Offer and Acceptance

Question 1

Agreement Structure and framework

Answer 1

1. Invitation to treat
2. Offer
3. Counter offer
4. Acceptance
5. Revocation
6. Unilateral contracts

Question 2

Importance of agreement

Answer 2

1. Required for a valid contract
2. The point at which the rights and obligations begin.
3. The basis for contractural obligations
4. Tells us when / where the contract is formed

Question 3

What is the offer and acceptance approach?

Answer 3

Where there has been an exchange of correspondence between the parties.

1. Has there been an offer
2. Has there been a corresponding acceptance
   If there has been, this is seen as the point of valid acceptance.

Question 4

What is the objective approach of determining acceptance + Case used?

Answer 4

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.

Question 5

Case to use if one party sees it as an offer which they accept, and not an invitation to treat.

Answer 5

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.

Question 6

What is a Unilateral contact?

Answer 6

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.

Question 7

Unilateral contract case

Answer 7

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.

Question 8

Revocation of a unilateral offer?

Answer 8

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

Question 9

Auctions in terms of structure

Answer 9

ITT - Auctioneer calling out a bid
Offer - Bidder offering
Acceptance - Auctioneer accepting bid

Question 10

What if the auctioneer refuses to sell to the highest bidder?

Answer 10

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.

Question 11

Cases to use on auctions

Answer 11

Payne v Cave 1789 - ITT in auctions is not an offer.

Warlow v Harrison 1859 - Refusal to sell without a reserve isnt

Question 12

What are tenders

Answer 12

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.

Question 13

What are requests for tenders legally seen as?

Answer 13

Normally invitation to treat.

Outlined in Spencer v Harding 1870

Question 14

In what two circumstances are tenders viewed as. unilateral contracts?

Answer 14

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

Question 15

What are the rules of acceptance

Answer 15

Receipt rule
Prescribed mode of acceptance
Silence
Instantaneous communications
Postal rule
Revocation

AKA RRIPPS

Question 16

What is the receipt rule

Answer 16

“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

Question 17

Receipt rule; 3 Roles of fault

Answer 17

1. Failed communication + sender knows = No contract

• 2. Failed communication + sender thinks it has worked + receiver at
     fault = Could be a contract.
• 3. Failed communication + sender thinks it has worked + no fault = No
     contact.

Question 18

Prescribed mode of acceptance

Answer 18

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

Question 19

Silence

Answer 19

Silence cannot amount to a valid acceptance.

Felthouse v Bindley

Question 20

Instantaneous communication

Answer 20

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)

Question 21

Postal rule

Answer 21

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.

Question 22

Revocation

Answer 22

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.

Question 23

What is the effect of a counter offer?

Answer 23

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

Question 24

What is the rule on offers?

Answer 24

A response to a request about the price of an item is not held to be an offer.

CASE: Harvey v Facey

Question 25

Best case for invitation to treat?

Answer 25

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.