Offer and Acceptance

Question 1

1 - 17: OFFER

1. What is an Offer?

Answer 1

A promise or indication by a party that he/she is willing and prepared to enter into contract with another party, upon certain terms.

Question 2

2. How can an indication for an offer be made?

Answer 2

• The courts look for some behaviour which indicates a willingness to enter into a contractual agreement.
• This indication could be by words or conduct. That give than indication to the law however it is made it must:
• The indication needs to communicate and convey very clearly to the potential ‘acceptor’ of the offer, the basis upon which the ‘offeror’ is prepared to contract.

Question 3

3. What aspects of the offer need to be very clear and unambiguous?

Answer 3

The terms of the offer need to be very clear. You cannot have ambiguous terms if you do not have these then it is not a contract

Question 4

4. What can an offer refer to?

Answer 4

The offer could refer to terms which were discussed in earlier communication.

Example: A person wants to go into a contract with me we sit down and offeror tells me the terms but it wasn’t clear, offeor then speaks to me another day to reinterate those same terms another day and so the offeor is conveying clearly in communication.

Question 5

5. What principle did Spencer v Harding set out?

Answer 5

The use of the word ‘offer’ does not necessarily mean a contractual offer has been made - Spencer v Harding [1870] LR 5 CP 561

Circular issued by the defendants read ‘we are instructed to offer to the wholesale trade by tender the stock in trade…’

• Claimants made the highest tender but defendants refused to grant them the goods.
• Held: the request for tenders was not an offer.

Question 6

6. What consitutes an acceptance of an offer/What is an Invitation to Treat?

Answer 6

Once a statement or action or conduct is categorised as an ‘offer’, a simple yes or assent to it will lead to a binding contract.

An intention to open negotiations is not an offer

Preliminary communications in which parties only wish to open negotiations is ‘invitation to treat’

Question 7

7. What happened in Gibson v Manchester City Council [1979]

Answer 7

Mr Gibson received a letter which indicated a price for the house and stated as follows:

‘The Corporation may be prepared to sell the house to you…’

The letter also instructed Mr Gibson, if he wished to make a ‘formal application’, to complete a form and return it to the Council.

Council was then taken over by labour party instead of tory, labour stated that council home should not be sold on to ordinary people

Gibson argued that there was a indeed a contract, went to the House of Lords reversed the decisions of the court of appeal, statting that this was a invitation to treat mr Gibson did “offer” when he filled out the form but the council did not formally accept the form filled out by Gibson.

Question 8

8. What happened in Storer v Manchester City Council [1974]?

Answer 8

Mr Storer signed and returned a document titled ‘Agreement for Sale’.

The document amounted to an offer from the Council which Mr Storer accepted by signing and returning it.

The document was deemed to be sufficiently definite to be an offer.

Question 9

9. What are the Particular Situations? (Display of Goods)

Answer 9

Display of Goods - Shop Windows

Fisher v Bell [1961] - defendant displayed a flick-knife in his shop window. Accused of a criminal offence by displaying a weapon

Per Lord Parker

It is clear that according to the ordinary law of contract, the display of an article with a price on it in a shop window is merely an invitation to treat…

Contract would not start until the customer actually walks into the shop and asks to buy it from the shop

Question 10

10. What happened in the case of Pharmaceutical Society of GB v Boots Cash Chemists (1953) (Invitation to treat)

Answer 10

• The Pharm Society sued Boots for selling poisons (drugs) contrary to s. 18 of the Pharmacy and Poisons Act 1933.
• The Act made it an offence to sell certain drugs without the supervision of a registered pharmacist.
• The C of A held that the sale was made at the cashier’s desk.
• The customer made the offer at the till and the cashier could accept or reject it.
• The display at the shelves was an invitation to treat.

Question 11

11. What are the Particular Situations? (Advertisements)

Answer 11

Partridge v Crittenden [1968]

• Mr Partridge placed an advert in a periodical which indicated he had bramblefinches for sale at 25s each
• He was charged with contravention of s.6 of the Protection of Birds Act 1954 - offering the sale of a wild bird.

Mr partridges p placed an advertisement which stated he had bramblefiches in the newspaper, he was charged with contravention of s.6 of the Protection of Birds Act 1954 - offering the sale of a wild bird.

• Was this an offer?
• Limited Stock Argument he is not the manufactuer of the birds in question.

Question 12

What happnened in Lefkowitz v Great Minneapolis Surplus Stores [1957]? (persuasive)

Answer 12

Lefkowitz v Great Minneapolis Surplus Stores [1957]

Whether an advertisement will be treated as an offer will be determined by the context in which it appears andthe practical consequences of treatingit as either an offer or invitation to treat.

