Offer And Acceptance

Question 1

Definition of offer

Answer 1

An offer is defined by Professor Treitel as an express willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.

Question 2

Rules of offer

Answer 2

1. Must be precise, clear, and capable of acceptance.
2. Must be communicated as stated in Taylor v Laird.
   > master of the ship gave up command during the voyage but helped sail the ship home
   > it was held that the owners had no need to pay for his help as the offer was not communicated to them, so there was no opportunity to accept or reject
3. Must be accepted while it is still in force.

Question 3

Harvey v Facey

Answer 3

A mere statement of price, not an offer that can open to acceptance.

Question 4

Offer VS Invitation to treat

Answer 4

1. Offer must be distinguished from invitation to treat which is an invitation to the other party to enter a negotiation or make an offer.
   > ITT is a proposition that indicates a willingness to consider offers made by others, or invitations to enter into negotiations, but is not yet prepared to be bound.
2. Gibson v Manchester City Council
   > the council’s letter stated, ‘we may be prepared to sell you’
   > a response to an invitation to treat does not lead to an agreement
   > the response itself may be an offer
3. Distinction between an offer and an invitation to treat depends on the intention of the parties.
4. Situations where there is no intention to be bound
   A. Advertisements
   > Partridge v Crittenden
   » the defendant placed an advertisement for ‘Bramblefinch hens and cocks, 25s each’
   » the court held that the advertisement was not an offer but an invitation to treat
   » the advertisement was the starting point of the negotiations, and the offer would only occur if a person reading the advertisement responded with an offer to buy a bird
   > Carlill v Carbolic Smoke Ball
   » Advertisement which is unilateral in nature will be treated as an offer
   » Unilateral because only one party has obligation and acceptance is by conduct
   > Grainger & Sons v Gough
   » Price lists, brochures and catalogues are ITT.
   B. Display of goods for sale
   > Fisher v Bell
   » Display was only an ITT.
   > Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd
   » Goods on the shelves are mere invitation to treat.
   C. A mere statement of price
   > Clifton v Palumbo
   » No offer to sell but merely an indication of price of the estate should all other matters be in order.
   D. Auction sakes
   > Payne v Cave
   » Auctioneer’s request was an ITT.
   » Acceptance occurs at teh fall of the hammer at which point the contract is made.
   > Harris v Nickerson
   » Notice of an auction is ITT.
   > Warlow v Harrison
   » When an auctioneer puts up goods without reserve, a contract exists between the auctioneer and the bone fide highest bidder.
   > Barry v Davies
   » Holding of an auction for sale without reserve is an offer by the auctioneer to sell to highest bidder.
   » Auctioneer was contractually obliged to sell the the highest bidder as it gives rise to collateral contract.
   > No binding contract if the claimant knows the reserve price beforehand as he failed to meet reserve price.
5. Offer must be accepted for there to be a valid contract.

Question 5

Foley v Classique Coaches Ltd

Answer 5

The price was taken to be implied in the contract due to the terms of the contract saying that ‘price to be agreed between the parties in writing from time to time’.

The contract had been running for three years would be an influencing factor.

Question 6

Counter offer

Answer 6

1. If the offeree adds new terms, it becomes a qualified acceptance and no contract is formed.
2. If the offeree accepts the offer but changes the terms, it becomes a counter offer and will amount to a rejection.
3. The counter offer will destroy the original offer.
4. Hyde v Wrench
   > Wrench offered to sell his farm to Hyde for £1000
   > Hyde offered to pay £950
   > Wrench rejected the counter offer
   > Hyde then sought to accept the original offer of £1000
   > Wrench sold to another party
   > Hyde claimed breach of contract
   > it was held that the counter offer amounted to a rejection of the original offer, and as a result, that offer had come to an end
   > in effect, Hyde’s subsequent offer to buy at £1000 was in fact an offer rather than an acceptance

Question 7

Routledge v Grant

Answer 7

Withdrawal before the expiration of six weeks is entitled to do so as at the time of revocation, there is no acceptance.

