Offer and Invitations to Treat/Also Tenders Flashcards
Canadian Dyers Association LTD. V. Burton (1920), 47 0.L.R. 259 (H.C)
(Quotation vs Offer/Willingness to Sell)
Issues:
Was there in fact a valid offer, or was it an invitation to treat?
Rules:
- Exception to the rule of invitation to treat: court can treat a price quote as an offer if an objective reasonable person would have objectively interpreted the seller’s actions as providing an offer.
- The invitation to treat can be treated as an offer, believing that objectively a person would have interpreted the seller’s willingness to sell as a legitimate offer based upon the language used.
- Quotation does not constitute an offer to sell, it is to be determined by the language used and considering the circumstances
- Normally the quotation of a price is not directly an offer, it is an invitation to treat and can be negotiated.
- A quotation of price does not constitute an offer to sell = invitation to treat
Analysis:
-The defendant wrote a letter on the 21st saying that “the last price I gave you is the lowest I am prepared to accept. In fact I feel that under present conditions that this is exceptionally low and if it were to any other party I would ask more”.
- This is an invitation to sell/offer.
-This is language saying the defendant is making an invitation to sell and upon receiving a cheque of $500 on the 23rd from the plaintiff, and later creating a deed to close the deal confirming, thus clearly seeing it as an offer capable of acceptance. The contract had been accepted and made by the plaintiff.
Conclusion:
- The defendant had to uphold his end of the contract and accept the $500 of payment for the sale of his house to the plaintiff despite not believing he had accepted an offer.
- This was a legitimate contract being made despite the defendant not seeing his offer as legit.
Valid contract with offer and acceptance.
Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) LTD.
(Offer or Invitation to Treat?)
Issue:
Is the display of goods (with price) on a shelf an invitation to treat or a legal offer capable of acceptance?
Rules:
- Simply displaying prices on a shelf in a store does not make an offer, it is an invitation to treat.
- The offer comes from the customer and acceptance comes at the cashier till by the seller.
- In a store the shopper is the offeror, and the shopkeeper is the offeree.
Analysis:
- Display is an invitation to treat to the customer who can make an offer to buy which the cashier can accept or reject
- Real world implications if the display price constituting an offer wouldn’t make any sense – couldn’t possibly be intended because the ORP wouldn’t intend something that doesn’t make sense
- Would take away customers freedom of choice because it would mean that they would be bound to purchase something as soon as its taken off the shelf
- Would take away stores freedom of choice because they wouldn’t be allowed to refuse a sale once customer grabs item
Conclusion:
- Display of goods on a shelf in a store is an invitation to treat.
Carlill v. Carbolic Smoke Ball Co.
(Promise/Offer or a Sales Puff?)
Issue:
Was the ad an offer or a mere puff?
Rules:
- Unilateral contract: provide acceptance through the performance of an act, the requirement for communication of acceptance is waive if not stated.
- In advertisements there is a promise/offer if the ORP in the position of the recipient would believe there to be sincerity (real reward upon acceptance of offer).
- Extravagance of a promise/reward is no reason why someone should not be bound by it.
No limit on the number of people you can make an offer to.
Analysis
- A reasonable person would treat the ad as an offer not a puff, evidence = money in bank as a promise.
- The add showed them depositing money into someone’s account – elevated the sincerity.
- Unilateral contract – acceptance was P using the smoke ball and getting influenza.
- Just because the offer is vague and extravagant doesn’t mean that the defendant shouldn’t have to pay and fulfill his offer it if it’s advertised to the public, and there is sincerity behind it.
Conclusion:
- The add for the smoke ball was a valid offer, not just a sales puff.
Goldthorpe v Logan
(Guarantee in an Ad/ Unilateral Contract)
Issue:
- Did this ad constitute a promise?
- Is a “guarantee” in an ad a legal offer capable of acceptance? Meaning Was there a contract?
Rules:
- The invitation to treat can be treated as an offer if the ad “guaranteed” something (this depends on the language.
- Ads are generally an invitation to treat but can be an offer depending on the language i.e., if they “guarantee” something.
- If explicit promise is made then an offer has been made.
Analysis:
- Would a ORP seeing this add believe this to be an offer? YES
- Ad was an offer, the act of getting the treatment was acceptance.
- Same as carbolic, depends on the objective reasonable person would think it’s an ad, intention found in the circumstances.
- By running the ad logan made an offer to anyone willing to accept the terms and conditions as they were written, Goldthorpe did and therefore there was a contract.
- Unilateral contract – client accepted offer by fulfilling the necessary condition.
Conclusion:
- P awarded cost of treatment and damages.
- The guarantee in the ad was an offer.
Harvela Investments Ltd. v Royal Trust Co of Canada
- Call for tender is seen as an offer.
- If tenders were treated as an invitation to treat, when receiving offers there was no contract so could do whatever you want and discriminate.
R . v. RON ENGINEERING & CONSTRUCTION (EASTERN) LTD. [1981]
(A/B Relationship, Tender = Offer)
Issue:
Is the tenderer bound by the call for tenders despite underbidding by accident, or can he withdraw?
Rules:
Courts constructed an analytical A-B relationship to “protect the integrity of the bidding process”
- The call for tenders = an offer of unilateral contract A where the acceptance = submission of a bid
- Everyone who submits a compliant bid is accepting unilateral contract A but is simultaneously offering a bilateral contract B
- Terms of contract A are stipulated in the tender documents and any implied terms
- The owner has multiple unilateral contract A’s with each compliant bidder, and the owner must consider the multiple offers of bilateral contract B, which the owner will accept through exchange of promises
- Ultimately there is one bilateral contract B
- An invitation for tenders is sent out as an offer and acceptance by a tenderer through a submission of tender/bid creates this unilateral contract.
