Offer & Acceptance Flashcards
To make an offer, and offeror must make a what?
- A clear and unequivocal statement that he will regard himself as legally bound to perform his promise if the other party accepts his offer.
What is not an offer? (3)
- Invitation to Treat
- Supply of Information
- Statement of Intention
Invitation of Treat: Example?
- Goods on a store shelf in not an offer, takes place at the till.
- We can return it otherwise
Supply of Information: Example?
- This is how much it is worth, if you make an offer, I may accept it.
Statement of Intention: Example?
- Parties sometimes communicate that they intend to do something.
- the communication is not intended to be binding
- There is no offer
Goods on display in a shop are what kind of offer?
- Not an Offer
- They are an invitation to treat
Are Advertisements offers?
- Generally no
- Invitation to Treat
Advertisement case law? (1)
Partridge v Crittenden
Partridge v Crittenden (1968)
- Hens and cocks for sale in advertisement
- they were protected birds, making it illegal to offer to sell them
Held: - Not guilty
- It was not an offer
- Invitation to treat
Is supplying information an offer?
- No
- Supply of information
Is a Statement of Intention an offer?
- No
- the communication is not intended to be binding, thus there is no offer
What is a Bilateral Contract?
- They are contracts where there is an outstanding obligation on either side
What is a Unilateral Contract?
- A contract where only one party has an obligation from the outset
- ex: Missing cat reward, no obligation to accept, only to pay
Carlill v Carbolic Smoke Ball Co. (1893) (Issue)
- Unilateral Contracts
Carlill v Carbolic Smoke Ball Co. (1893) (facts)
- Carlill purchased a smoke ball to get rid of the flu
- Carlill used it according to the directions
- D offered a reward to anyone that was still sick after using it for so long (£100)
- Carlill sought the reward
Held: - It was a unilateral offer
- Carlill fulfilled the terms and accepted it
Termination of an offer?
- Unless acceptance happens, there is no contract
- Acceptance must occur in order for the contract to be binding
- Offer is still open if these do not happen
Methods of Terminating a Contract? (4)
- Revocation
- Rejection
- Expiry
- Lapse
Termination By Revocation?
- Must be communicated to the Offeree or an intermediary
- Offeree must actually receive the revocation
- Cannot accept if revoked
What if the offeree is not aware of the revocation and accepts the offer?
- revocation is no good
- there is a binding contract
- Offeree must actually receive the revocation
What if the offeree began the act of acceptance for a unilateral offer?
- Cannot be revoked
- Once acceptance has started, cannot revoke the offer
Rejection?
- Offer may be rejected by the offeree
- Expressively or by counter-offer
- If there is a condition in the offer that is not fulfilled, the offer terminates
How can an offeree reject an offer? (2)
- Expressively
- Counter-offer
What happens if a condition in the offer is not fulfilled?
- Offer terminates
Lapse & Death
- Offer may lapse for want of acceptance
- Offeror dies, offer may lapse
Acceptance
- Must be communicated
- There is no contract until offer is accepted
- Revocation cannot take place after offer is accepted
Exception to acceptance? (3)
- Postal Acceptance Rule
- Prescribed mode
- Via Third Party
Acceptance in response?
- Must be in response to the offer
Knowledge of Acceptance?
- Knowledge of the offer is required
- Not sufficient that the wishes of the parties simply coincide through accident
Communication of acceptance?
- Acceptance must be communicated to the offeror
- Offer cannot be accepted by silence
Exception to the need for communication?
case?
- Where the offeror has waived the requirement for communication
- Carlill v Carbolic Smoke Ball Co.
Postal Acceptance Rule?
- Acceptance by post takes effect where and when letter is posted (Dispatch Rule)
- Exception to rule that acceptance must be communicated
- Risk of rule falls on offeror
- Only applies if reasonable for offer to be accepted by post
Telegraph Acceptance Rule
- Where it is reasonable to use telegraph
- Acceptance takes place when the acceptance is handed to the person authorised to take telegraphs
Telexes and telephones?
- Postal rule does not apply to these
- They are a form a instantaneous communication
- Not an exception
Electronic Contract Formation?
