Offer and Acceptance

Question 1

Smith v Hughes (1871) LR 6 QB 597

Answer 1

Facts – Smith sold oats to the defendant but when they were delivered, he refused to pay as he thought they were old oats not new oats. Smith said he didn’t know this.

Legal principle- Had they agreed on the same thing? He conducted himself that he would buy the oats objectively they had agreed.

Question 2

Hartog v Colin & Shields [1939] 3 All ER 566

Answer 2

Facts- Hair skins were sold in price per skin not weight in custom of trade. Shields mistakenly sold in weight making them very cheap. Objectively a meeting of minds had been found but the knowledge of the mistake was taken into account.

Legal principle- If the offeree is aware of the mistake of the offeror the objective test will not prevail. As it was commercial it was deemed that Hartog would have known the custom and therefore the mistake.

Question 3

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Answer 3

Facts- An advert was placed with an offer to pay £100 to whoever would use their smokeball and not catch the flu. The company placed a £1000 in a bank to show their seriousness. Argued that there was no intention to create legal relations and it was just “mere puff”. That they would be bound to contract with all of the world.

Legal Principle- Unilateral advertisement is an offer. There was an express promise and the money meant they had intended to create legal relations. It is an offer to the whole world not a contract. (an offer can be made to the entire world) Acceptance was the performance of the act and there was no requirement to communicate the fact the offeree was about to attempt the performance.

Question 4

Consensus ad idem - definition

Answer 4

‘If the parties reach accord by means of offer and acceptance then they should be contractually bound’ Martin Smith v Williams [1998] CMLR 334

Question 5

Offer - definition

Answer 5

Professor Treitel- ‘An offer is an expression of willingness to contract on specified terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.’

Question 6

Invitation to treat - definition

Answer 6

Statement which indicate the makers willingness to receive offers. If there’s rooms to negotiate its more likely to be an ITT

Question 7

Gibson v Manchester City Council [1979] 1 WLR 294

Answer 7

Facts- Gibson applied for details and the terms of the mortgage to buy a council house. Council replied with information and said that they “may” sell. He completed the form but the council changed hands and changed the policy. Where the council bound? Had offer and acceptance been found?

Legal Principle- Objectively the initial letter was not an offer but only an invitation to treat. He had made the offer but the council had not accepted this. In relation to wording used.

Question 8

Storer v Manchester City Council [1974] 1 WLR 1403

Answer 8

Facts – Storer applied to buy council house and they replied saying “I understand you wish to buy your council house and I enclose the agreement, if you sign this and return it signed in exchange”.

Legal Principle- the council had shown an intention to be legally bound by their letter so there was no more room for negotiation and was therefore capable of acceptance which he did when he signed and returned the form.

Question 9

Partridge v Crittenden [1968] 1 WLR 1204

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Answer 9

(bilateral invitation to treat)

Facts- defendant selling a protected bird by placing an advert but no information about delivery or quantity of birds available.

Legal principle- was not an offer but an invitation to treat. Limited stocks argument. As otherwise he could be contractually bound to too many people.

Question 10

Bowerman v ABTA Ltd [1996] CLC 451

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Answer 10

Facts- the claimant booked a holiday through Adventure express with ABTA insurance. When they went bankrupt ABTA refused to refund the holiday insurance premium. There had been a notice displayed in AE’s office describing the ABTA scheme.

Legal principle- the question was whether there was a contractual relationship between the customer and ABTA because the notice amounted to an offer to the public at large and the offer was accepted when the holiday was booked. The court held that the notice was a unilateral contract which was clear enough to enable the customer to legally enforce the promise. An ordinary member of the public would consider that it intended to create legal relations.

Question 11

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401
(Shops)

Answer 11

Facts- selling a listed drug without the presence of a pharmacist. It was a self-service shop. At what point did the contract complete?

Legal principle- The display of goods in a shop is only an offer to treat, the offer occurs at the cashier’s desk and acceptance is made when they ring them up on the till. Shop keeper’s freedom of contract said they have the right to refuse to sell at the cashier’s desk. The customer would be unable to change their mind if contract formed at the point of picking up the goods.

Question 12

Fisher v Bell [1961] 1 QB 394

Shops

Answer 12

Facts – illegally selling a flip knife with a price on it.

Legal principle- the display of the knife was only an offer to treat and therefore no crime had been committed as no contract was formed.

Question 13

Payne v Cave (1789) 3 Term Rep 148

(Auctions) - general rule

Answer 13

Legal principle- Offer is made by the bidder and is accepted by the auctioneer when the hammer falls. The bidder can withdraw their bid anytime before that moment.

