Offer & Acceptance

Question 1

What is the definition of an offer?

Answer 1

An expression of willingness to be bound by the specified terms of the contract.

Question 2

What are the guidelines for an offer to be valid?

Answer 2

It must be communicated to the offeree.

It must be definitely in substance.

It must be distinguished from an ITT.

Question 3

What is the principle of (Scammell v Ouston, 1941)?

Answer 3

The terms of the contract must be certain and intention made clear or else the court will not recognized its validity.

Background
The courts refused to enforce a sale stated to be made ‘on hire purchase terms’, when neither the rate of interest, nor the period of repayment, nor the number of installments was stated.

Question 4

What is the principle in the case of (Walford v Miles, 1992)?

Answer 4

The courts will not enforce a contract if the terms are uncertain or intention unclear.

Background
The court refused to enforce an ‘agreement to negotiate in good faith’

Question 5

What are the 2 cases showing the courts refusal to enforce a contract where the terms are uncertain and intention unclear?

Answer 5

Scammell v Ouston, 1941

Walford v Miles, 1992

Question 6

What is the definition of an ITT?

Answer 6

An invitation to treat is simply an expression of willingness to enter into negotiations, which, it is hoped, will lead to the conclusion of a contract at a later date.

Question 7

What is the main distinction between an offer and an Invitation To Treat (ITT)?

Answer 7

Intention.

That is, whether the maker of the statement intend to be bound by an acceptance of his terms without further negotiations, or did he only intend his statement to be part of the continuing negotiation process.

Question 8

What is the principle in (Gibson v Manchester City Council, 1979)?

Answer 8

HOL held that “may be prepared to sell” was not an offer as it did not commit the council to sell Gibson the house.

The courts will seek to identify from the language used and from the actions of the parties to infer if either party intended to make an offer which is capable of acceptance.

Question 9

What are the 4 main categories of ITTs?

Answer 9

Display of goods for sale in shop

Advertisements

Auctions

Tenders

Question 10

What are the 2 main authorities showing that a a display of goods in a shop is an ITT?

Answer 10

Pharmaceutical Society of GB v Boots Cash Chemist, 1952

Fisher v Bell, 1961

Question 11

What are the 2 main authorities showing that an advertisement is an ITT?

Answer 11

Partridge v Crittenden, 1968

Carlil v Carbolic Smoke Ball Company.

Question 12

What is the main principle why an advertisement should be held to be an ITT instead of an offer?

Answer 12

If an advertisement was treated as an offer, this could lead to a floodgate of litigation suing for breach of contract against the advertiser.

If the advertiser have limited stocks (eg bramblefinches), he could not have intended the advertisement to be an offer.

Question 13

What is the principle in (Carlil v Carbolic Smoke Ball Company, 1893) and the American case of (Lefkowitz v Great Minneapolis Surplus Stores, 1957)?

Answer 13

If an advertisement may constitute an offer if it is unilateral in nature, and capable of acceptance by performing a stipulated act.

Question 14

What is the authority stating that an auction is an ITT?

Answer 14

Payne v Cave, 1789.

The offers are made by the bidder.

Question 15

What does the phrase ‘without reserve’ means?

Answer 15

The phrase ‘without reserve’ constitutes a unilateral offer which can be accepted by turning up and submitting the highest bid.

Question 16

What is the principle in Harvela Ltd v Royal Trust of Canada, 1985?

Hint: Tenders

Answer 16

It was held that if the request is made to specified parties and states that the contract will be awarded to the lowest or highest bidder, this will be binding as an implied unilateral offer.

Question 17

What is the definition of an acceptance?

Answer 17

An acceptance is a final and unqualified assent to all the terms of the offer.

Question 18

What is the authority that says that the acceptance must ‘mirror’ and match exactly to the terms of the offer?

Answer 18

Hyde v Wrench, 1840

Any significant difference in the acceptance will constitute a counter-offer.

Question 19

What is the authority stating that conduct can constitutes acceptance?

Answer 19

Brogden v Metropolitan Railway, 1877.

A returned document was held to be a counter-offer which the defendants then accepted either by ordering coal from Brogden OR by accepting delivery of the coal.

Question 20

What is the the authority stating that a person cannot accept an offer which he has no knowledge of?

Hint: Australian case

Answer 20

R v Clarke, 1927.

Question 21

Explain briefly the facts in Hyde v Wrench, 1840.

Hint: regarding a farm.

Answer 21

In Hyde v Wrench, the defendant offers to sell a farm to the claimant for £1000. In reply the claimant offered £950. Defendant rejected it and sold to a 3rd party. Claimant then attempted to accept the original offer of £1000 and sue the defendant for B.O.C.

It was held that there was no contract. The counter-offer of £950 had impliedly rejected the original offer which was no longer capable of acceptance.

Question 22

What is the authority distinguishing a mere enquiry from an offer and what is the brief facts?

Hint: delivery; 2 months

Answer 22

Stevenson v McLean, 1880

In S v M, in response to an offer to sell goods at a stated price made by the defendants, the claimants replied enquiring whether delivery could be made over 2 months. No reply to this enquiry was received but the claimants accepted the offer.

It was held that there was a binding contract. The claimant’s reply was a request for information and not a counter offer.