Question 13

13. What are the Particular Situations? (Auctions) Barry v Davies (2001)

Answer 13

• Generally, the bidder makes the offer.
• The Sale of Goods Act 1979 (Sec 57) provides that in relation to a sale of goods by auction, the bids constitute offers which are accepted by the fall of the hammer.

However, ‘sale without reserve’ meaning the highest bidder is entitled to the product – Barry v Davies (Heathcote Ball & Co) (2001)

• Two engine parts valued at £14,000 each were offered for sale in an auction without reserve.
• Highest bid was £200 for each item.
• Auctioneer withdrew the goods.
• C of A held that there was a contract between the auctioneer and the highest bidder.

Question 14

14. What is an Invitation to Tender?

Answer 14

Where people are invited to submit tenders (quotations) to carry out work, for goods etc.

A tender is a bid.

• Generally considered as an invitation to treat
• Spencer v Harding [1870]
• But note Blackpool & Fylde Aero Club v Blackpool Borough Council [1990]

Question 15

15. What is a Unilateral Contract?

Answer 15

Where only one party to the contract is obliged to perform their promise in exchange for something.

Question 16

16. What happened in Carlill v Carbolic Smoke Ball Co? [1893]

Answer 16

• The manufacturers of a ‘smoke ball’ published an advert during the influenza epidemic, claiming their product could cure all kinds of ailments.
• They stated anyone who bought it, used it as directed and then caught influenza, would be paid £100 from the company.
• Advert also stated ‘£1,000 is deposited with the Alliance Bank, showing our sincerity…’

The court held as follows:

• It was an offer to ‘the world at large’
• The nature of the offer waives the need for
  communication of acceptance to the offeror
• Acceptance is undertaken by ‘performance’ therefore the contract is created

Question 17

17. What happened in Barton v Morris 2023 UKSC 3?

Answer 17

• The Supreme Court explored some issues as regards Unilateral Offers.
• Defendant orally agreed to pay £1.2 million if the claimant introduced a buyer who would buy the property in question for ‘more than £6.5 million’.
• Claimant introduced a buyer who paid £6 million.
• The question is whether the claimant had performed to entitle the payment of the fee.
• UKSC by a majority held 3:2 that the claimant was entitled to nothing.

Question 18

18 - 32: ACCEPTANCE

18. What is Acceptance?

Answer 18

A final and unqualified assent to all the terms of an offer

It is the second stage of deciphering whether there has been an agreement which could bea contract.

Requires no particular formula, but it must provide the intention to be bound by the terms of an offer, which then becomes an agreement.

Question 19

19. What must an acceptance do under the mirror image rule?

Answer 19

Must be unequivocal, unconditional and it should match the offer as per the Mirror-image rule.

e.g In a Bilateral Contract, acceptance must be communicated to the offeror.

In a Unilateral offer/contract, acceptance occurs by ‘performance’.

Question 20

20. What must an acceptance not do as in Hyde v Wrench?

Answer 20

It must not introduce new terms.

Hyde v Wrench (1840) 3 Beav 334-

*Defendant offered to sell a farm to Plaintiff for £1,000.
*Plaintiff offered to buy the farm for £900.

*Defendant rejected that offer.

Plaintiff then wanted to accept the initial offer of £1,000. Plaintiff made a counter offer and so the original offer was not valid

*Defendant refused to go through with the transaction and Plaintiff sought specific performance.

*Held -Plaintiff’s offer of £900 was not an acceptance.

It was a counter-offer and his final communication was not an acceptance of the original offer but a further offer to buy at £1,000, which the defendant was at liberty to accept or reject.

Question 21

21. What is a Counter Offer?

Answer 21

A counter-offer is a rejection of an offer and destroys it, rendering it incapable of subsequent acceptance.

Only the last offer or counter-offer put forward survives and is available for acceptance.

Once you have propose a counter offer you cannot go back and accept the initial offer as it has been destroyed.

Question 22

22. What is a Request for Information?

Answer 22

In certain situations, it might be difficult to determine whether a communication is counter-offer or not.

An inquiry is not a counter-offer because it is not suggesting or introducingnew terms but simply clarifying the way the contract will be performed.

Question 23

23. What happened in Stevenson, Jaques & Co v McLean (1880)

Answer 23

Offeror made an offer to sell some iron to offeree for 40 shillings, but did not indicate a delivery time

Offeree (Acceptor) replied stating: Please wire whether you would accept 40 for delivery over two months, or if not, longest time you would give. (This communication does not introduce new terms)

Offeree subsequently accepted the offer.

Held: The acceptance was valid. The inquiry sought to clarify the position as to delivery of the iron. It was not a counter-offer.

