PQ - Offer and Acceptance

Question 1

What is the starting point of contract law?

Answer 1

Freedom of contract = freedom to contract + freedom from contract

Question 2

What is the traditional analysis of a contract?

Answer 2

Contract = offer + acceptance

Question 3

Define a contract and its components

Answer 3

• Contract: ‘a set of promises for the breach of which the law gives a remedy’
• Offer: communication of the intention to be bound on sufficiently definite terms
• Acceptance: communication of the intention to be bound on the proposed terms
- If you propose new terms, that is, de facto, a rejection of my offer, and a proposal of a counter-offer

Question 4

What are examples of contract that do not fit into the traditional model?

Answer 4

Negotiations (point-by-point) – until the signing of the final document, there is no contract

Question 5

What are the approaches in Gibson v Manchester City Council?

Answer 5

• Lord Denning (CA): Global approach - you “should look at the correspondence as a whole and at the conduct of the parties and see there from whether the parties have come to an agreement on everything that was material.”
• Lord Diplock (HL): ‘There may be contracts which do not fit into the normal analysis of offer and acceptance… A contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first were in reply to one another is not one of these…’

Question 6

What was decided in Gibson?

Answer 6

There was an offer, when Gibson submitted the form, but it was not accepted by the council – there was no acceptance

Question 7

What was decided in storer v Manchester City Council?

Answer 7

• CA found a contract had been concluded, but, unlike Gibson, there was no appeal
• Due to the language – ‘I will send you the Agreement…’
  o In contrast to the earlier case, where they used the term ‘may’

Question 8

How do you test if an agreement has been reached?

Answer 8

It is an objective test that examine what the parties said and did and not what they actually intended to say or do. (Smith v Hughes)

Question 9

What was decided in Smith v Hughes?

Answer 9

H was a racehorse trainer. H was given a sample of new oats to inspect.
H made an order after inspecting the sample but refused to pay S when oats arrived as they were new oats, only old oats could be used to feed horses.

HELD: H could not avoid contract as H conducted himself that a reasonable man would believe that he agreed to the terms proposed by S. There was a contract formed.
Blackburn J: ‘If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party…’

Question 10

What is the mirror image rule?

Answer 10

the court must be able to find in the documents passed between the parties a clear and unequivocal offer which is matched or ‘mirrored’ by an equally clear and unequivocal acceptance

Question 11

What was decided in Butler v Ex-Cell-O Corp?

Answer 11

• Facts: The buyer’s order did not mirror the terms of the seller’s amounting to a counter offer. Seller accepted this by signing on acknowledgement slip
• HELD: A purported acceptance which does not accept all the terms of the original offer is not in fact a true acceptance, but a counter-offer which ‘kills off’ the original offer and amounts to a new offer which can in turn be accepted by the other party

Question 12

What are the adv of the mirror rule?

Answer 12

• Provides some degree of certainty because legal advisers know the principles which the courts will apply in deciding whether or not a contract has been concluded
• Provides a standard which can be applied to every type of contract

Question 13

What are the criticisms of the mirror rule?

Answer 13

• Excessively rigid; produces an ‘all or nothing’ result.
  o It is either the terms of the buyer or the terms of the seller which govern the relationship of the parties
  o The court cannot seek to find an acceptable compromise
• Encourages parties to continue to exchange their standard terms of business in hopes of getting the ‘last shot’ in
  o Places the party in receipt of the last communication in a very difficult position

Question 14

What is Lord Denning’s approach in Butler?

Answer 14

• ‘To look at all the documents passing between the parties and glean from them, or from the conduct of the parties, whether they have reached agreement on all material points’
• A court may find that a contract has been concluded on terms other than those to be found in the parties’ respective standard terms – i.e. the court has discretion in filling in the gaps

Question 15

What is the advantage and disadv of Butler’s rule?

Answer 15

ADV
More flexible framework – accommodates inconsistent terms and an apparent lack of consensus

DIS
Produces uncertainty - Gives too little guidance in determining whether or not an agreement has been reached

Question 16

Has Lord Denning’s approach been applied?

Answer 16

Yes. GHSP Inc v AB Electronic Ltd [2010] :
o Burton J concluded that there was a conflict between the parties’ standard terms of business and neither party had accepted the other’s terms
o Rather than find that there was no contract between the parties, he held that the terms of the contract were to be found in the terms to be implied into the contract by the Sale of Goods Act 1979.

Question 17

What is an invitation to treat?

Answer 17

expression of willingness to enter into negotiations which, it is hoped, will lead to the conclusion of a contract at a later date

Question 18

What is the difference between a offer and an invitation to treat?

Answer 18

intention.
• Did the maker of the statement intend to be bound by an acceptance of his terms without further negotiation, or did he only intend his statement to be part of the continuing negotiation process.

Question 19

Is a Display of goods an invitation to treat?

Answer 19

the display of goods in a shop window is an invitation to treat rather than an offer

• Pharmaceutical Society of GB v Boots Cash Chemists [1953] 1 QB 401 – held that the sale took place at the cash desk and not when the goods were taken from the shelves; the display of the goods was simply an invitation to treat
• Usually, the contract is concluded when the customer walks to the cashier and puts the item before the cashier.
• The customer making an offer to buy whatever is in the basket, and the cashier, processing the transaction, accepts that offer
• Paying the money, and handing over the item, are acts of performing the contract – both parties are obliged to do this

Question 20

Is advertisements an invitation to treat?

Answer 20

a newspaper advertisement is an invitation to treat rather than an offer (Patridge v Crittenden [1968] - where the advertiser might find himself contractually obliged to sell more goods than he in fact owned if adverts were treated as offers)

Question 21

When is an advert an offer?

Answer 21

• when it constitutes a unilateral offer. In Carlil it was held that a unilateral Contract was made w those who met the condition ‘on the faith of the advertisement’.

Question 22

Are auction sales an invitation to treat?

Answer 22

an auctioneer, by inviting bids to be made, makes an invitation to treat
• The offer is made by the bidder which, in turn, is accepted when the auctioneer strikes the table with his hammer (British Car Auctions Ltd v Wright)