Auctions with a reserve – Bilateral contract – auctioneer promises to sell to highest bidder above reserve price.

Auctions without reserve- 1) Bilateral contract – auctioneer promises to sell to highest bidder

2) Collateral unilateral contract – auctioneer promises that the auction is without reserve and its acceptance by the highest bidder.

Question 14

Warlow v Harrison (1859) 1 E & E 309

Auctions without reserve

Answer 14

Facts- advertised the sale of the horse without a reserve but the auctioneer allowed the owner to bid to raise the price. He noticed and wasn’t the highest bidder so didn’t meet contract 1 requirements.

Legal principle- an advert to sell the goods without a reserve will create the contract (2) this offer was accepted by the highest bidder. He won’t be able to get the horse as he failed on contract (1) but would be able to claim damages from the auctioneer.

Question 15

Barry v Davies (t/a Heathcote Ball & Co) [2000] 1 WLR 1962

Auction without reserve

Answer 15

Facts- Sale of two machines with no reserve worth £14,000 each but Barry was the only bidder at £200 each. The auctioneer didn’t accept his offer and withdrew on the basis of it being too low.

Legal principle- selling without a reserve meant that the auctioneer had breached this contract by not accepting. He was entitled to damages of £28,000.

Question 16

Tenders- General rule

Answer 16

The request for tender is an invitation to treat and every tender submitted is an offer which I can accept or reject

Question 17

Spencer v Harding (1870) LR 5 CP 561

Tenders

Answer 17

Facts- Harding are selling shares in company Spencer sent highest bid arguing it was a unilateral offer. The court disagreed.

Legal principle- nothing in the wording specified it would accept the highest bidder and the tenders were just offers. It did not constitute an offer.

Question 18

Harvella Investments Ltd [1984] 2 All ER 65

Tenders

Answer 18

Facts- referential tenders state their price in relation to other parties. The sellers promised to bind themselves to the highest bidder out of the two competing companies. Harvella bid the highest price but the other company offered 101,00 dollars more than any other bid they would receive. The defendants accepted the referential bid.

Legal principle- a promise had been made this was a unilateral offer accepted by the highest bidder. The referential tender was not valid as it is contrary to the process of tendering.

Question 19

Blackpool and Fylde Aero Club Ltd v Blackpool BC [1990] 3 All ER 25
(Tenders)

Answer 19

Facts- BBC had invited BFAC to submit a tender for a pleasure flight concession with a deadline of 12 noon on March 17. BFAC posted their tender at 11am on that day which was normally cleared every day at noon. However, that didn’t occur and their tender was dismissed as late.

Legal principle- In submitting a conforming tender they were contractually entitled to have their tender considered.

Question 20

Automatic Machines- general rule

Answer 20

The goods on display constitute an offer to buy and your money going in the machine is your acceptance as there is no more room for negotiation

Question 21

Thornton v Shoe Lane Parking [1971] 2 QB 163

Automatic machine

Answer 21

Facts- Parked in the defendant’s carpark they paid for a parking ticket but on the back, it referred them to a notice stating that the company would not be liable for any injury incurred on the premise (exclusion clause). He tripped and injured himself due to their negligence. To include a notice, it has to be brought to the attention of the parties before the contract is formed.

Legal principle- at what point was the contract formed? Did they have notice of the clause before it was? They didn’t receive notice until after the contract was formed so he could claim damages.

Question 22

Websites

Answer 22

Argos (this case never went to court) accidentally put tv’s up for sale on their website for £3 instead of £300 but then refused to honour it as they said they were not contractually obliged. Kodak did the same with a camera but it differed as it had a buy now button and then asked or bank details. Did the confirmation email constitute a contract? No

Question 23

Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013)

Answer 23

Require an intermediate stage – acknowledge receipt of the order (confirmation order) to provide protection for consumers who buy something by accident (not an offer). You make the offer. Acceptance will occur either when the goods have been shipped or received by you as per the terms.

Consumer Contract (Information, Cancellation and Additional Charges) Regs 2013 (which have replaced the previous Consumer Protection (Distance Selling) Regulations(SI 2000/2334))

Schedule 1 & 2 – information the trader must provide

Part 3 – right to cancel (normally 14 days)

Question 24

Acceptance

Answer 24

Professor Treitel: “A final and unqualified expression of assent to the terms of an offer.”

