Offer & Acceptance Flashcards
What is the definition of a Contract?
A contract is defined as an agreement giving rise to obligations which are recognised or enforced by law.
What are the requirements of a Valid Contract?
In order to create a valid contract there must be:
1) Agreement (offer & acceptance);
2) Consideration
3) Intention to create legal relations
Offers can be either..
Bilateral or Unilateral
What is a Bilateral offer?
Bilateral offer’s are the most common type of offers.
They are made from one party to one other party.
What is a Unilateral offer?
A Unilateral offer is made to one party, multiple parties, or even to the world at large.
The offeror promises to pay on performance/completion of a specified task. The offeror is the only party with the contractual obligation.
In a unilateral contract, the offeror may revoke the offer before the offeree’s performance begins.
Unilateral offer’s are common in adverts for rewards.
CASE: Carlill v Carbolic Smokeball Company.
What is the definition of an offer?
An offer is a statement of terms upon which we are willing to be bound. If accepted, it will lead to a binding agreement.
What are the requirements of an offer?
The offer must be clear and certain.
An agreement which is uncertain will be unenforceable, but may give rise to a claim for payment for work done on a quantum meruit basis
CASE: British Steel Corporation v Cleveland Bridge
What two part test must an offer meet?
1) An offer must be communicated to the other party for it to be capable of acceptance. (Taylor v Laird)
The acceptance must be a ‘mirror image’ of the offer, in that no terms are added, removed or altered (Hyde v Wrench).
2) the acceptance must be communicated to the offeror (Entores v Miles Far East Corporation).
What the definition of an Invitation to Treat?
An invitation to treat is an invitation to the other party to make an offer.
Unlike a party making an offer, a party communicating an invitation to treat does not intend to be bound by their statement.
What are some examples of an Invitation to Treat?
Advertisements (Partridge v Crittenden).
Goods on display (Fisher v Bell)
Auctions with a reserve price, where the bidder makes an offer, and the seller can choose to accept or reject. The fall of the gavel is indication of acceptance (Payne v Cave)
Call for Tenders (Spencer v Harding)
What is the general rule of acceptance?
The general rule is that silence will not amount to acceptance. The offeror cannot include an ‘Acceptance by Silence’ clause.
(Felthouse v Bindley)
What is the exception to the general rule of acceptance?
An exception exists in the case of unilateral contracts, (Carlill v Carbolic Smoke Company).
A unilateral contract is created when someone offers to do something “in return for” the performance of specified act in the offer.
Acceptance does not need to be communicated and can be accepted through conduct by performing the act. In this case, the offer was accepted by performance.
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The postal rule is where it is agreed that the parties will use the post as a means of communication. This is an exception to the general rule: acceptance does not need to be communicated. (Adam v Linsdal)
The postal rule is subject to a number of limitations, what are they?
The postal rule is subject to a number of limitations:
- It only applies to acceptances.
- It only applies where it was reasonable for the acceptance to be sent by post. (Henthorn v Fraser)
- The letter must be properly stamped, addressed and posted. The acceptance takes place when the letter is placed in the post box. (Adams v Lindsell)
- The rule can always be excluded by the offeror, either expressly or by implication.
Why does battle of the forms cause complications?
Even when a formal offer and acceptance is present, problems can arise in the so-called ‘battle of the forms’ (Butler v Ex-Cell-O Corporation).
In this case the claimant attempted to sell a machine tool using its standard terms of business. The buyers replied with an order on their own standard terms.
How can an offer be terminated?
1) Counter offer
2) Lapse of Time
3) Revocation
