Offer and Acceptance Flashcards
The three essential elements required to form a legally binding contract.
- consideration
- intention to create legal relations
- agreement
An offer must be
- valid (clear, certain, addressed to the offeree)
- communicated to the offeree
- not rejected, revoked or lapsed
An acceptance must be
- A mirror of the offer
- made by the offeree in response to the offer
- communicated to the offeror
A valid offer: an expression of willingness to contract on specific terms made with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed
Treitel
If the reasonable person would have considered the terms to be as proposed by the other party, despite his intention, then the contract is valid
Smith v Hughes
There is an invalid offer when the subjective knowledge of an error defeats the objective appearance of an agreement - also known as ‘snapping up’
Hartog v Colin & Shields
For a valid offer the parties must demonstrate an intention to enter into a legal relationship
- Language of ‘may’ was not sufficient (Gibson v Manchester CC)
- Language of ‘will’ was sufficient (Storer v MCC)
An invitation to treat (ITT)
- the preliminary stage of negotiations
- an ITT is not an offer
Adverts
- the general rule is that an advert is an ITT i.e. not an offer
An advert containing few details was not an offer but an ITT
Partridge v Crittenden
- Partridge was not convicted of offering wild birds for sale.
The display of goods is also an ITT
Fisher v Bell
Placing goods on supermarket shelves is also and invitation to treat. The offer is made by the customers at the till.
Pharmaceutical Society of GB v Boots Chemists
Parking machines are offering as they are ready to receive the money and the acceptance takes place when the customer puts his money in the slot
Thornton v Shoe Land Parking.
The court regarded a pile of deck chairs as the offer and the act of sitting down on them as acceptance
Chapelton v Barry UDC
Exception: where an advert is clear and certain enough to demonstrate an intention to be bound, and is from the product’s manufacturer, an advert may constitute an offer.
Grainger v Gough
An advert conched in a certain language may be an offer, if it is a unilateral offer.
Carill v Carbolic Smoke Ball Co
A unilateral offer:
one that prescribes an act, the performance of which constitutes acceptance
Offer and acceptance over the telegram was not in fact concluded when the title deeds were not sent.
Harvey v Facey
A letter outlining the conditions for acceptance was found to be merely a preliminary statement as to the price rather than an offer capable of an acceptance.
Clifton v Palumbo
The council’s letter to the tenant outlining the purchase price was deemed to be no more than an invitation to treat
Gibson v Manchester CC
Invitation to Tender
- where the parties are invited to provide offers.
- this is not an Invitation to Treat nor an offer.
P1 sent in the highest offer, but was not accepted. P2 did not commit to selling to the highest bidder and so was free to choose which offer was accepted or to accept none.
Spencer v Harding
Exceptions to invitations to tender
- if the party calling the bids makes a commitment in relation to the tender.
- Blackpool Aero Club v Blackpool BC (not checking their mailbox before the deadline)
- Harvela Investments v Royal Trust of Canada (agreed to sell to the highest bidder)
At auctions, offers are made by the bidders, and are only accepted by use of the auctioneers hammer. Items can be withdrawn at the auctioneers or bidders discretion at any time before the hammer falls
Payne v Cave
The refusal of an auctioneer to accept a low bid and then to subsequently withdraw an Item from auction is a breach of a unilateral contract.
Barry v Davies
An offer must always be communicated to the offeree in one of three ways, so as to give the offeree a chance to accept or reject it
Taylor v Laird
- Orally
- In writing
- by conduct
An offer can be terminated by
- rejection
- counter offer
- battle of the forms
- withdrawal / revocation
- lapse
Counter offer
- an attempt to accept an offer on new terms
- this is a rejection of the first offer
- this also terminates the original offer
The proposal to by a farm for a different offer was deemed to be a counter offer
Hyde v Wrench
An enquiry as to the offer is not a counter offer and therefore does not terminate the offer
Stevenson v McLean
An exploratory letter inquiring as to a reduction in price is not to be considered as a counter offer.
Gibson v Manchester CC
Battle of the forms
parties doing business exchange paperwork which in fact constitutes a written dispute over whose terms are to govern the deal.
The stamping of a delivery note was deemed a counter offer and the acceptance of this offer was the driving of the lorry into the warehouse - an acceptance by conduct.
BRS v Arthur Crutchley
The signing and return of a buyers’ tear off slip had made the contract on the buyers terms.
Butler machine tool Co
Withdrawal of an offer can occur anytime before acceptance
Payne v Cave.