Question 8

Revocation

Answer 8

1. Revocation must be communicated
   > express communication by specific words or conducts that show a clear intention to revoke
   > Byrne v Van Tienhoven
   » Revocation was ineffective and the offer remained open until 20 October which is the date on which the revocation was communicated to the defendant.
2. Communication can be made by a reliable third party
   > third oarty must come from a reliable source and on whom both parties can rely
   > Dickinson v Dodds
   » Revocation was valid as it was communicated by a third party who is a reliable mutual friend.
3. Unilateral offer cannot be withdrawn while the offeree is performing
   > Errinton v Errington and Woods

Question 9

Requests for information

Answer 9

1. A request for further information or a mere enquiry about some part of the contract will not amount to a counter offer, and does not destroy the offer.
2. Not everything said during negotiations will amount to a counter offer, even where it may appear contrary to the offer.
   > much will depend on the phrasing of the statement
   > the offeror will not be entitled to treat the offer as ended and make a deal elsewhere
3. Stevenson v McLean
   > in response to an offer to sell iron, the price and quantity were accepted but the offeree wished to know whether delivery could be staggered, as he would have to make arrangements
   > having heard nothing further from the offeror, the offeree sent a letter of acceptance
   > he later sued when he discovered that the iron had been sold to another
   > it was held that there had been no rejection of offer, and that it was merely an enquiry about details
   > the offer was still open to acceptance
4. A mere inquiry if he phrases it in a way inquiry is possible rather than changing the terms.
5. A mere enquiry will not destroy the offer.

Question 10

Lapse of time

Answer 10

1. Ramsgate Victoria Hotel Co. Ltd v Montefiore
   > The offer had lapsed and the offer cannot stayed open indefinitely.
   > Where the value of the goods or services would change rapidly, the reasonable period of time would be short.

Question 11

Definition of acceptance

Answer 11

Acceptance is a final and unqualified assent to all the terms of the offer

Question 12

Rules of acceptance

Answer 12

1. Must be made while the offer is still in force.
2. Must be the mirror-image of the offer.
3. Acceptance must be communicated.
   > an offeror is unable to impose liability in an offer by stating that silence shall be deemed to be consent
   > Felthouse v Bindley
   » an uncle and nephew were negotiating for the sale of a horse
   » the uncle concluded by saying, ‘If I hear no more from you, I shall consider the horse mine at £30.15s’
   » at auction, the auctioneer failed to withdraw the horse as instructed to do so by the nephew
   » the uncle failed in his action against the auctioneer, as he could not prove the horse was his
   » there was no contract between the uncle and the nephew, as the nephew had not actually accepted the uncle’s offer to buy
   > withdrawal has to be communicated, which means the auctioneer has to hear his withdrawal
   » if the withdrawal is not effective, there is a binding contract
4. An exception that communication does not need to be communicated if the offer is unilateral in nature
   > Carlill v Carbolic Smokeball
   » in unilateral, they must perform the contract
   » acceptance is by performance, performance is sufficient

Question 13

Knowledge of an offer to accept

Answer 13

1. R v Clarke
   > states that you must have knowledge of an offer to accept
2. Williams v Cawardine
   > states that if you have knowledge of the offer, motive for acceptance is irrelevant
3. Gibbins v Proctor
   > states that as long as you are aware of the offer before acceptance is complete, you can accept the offer

Question 14

Acceptance by post

Answer 14

1. Known as the ‘postal rule’
   > the acceptance by post is effected as soon as the letter is validly posted
   > at the point the letter is posted, the offeror is not aware of the acceptance. He will only be aware of it and the acceptance will only be communicated when the offeror reads the letter.
2. One of the significant exception to the GR regarding communication of acceptance.
   > acceptance is the final and unqualified assent to all the terms of the offer.
   > case that proves it must be communicated is Felthouse v Bindley
   > exception found in Adams v Lindsell
   » the seller asked for acceptance of the sale of some wool by post
   » the buyer accepted by post on the same day that the offer was received
   » however, the letter was not received until sometime later, by which time the seller had sold elsewhere
   » the buyer sued for breach of contract
   » it was held that the letter of acceptance was effective from its time of posting and that a binding contract existed
   » the court found that acceptance was taken place when the letter was posted, not when it is received
   » a contract may be formed even though the actual notification of acceptance is received later than revocation of the original offer
3. The rule will only apply
   > provided the letter is properly stamped and addressed and posted
   » In Adams and Lindsell, the defendant incorrectly addressed
   > where postal acceptance is specified by the offeror
   > where postal communication is reasonable in the circumstances
4. Nevertheless, the offeror can exclude the postal rule by stating in the offer that postal acceptance will only be effective upon receipt.
   > Holwell Securities v Hughes
   » the defendant sent the claimant an option to purchase some land, and such option could only be exercised by writing to the defendant before a certain date
   » the claimant posted an acceptance but the defendant never receive it
   » because the offer said there had to be notice in writing, the court held that there had to be actual communication of the acceptance and therefore the postal rule could not apply
5. Postal rule does apply even if the letter is never received rather than just delayed, providing it meets the above-mentioned criteria and has not been excluded by the offeror.
   > Household Fire Insurance v Grant
   » the defendant made a written offer to buy shares
   » the claimant posted an allotment of shares to the defendant, which was the acceptance
   » this acceptance was posted but never received
   » the claimant went into liquidation and claimed payment for the shares
   » the defendant denied he was a shareholder and owed the money for the shares
   » the court held that he was a shareholder and owed the money, even though he was not aware of it
6. The letter of revocation can only be effective when received, but the acceptance is effective when posted.

