Topic 1: Offer and Acceptance Flashcards
Define the term ‘offer’
An expression, by words or conduct, of a willingness to be bound by specified terms as soon as there is acceptance by the person to whom the offer is made
Which two cases demonstrate the need for an intention of the parties to be bound by the terms of a contract?
Carlill v Carbolic Smoke Ball Co (1893)
Blue v Ashley (2017)
Briefly outline the facts of Carlill v Carbolic Smoke Ball Co (1893)
CSBC issued an advert for its smoke ball that guaranteed that if anyone used it according to instructions and still caught the flu, the company would pay them £100
They deposited £1,000 with a bank to show their sincerity
Mrs Carlill bought the smoke ball, used it according to instructions, and caught the flu
The Court of Appeal held that the terms of the offer were clear and very specific and that by depositing the money with their bank, there was serious contractual intent
Briefly outline the facts of Blue v Ashley (2017)
Blue worked for Sports Direct (owned by Ashley) to give company strategic adive
One night, after much drinking, Blue, Ashley and other specialists discussed Sports Direct’s share price and suggested that Blue be offered an incentive to work on the company’s image and growth
Jokey banter led to Ashley suggesting £15m if the price got to £8 within three years
Blue took this seriously and sued when Ashley failed to pay him £15m when the share price reached £8
The High Court held that there was no contract because there was no contractual intention
This is because the purpose of the occasion was not to form a contract, it was a social occasion, the terms were too vague, an amount was fixed arbitrarily, and there was no commercial sense to the offer
Are adverts in magazines, newspapers, etc., normally interpreted as contractual offers?
No
Does a request for information (along with its subsequent response) have any legal effect?
No
What is the case to show request for information?
Harvey v Facey (1893)
Briefly outline the facts of Harvey v Facey (1893)
Harvey asked for the lowest price Facey would accept for land
Facey responded with the price and Harvey replied, ‘agreeing’ to buy the land
The court held that Facey had not made an offer that showed a serious intention to be bound to sell the land to Harvey; he was merely responding to a request for information
Because Facey had made no offer, Harvey’s final response could not be legal acceptance; there was no offer and acceptance, so there was no valid contract
Define the term ‘invitation to treat’
An invitation to others to make an offer
Can an invitation to treat be accepted?
No, because it’s not an offer
Are adverts to the public usually held to be invitations to treat or offers?
Give the two cases for adverts to the public
Invitations to treat
Partridge v Crittenden (1968)
Lefkowitz v Great Minneapolis Surplus Store Inc (1957)
Briefly outline the facts of Partridge v Crittenden (1968)
An advert in a magazine for the sale of birds was held to be an invitation to treat because had it been an offer, there could have been large numbers of people ‘accepting’ it
This would have been commercially unworkable
Briefly outline the facts of Lefkowitz v Great Minneapolis Surplus Store Inc (1957)
The advert stated that three fur coats were available for $1 each: first come, first served
This was held to be an offer because the terms were certain and potential acceptances were limited to the first three customers
Are displays in shops generally held to be offers or invitations to treat?
What is the name of the case that shows this?
Invitations to treat
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952)
Briefly outline the facts of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952)
Items displayed on shop shelves are invitations to treat
The offer is when the customer presents the item at the till, as the cashier can refuse sale at this point
The offer is accepted when the cashier rings through the sale
What are the three responses to an offer?
Rejection, counteroffer, acceptance
Define rejection
A refusal of an offer by the offeree
What is the legal consequence of the rejection of an offer?
The offer can no longer be accepted
Define counteroffer
A response to an offer that seeks to introduce a new term or alter an existing term
What is the legal effect of a counteroffer?
The same as rejection: the original offer can no longer be accepted
What is the case demonstrating a counteroffer?
Hyde v Wrench (1840)
Briefly outline the facts of Hyde v Wrench (1840)
Wrench offered to sell his farm to Hyde for £1,000; Hyde responded to this by offering to pay £950
The original offer could not be accepted once the counteroffer had been made
Define acceptance
An absolute, unconditional and unequivocal assent to the terms of the offer
What are the four principal rules for acceptance to be valid?
(i) It must take place whilst the offer is still in force
(ii) It must be on the same terms as the offer
(iii) It must be unconditional
(iv) It must be communicated to the offeror
What case demonstrates acceptance?
Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (1979)
Briefly outline Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (1979)
The seller offered to sell a machine tool on their standard terms and conditions
The buyer said they accepted on their standard terms and conditions; they sent a form with their terms and conditions with included a tear-off slip for the sellers to return which stated that they accept the buyer’s order on their terms and conditions
The seller returned the tear-off slip
It was held that the seller made an offer and the buyer a counteroffer. The seller accepted this by returning the tear-off slip
What’s the rule for instantaneous communication of acceptance?
Acceptance occurs at the point it is received by the offeror
What are the three cases demonstrating instantaneous communication of acceptance?
Entores Ltd v Miles Far East Corporation (1955)
The Brimnes (1975)
Thomas v BPE Solicitors (a firm) (2010)
Briefly outline Entores Ltd v Miles Far East Corporation (1955)
Established the rule that communication of acceptance occurs at the time it is received
If it was the offeror’s fault that he did not hear the words of the acceptance, and the offeree reasonably believed that he did, then acceptance is communicated
This applies to electronic communications, e.g. email, fax
Briefly outline The Brimnes (1975)
Acceptance was sent by telex and printed out on the defendant’s machine at 17:45
It was held that acceptance was communicated effectively at 17:45; it was the defendant’s fault that they left the office early without checking the machine
The acceptance just has tone received, not read
Briefly outline Thomas v BPE Solicitors (a firm) (2010)
An email communicating acceptance was received in the inbox at 18:00, which was still within working hours
The email was an effective communication of acceptance, even though it had not been read
What’s the rule for non-instantaneous communication of acceptance?