Withdrawal of an offer must be communicated to the offeree
Mountford v Scott
Revocation is only effective upon receipt by the offeree
Bryne v van Tienhoven
Revocation of an offer can be communicated indirectly by a 3rd party
Dickenson v Dodds
A unilateral offer may be revoked anytime before complete performance
GNR v Witham
If one has begun to accept the terms of a unilateral offer, they should be allowed to try and complete the act
Denning in Errington v Errington
A lapse of an offer can be caused by a passage of time
Ramsgate v Montefiore
A lapse of an offer can occur from the non-fulfillment of a condition
Financings ltd v Stimson
A lapse of an offer can be caused by the death of a party
Reynolds v Atherton
An acceptance must be a mirror image of the offer, i.e. accepted on the exact same terms
Hyde v Wrench
The motive for an acceptance is irrelevant
Williams v Carwardine
The acceptance must be made by an offeree
Boulton v Jones
An acceptance must be made in response to the offer
R v Clarke
An acceptance must be communicated
Felthouse v Bindley
An acceptance can be communicated by a third party authorised by the offeree
Powell v Lee
Acceptance by conduct is possible
Brogden v Metropolitan Railway
There was no acceptance of an offer for a unilateral contract until the conditions were fully performed
Luxor v Cooper
Once the performance of a condition has begun it is too late for the offer to be withdrawn
Errington v Errington
For unilateral offers, only performance of the act is necessary for the acceptance of an offer.
Carill v Carbolic Smoke Co
Acceptance by conduct
The offeree’s conduct may in certain circumstances validly constitute an acceptance of the offer made to him.
The nature of a unilateral contract leads naturally to the inferance that the offeror want’s action in response to the offer rather than assent
Carill v Carbolic Smoke Ball Co
Generally acceptance cannot be inferred from silence
Felthouse v Bindley
A period of silence does not infer a mutal abandonment of agreement
The Leonidas
Where the offeree himself indicated that an offer is to be taken as accepted if he does not speak the contrary, then silence may be accepted.
Gibson J in Re Selectmove
If the offeror makes it clear that only one form of communication will amount to a satisfactory response this stipulation should be upheld.
Eliason v Henshaw
Where disruption is apparent to the maker of the acceptance, it will not be valid util it has been repeated
Entores v Miles Far East Corp
Communication is deemed to have been transmitted and received during working hours
The Brimnes
For an acceptance by post, acceptance occurs at the moment of posting
Adams v lindsell
An offeror cannot revoke their offer after the acceptance has been posted as his offer has already been accepted
Bryne v van Tienhoven
A posted acceptance must be properly posted - in a royal mail postbox or given to an employee authorised to receive letters
Re London and Northern Bank, ex p Jones
The acceptance is still valid, even if the letter is lost or destroyed in the post
Household fire Insurance Co v Grant.
If a postal acceptance is addressed incorrectly by the offeree then it is only valid from the moment that it arrives
Getreide v Contimar
If there is a misdirected communication, the acceptance is not made
Korbetis v Transgrain Shipping
A postal acceptance is not made if it is not reasonable to use the post (a postal strike is on)
Henthorn v Fraser
A postal acceptance is not made if the application of the ‘postal rule’ would cause ‘manifest inconvenience and absurdity’
Howell Securities v Huges
For instantaneous communication, acceptance occurs when the communication is received.
Entores v Mile Far Eastern Corp
If the acceptance is received within office hours but the offeror does not read it , that still counts as communication as the offeror is to blame for ignoring it.
The Brimnes
if acceptance has been received outside office hours, then it counts as having been received at the beginning of the next working day.
Mandial Shipping v Astarte Shipping
Conditional Agreement
A condition which is binding pending the occurrence of a condition (Winn v Bull)
Deferred agreements
The postponement of legal relations until the conclusion of a formal contract (Chillingworth v Esche)
The usual meaning of ‘subject to contract’ suggests the liberty to withdraw but also that the agreement was intended to create a duty to exchange contracts.
Alpen Stow v Regalian Properties
Pre-emptive agreement
the insertion of words into an agreement that will postpone the point of which they are legally binding
An agreement to negotiate is a pre-emptive agreement
Courtney v Fairburn
There will not be a contract with a pre-emptive agreement, as it is too uncertain to have a binding force
Denning in Courtney v Fairburn
A resolution of incomplete incompleteness
- agreed machinery
- Severance of meaningless expressions
Agreed machinery for resolving disputes
- an agreement to agree on a fair price (Sudbrook v Eggleton)
- An agreement to agree can be a binding contract (Foley v Classique Coaches)
Severance of meaningless expressions
- contract will not be void on the basis of an unclear statement, but rather severable from the main contract.
(Nicole v Simmonds)
Vague Agreements
- the courts will try to upload a contract where possible
- some uncertainties are incapable of resolution
There is a presumption that an intention to create legal relations exists in commercial arrangements
Rees v Parker
There is a presumption of no intention to create legal relations in social and domestic arrangements
Balfour v Balfour
An offer made in a pub was held not to have been made with an intention to be bound
Blue v Ashley
To create a contract there must be a common intention to of the parties to enter into legal obligation, mutually communicated expressly or impliedly
Rove and Frank v Compton Bros
