offer and acceptance

Question 1

What is an offer?

Answer 1

A statement of the terms by which a person is prepared to be bound by a contract

Question 2

Who is an offeror?

Answer 2

The person who makes an offer to another

Question 3

Who is an offerree?

Answer 3

The person to whom an offer is made (can accept or decline)

Question 4

offer and communication

Answer 4

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

Question 5

can an invitation to treat be an offer?

Answer 5

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

Question 6

Advertisements

+case - offer + acceptance

Answer 6

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

Question 7

Advertisements - exception

offer + acceptance

Answer 7

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

Question 8

what is a unilateral and bilateral contract?

Answer 8

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)

Question 9

Carlill v Carbolic Smoke Ball Co. (1893)

offer and acceptance

Answer 9

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

Question 10

Goods in a shop window/on a shop shelf

+cases - offer and acceptance

Answer 10

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)

Question 11

Lots at an auction

+case - offer and acceptance

Answer 11

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

Question 12

A request for information

Answer 12

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!

Question 13

Who can make an offer?

Answer 13

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

Question 14

Exact … can be critical as seen in

Answer 14

timing

Stevenson v Mclean (1880)

Question 15

how can an offer end?

Answer 15

• Revocation
• Rejection
• Lapse of time
• Death
• Acceptance

Question 16

Revocation

Answer 16

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)

Question 17

Routledge v Grant (1828)

Answer 17

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.

Question 18

Dickinson v Dodds (1876)

Answer 18

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.

Question 19

Rejection

Answer 19

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.

Question 20

Lapse of time

Answer 20

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

Question 21

Death

Answer 21

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)

Question 22

Acceptance

(how can an offer come to an end)

Answer 22

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

Question 23

Acceptance of the offer

Answer 23

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

Question 24

How do you accept an offer?

Answer 24

Must be unqualified and communicated to the Offeror

It does not have to be in the same format as the offer

Question 25

Acceptance cannot be …

+case

Answer 25

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

Question 26

what if an offer requires a particular manner of acceptance?

Answer 26

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)

Question 27

When does acceptance take place?

Answer 27

General rule – acceptance takes place when the acceptance is communicated
to the Offeror

Question 28

There are three ways of accepting an offer:

Answer 28

• acceptance by conduct
• acceptance by use of the post (postal rules)
• acceptance by electronic methods of communication

Question 29

Acceptance by conduct

Answer 29

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.

Question 30

what case established the postal rules?

KEY

Answer 30

Adams v Lindsell (1818)

Question 31

Acceptance by use of the post – The Postal Rules

Answer 31

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.

Question 32

Adams v Lindsell (1818)

Answer 32

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

Question 33

Acceptance by the use of electronic methods of communication

Answer 33

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”

Question 34

Brinkibon Ltd v Stahag Stahl (1983)

Answer 34

Dealt with the problem of out-of-hours messages. These are only effective once the office is reopened

Question 35

Article 11 Electronic Commerce Regulations (2002)

Answer 35

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.