- Everyone who submits a compliant bid is accepting unilateral contract A, but is also simultaneously offering a bilateral contract in the next phase B.
- The owner must accept the lowest tender in accordance to the “information of tenders” unless there is privilege cause.
Analysis:
- A unilateral contract had been formed once the tenderer had submitted his bid. An irrevocable bilateral contract had been formed as well which would need to be fulfilled next.
- “Contract A applies through the irrevocability of the bid, and the corollary term is the obligation in both parties to enter into a contract (contract B) upon the acceptance of the tender”.
-Contract B must be completed since the tender has been submitted.
- “Tender deposit may be returned once the construction contract B has finished”, however this was not executed so the contract was breached.
Conclusion:
- Bound to contract B and loses deposit.
M.J.B. ENTERPRISES LTD. Y. DEFENCE CONSTRUCTION (1951) LTD. [1999] 1S.C.R.619, 170 D.L.R: (4th) 577
(Privilege Clause, Implied Obligation, Lowest/Non-Compliant Bidder)
Issues:
- Whether the inclusion of a “privilege clause” in the tender documents allows the person calling for tenders (the “owner”) to disregard the lowest bid in favour of any other tender, including a non-compliant one?
- Was there an implied intent from the parties to contract?
Rules:
- You don’t have to accept the lowest bid in a contract due to the privilege clause, however, you cannot accept a non-compliant bid/tender since this would breach the contract of other tenders in contract A).
- There is an implied obligation to only accept compliant bids. If the owner accepts a breached contract, they’ve breached their contract A) to every other bidder.
Analysis:
- There is an obligation to accept only compliant bids, when the bids come in, the bidders expect the owner to accept only a compliant bid that gives business efficacy and its obvious = Canadian Pacific Hotels
- There is an implied obligation to only accept compliant bids. If the owner accepts a breached contract, they’ve breached their contract A to every other bidder
- Privilege clause means owner doesn’t want to be constrained to the lowest bidder, needs to account for nuances of cost but the court says still need to accept compliant bids.
- Canadian Pacific Hotels Case: an implied obligation is based on the presumed intentions of the parties, which is to only accept compliant bids.
(Note sure if the content below is important to know)
- There was an obvious implied intent from parties to contract, and an implied obligation to only accept compliant bids. The owner has accepted a breached contract though, which violates the contract to every other bidder.
-Implied obligations can come from:
1. Industry customer uses.
2. Nature of the specific title contract.
3. Intention of the parties. Implied obligations come from an objective perspective of the issue. Is it obvious that there was implied intent? Business efficacy principle that if the alleged implied term gives business sense to the contract, it is likely intended since people in business intend to make business decisions that make sense.
- In this case both parties showed intent on agreeing to a contract, despite issues from other tenderers and appellants who they believe unfairly lost the bid.
- It can be assumed that two parties with intent to contract would have not done so in with an invalid tender, and the tendering process completed thoroughly with documentation.
- Here we have offer and acceptance. Through the invitation of tender and the offer provided by Sorochan.
-A tender, in addition to responding to an invitation for tenders, is also an offer to perform the work outlined in the plans and specifications for a particular price. The invitation for tenders is therefore an invitation for offers. - The Sorochan bid was non-compliant since its pricing which was 2nd lowest out of all tenders was made out of misunderstood criteria and now what other tenders had interpreted.
-This makes a breach of contract and violates the contracts with other tenders who may have won the contract otherwise.
Conclusion:
- There was intent to contract through implied obligation, there was invitation to treat with an offer and acceptance, the privilege clause was applicable, however, there was a breach of contract.
- No, privilege clause does not allow someone to disregard the lowest bid in favour of a non-compliant bid.
Double N Earthmovers Ltd v City of Edmonton
(TRIVIAL NON-COMPLIANCE)
Issues:
Does a trivial informality make S’s bid non-compliant under contract A?
Rules:
- The owner has the right to waive informalities that are trivial so long as it does not cause unfairness to other bidders.
- The requirement is to only accept materially compliant bids.
- There is no duty to investigate the compliance for every bid under implied obligation, only under expressed obligation.
- The owner and the bidder can renegotiate terms after contract B is chosen since all contract A’s are discharged, and have nothing to do with contract B.
Analysis:
(1) Did the owner accept a non-compliant bid?
- The dating of 1979/1980 for the equipment was an informality/trivial and didn’t affect the cost of the bid.
- The bid was compliant on its face, since S did not have equipment form 1980, but they promised to use equipment from 1980 or newer upon acceptance. Everything else was compliant.
(2) Is there an implied obligation on the owner to investigate the bid for compliance?
- Owner is under no obligation to investigate every condition under implied obligation because that would be too much.
- There would only be duty to investigate under expressed obligation.
(3) Can the owner renegotiate after contract B or does this breach contract A with all other bidders?
- The parties in the contract can negotiate at any time and people outside of the contract have nothing to say once contract A) is picked. contract B) has nothing to do with other parties.
Conclusion:
- No, Edmonton did not breach contract A
Why did the court create this A) and B) contractual relationship in tenders?
Do protect the integrity of the bidding contract.
Obligation to accept the lowest bid: Is there obligation to accept the lowest bid?
there is an implied obligation to accept the lowest bid based upon business efficacy. Objectively, based upon what a reasonable person would think, the owner would not intend to constrain themselves to always accepting the lowest offer when there could be other factors such as relationships and quality of work to consider.
Must explain what a material breach of contract is vs a trivial one (MJB Case)
where there was not determined to make a competitive difference based upon something trivial. There is no evidence here to suggest that anything has changed to provide an unfair competitive advantage based upon a late submission of bid, therefore making this a trivial matter, however, if information came up suggesting otherwise it may be a material breach.