Question 15

Instantaneous forms of communication

Answer 15

1. Entores Ltd v Miles Far East Corporation
   > Because of the method of communication, the contract was made in England where the telex was received, not when it was transmitted in Holland.
2. Brinkibon Ltd v Stahag Stahl
   > Acceptance could only be effective and contract only formed once the office reopened.
3. Chwee Kin Keong v Digiland.com Pte Ltd
   » No consensus ad idem or meeting of the minds between the parties, which meant that there could be no binding contract between them.
4. Thomas and Another v BPE Solicitors

Question 16

Standard form contracts

Answer 16

1. Hyde v Wrench
2. Butler Machine Tools Co. Ltd v Ex-Cell-O Corporation (England) Ltd
   > Failure of the claimant to reiterate their terms, by more than just reference, meant that they were not incorporated, and negated their reliance on the ‘final shot’ principle.
3. G.Percy Trentham Ltd v Archital Luxfer Ltd
   > The court held that regardless of whether the offer is matched by an acceptance, the contract could have come into existence as a result of the performance of the work.

Question 17

Rationale of postal rule

Answer 17

1. Uncertainty
   > the rule exists because when acceptance is communicated through post, letter could reach within the spend of one day, there is also a possibility that it could be never reaching at all
   > there is a wide gap of uncertainty
   > nonetheless, the law needs to be certain
   > postal rule is a rule to promote that certainty
2. Application of the rule
   A. Apply only when the letter is correctly addressed and sent as was in Adams and Lindsell
   > it was the second time it is correctly sent. Hence. Acceptance took place in 5th of December
   > the extent to send the letter to postman, it will also not redeem as correctly posted as the postman means to deliver letters, not post letters
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   B. Only applied when post is a reasonable means of communication if acceptance.
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   C. According to Household Fire Insurance v Grant, once the rule is applied, even the letter is lost in post, acceptance is seen to be effective.
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   D. Postal rule only applied to post.
   > however, in the world of modern business communication, there are many different methods to communicate acceptance, such as telephone, e-mail, instantaneous messaging services such as WhatsApp, telegram, fax, and many more as modern technologies continues to evolve.
   > there are no cases governing all sorts of instantaneous communication
   » Entores Ltd v Miles Far East Corporation and Brinkibon Ltd v Stahag Stahl addressed the rule of acceptance using instantaneous means of communication. These cases are specifically dealing with fax but can apply to other instantaneous communication.
   »> Entores Ltd v Miles Far East Corporation
   »» the Dutch agents of an American company accepted an offer for the sale of equipment made by a British company by telex
   »» a dispute arose between the parties, and the claimant would have been unable to sue the defendant unless the contract was made in England
   »» the court held that acceptance through fax takes place when the fax is printed out, not when it is read
   »> Brinkibon Ltd v Stahag Stahl
   »» the Entores decision was approved in this case, which had almost identical facts, but in this case the telex had been received out of working hours
   »» the House of Lords held that acceptance could only be effective and a contract formed once the office reopened
3. Lord Wilberforce demonstrated that there is no universal rule on this.
   > we should decide based on intention of the parties, some business practice, and a judgement of where the risk should apply
4. There is still possible to use postal rule in modern days, for example, the fax had run out of paper, sent outside business hours or no Wi-Fi.
   > Lord Wilberforce points out if it is the fault of the offeror, the claim is failed.
   » it was not communicated because of offeror fault, in this situation, the claim is failed.
   » the postal rule should apply now because it was the offeror fault, the acceptance should be at the minute the offeree sent out
5. Posting is a means of communication that is rarely used now.
   > however, for certain important documents still rely on this means of communication like banks, they still used it although many has resorted to using online or other means of communication.
   > especially after the pandemic COVID-19, a lot of businesses have also moved to online platform to instantaneous communication.
   > this demonstrated that reliance on post is reduced, similarly, the reliance on postal rule is also reduced.
   > the case of Thomas and Another v BPE >Solicitors on email which is also a quite common means of communication said that postal rule does not apply to show the reliance on postal rule reduced.