The postal rule: acceptance is communicated at the point it is sent
What are the three cases demonstrating non-instantaneous communication?
Adams v Lindsell (1818)
Household Fire & Carriage Accident Insurance Co Ltd v Grant (1879)
Holwell Securities Ltd v Hughes (1974)
What was established in Adams v Lindsell (1818)?
Acceptance is communicated at the point of posting the letter
The offeror does not have to receive the letter or read it
What was established in Household Fire & Carriage Accident Insurance Co Ltd v Grant (1879)?
Acceptance is still made even when the post is delayed or the letter is lost
What was established in Holwell Securities Ltd v Hughes (1974)?
The offeror may exclude the postal acceptance rule and require acceptance to be notified
The postal rule will not apply where it would lead to ‘manifest inconvenience or absurdity’
What is the case demonstrating acceptance by conduct?
Brogden v Metropolitan Railway Co (1877)
Briefly outline Brogden v Metropolitan Railway Co (1877)
There was no formal acceptance of the offer for the sale of coal
However, the coal was ordered and delivered in accordance with the terms of the agreement, so acceptance was implied by this course of conduct of the parties
What are the cases demonstrating acceptance by silence?
Felthouse v Bindley (1862)
Re Selectmove Ltd (1995)
What was established in Felthouse v Bindley (1862)
An offeror cannot impose a contract by saying that silence is acceptance
What was established in Re Selectmove Ltd (1995)?
Silence may exceptionally amount to an acceptance where there is an agreement to that effect or established practice between the parties
It may be possible for the offeree to use silence, e.g. “If you don’t hear from me by Friday, assume I accept”
What are the three ways in which an offer can come to an end?
Revocation, time lapse, rejection
What case demonstrates revocation of an offer?
Dickinson v Dodds (1876)
What was established in Dickinson v Dodds (1876)?
An offer can be revoked at any time before it has been accepted, meaning no contract is entered into
If an offeror attempts to revoke an offer after it has been accepted, the revocation is ineffective; a contract has already been formed
Like acceptance, revocation must be communicated, although these can be via a third party
A promise to keep an offer open is not enforceable in the absence of a deed or consideration, so the offer can be revoked
What was established in Henthorn v Fraser (1892)?
The postal rule does not apply to revocation of an offer
What is the time lapse rule for the death of an offer?
If an offer prescribes a time limit for acceptance, the offer lapses if not accepted by the time period stipulated
What was established in Ramsgate Victoria Hotel v Montefiore (1866)?
If there is no time limit set, the offer lapses after a reasonable time
What happens when an offer is rejected?
It comes to an end and can no longer be accepted
Define the term ‘bilateral contract’
A contract that creates mutual obligations, i.e. both parties undertake to do or refrain from doing something in exchange for the other party’s undertakings
Define the term ‘unilateral contract’
A contract that creates obligations for only one party, i.e. one party (the promisor) undertakes to do or refrain from doing something if the other party (the promisee) does or refrains from doing something, but the promisee does not undertake to do or refrain from doing that thing
Why is the situation in Carlill v Carbolic Smoke Ball Company (1893) an example of a unilateral contract?
Mrs Carlill was under no obligation to use the smoke ball and made no promise to do so
However, as soon as she had done so, and when she caught the flu, the company became obligated to make the payment
Mrs Carlill did not have to communicate her acceptance in the ordinary way; the company were taken as having ‘waived’ this requirement
Define there term ‘consensus ad idem’
The agreement by contracting parties to identical terms that is necessary for the formation of a legally binding contract
What is the case that demonstrates ‘consensus ad idem’?
Smith v Hughes (1871)
Briefly outline Smith v Hughes (1871)
Seller was negotiating for the sale of oats with a buyer (a racehorse trainer)
Seller gave a sample of the oats to the buyer, which were ‘new oats’
However, the buyer didn’t look at the sample and made the assumption he was buying ‘old oats’
There was agreement on the price and the oats were delivered
Buyer refused to pay because he said he was contracting to buy old oats
Seller wanted to get the contract price on the basis that the contract was for new oats
Held: a sample had been given and the reasonable person who observed this would conclude the agreement had been for new oats – contract upheld
In which case was the objective test to determine whether there is ‘consensus ad idem’ established?
Centrovincial Estates plc v Merchant Investors Assurance Co Ltd (1983)
Briefly outline Centrovincial Estates plc v Merchant Investors Assurance Co Ltd (1983)
Landlord of a commercial lease mistakenly entered a significantly lower figure on the contract for the rest: £65,000 instead of £126,000
The tenant accepted and the landlord tried to get out of the contract
Objective test was applied, i.e. what a reasonable bystander would have seen
No evidence that the tenants were aware, or ought reasonably to have been aware, that this was a mistake
In which cases will ‘consensus ad idem’ generally not be found?
Give the cases that established these
(i) One party is aware, or ought reasonably to have been aware, that the other party has made a mistake – Hartog v Colin and Shields (1939)
(ii) The seller cares the buyer to make a mistake – Scriven Brothers & Co v Hindley & Co (1913)
