Offer and Acceptance Flashcards
Agreement Structure and framework
- Invitation to treat
- Offer
- Counter offer
- Acceptance
- Revocation
- Unilateral contracts
Importance of agreement
- Required for a valid contract
- The point at which the rights and obligations begin.
- The basis for contractural obligations
- Tells us when / where the contract is formed
What is the offer and acceptance approach?
Where there has been an exchange of correspondence between the parties.
- Has there been an offer
- Has there been a corresponding acceptance
If there has been, this is seen as the point of valid acceptance.
What is the objective approach of determining acceptance + Case used?
A disagreement that an acceptance never happened can be rebutted if their actions afterwards point towards and understanding of acceptance.
RTS Flexible Systems Ltd v Molkerei Alois Müller [2010] aka RTS v Müller.
The objective approach is that regardless of the words used in the contract, such as ‘subject to contract’, if both parties act as if they had a binding agreement in place, then the terminology in the contract is waived and a new contract is formed.
Case to use if one party sees it as an offer which they accept, and not an invitation to treat.
Gibson v Manchester city council 1979.
The Council sent him a letter suggesting a price and mortgage terms, but said it wasn’t a firm offer and he should apply formally.
Mr. Gibson sent the application form.
The Council changed its mind about selling houses.
Mr. Gibson sued the Council for not selling him the house.
What is a Unilateral contact?
The offeror intends to be bound upon performance of a requested act or condition. The party which takes up this offer is not bound to it however.
For example, “money reward for finding lost dog” - reward only given upon the safe deliverance of the dog.
Unilateral contract case
Carlill v Carbolic Smoke Ball Co [1893]
Advertisement of Product, if you use it and contract illness, owed 100. Carlill suffered this, they denied. Court ruled that it was a binding contract as soon as she carried out the requirements.
No formal communication of acceptance was necessary; Mrs. Carlill’s use of the smoke ball was sufficient.
Revocation of a unilateral offer?
If the party which published the unilateral contract wants to revoke it, they must take reasonable steps to bring its revocation to the attention of all those who may have read the offer.
Shuey v United States
Auctions in terms of structure
ITT - Auctioneer calling out a bid
Offer - Bidder offering
Acceptance - Auctioneer accepting bid
What if the auctioneer refuses to sell to the highest bidder?
If the reserve price is not met, then the auctioneer is not obligated to sell to the buyer.
If there is no reserve price set, then the auctioneer is in breach contract; However, as there are two contracts at play simultaneously, a bilateral for the goods, a unilateral based on the promise to sell without the reserve, the auctioneer is only in breach of the unilateral, and the buyer does not get the goods.
Cases to use on auctions
Payne v Cave 1789 - ITT in auctions is not an offer.
Warlow v Harrison 1859 - Refusal to sell without a reserve isnt
What are tenders
When an organisation proposes to buy a (normally expensive) complex service or good from other entities, and then has them deliver offers. The best (lowest) offer wins.
Think of government defence contracts for example.
What are requests for tenders legally seen as?
Normally invitation to treat.
Outlined in Spencer v Harding 1870
In what two circumstances are tenders viewed as. unilateral contracts?
When there is either:
1.) An express contractual promise to accept most competitive bid.
* As outlined in Harvela Investments Ltd v Royal Trust Co. of Canada
2.) When there is an express contractual promise that a bid is to be confirmed under certain previously outlined conditions.
* Blackpool & Fylde
Aero Club v Blackpool Borough Council
What are the rules of acceptance
Receipt rule
Prescribed mode of acceptance
Silence
Instantaneous communications
Postal rule
Revocation
AKA RRIPPS
What is the receipt rule
“The contract is only complete when the acceptance is received by the offeror; and the contract is made at the place where the acceptance is received.” (Denning LJ)
CASE: Entores Ltd v Miles Far East Corporation
Receipt rule; 3 Roles of fault
- Failed communication + sender knows = No contract
- Failed communication + sender thinks it has worked + receiver at
fault = Could be a contract.
- Failed communication + sender thinks it has worked + receiver at
- Failed communication + sender thinks it has worked + no fault = No
contact.
- Failed communication + sender thinks it has worked + no fault = No
Prescribed mode of acceptance
If the offeror stipulates a prescribed method of acceptance (e.g. “you must reply by email”) then an acceptance by a non-prescribed mode will only be valid if it’s no less advantageous to the offeror.
CASE: Manchester Diocesan Council for Education v Commercial & General Investments Ltd
Silence
Silence cannot amount to a valid acceptance.
Felthouse v Bindley
Instantaneous communication
Instantaneous communications
i) Must be received (Entores)
a) During office hours - Received that day
b) Outside of office hours - Received the very Next day
CASE FOR THIS: Thomas v BPE Solicitors
HOWEVER: Lord Wilberforce stated there is no universal rule in another case regarding the same matter.
(Brinkibon v Stahag Stahl)
Postal rule
The postal rule: acceptance takes effect as the letter is posted.
Late letter: Adams v Lindsell
Missing letters: Household Fire Insurance v Grant
Applies when using the post is within the reasonable contemplation of the parties.
But if incorrectly addressed the rule is displaced and acceptances takes effect when received
An acceptance by post generally cannot be revoked by a more expeditious method.
Revocation
Anytime before acceptance – UNLESS the offer is supported by consideration to keep open.
CASES:
* Routledge v Grant
* Dickinson v Dodds
The postal rule does not apply in revocation.
CASE:
* Byrne & Co v Van Tien Hoven & Co.
What is the effect of a counter offer?
Extinguishes the effect of the previous offer, which means that it can never be gone back to.
For example:
“Buy for £15”
“How about £10”
“NO”
“OK Ill buy for £15”
“Price is now £20”
THERE IS NO BINDING OFFER HERE TO SELL FOR 15.
CASE: Hyde v Wrench
What is the rule on offers?
A response to a request about the price of an item is not held to be an offer.
CASE: Harvey v Facey
Best case for invitation to treat?
Partridge v Crittenden 1968
Classified ads:
“British… Bramble-finch cocks, Bramble-finch hens £25 s.
each”
Invitation to treat or an Offer?
High Court held => Invitation to Treat.
