offer and acceptance Flashcards
What is an offer?
A statement of the terms by which a person is prepared to be bound by a contract
Who is an offeror?
The person who makes an offer to another
Who is an offerree?
The person to whom an offer is made (can accept or decline)
offer and communication
An offer comes into existence when it is communicated to the offeree
Communication requires the offeree to know the existence of the offer
Taylor v Laird (1856)
- The ship owner had not received any communication of Taylor’s offer to work as an ordinary crew member therefore no contract could exist for the payment of wages on this voyage
can an invitation to treat be an offer?
An invitation to treat is not an offer and cannot be accepted to make a
contract
examples - advertisements, goods in a shop window, lots at an auction and a request for information
Advertisements
+case - offer + acceptance
Generally, an advertisement cannot be an offer and is only an invitation to treat
Partridge v Crittenden (1968) - the advertisement about the birds was not an offer but simply an invitation to treat. An offer would be made from the person responding to the contract
Advertisements - exception
offer + acceptance
Sometimes, if an advertisement contains a clear indication that there is an
offer because it is expected to be taken seriously then the court may well
decide that it is an offer
This usually occurs in a unilateral contract rather than a bilateral contract
what is a unilateral and bilateral contract?
Unilateral contract – obligation on one party to the contract only, the
Offeror
Bilateral contract – requires both Offeror and offeree to do something
unilateral - Carlill v Carbolic Smoke Ball Co. (1893)
Carlill v Carbolic Smoke Ball Co. (1893)
offer and acceptance
The promise was an offer that could be accepted by anyone who used the smoke ball correctly and still contracted the flu as the advertisement was a unilateral offer
Goods in a shop window/on a shop shelf
+cases - offer and acceptance
invitation to treat - a seller of goods is not obliged to sell the goods to you
Fisher v Bell
- D displayed in his shop window a flick knife accompanied by a price ticket displayed just behind it.
- He was charged with offering for sale a flick knife (Restriction of Offensive Weapons Act 1959)
- The display of the knife was not an offer of sale but merely an invitation to treat - not guilty
Pharmaceutical Society of GB v Boots (1953)
- Boots were charged with selling controlled pharmaceutical products without supervision of a pharmacist
- Customers could choose items off the shelf, put in a basket and take to the till
- Not guilty – as the actual offer was only made when the customer went to the till (where the pharmacist could say yes or no essentially)
Lots at an auction
+case - offer and acceptance
At an auction the bidder makes an offer that the auctioneer can accept by
banging the hammer
Therefore the lots are an invitation to treat only
British Car Auctions v Wright (1972)
- Auctioneers prosecuted for offering to sell an unfit vehicle at auction
however, the prosecution failed because there was no offer, only an
invitation to treat
A request for information
A request for information and a reply to such a request is not an offer
This might be a general enquiry e.g. when an item displayed has no price
Harvey v Facey (1893)
- Harvey wanted to buy Facey’s farm and sent a message: “Will you sell me Bumper Hall Pen [the farm] State lowest price”
- Facey replied: “Lowest price acceptable £900”
- Harvey tried to buy the farm for £900 and insisted that was what had been agreed, but court held it was merely a reply to the request for information and was not an offer!
Who can make an offer?
An offer can be made by anyone e.g. an individual, partnership, company or organisation
It can also be made through a notice or a machine -
Thornton v Shoe Lane Parking
- Mr Thornton put money into a machine and was given a ticket at the entrance to a car park. The offer was made by the machine on behalf of the company owning the car park.
- The acceptance of the offer was made by putting money into the machine and the terms were displayed on the machine
Exact … can be critical as seen in
timing
Stevenson v Mclean (1880)
how can an offer end?
- Revocation
- Rejection
- Lapse of time
- Death
- Acceptance
Revocation
An offer can be revoked (withdrawn) at any time before acceptance.
The Offeror must communicate the revocation to the offeree before it is effective
- Routledge v Grant (1828)
- Dickinson v Dodds (1876)
Routledge v Grant (1828)
Grant offered his house for sale, stating that the offer would remain open for 6 weeks.
When he told Routledge that he no longer wished to sell the house, this was effective revocation of the offer even though it was within the 6 week period.
Dickinson v Dodds (1876)
Dodds offered to sell houses to Dickinson. When a reliable person known to both of them told Dickinson that Dodds had withdrawn the offer, this was effective revocation.
