Offer and acceptance

Question 1

What three elements must be present in order for there to be a binding contract?

Answer 1

Offer and acceptance (agreement)

Intention to create legal relations

Consideration

Question 2

What constitutes offer and acceptance (agreement)?

Answer 2

Clear and certain offer displaying an intention to be bound + unequivocal acceptance = offer and acceptance (agreement)

Question 3

What are the requirements of a valid offer?

Answer 3

-An offer must be clear and certain: Gibson v Manchester CC (1979)

-An offeror must also show an intention to be legally bound: Storer v Manchester CC (1974)

Question 4

What is an invitation to treat?

Answer 4

A first step in negotiations which may or may not lead to a firm offer by one of the parties. It cannot be accepted to form a binding contract.

Question 5

What is the general rule regarding advertisements?

Answer 5

Partridge v Crittenden (1968): regarded as statements inviting further negotiations or invitations to treat.

Question 6

What is the exception to the general rule regarding advertisements, refer to the case of Carlill v Carbolic Smoke Ball Co (1893)?

Answer 6

The general rule does not apply where the advertisement amounts to a unilateral offer.

Carlill v Carbolic Smoke Ball Co (1893): the advertisement in this case was held to be a unilateral offer and therefore a binding contract because there was a clear prescribed act, performance of which constituted acceptance. Further, the D’s intention to be bound was demonstrated by their deposit of £1,000 into a bank account and the certainty of language used in the advertisement.

Question 7

What is the general rule regarding the display of goods for sale?

Answer 7

Regarded as an invitation to treat, the same principle applies to goods displayed on shelves of a self-service store and websites: Fisher v Bell (1961).

Question 8

What is the general rule regarding invitations to tender and what is the exception to this rule?

Answer 8

Normally deemed an invitation to treat: Spencer v Harding (1870).

An exception is where the invitation to tender expressly contains an undertaking to accept the highest or lowest bid-Harvela Investments Ltd v Royal Trust Co of Canada (1985).

Question 9

What is the general rule regarding auction sales?

Answer 9

The auctioneer’s request for bids is an invitation to treat: Payne v Cave (1789).

Question 10

In what three ways can an offer be terminated?

Answer 10

1. Rejection
2. Lapse
3. Revocation

Question 11

What is the effect of a counter-offer on the original offer as per Hyde v Wrench (1840)?

Answer 11

Hyde v Wrench (1840): where an offeree makes a counter-offer, the original offer is deemed to have been rejected and cannot be subsequently accepted.

Question 12

Does a request for further information terminate the original offer?

Answer 12

No, the original offer will remain open for acceptance.

Question 13

In what two ways can an offer lapse?

Answer 13

-By passage of time where acceptance is not made within the period prescribed by the offeror or acceptance is not made within a reasonable time.

-By death of a party, if the offeree knows the offeror has died then the offer will lapse. The death of the offeree will also cause the offer to lapse.

Question 14

At what point can an offeror revoke their offer as per Payne v Cave (1789)?

Answer 14

The offeror may withdraw/revoke their offer at any time before acceptance-Payne v Cave (1789). An offer cannot be revoked after acceptance.

Question 15

At what point does revocation take effect when communicated by post?

Answer 15

Byrne v Van Tienhoven (1880): where revocation is communicated by post it takes effect from the moment it is received by the offeree and not from the time of posting.

Question 16

What are the three rules in relation to acceptance?

Answer 16

1. Acceptance must be in response to the offer-only the person/people to whom the offer is made can accept the offer, the exception is unilateral contracts.
2. Acceptance must be unqualified and correspond exactly with the terms of the offer-‘mirror image rule’-Hyde v Wrench (1840).
3. Prescribed mode of acceptance-acceptance may be communicated in any matter whatsoever but if the offeror prescribes the mode of acceptance, particularly clear words would be required of the offeror to make their chosen mode mandatory-Manchester Council for Education v Commercial and General Investments (1970).

Question 17

What is the postal rule as set out in Adams v Linsell (1818)?

Answer 17

Adams v Lindsell (1818): where post is deemed to be a proper means of communication, the acceptance takes effect from the moment the letter of acceptance is properly posted. A letter is properly posted when it is put in an official letter box or in the hands of a postal operative who is authorised to receive letters.

Question 18

Does the postal rule apply in the following circumstances:
-when the acceptance is delayed or lost in the post
-if it is not contemplated that post would be used
-to letters revoking offers
-if the acceptance is incorrectly addressed
-if disapplied by the offeror

Answer 18

-Applies even if the acceptance is delayed or lost in the post-Household Fire and Carriage Accident Insurance Co v Grant (1879).

-Does not apply if it is not contemplated that post would be used. Postal rule is applicable only where it was reasonable in all the circumstances for the offeree to have used the post-Henthorn v Fraser (1892).

-Does not apply to letters revoking offers and only applies to letters of acceptance. Revocation must be received in order to be effective-Byrne v Van Tienhoven (1880).

-Does not apply if the acceptance is incorrectly addressed, the rationale being that the offeree has lost the benefit of the postal rule by their own carelessness.

-Does not apply if disapplied by offeror, for example if the offeror ousts the postal rule by requiring notice in writing-Holwell Securities v Hughes (1974).

Question 19

What is the general rule regarding communication by instantaneous means such as email?

Answer 19

General rule is that the acceptance takes place at the moment the acceptance is received by the offeror-Entores v Miles Far East Corporation (1955) & Thomas v BPE Solicitors (2010).