Offer and Acceptance Flashcards
Smith v Hughes
Objective test
What ingredients must be present for a contract to be binding?
- Offer
- Acceptance
- Intention to create legal relations
- Consideration
An agreement may be made:
- in writing
- by word of mouth (orally)
- by inference from the conduct of the parties and the circumstances of the case
- by any combination of the above modes
Bilateral and Unilateral Contracts:
Bilateral: most common form. Parties make each other a promise to do something. Eg. Sell item in exchange for payment.
Unilateral: one party makes an offer which calls for an act to be performed by one or more other parties. Eg. offer calling for lost item to be returned for a reward.
*Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256
Unilateral contract quote
“Why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition?” per Bowen LJ
What is an offer?
“An offer is an expression of willingness to contract on specified terms, made with the intention that it is to be binding as soon as it is accepted by the person to whom it is addressed.”
Grecoair Inc v Tilling [2005] Lloyds Rep 151
Is it an invitation to treat?
*Gibson v Manchester City Council [1978] 1 WLR 520 (CA); [1979] 1 WLR 294 (HL)
Ratio: Permissive language negates an offer
Facts
• Council willing to sell council houses to tenants. Council contact Gibson telling him they may be willing to sell him the house if he completes forms etc. Change of council, cancelled offer. Gibson said they made him an offer.
Held
• Court said the council said they “may be willing” if certain steps were fulfilled.
• Were not therefore willing to be legally bound and were inviting Gibson to make an offer which was never accepted by the council, therefore do not have a contract.
Is it an invitation to treat?
*Storer v Manchester City Council [1974] 1 WLR 1403
Facts
New city council refused to proceed with sale of house to sitting tenant arranged by the previous council. Only the date when lease would cease and mortgage payments would commence was left open.
Held
Parties to negotiations may, by their words and conduct, make it clear that they do intend to be bound even though there are other terms yet to be agreed.
The legal rights and obligations of the parties turn upon what their words and conduct would reasonably be understood to convey, and not upon their actual beliefs or intentions.
“Exchange” of contracts is not necessary to form a concluded contract where the terms are agreed in correspondence between the parties.
Held that M Council were bound from the moment S completed and returned the “agreement for sale.”
Displays and Adverts
*Pharmaceutical Society of GB v Boots [1953] 1 QB 101
Adverts invitation to treat or offer?
Goods are an offer, if picked up offer and acceptance has happened and contract complete, therefore sale completed w/out supervision by registered pharmacist. Boots argued goods on display merely an invitation to treat and offer and acceptance only happens once goods taken to till. Retailer still able to refuse to sell. Court ruled in favour of Boots.
Displays and Adverts
Fisher v Bell [1961] 1 QB 391
Display of flick knives not an offer but invitation to treat.
Displays and Adverts
Partridge v Crittenden [1968] 2 ALL ER 121
Newspaper advert for cocks and hens. Charged for unlawfully selling live birds. In appeal claimed to be making only an invitation to treat there for not in violation of protection of birds act. Contrast w/ Carlill
Train Timetables
Denton v Great Northern Railway
If people are doing as encouraged by the other party then that is sufficient exchange of values and therefore a contract. The timetable is the offer, going to the train station is the acceptance.
Buses
Wilkie v London Passenger Transport Board
Obiter Lord Greene: public bus plying for hire is offer. Boarding is acceptance.
Problem: How could bus driver refuse drunk or abusive passengers?
Maybe better to consider plying ITT, boarding the offer, and the acceptnce takes place with the bus driver
Auctions
Advertising the auction (ITT)
Putting up goods for sale (ITT)
Bid (offer)
The fall of the hammer (acceptance
Auctions
Case 1
Warlow v Harrison
Highest bona fide bidder can sue the auctioneer if goods are withdrawn without a reserve
Auctions
Case 2
Barry v Davies
Confirms Warlow
Auctioneer is obliged through colateral contract with buyer to accept highest bona fide bid (if no reserve)
Tenders
General rule
An invitation to tender is an invitation to treat
Offer is made by persons submitting tender
Acceptance is made when the person inviting the tenders accepts one of them
Tenders
Referential bids are not valid case and reasoning
Harvela Investments Ltd v Royal trust Co of Canada (CI) Ltd [1986] A.C. 207
Referential bids are not valid. They conflict entirely with the purpose of tenders which is an idependent, self contained bid
Tenders
Collateral contract case
Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 W.L.R. 1195
There is a collateral contract with bidders implying that the requester will inspect all bids
Communication of the offer
Offer must be communicated to the offeree
Bilateral contract case
Taylor v Laird [1856] 25 LJ Ex 329
A captain of a ship decided to step down during a trip and went back to working as a normal member of the crew. Upon returning, he tried to claim wages from the owner of the ship, but the ship owner was unaware of Taylor’s decision to quit his job as captain and he had not received an offer from Taylor to work in alternative capacity.
Held: His claim failed because Laird did not have an offer from the commander to do a different job, so there was not a binding contract.
Communication of the offer
Offer must be communicated to the offeree
Unilateral contract case
Carlill
An offer may be communicated to a particular person or group of people or generally to the whole world
Pricing Errors and Electronic Communication
Pricing errors don’t really matter even electronically. Only ITT, customer still makes the offer at checkout, so the seller can not accept if the price was wrong
WHSmith internet terms and conditions:
Although we make every effort to ensure the prices on the website are correct, mistakes may sometimes be made. If we discover a mistake in the price of the products you have ordered, we will tell you and give you the option of either reconfirming your order at the correct price or cancelling your order. If we are unable to contact you or we receive no reply from you, we will cancel your order. If your order is cancelled and you have already paid for the products you will receive a full refund.”
What is an acceptance?
Day Morris Associates v Voyce [2003] per Black J
“A contractual acceptance has to be a final and unqualified expression of assent to the terms of the offer.”
General Rules of acceptance:
The acceptance must correspond with the terms of the offer
The acceptance must be given in response to the offer
The acceptance must be made by the appropriate method
The acceptance must be communicated to the offeror