Offer & Acceptance

Question 1

The general rule is that acceptance must be communicated. Which type of contract does this not apply to? Why?

Answer 1

Unilateral contracts

To accept a unilateral offer, you simply have to perform the act asked of you. This does not require communication

Question 2

What does the mirror image rule state?

Answer 2

• The acceptance of an offer must be a mirror image of the offer
• This means the acceptance must be made in the same way as the offer was given
• If the acceptance is not exactly the same as the offer, it is not an acceptance at all. Instead, it is a counteroffer

Question 3

An offer can be terminated in 7 ways. Name them

Answer 3

• Rejection
• Lapse of specified time
• Counter-offer
• Failure of a pre-conditon
• Resonable time passed
• Revocation
• Death

Question 4

What does the postal rule state?

Answer 4

• The postal rule states that when posting a letter of acceptance, it is effective from the moment of posting, even if it never reaches the offeror
• It only applies to letters of acceptance

Question 5

Why was the postal rule created?

Answer 5

It was argued there was a lapse of time between when letters were sent and when they were received. It covers the lapse of time if the letter gets lost

Question 6

When can the postal rule be excluded?

Answer 6

• The postal rule can be excluded if the offerer states that the offer is only effective upon receipt of an acceptance
• The postal rule does not apply to incorrectly addressed letters

Question 7

Weeks v Tybald [1605]

Answer 7

Facts: A man said he would give his daughter’s suitor £100 to marry her

Held: This was not a contract because the language is too ambiguous. What classes as a suitor? It was an invitation to treat

Question 8

Confetti Records v Warner Music [2003]

Answer 8

Facts: A company sought to use a copyrighted track and this was agreed subject to contract. The copyright owners changed their minds and said the song was not to be used in the meantime. It was used

Held: There was no contract due to the “subject to contract” clause

Question 9

In what 3 ways can an offer be made?

Answer 9

• Orally
• In writing
• By conduct

Question 10

Who can an offer be made to?

Answer 10

• An individual
• A group
• The world

Question 11

What must an offer be in order to be valid?

Answer 11

• Clear
• Precise
• Capable of acceptance as it stands

Question 12

Harvey v Facey [1893]

Answer 12

Facts: A prospective buyer asked a seller “will you sell… Telegraph lowest price”. Seller telegraphed lowest price, and buyer said “we agree to buy for…”

Held: This was a statement of price, not an offer

Question 13

Partridge v Crittenden [1968]

Answer 13

Facts: Crittenden was charged for offering to sell a protected species of birds by way of an advertisement

Held: This was not an offer to sell, but rather an invitation to treat

Question 14

Fisher v Bell [1961]

Answer 14

Facts: Bell displayed a flick knife with a price tag in his shop window. This was an offence under the Restriction of Offensive Weapons Act 1959

Held: This was an invitation to treat, not an offer to sell

Question 15

Pharmaceutical Society of GB v Boots Cash Chemists [1953]

Answer 15

Facts: Boots had opened self-service stores. Under the Pharmacy and Poisons Act 1933 certain goods had to be ‘sold’ under the supervision of a registered pharmacist

Held: Goods on shelf are NOT ‘offers to sell’ but simply ‘inviting’ customers to take them to till to make an ‘offer to buy’

Question 16

Clifton v Palumbo [1944]

Answer 16

Facts: A property seller wrote to a potential buyer I am prepared to offer you… my estate for…” The seller later decided against this

Held: The statement of preparation was not an offer, but rather an invitation to treat

Question 17

British Car Auctions v Wright [1972]

Answer 17

Facts: A dealer was charged with offering to sell an unroadworthy car at an auction

Held: There was no offer to sell, just an offer to buy. It was an invitation to treat

Question 18

Taylor v Laird [1856]

Answer 18

Facts: The captain of a ship gave up his position during a voyage and worked as a crewmate instead. He sought to claim wages for his work. The owner was not made aware of this

Held: He was not entitled to wages. The owner could not accept the offer to work as a crewmate so there was no contractual basis

Question 19

Foley v Classique Coaches [1934]

Answer 19

Facts: Foley sold part of his land to Classique Coaches on the condition that the company purchase all of their fuel from him. There was no agreed price. Classique complied with the terms of this agreement for three years until they stopped

Held: The agreement was not void. Classique had performed their agreement for several years so the contract could not simply be repudiated. The length of time implied the price was reasonable

Question 20

Routledge v Grant [1828]