Question 24

24. What is the Battle of the Forms?

Answer 24

An approach to determine whether a particular communication is a counteroffer or not and whether or not it has been accepted.

Parties in negotiation exchange standard form contracts (ie standard terms), in which the terms are conflicting.

Question 25

25. What is the Traditional Approach for the Battle of the Forms, and what happened in Buter Machine Tools?

Answer 25

*Seller’s offer of 23rd May was made on their standard terms and contained a price variation clause.

*Buyer responded on 27th May with an order on their own standard terms which did not include a price variation clause.

*Buyer also included a tear-off acknowledgement slip stating ‘we accept your order on the Terms and Conditions stated therein’

• Seller signed and returned the acknowledgement slip together with a covering letter referring back to their own terms as set out in their initial offer of 23rd May.
• Seller subsequently tried to enforce the price variation clause.
• The C of A held in favour of the buyer, stating that the acknowledgement slip was a counter-offer, which was accepted by the seller, and the seller’s covering letter was not sufficiently specific to revive the earlier terms not robust enough to become a valid counteroffer in the seller’s original offer of 23rd May.

Question 26

26. What happened in British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504?

Answer 26

Parties kept negotiating but never came to a true agreement, b supplied products no contract, but restitutionary obligation arose NOT an obligation in contract.

Question 27

27. What happened in Trentham Ltd v Archital Luxfer [1993] 1 Lloyd’s Rep 25?

Answer 27

◦ Where a contract has been completed/executed, courts may be more flexible about identifying Offer and Acceptance, and could find the existence of an agreement.

Question 28

28. What happened in RTS Flexible Systems Ltd v Molkerei [2010] UKSC 14? (Battle of the Forms)

Answer 28

Parties were in negotiation and work started on the basis of a letter of intent which later expired. There was agreement on many terms including the price, but no written contract was ever finalised.

The SC held, looking at the overall communications and actions between the parties that there was a contract and it was intended to be governed by the terms agreed during the negotiations.

◦ Contract existed without the specific need to find offer and acceptance.

◦ Reflective of Lord Denning’s C of A approach in Gibson v Manchester City Council.

Question 29

29. What is the difference between the Traditional Approach and the Subesequent Developement?

Answer 29

Flexibility - where the parties have started work without coming to a complete agreement

Traditional approach - where the courts can identify an exchange of correspondence

Question 30

30. What happened in Tekdata Interconnections Ltd v Amphenol [2009] ECWA Civ 1209.

Answer 30

• Buyer ordered goods on forms setting out its terms and conditions.
• Seller acknowledged the order but stated that its own terms and conditions applied.
• The goods were then supplied and accepted by the buyer.
• Looking at the overall relationship between the parties, the trial judge held that the buyer’s term prevailed.
• However, the C of A disagreed and held that a straightforward offer and acceptance analysis should be used.

Based on this, the seller’s statement was a counter-offer and this was accepted by the buyer when it took delivery of the goods, ie acceptance by carl.

Question 31

31. What is the rule for direct communication and conduct for methods of acceptance? and What happened in Brogden v Metropolitan Railway (1877) 2 App Cas 666?

Answer 31

• Railway Co sent Brogden a draft agreement (invitation to treat) for the supplyof coal.
• Brogden completed it and sent it back, constituting anoffer.
• The Railway Co’s manager, however, put the agreementinto a drawer and forgot about it.
• Coal was ordered and delivered on the terms of theagreement.
• When a dispute arose, Brogden contended that the RailwayCo had not accepted the offer.

The H of L held that therehad to be some external manifestation of acceptance, andin this case, it was the Railway Co placing orders on thebasis of the agreement.

Question 32

32. What is Acceptance by Silence, and what happened in Felthouse v Bindley 1862?

Answer 32

• An uncle was negotiating to buy a horse from his nephew and wrotesaying ‘if I hear no more about him, I consider the horse mine’.
• Nephew did not respond, but told an auctioneer to remove thishorse from a forthcoming auction.
• The auctioneer omitted to do so and the horse was sold.
• The uncle sued the auctioneer and the issue was whether the unclehad made a binding contract for the purchase of the horse.
• It was held that there was no contract because the nephew nevercommunicated his acceptance and his uncle knew nothing of hisaction in removing the horse from the auction.

◦ Suggests that silence cannot amount to acceptance in bilateralcontracts

◦ But note Carlill v Carbolic Smoke Ball- unilateral Contracts- offerto the world- performance is acceptance

Question 33

33 - 34: TERMINATION OF AN OFFER

33. How can parties terminate an Offer?

Answer 33

Revocation

Rejection- For Example a counteroffer, Hyde v Wrench
A second or subsequent offer: Pickfords v Celestica (2003) EWCA Civ 1741

Lapse of time, If no time limit is specified, the offer remains open for a reasonable time:

Ramsgate Victoria Hotel v Montefiore (1866) LR 1Ex 109- it was held that a delay of 5 months mean that an attempt to accept an offer to buy shares was ineffective.

