Offer & Acceptance Flashcards
What is an offer?
- An offer is the announcement of a person’s willingness to enter a contract either expressly or impliedly. The proposition is put by the offeror to the offeree and the offeror is willing to be bound by the terms of the proposition if the offeree accepts. It can be made orally, in writing, or by conduct.
- An offer must not be vague-it must be clear, precise, and capable of acceptance as it stands.
- An offer can be accepted or rejected. It is possible to withdraw an offer at any time before it is accepted.
Harvey v Facey
(Offer CL)
It was held that the seller’s reply was merely a statement of price, not an offer open to acceptance.
What is an invitation to treat?
- An invitation to treat is an attempt to stimulate the other’s interest to make an offer without any intention to be bound. It indicates a willingness to consider offers made by others or invitations to enter into negotiations.
- An offer is binding while an invitation to treat is not
Gibson v Manchester City Council
(Invitation to treat CL)
- Council wrote to Mr. Gibson that it may be prepared to sell the house to him for £2180. Mr. Gibson said that the path was in a bad condition, but the Council refused to change the price.
- Mr. Gibson asked the Council to carry on with the purchase, but the Council said he could not buy it. It was held that the letter giving the purchase price was merely a negotiation to enter into a contract, and can only amount to an invitation to treat, not an offer.
Common law has developed guidelines for commonly occurring situations where we should always consider whether there is intention to be bound. What are these situations?
- Advertisements
- Display of goods for sale
- Mere statement of price
- Auction sales
Advertisements
- Advertisements for unilateral contracts like that in Carlill v Carbolic Smoke Ball Co., are usually offers as it can be accepted without any need for further negotiations as one party pays another to perform an action.
- Advertisements for bilateral contracts are usually invitations to treat, as it may lead to further bargaining and that stocks could run out. This is because both parties have obligations.
Advertisements
(CL)
- Ads for a unilateral contract
Carlill v The Carbolic Smoke Ball Co. - Ads for a bilateral contract
Partridge v Crittenden: A person was charged for offering for sale a wild bird under the Protection of Birds Act 1954, but his conviction was quashed because the advertisement was not an offer, but an invitation to treat. - The cases contradict each other
- The main distinction is the type of contract as one was an offer(unilateral) and the other was an invitation to treat (bilateral)
Display of goods for sale(with price tag)
Display of goods is usually an invitation to treat because they are there to invite members of the public to offer to buy the goods. The shopkeeper has the right to refuse to sell the goods
Display of goods for sale
(CL)
Fisher v Bell: A flick-knife in the shop window was only an invitation to treat.
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd.: the court held that shelf display was like an advertisement for a bilateral contract, and, an invitation to treat. The offer was made by the customer when the medicines were presented at the cash desk and was only accepted by the shop at the cash desk, which was supervised by a pharmacist. Boots was charged with an offence due to the self-service
Mere statement of price
An invitation to treat as the seller has only indicated the price. does not make it an offer regardless of the buyer finding it acceptable
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.
Auction sales
(CL)
Warlow v Harrison:
It was held that in an auction ‘without reserve’, the advertisement becomes an offer to the public, that in the auction, they will sell to the highest bidder. The offer is accepted when someone bids, and that acceptance completes the contract.
An auctioneer who puts a reserve price breaches this contract.
Communication of offers
- Once confirmed that the proposition is an offer and not an invitation to treat, we must establish that it has been communicated to the offeree.
- If offeree is unaware of the offer they will be unable to accept/reject it. e.g. If I lose my watch and put out a $50 reward for it and someone sees the ad and returns it, they’re entitled to the $50 but if sum1 found my watch and returned it without knowing about the reward they will not be entitled to the $50 even if they subsequently hear of it.
Certainty
The terms of the contract must be certain. If there’s any doubt as to the terms on which the parties are contracting, the offer would not be valid. It would be unfair on the offeree if they didn’t know what they were accepting, and the contract would be impossible to perform
Foley v Classique Coaches Ltd.
(Certainty CL)
- Exception when parties have already started performing their contracts
- A contract cannot be repudiated if the parties have already begun to perform their contract