Offer and Acceptance 1

Question 1

what must there be for a contract to be formed?

Answer 1

an offer and acceptance

Question 2

what is an offer?

Answer 2

an offer is an expression, by words or conduct, of a willingness to be bound by specified terms as soon as there is acceptance.

There must be sufficient certainty of terms and the discussion/communication must show an intention to be bound by the terms of the offer

Question 3

Carlill v Carbolic Smoke Ball Company

Answer 3

CSBC issued advert for the sale of the smoke ball, offered £100 if it didn’t work and to show their sincerity to upholding the terms, they deposited £1000 in a bank.
Mr Carlill bought the smoke smoke ball and used it properly and still caught the flu.
CA held that CSBC showed intention to be bound to the contract and it wasn’t an advertising blurb.

Question 4

Are adverts in magazines etc. normally interpreted as contractual offers?

Answer 4

No, Carlill case different because of the intention to be bound

Question 5

Harvey v Facey

Answer 5

Distinguish an offer from a mere request for information, A request and a response do not have a legal effect.
Harvey had not showed serious intention to be bound to the contract

Question 6

Blue v Ashley

Answer 6

Ashley and Blue met in a public house (pub). After drinks, they discussed share prices and jokingly agreed that if the share prices rose from £4 to £8 in 3 years then Mr Blue would be paid £15 million. Mr Blue took this agreement seriously.
Ashley refused to pay and Blue resigned.

Leggatt J held that were no contract because the purpose of the occasion was not to make a contract, also it is possible for contracts to be formed in social occasions, but the drinking and jokey banter indicates that there was no serious intent to be bound on Ashley’s side. The terms of the contract were also vague and the £15 million was fixed arbitrarily and casually.

Question 7

Invitation to treat

Answer 7

A communication that is not definite enough to be an offer, but an opening gambit in negotiations or willingness to receive offers.
As it’s not an offer it can’t be accepted
Adverts to the public are invitation to treat

Question 8

Partridge v Crittenden

Answer 8

Advert for the sale of birds. In theory, it was an offer, but there could have been unlimited acceptances, so it was commercially unworkable.

Question 9

Lekfowitz v Great Minneapolis Surplus Store

Answer 9

Advert for the sale of fur coats. Difference from this and Partridge case is that the terms were certain and the potential acceptances were limited. “3 fur coat for $1 each- first come first served”

Question 10

Pharmaceutical Society of Great Britain v Boots

Answer 10

Items on shelves are not offers, but invitation to treat. Cashier can refuse the sale at the till and an offer is accepted when the cashier rung through the sale.

Question 11

rejection of offer

Answer 11

an offer is dead if refused

Question 12

Counter offer

Answer 12

The offeree changes the terms of the offer and bounces it back to the offeror to accept.
HAS THE SAME LEGAL EFFECT AS REJECTION, KILLS THE OFFER AND CAN’T BE ACCEPTED LATER

Question 13

Hyde v Wrench

Answer 13

W offered to sell his farm for £1000, H responded to this offer by offering £950. it was held that the counter offer kills the original offer and it cannot later be accepted.

Question 14

What’s the difference between a counter-offer and a mere request for more information

Answer 14

A request for mere information does not kill the offer and the offeree can still accept it

Question 15

Acceptance

Answer 15

Once there is acceptance of an offer, there is a contract.

Question 16

Butler Machine tool v Ex-Cell-O Coperation

Answer 16

Seller offered to sell a machine tool, on their standard terms and conditions (included a price variation clause).
Buyer said they accepted their standard terms and conditions.

Question 17

communication of the acceptance

Answer 17

an acceptance has to be notified to the offeror for a contract to be binding

Question 18

Instantaneous communication

Answer 18

acceptance occurs at the point it is received by the offeror

Question 19

Entores v Miles Far East Corporation

Answer 19

Acceptance occurs at the point it is received by the offeror.
In face-to-face situations, it will usually be clear if the offeror has received the acceptance.
If it was the offeror’s fault that he did not hear the words of the acceptance, and the offeree reasonably believed that he did, then acceptance is communicated.

Question 20

Thomas v BPE solicitors

Answer 20

when communicating acceptance by email, acceptance is received when the email lands in the other persons inbox.

Question 21

Postal rule

Answer 21

acceptance is communicated at the point of posting the letter. The offeror does not have to receive the letter or read it.
Offeror may decide to exclude the postal acceptance rule and require acceptance to be notified. e. g Holwell Securities v Hughes ‘accept by notice in writing’

Question 22

when does the postal rule not apply

Answer 22

postal rule will not apply where it would lead to ‘manifest inconvenience or absurdity - Holwell Securities v Hughes

Question 23

the mode of acceptance

Answer 23

offeror can stipulate the method of acceptance

Question 24

acceptance by conduct -

Answer 24

Brogden v Metropolitan Railway Company - there was no formal acceptance of offer for sale of coal, however the coal was ordered and delivered in accordance with the terms of the agreement. So acceptance was implied by this course of conduct of the parties.

Question 25

Acceptance by silence

Answer 25

an offeror cannot impose a contract by saying that silence is acceptance.
Silence may amount to an acceptance where there is an agreement or there is an established practice between the parties.

Question 26

revocation

Answer 26

different from a counter offer but same legal consequence, kills the offers as it’s withdrawn

Question 27

Dickinson v Doods

Answer 27

deals with a lot of points on revocation

• an offer can be revoked at any time before it has been accepted
• revocation has to be communicated, and it can be communicated via a third party

Question 28

time lapse

Answer 28

if an offer prescribes a time limit for acceptance, the offer dies after the time limit.
if there is no time limit the offer lapses after a reasonable time

Question 29

bilateral contract

Answer 29

both parties are under obligation to do something

Question 30

unilateral contract

Answer 30

only one party has to perform an obligation like in Carlill where Mrs carlill had no obligation to use the smoke ball, but as soon as she did the company was obliged to pay her

Question 31

meeting of the minds

Answer 31

‘consensus ad idem’- the parties need to be agreeing to the same thing. not usually an issue but there might be confusion between what a party said and meant

Question 32

Smith v Hughes

Answer 32

sell for old and new oats. The seller gave a sample of oats (new oats) to the buyer , however he didn’t look at this and assumed they were older oats. There was an agreement and the oats were delivered. Buyer refused to pay and seller wanted the contract price.
Objective test was used and the reasonable person would have concluded that the agreement was for the sale of the new oats, so contract was upheld.

Question 33

objective test

Answer 33

would the reasonable observer, on the basis of external appearances, think that the buyer agreed to the terms of the seller?

Question 34

centrovnicial estates v merchants investors assurance

Answer 34

seller of commercial lease mistakenly entered a significant lower figure for the contract rent(65k instead of 125k) . the tenant accepted but the seller then tried to get out of the contract
courts applied the objective test instead of looking at hat the parties intended. If the buyers could not reasonably have known that this was a mistake, the sellers would be bound to the lower figure. The court held that there was no evidence the tenants knew so the sellers were bound to the contract

Question 35

when will there be no agreement in the objective test

Answer 35

1- when one party is aware is aware that the other party has made a mistake - Hartog v Colin and Shields

2- the seller causes the buyer to make a mistake - Scriven Brothers & co v Hindley and co.