• May be express or implied
• Must be aware of the offer
• Acceptance must correspond with offer
• Acceptance must be communicated to offeror (only bilateral contract)

Question 25

Hyde v Wrench (1840) 3 Beav 334

Counter offer

Answer 25

Facts- offered to sell farm for £1000 the plaintiff replied and offered £900. This was rejected in response he tried to go back to the original offer. So, no contract had been made.

Legal principle- a counter offer will bring the original offer to and end thus making it incapable of acceptance

Question 26

Stevenson v McLean (1880) 5 QB 346

Request for further information

Answer 26

Facts- McClean offered to sell 3800 tonnes of iron at a price of 40 shillings with the offer open until end of day Monday, the defendant asked if they could pay for it in instalments? No reply came and they sold to a third party. They had sent acceptance within the time frame.

Legal principle- This was not a counter offer but a request for further information so it was capable of being accepted for which it was so the contract was made.

Question 27

British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811
(Battle of the forms)

Answer 27

Facts- Long history of dealings. BRS would deliver goods to be stored in the defendant’s warehouse giving them a delivery note stating their terms in regards to liability then the defendant would stamp that delivery note with their terms and conditions. The defendants failed to protect their goods from theft.

Legal principle- On who’s terms had this contract been entered into? The defendant’s terms prevailed as they got the final shot in and this was accepted without complaint. Normally silence can’t imply acceptance but the long business relationship was taken into account.

Question 28

Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401
(Battle of the forms)

Answer 28

Facts- defendant enquired about purchasing a machine and the plaintiff offered to sell for £75,000 and it stated that the offer was subject to the seller’s terms which would prevail over the buyer’s terms including a clause which allowed them to vary the price. They placed an order and they stated it would be made in regards to their terms and conditions at the bottom of the order form there was an acknowledgement slip stating “we accept your order on the terms and conditions” they signed this sent it back to the buyers and they accompanied this with a letter saying it was in line with their original offer. The plaintiff tried to change the price as per their terms.

Legal Principle- the defendant prevailed as when the defendant had responded to the original offer to sell with their order form this amounted to a counter offer as it was a variation meaning the original offer had ended. The plaintiff had accepted this counter offer by signing and returning this slip. The accompanying letter did not amount to a counter offer.

Question 29

Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209
(Battle of the forms)

Answer 29

Legal principle- asked to reconsider the last shot approach where a long-standing business relationship existed, they looked at this but chose to stick with the traditional approach of offer and acceptance.

Question 30

Brogden v Metropolitan Railway Co (1877) 2 App Cas 666

Acceptance by conduct

Answer 30

Facts- Brogden supplied coal for a number of years with no formal agreement. So, they brought in a contract signed it and added a name of an arbitrator to be used in case of disagreements (varied a term) making it a counter offer. The manager didn’t read it and just put it in his desk draw as per the terms of the agreement. When they had a disagreement Brogden argued that there was no contract in place as they hadn’t responded to the counter offer.

Legal principle- the putting of the contract in the draw amounted to a private act and could not constitute an acceptance. The court agreed but the conduct of the railway company in carrying on with business can amount to acceptance.

Question 31

Felthouse v Bindley [1862] 11 CB (NS) 869

Silence as acceptance

Answer 31

Facts- during negotiations between and uncle and his nephew for the sale of a horse the uncle wrote and said “if I hear no more from you, I consider the horse is mine” the nephew didn’t respond and 6 weeks later the auctioneer mistakenly sold this horse. The uncle brought an action against the auctioneer.

Legal principle- Did the uncle own the horse at the time of the sale? No acceptance had been communicated so no contract had been made through silence.

Question 32

Tinn v Hoffman & Co (1873) 2 LT 271

Prescribed method of acceptance

Answer 32

Facts- the offeror had prescribed that they wanted the acceptance by post but they had used a phone call.

Legal principle- if the commercial objective is speed a phone call would be quicker. As long as it is equally as quick it will be sufficient to be acceptance and form a contract.

Question 33

Manchester Diocesan Council of Education v Commercial & General Investments [1970] 1 WLR 241
(Prescribed method of acceptance)

Answer 33

Facts- land was under a scheme whereby it could be sold by the plaintiff subject “to approval of the purchase price”. The plaintiff invited tenders from prospective purchasers and stated that acceptance of the tender would be made by post to the address given in a successful tender.

Legal principle- if you have prescribed a specific method of acceptance you must state explicitly that it can only be done this way. If not, providing the method is not disadvantageous to the offeror it will conclude the contract.