- General Contractual principles will be applied to issues raised by electronic correspondence
Prescribed Method of Acceptance
- an offeror may prescribe that acceptance is made in a certain way
- Offeree must accept via the prescribed method if the offeror clearly states that he will only be bound if the prescribed method is followed
Brogden v Metropolitan Railway Co. (Issue Topic)
Communication of Acceptance
Brogden v Metropolitan Railway Co. (Facts)
- Railway and Coal
- Agent did not sign the contract
- Had issues, referred to contract to resolve them
-Sued and said there was no contract
Held: - Contract was enforceable because they behaved as so
- Can accept through behviour
Brogden v Metropolitan Railway Co. (Principle)
Can accept a contract through behaviour
Gibbons v Proctor (Facts)
- Police officer unknowingly fulfilled a reward
Held: - Court allowed officer to collect the reward
- Exception to the rule
- Must have knowledge of the offer to accept it
Gibson v Manchester City Council (Issue Topic)
Invitation to treat
Gibson v Manchester City Council (Facts)
- Selling Council house
- Council “may” be prepared to sell the house
- Is it an offer?
Held:
-No - Not capable of being accepted
Harris v Nickerson (Facts)
- Said there was an auction that was selling office furniture
- Did not actually sell the office furniture
Held: - There was no offer
- Statement of Intention
Harvey v Facey (Issue Topic)
Supply of Information
Harvey v Facey (Facts)
-Told Pen is around £900
- H agreed to buy it
- F argued that it was not an offer, he was only stating that he was willing to sell at
Held:
-It was not an offer
- It was a Supply of Information
Partridge v Crittenden (Issue Topic)
Advertisement
Invitation to treat
Pharmaceutical Society v Boots (Issue Topic)
Goods on Display
Acceptance
Pharmaceutical Society v Boots (Facts)
- Self Service Shop
- when does acceptance take place?
Held: - Offer is accepted when item is swiped and placed in bag
Storer v Manchester City Council (Issue Topic)
Offer & Acceptance
Storer v Manchester City Council (Facts)
- S wanted to buy a council house
- Signed the agreement and returned it to the council
- Gov’t changed before the council signed it
- New gov’t did not want to sign it
Held: - S did everything he could to bind himself
- Gov’t was bound to sell
Thornton v Shoe Lane Parking (Facts)
- Parking Facility
- Does the offer occur when ticket machine was ready for payment or when money goes in?
Held: - Acceptance was made when money was inserted
Harris v Nickerson (Issue Topic)
Statement of Intention
Intention to Create Legal Relations?
- Agreements will not be enforced unless the parties intended to create contractual relations
Balfour v Balfour (1919) (facts)
- Came with wife to England
- He left, she stayed
- He gave her money to stay
- They got divorced
- Does he have to continue to pay her the £?
Held: - No
- Agreements made while still spouses are generally not enforceable
- Family Members
Are Social/Domestic Arrangements Binding?
- Agreement entered into in domestic context
- Presumption is that the parties did not intend to create legal relations
- Generally, no
Jones v Padavattan (1969) (Principle)
- Agreements in domestic situations are typically non binding
Jones v Padavattan (1969) (facts)
- Mother to pay maintenance
- They fought
- J sued her own daughter
- Is there a binding contract?
Held: - No
- Not sufficient evidence
Parker v Clark (1960) (Principle)
- Agreements entered into in domestic situations can be binding if the agreement is contractual in nature
Parker v Clark (1960) (Facts)
- P to live with C to take care of them
- Agreed to give house to P when die
- C changed will
- Was the agreement binding?
Held: - Yes
- Agreement was contractual in nature
Intention and Reasonable Expectation
test?
- Test is objective
- If reasonable person concludes that there is an intention to contract, than person making promise would be bound
Commercial Agreements? Binding?
- General assumption that there is an intention to create legal relations
Kleinwort Benson Ltd v Malaysia Mining Corp. Bhd (1989) (Facts)
- M subsidiary approached K for a loan
- K gave loan, wanted guarantee from M
- M said they won’t guarantee, but it is part of their public policy to repay loans
- M wrote a letter of comfort (not an agreement)
- M took the loan
- M did not pay K back
Held: - No legal effect
- Comfort letter is not a guarantee
Kleinwort Benson Ltd v Malaysia Mining Corp. Bhd (1989) (Issue Topic)
- Commercial Agreements
What is Certainty?
o In order to constitute a valid contract, the parties must express themselves that their meaning can be determined with a reasonable degree of certainty
- Must be reasonably clear
- They both meant the same thing
Cases regarding Certainty? (3)
May & Butvcher v R (1945)
Hillas v Arcos (1932)
Foley v Classique Coaches (1934
May & Butvcher v R (1945) Facts
- Was there a contract in the case?