Answer 20

Facts: Grant made an offer to sell his house which should remain open for 6 weeks. He terminated the offer and withdrew it in writing. Routledge saught to accept the offer after its withdrawal

Held: The offer was validly withdrawn and was no longer open

Question 21

Byrne v Van Teinhoven [1880]

Answer 21

Facts: Negotiations were made via post. D revoked the offer but C accepted before it arrived

Held: The revocation was not effective until it was received, so was not valid

Question 22

Dickinson v Dodds [1876]

Answer 22

Facts: Dodds offered to sell his house and gave a deadline for acceptance. He sold the house before this deadline and asked a third party to inform Dickinson. Dickinson then saught to accept the offer seeking specific performance

Held: The offer had been validly revoked. No contract existed between the parties

Question 23

Errington v Errington & Woods [1952]

Answer 23

Facts: A father purchased a house for his son and daughter-in-law to live in. He paid the deposit as a wedding gift and promised that if they paid the mortgage instalments, he would transfer the house to them. The father died. The mother inherited the house and the son went to live with her, but the wife didn’t so continued to pay the mortgage instalments. The mother brought an action to remove the wife from the house

Held: The father made a unilateral offer to the couple. The wife was performing an acceptance by meeting the mortgage payments

Question 24

Ramsgate Victoria Hotel v Montefiore [1866]

Answer 24

Facts: M offered to purchase shares of the hotel. The hotel had accepted 6 months later when the shares had fallen

Held: There was no offer. It had lapsed after a reasonable time

Question 25

Financings Ltd v Stimson [1962]

Answer 25

Facts: There was a hire purchase of a car where the agreement would not bind until the finance company accepted. The car was stolen and damaged before then

Held: There was a pre-condition that the car should remain undamaged before the offer. This failed so the offer lapsed

Question 26

Hyde v Wrench [1840]

Answer 26

Facts: Negotiations took place regarding a sale. The potential buyer made a counter offer which was refused, then tried to accept the original offer

Held: A counter-offer destroys a previous offer, so the previous offer is no longer open for acceptance

Question 27

Jones v Daniel [1894]

Answer 27

Facts: The defendant offered to sell his property to the claimant. The claimant wrote a letter accepting the offer, but this letter included additional terms that had not been included in the original offer

Held: There was not a contract because the acceptance contained additional terms, making it a counter-offer instead

Question 28

Stevenson v Mclean [1880]

Answer 28

Facts: A merchant asked whether they could pay in instalments. The merchant accepted but the goods were already sold

Held: ​It was a request for information, so the original offer wasn’t cancelled

Question 29

Heathcote Ball v Barry [2000]

Answer 29

Facts: Barry placed the highest bid on an item in auction which did not have a reserve. The auction house refused to sell the item

Held: Auctioning an item without reserve is a unilateral contract

Question 30

Butler v Ex-Cell-O Co [1979]

Answer 30

Facts: Butler made an offer to sell with a condition all orders were accepted on the sellers terms which were to prevail over and terms & conditions in the buyers order. Ex-cell-O ordered the machine with new terms

Held: The offer to sell the machine on Butler’s terms was destroyed by the counter-offer. Butler signed the acknowledgement slip accepting those terms

Question 31

Felthouse v Bindley [1863]

Answer 31

Facts: A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don’t hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion

Held: The horse hadn’t been sold to the nephew as silence does not constitute an acceptance

Question 32

What did Adams v Lindsell [1818] define?

Answer 32

A letter of acceptance is effective from the time of posting

Question 33

Holwell Securities v Hughes [19174]

Answer 33

Facts: Dr Hughes granted Holwell Securities an option to purchase his house exercisable ‘by notice in writing’ within 6 months. Five days before the expiry, Holwell posted a letter exercising the option. This letter was never received by Hughes. Holwell sought to rely on the postal rule stating the acceptance took place before the expiry of the option

Held: By requiring ‘notice in writing’, the postal rule had been excluded

Question 34

Household Fire Insurance v Grant [1879]

Answer 34

Facts: Grant applied for shares in a company and was allotted them. The contract was posted but he never received it. He never paid as a result. The company went bankrupt and Grant refused to pay his share

Held: There was a binding contract. The postal rule was applied

Question 35

Entores v Miles Far East Co [1955]

Answer 35

Facts: A telex was sent outside of an office’s opening hours

Held: The postal rule does not apply to instantaneous methods of communication. The contract was valid when the office opened

Question 36

When are acceptances via instantaneous forms of communication effective?

Answer 36

Upon receipt