Question 34

34. What is Revocation?

Answer 34

An offer can be revoked at any point before it is accepted- Payne v Cave (1789) 3 TermRep 148
Revocation of offer must be communicated

Communication of revocation can be done through a reliable 3rd party- Dickinson v Dodds (1876) 2 Ch D 463

Question 35

35. REVOCATION IN BILATERAL CONTRACTS

35. What is the rule in relation to the time an offer can be open?

Answer 35

This is so even if the offeror had promised to keep the offer open for a specified time:

Routledge v Grant (1828) 4 Bing 653; not bound to the offer, they are still allowed to revoke their offer however there is an exception if the offeree has given consideration (such as a deposit of £5) and the offeror will be bound to the contract.

Mountford v Scott (1975) 2 WLR 114 made an offer to buy property, consideration was given of £1 and the offer was open was 6 months, however the auctioneer decided to close it and so it went to court, but the courts disagreed with the offeror and agreed with the offeree with the consideration of £1 being valid to keel the offer open and so there was a valid contract

Question 36

36. What happened in Dickinsons v Dodds?

Answer 36

• 10 June - Dodds (D) made an offer to sell a property to Dickinson (C), and promised to keep the offer open until 12 June.
• 11 June - Dickinson was told by a 3rd party that Dodds was negotiating with another person for the sale of the property.
• Dickinson tried to accept the offer on 11 June and on the morning of 12 June, but Dodds had already sold the property.
• The C of A held that acceptance was not possible because Dickinson knew that Dodds had revoked the offer as he was told by the third party and therefore was communicated to him,

Note that the third party should be a ‘reliable’ third party

Question 37

37 - ACCEPTANCE IN UNILATERAL CONTRACTS

37. What is acceptance in a unilateral contract?

Answer 37

Performance of what has been stated in the offer is acceptance.

Question 38

38. What happened in Errington v Errington?

Answer 38

Errington v Errington (1952) – fateher bought a property in his name but wanted to give it to her son and son in law, he said if you pay off the mortgage you can have the property, one can argue that the father made an unilateral offer to the Son inlaw and daughter, father died aand the widow sought to revoke the offer and wanted the house. Lord drnning stated that the offer was made to the son in law and daughter as they have aleardy embarked on performance by paying the mortgage.

Question 39

39. When will an offer not be revoked in unilateral contracts?

Answer 39

An offer cannot be revoked once the offeror knows that the offeree has embarked on performance.

Question 40

40. What happened in Daulia v Four Millibank Nominees?

Answer 40

Daulia v Four Millbank Nominees (1978) there should be an implied promise that the offeor should not interrupt/disrupt performance of the offeree

Question 42

42. What is the rule with revocation and offers to the world?

Answer 42

As regards offers to the world, If revocation is possible, it must be done with the same publicity/notoriety as the offer was made - Shuey v United States (1875) 92 US 73 (persuasive authority ONLY) – if you are going to revoke a unilateral offer to the world it must be communicated with the same level of coverage to communicate the offer has been revoked in order for it to be valid.

Question 43

43. What is the rule with Motive and Ignorance in unilateral contracts? (Williams v Carwardine)

Answer 43

Williams v Carwardine (1833) - motive is irrelevant. – woman became aware of an offer of a reward for anyone who provided info that would lead to the convection of a murderer however she didn’t do it foe the reward she did it to ease her consuince for the fear of her getting murdered the courts said she was entitled to the reward as she performed.

Question 44

44. What happened in Gibbons v Proctor?

Answer 44

Gibbons v Proctor (1891) - Knowledge of the offer is required, but it could be knowledge acquired moments before the performance is complete.

An offer by an offeror for info and the reweard was to be given, police officer has the info but did not know that there was a reward another officer heard it from the first officer and passed it on to the offeror.

The first officer was entitled to the reward.

Question 45

45. What happens with the death of an Offeror?

Answer 45

Depends on the nature of the offer.

• If it is to render personal services, the offer terminates upon the death of the offeror.
• If the contract is one that remains capable of performance, then acceptance can occur as long as acceptor is unaware of offeror’s death.
• Offers in bilateral contracts are less likely to survive the death of an offeror because the impossibility of performance on either side will nullify the offer.

Question 46

46. What happens with the death of an Offeree?

Answer 46

• The death of an offeree will generally bring an offer to an end.
• Also, any authority of an agent to conclude a contract on behalf of a party is generally revoked by the party’s death.