands it: * Unilateral contract to consider conforming tenders * Main contract with the successful offered tender

Question 27

Blackpool & Fylde Aero Club v Blackpool Borough Council (1990)

Answer 27

Considered an invitation to tender as an offer and not as an invitation to treat; note however that requests for tenders are merely invitations to treat (cf: Spencer v Harding [1870])

Question 28

Hiap Huat Pottery (S) Pte Ltd v. TV Media Pte Ltd (1999)

Answer 28

* Blackpool was distinguished because in this case, the consideration for the collateral (which is TV Media’s obligation to submit HHP’s tender to the manager) contract depended on the agreement to lease and could not exist by itself. * HELD: This tender process was not a unilateral offer and was only an invitation to treat. The collateral contract exists only when the main contract has been entered to. It is supplemental to the main contract.

Question 29

auctions

Answer 29

* Advertisement – merely an invitation to treat * Putting up for item for sale – also an invitation to treat * Bid by the purchaser – offer * Fall of the hammer – acceptance * Unilateral contract between the highest bidder and the auctioneer. Main contract between the bidder and the owner.

Question 30

Harris v Nickerson (1873)

Answer 30

Question - is an advertisement of an auction on a special day a promise to potential bidders that the auction will really be held? Facts : Plaintiff attempted to recover travelling expenses for going to venue of advertised auction which was cancelled. Held : Court held that this was “an attempt to make a mere declaration of intention a binding contract”.

Question 31

when is an offer terminated?

Answer 31

Although a “live” offer once existed, it has ceased to exist and was “dead” by the time the offeree’s attempted acceptance was communicated to him. Hence, the offeree ceased to have the power to bind the offeror with his acceptance.

Question 32

how can an offer be terminated?

Answer 32

* revocation by the offeror * rejection by the offeree * lapse of offer * death of either the offeror or offeree.

Question 33

when is an offer revocated?

Answer 33

An offer is only revocable by the offeror if it is communicated to the offeree before the offeree’s acceptance takes effect

Question 34

Henthon v. Fraser (1892)

Answer 34

A postal revocation does not take effect on posting (cf. Postal acceptance rule). It must be “brought to the mind” of the offeree, which would mean the time when it would be reasonable to expect the offeror to have acquired notice of it.

Question 35

Tenax SS Co Ltd v. The Brimnes (1975)

Answer 35

A revocation letter takes effect when it arrives at business premises during the office hour, but not one that arrives near or after the closing hours and is not seen that day. Those will take effect the next morning.

Question 36

Shuey v US (1875)

Answer 36

An offer made by advertisement in a newspaper can be revoked by a similar advertisement even if some offerees do not see it.

Question 37

Dickinson v. Dodds (1876)

Answer 37

* D offered to sell property to P and added that offer would stay open till Friday morning. D’s agent told P on Thursday that the offer was revoked. P rushed to inform D of his acceptance but discovered it sold. * HELD: D was held to have effectively revoked the offer. A reliable third party acting without the offeror’s authority can revoke an offer. However the courts will be cautious to conclude as such and the onus is on the offeror to show that it would be unreasonable for the offeree to doubt the accuracy of the information conveyed.

Question 38

rejection by offeree

Answer 38

* An offer is terminated as soon as the offeree communicates his rejection of it to the offeror. * Fine distinction between a counter-offer (which kills off the original offer by rejecting it) and a request for further information or a clarification of the original offer. * Also, conflict with the postal acceptance rule: * If an offeree posts acceptance, changes his mind and informs the offeror about the rejection by a speedier means before the acceptance letter reaches, the parties are still bound by postal acceptance. * If an offeree posts rejection, changes his mind and posts acceptance before his rejection letter arrives, then he can bind the offeror even thought he acceptance letter arrives after the rejection letter.

Question 39

how may an offer lapse?

Answer 39

May lapse on * The expiry of the period for which the offer is expressed to be open * The expiry of a condition other than time, which is expressly or impliedly contained in the terms of the offer. * The passage of a reasonable period of time where no time limit is imposed.

Question 40

Ramsgate Victoria Hotel Co Ltd v. Montefiore (1866)

Answer 40

* D offered to buy shares in the company and only informed 5 months later that the shares had been allocated to him. * HELD: Offer has lapsed due to the reasonable period of time where no acceptance was given. * What is “reasonable” depends on the circumstances and context of each case, including the urgency of the matter, the nature of the subject matter, and the practice of the trade and previous mode of communication used.

Question 41

Reynolds v. Atherton (1923)

Answer 41

An offer is terminated by the death of the offeree

Question 42

Re Irvine (1928)

Answer 42

* An acceptance was handed by the offeree to his son but was not posted until his death. * HELD: Still not a valid acceptance as the acceptance was made after the offeree’s death

Question 43

Coulthart v. Clemetson (1879)

Answer 43

An offer is also terminated by the death of the offeror.

Question 44

Errington v Errington (1952)

Answer 44

An offer remains open if the offeror could not have terminated the offer during his lifetime and the performance of the contract does not depend on the offeror’s personality and can be satisfied out of his estate