- Price is important
- They said they would agree upon a price in the future
- Used tents
- Did R have to sell the excess of tents to P?
- Courts said no
- Price was too vague, so not really a contract
Hillas v Arcos (1932) Facts
- Contract for sale of timber
- Gave option to buy more timber in the following year
- Because it gave the quantity, it was a valid contract
- Is it reasonable to set a price/amount?
- What is reasonable given the circumstances
Foley v Classique Coaches (1934 Facts
- Supply of Petrol
- Price agreed by parties in writing and from time to time
- Binding without a specific price?
- Held: it was a binding agreement
- Why different from other case?
- Petrol price changes all the time. More flexible regarding price. Tents don’t change.
Ambiguity, vagueness, incompleteness cases? (4)
Scrammell v. Ouston (1941)
Nicolene v Simmonds (1953)
Winn v Bull Chancery Division (1877)
Raffles v Wichelhaus (1864)
Scrammell v. Ouston (1941) Facts
- D agreed to buy a van from P
- Place higher purchase terms
- Was there a contract based on higher purchase terms?
- Held: no, not specific enough
- If no certainty, then there is nothing for the court ot interpret.
Nicolene v Simmonds (1953) Facts
- One term at the end. Very vague and leacked meaning
- Argued that the quality of the product was poor
- P argued that they have a contract
- Held: removed problematic clause
- Severance of the problematic term in the contract
- Court wants to do the least intrusive thing in order for the contract to continue
Winn v Bull Chancery Division (1877) Facts
- Lease a dwelling house.
- If agreement is “subject to contract”, need a contract in order for the agreement to be enforceable
- Term sheet is not a contract
Raffles v Wichelhaus (1864) Facts
- Unusual
- P was supposed to sell cotton to D
- Supposed to arrive on a ship called the peerless
- There were more then one ship called this
- P was ready to sell, D didn’t want it anymore
- D said that he meant the peerless that arrived at a later date
- Should D be bound?
- Held: no binding contract unless the parties agree to the same thing
- Too ambiguous
Are Agreements to agree enforceable?
Generally, No
Walford v Miles (1992)
Petromec Inc. v Petroleo Brasileiro SA Petrobas (2005)
Walford v Miles (1992)
Facts
- Sale of photo item
- P said that D said they wouldn’t go elsewhere
- D did go elsewhere
- Is this enforceable?
- Problem: cannot make a promise for an indefinite amount of time
- Limited in duration
- Not enforceable
Petromec Inc. v Petroleo Brasileiro SA Petrobas (2005) Facts
- Pruchase of oil production platform
- Anticipated that it need to be upgraded
- Discovered new oilfield
- Had to make changes to contract
- 4 parties
- 2 parties had agreement to negotiate in good faith regarding upgrade
- Is this enforceable? (Negotiate in good faith)
- Common law: do what you said you would in the contract
- It was an agreement to agree
- Can’t prove “lack of good faith”
- Loss was quantifiable
- Was termination made in good faith
- Judge: good faith is not justification to terminate a contract
- Agreement was enforceable
- If sophisticated parties, we make it difficult for them to get out of contracts that they get into
Modern Approach to Agreements to to agree? (case)
Bear Stearns Bank v Forum (2007) • P owed D money • D would sell titles to P • Court: valid agreemen • Pagnan v Feed Products (1987) • Parties are masters to their own contractual state • Should know consequences
Implied Terms case?
British Steel v Cleveland Bridge & Engineering
British Steel v Cleveland Bridge & Engineering Facts
• Letter of intent to supply with nodes
• Negotiated terms of contract
• No contract agreed originally
• Quantum Marowit?
• The amount the goods that we have provided to
• Made a contract claim, if not, thy provided goods which have a value
• D said no, they are not paying. Counter sued because of delay
• Question
• Type of contract?
o Executory contract: if do x, I will do Y
o Not applicable in this case
o No if
o Still in state of negotiations
o By deliverying nodes, does not enforce contract
• Held: D had obligation to pay P the value of nodes.
• D couldn’t claim damages because there was no contract
General rule of Performance?
2 cases
Once performance has begun, court will usually enforce the agreement
oFoley v Classique coaches
oSudbrook Trading Estate Ltd v Eggleton (1983)
5 Requirements to enter into a contract?
Offer Acceptance Intention Certainty Consideration (if not, promissory estoppel)
Butler Machine Tools case Facts
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Butler Machine Tools case Principle
?
New Zealand Shipping Co case Facts
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