Question 34

Adams v Lindsell (1818) 1 B & Ald 681

Acceptance by post

Answer 34

Facts- defendants wrote to offer to sell (2nd )this wool asking for reply by post it took 3 days to arrive (5th) the plaintiff sent their acceptance letter on the same day (5th) and it arrived on the (9th). The seller (7th) sold the wool to a third party.

Legal principle- at what point did the contract come into play? It came into play on the 5th when the acceptance letter was posted. This creates an exception to the normal rules that acceptance must be communicated.

Question 35

Household Fire Insurance v Grant (1879) 4 Ex D 216

Acceptance by post

Answer 35

Facts- the defendant applied for shares in the company and a letter accepting his offer was posted by the company but never received. But they still became a share-holder.

Legal principle- postal rule will apply even when the letter of acceptance is permanently lost and never arrives.

Question 36

Limits to postal rule

Answer 36

• Where it is unreasonable to use it as a means of communicating acceptance e.g. in response to an offer by email
• Where it would be absurd to use the post as a means of communicating e.g. during a postal strike
• Where the letter is incorrectly addressed or stamped
• Where the other party has expressed that acceptance will not be affected until receipt occurs

Question 37

Holwell Securities Ltd v Hughes [1974] 1 WLR 155

Acceptance by post

Answer 37

Facts- D granted P an option to purchase land exercisable by notice in writing within six months. Before the expiration period P posted a notice of acceptance which never arrived and argued that this was valid from the moment, he sent it even if it didn’t arrive.

Legal principle- if you have stipulated that acceptance will not be effective until they have actually received it, the postal rule will not apply.

Question 38

Postal rule and the internet e.g. emails

Answer 38

Postal rule (the moment the email is sent) or receipt rule (when the email is received) but given the complexities of the email system the receipt rule would make more sense and they would know if the email hadn’t been sent as it would bounce back.

Question 39

Byrne v van Tienhoven (1888) 5 CPD 344

Postal rule-withdrawal of an offer

Answer 39

Facts- Oct 1st wrote to New York to offer the sale of goods which was received oct 11th. They accept the offer by telegram and a written letter on the 15th Oct. On 8th October they had written to withdraw the offer which was received on 20th Oct.

Legal principle- The revocation of an offer is not accepted until it is actually received by the offeree so if acceptance has happened before this a contract will exist. The postal rule does not apply to letters of revocation.

Question 40

Entores v Miles Far Eastern [1955] 2QB 327

Instantaneous communications

Answer 40

Facts- Sold copper from Holland. The claimants (London) telexed the defendants to offer to buy some cooper then defendants telexed acceptance back to London. When sued for breach of contract in England but they said the contract wasn’t made in England. When was acceptance made? And in which country?

Legal principle- They said English law would apply as acceptance had to be received by the buyers here in England. Distinguished this type of communication from the postal rule.

Question 41

The Brimnes [1975] QB 929

Other methods of acceptance

Answer 41

Facts- a communication withdrawing an offer was telexed and received during the office hours but no one was in or saw it until the next day.

Legal principle- Was the withdrawal effective when sent, received or read? It was received when it appeared on the machine within normal working hours.

Question 42

Brinkibon Ltd [1983] 2 AC 34

Instantaneous communication

Answer 42

Facts- after negotiations between the parties for the sale of steel bars, the buyers an English company accepted by a telex sent from London to Vienna. The contract was not performed and the buyers sued for damages of breach of contract. Where there was an instantaneous communication the formation of the contract will be where and when acceptance of the offer was received. In this case Austria.

Legal principle – no single rule can apply to cover every situation and they should consider the intention of the parties, sound business practice and who is better placed to bare the risk.

Question 43

Gibbons v Proctor (1891) 64 LT 594; (1891) 55 JP 616

Knowledge of the offer

Answer 43

Facts- Policeman giving evidence and a reward but that it must be communicated to a specific inspector. He gave the information to the front desk not knowing about the offer. He then went into a waiting room and saw the offer. The clarke then took the information upstairs to the inspector so by the time he received it Gibbons had seen this reward so when he claimed the reward the question was did; he has knowledge of the reward at the time he performed the act.

Legal principle- yes, he did. Knowledge of this offer was in his mind at the time.

Question 44

R v Clarke (1927) 40 CLR 227

Knowledge of the offer

Answer 44

Facts- reward for £100 for evidence leading to the arrest of a murderer. Clarke had been arrested on suspicious of this and he gave evidence of who did it then claimed the reward.

Legal principle- they can be no acceptance of an offer in ignorance of that offer. When he gave this information, he had seen the offer but it was not in his mind at the time. It must be connected to why he was giving the evidence.