Rejection
Once an offer is rejected, it cannot be accepted by the person rejecting the offer as the rejection ends the offer
If the offer is made to more than one person, rejection by one person does not stop the other offerees from accepting the offer
The rejection must be communicated to the Offeror before it is effective
A counter offer is a rejection of an offer
Hyde v Wrench (1840)
- Wrench offered to sell his farm for £1000 to Hyde. Hyde replied with a counter offer of £950. Wrench rejected this counter offer. Hyde then replied that he accepted the £1000 earlier offer but the offer had now ended so could not be accepted.
Lapse of time
An offer can come to an end by lapse of time.
If a fixed period for the duration of the offer is stated, then as soon as that expire there can be no offer to accept.
The problem arises when no time is set – in this situation the time is a reasonable time.
Ramsgate Victoria Hotel v Montefiore (1866)
It was held that the long delay between the offer and the acceptance meant the offer had lapsed and could no longer be accepted
Death
The effect of the death of either the Offeror or the offeree depends on which party died and the type of contract involved
- If the Offeree dies then the offer ends and those dealing with his estate cannot accept on his behalf although they can make a new offer as can the Offeror
- When an Offeror dies, the acceptance can still take place until the offeree learns of the Offeror’s death (unless offer is to perform a personal service e.g. tuition)
Acceptance
(how can an offer come to an end)
Once an offer has been accepted there is agreement and assuming that the
other essential features of a contract have been fulfilled, there is a legally
binding contract
Acceptance of the offer
Acceptance must be positive and unqualified
It must be acceptance of the whole offer and all of the terms in it
There is no acceptance to “yes, but” or “yes, if” – this is a counter offer or in
some cases a request for more information
no acceptance to “yes, but” or “yes, if” – this is a counter offer or rq
How do you accept an offer?
Must be unqualified and communicated to the Offeror
It does not have to be in the same format as the offer
Acceptance cannot be …
+case
Acceptance cannot be silence – there has to be a positive act for acceptance
Felthouse v Bindley (1863)
There was no further response but the court held there was no contract as an offer could not be accepted by silence/inactivity
what if an offer requires a particular manner of acceptance?
If the offer requires a particular manner of acceptance, then that must usually be complied with if there is to be a valid acceptance
Yates v Pulleyn (2016)
When does acceptance take place?
General rule – acceptance takes place when the acceptance is communicated
to the Offeror
There are three ways of accepting an offer:
- acceptance by conduct
- acceptance by use of the post (postal rules)
- acceptance by electronic methods of communication
Acceptance by conduct
This was seen in Carlill v Carbolic Smoke Ball Co (1893)
Reveille Independent LLC v Anotech International (UK) Ltd (2016)
In common with many contracts, there was a written offer document which stated that
it was not binding until signed by both parties. The offeree made some alterations and
signed the document but as the alterations amounted to a counter offer the document
remained unsigned.
There was ‘performance’ of the contract in accordance with its terms. The dispute
concerned whether a binding contract came into existence (Reveille agreed to
integrate and promote products in three episodes of Season 2 of Masterchef US). The
promotions took place but the document remained unsigned. The court held that the
counter offer had been accepted by conduct. Acceptance was by the conduct of the
offeree.
what case established the postal rules?
KEY
Adams v Lindsell (1818)
Acceptance by use of the post – The Postal Rules
Adams v Lindsell sets out the postal rules
1) Rules only apply if post is the usual or expected means of communication
2) The letter must be properly addressed and stamped
3) The offeree must be able to prove the letter was posted
If these rules are met, acceptance takes place at the moment the letter is posted.
Adams v Lindsell (1818)
Lindsell wrote to Adams offering to sell them some wool and asking for a reply ‘in the course of post’. The letter was delayed in the post. On receiving the letter Adams posted a letter of acceptance the same day. However because of the delay, Lindsell assumed Adams did not want the wool and sold it to someone else.
However there was a valid contract because acceptance took place as soon as the letter was placed in the post box and there had been no communication about revoking the offer.
This case established the postal rules
Acceptance by the use of electronic methods of communication
The principle is that acceptance, apart from the postal rules, occurs when the Offeror is aware of the acceptance.
Entores v Miles Far East (1955)
Lord Denning: “If a man shouts an offer to a man across a river but the reply is not heard because of a plane flying overhead, there is no contract. The offeree must wait and then shout back his acceptance so that the Offeror can hear it”
Brinkibon Ltd v Stahag Stahl (1983)
Dealt with the problem of out-of-hours messages. These are only effective once the office is reopened
Article 11 Electronic Commerce Regulations (2002)
where a buyer is required to give his consent through technological means (such as clicking an icon) the contract is made when the buyer has received from the service provider, electronically an acknowledgement of receipt of acceptance.