Question 45

Williams v Cawardine (1833) 5 C & P 566

Knowledge of the offer

Answer 45

Facts – two men accused of the murder of the defendant’s brother. The plaintiff had given false evidence in the case and the men were acquitted. Carwadine offered a reward for information leading to a conviction. The plaintiff got ill and her conscience made he want to tell the truth so she told the police. She knew about the reward and claimed it. They argued that in her mind was not the motive of getting the reward but of clearing her conscious. The question for the court was if this mattered?

Legal principle- as long as the knowledge is present the motive is irrelevant.

Question 46

Errington v Errington [1952] 1 All ER 149

Withdrawal of a unilateral offer

Answer 46

Facts- A father brought a house for his son and daughter in law. He paid some cash and some mortgage. He promised the house would be theirs if they paid the mortgage although they had no contractual reason to do that. The father died before it had been repaid and his widow got it in the will. She tried to gain possession of the house. The court looked at the nature of the agreement. Had there been acceptance and could his will serve as revocation?

Legal principle- a unilateral contract cannot be revoked once the offeree starts to perform the act. The contract will not be complete until the performance is complete (acceptance).

Question 47

Daulia v Four Millbank Nominees [1978] 2 All ER 557

Withdrawal of a unilateral offer

Answer 47

Facts- Daulia negotiated with F for the sale of properties. They alleged that there was an oral agreement that F would exchange contracts for the sale if D attended their offices with a draft contract. D complied but F refused to exchange contracts. D claimed damages for breach of oral agreements.

Legal principle- there must be an implied obligation on the part of the offeror not to revoke their offer once performance has begun but acceptance will not occur until full performance has been completed.

Question 48

Payne v Cave (1789) 3 Term Rep 148

Revocation prior to acceptance - general rule

Answer 48

In relation to unilateral contracts that an offer can be revoked any time before acceptance takes place.

Question 49

Routledge v Grant (1828) 130 ER 920

Revocation prior to acceptance

Answer 49

Facts- offer to sell a house which was to remain open for six weeks but before that the sellers sold the house to a third party.

Legal principle- the offer could be withdrawn any time before acceptance even when they had said they would keep the offer open.

Question 50

Dickinson v Dodds (1876) 2 Ch D 463

Revocation prior to acceptance

Answer 50

Facts- 10th the defendant sent to the plaintiff a note in which he offered to sell a house said it would be open until Friday at 9am. The plaintiff was informed by his agent that the defendant had sold the property to a third party. He then tried to make acceptance before the deadline with this knowledge.

Legal principle- the person to who the offer is made must know that the offer has been withdrawn. However, this doesn’t have to come from the offeror himself and can come from a third party. The defendant was entitled to revoke his offer at any time and he knew so the acceptance was not valid.

Question 51

Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Exch109

Revocation- lapse of time

Answer 51

Facts- the defendant applied to purchase shares in June shares were allocated in November (5 months to communicate acceptance) although he hadn’t withdrawn, he offer it had been a lapse of time

Legal principle- the court agreed it had not been made within a reasonable time

Question 52

Financings Ltd v Stimson [1962] 3 All ER 286

Revocation- conditional offer

Answer 52

Facts- in most hire-purchase transactions, the dealer is for many purposes the agent of the finance company. X paid to Y a motor dealer a deposit for the purchase by x on hire purchase terms. Y produced an agreement for signature by X under which hire purchase finance company Z would sell X the car. X signed but retuned the car after a few days forfeiting the deposit. Both X and Y thought the agreement had been signed on behalf of Z but it had not. Four days later the car was stolen from Y and when it was recovered it was damaged. In the meantime the agreement had been signed by Z which held X to the agreement.

Legal principle- Y had apparent authority as agent of Z to receive X revocation of his offer to enter into the agreement. That offer was conditional on the car being in the same condition as when the offer was made and Z could not accept the offer after the car had ceased to be in that condition therefore no contract had been formed.

Question 53

Bradbury v Morgan (1862) 1 H&C 249

Revocation - death

Answer 53

Facts- the plaintiff had given credit to party A on a request from party B and a guarantee. Party B died unknown to the plaintiff not knowing about this. Party A defaults and the plaintiff sued party B’s estate.

Legal principle- Party B’s estate was liable. No direct authority that a contract is put to an end by the offeror.

Question 54

Shuey v US (1875) 92 US 73

Revocation of unilateral contracts

Answer 54

Legal principle- revocation is sufficient in a unilateral offer where the same channel and the same level of publicity is used for the revocation as the offer e.g. newspaper to the same audience not every single person must see it. (US case)