Question 23

What is Butler Machine Tool v Ex-Cell-O Corporation essentially about and what did Lord Denning said?

Answer 23

Concerning ‘battle of the forms’.

L.D chose to look beyond the strict wording of the forms rather than the strict offer/counter-offer analysis.

“The T&C of both parties are to be construed tgt. If they can be reconciled so as to give a harmonious effect, then all is well and good.

If the differences are irreconcilable, so that they are mutually contradictory, then the conflicting terms may have to be scrapped and replaced by a reasonable implication.”

Question 24

What is the principle of Powell v Lee, 1908?

Answer 24

Communication of acceptance must be made by an authorized agent or 3rd party.

Background
In P v L, an unauthorized communication by one of the managers that the Board of Managers had selected a particular candidate for a headship was held not to be a valid acceptance

Question 25

What is the authority that says silence cannot amount to an acceptance?

Answer 25

Felthouse v Bindley, 1862.

Background
The plaintiff wrote to his nephew offering to buy a horse, adding “if I hear no more .. I will take it that the horse is mine.”

The nephew did not reply to this letter.

Held: NO contract.
Reason: acceptance had not been communicated to the offeror.

Question 26

What are the 2 exceptions to the rule that acceptance must be communicated?

Answer 26

Unilateral contract where communication is expressly or impliedly waived. (Carlil v CSBC)

Offeror caused or is responsible for the failure of communication. (Suggested by L.D in Entores v MFEC)

Where post is deemed to be the proper mode of communication.

Question 27

What is the definition of ‘Postal Rule’ and which case was it derived from?

Answer 27

The postal rule, derived from Adams v Lindsell, 1818, states that an acceptance sent by post, where post is a reasonable means of communication, will take effect on posting rather than receipt.

Question 28

What is the rationale behind the creation of the ‘postal rule’?

Answer 28

The Postal Rule is essentially a rule of convenience and is usually justified on the grounds that if the offeror chooses the post as a means of effecting a contract, then he/she must accept the inherent risks that comes with it.

Question 29

What are the 5 exceptions to the Postal Rule?

Answer 29

1) Only applies to acceptance.
2) Only applies to letters and telegrams.
3) It must be reasonable to use post.
4) It must be properly stamped and addressed.
5) It must not be excluded by the offeror.

Question 30

What is the 2 principles in Entores v Miles Far East Corporation?

Answer 30

1) Postal Rule does not apply to instantaneous communication.
2) In relation to instantaneous communication, acceptance takes place when and where the message is received.

Question 31

What is the underlying theme in this 3 cases:

• Entores v Miles Far Easr Corporation, 1955
• The Brimnes, 1975
• Brinkibon Ltd v Stahag Stahl, 1983?

Answer 31

In Entores, it was held that in relation to instantaneous communications, they take effect at the place where they are received.

In The Brimnes, it was held that a telexed withdrawal was effective when it was printed on the recipient’s telex machine, not when it was actually read.

In Brinkibon, however, the HOL refused to confirm any hard and fast rule stating that the intention of the parties and business practice must be taken into account in deciding when a communication is effective.

Question 32

What is the underlying theme of these cases:

• A to Z Bazaar v Minister of Agriculture, 1974
• Cheshire
• Countess of Dunmore v Alexander, 1830

Hint: regarding revocation of acceptance

Answer 32

Bazaar says that once a letter is posted, the offer is accepted, acceptance cannot be revoked.

Cheshire supports this and said that it would be unfair to the offeror, who would be bound as soon as the letter was posted, whereas the offeree could keep his options open.

Dunmore, on the other hand, says that actual prior communication of rejection would not necessarily prejudice the offeror, who by definition, is unaware of the acceptance.

Question 33

What is the principle of Manchester Diocesan Council for Education v Commercial & General Investments Ltd, 1970?

Hint: method of acceptance

Answer 33

It was held that an acceptance which meets the offeror’s objective in prescribing a method of acceptance (albeit not by the method prescribed) will still remain valid.

Question 34

What is the authority that says that in the absence of a prescribed method of acceptance, it is implied that an equally expedient mode of communication is expected?

Answer 34

Quenerduaine v Cole, 1883.

If an offer is sent by telegram, a reply by post would be ineffective.

Question 35

What is the 2 case that establishes that a revocation of offer can be withdrawn at any point prior to acceptance, provided that the withdrawal is communicated to the offeree?

Answer 35

Payne v Cave, 1789

Byrne v van Tienhoven, 1880

Question 36

Can a revocation of offer be communicated by a 3rd party? If so, what is the authority?

Answer 36

Dickinson v Dodds, 1876

Background

The plaintiff was told by a neighbor that a pretty which had been offered to him had been sold to a 3rd party. It was held that the offer had been validly revoked.

Question 37

What is the principle in Routledge v Grant, 1828?

Answer 37

An offer to keep an offer open is not legally binding unless consideration has been provided.

Question 38

What is the case that establishes that reasonable steps taken to inform the public would suffice to deem a revocation is communicated?

Hint: American case

Answer 38

Shuey v USA, 1875.

This dude placed an advertisement in the same newspaper informing that it is over.

Question 39

What is the principle and facts of Errington v Errington and Woods, 1952?

And what was the case that confirms it in orbiter dicta?

Answer 39

The offeror cannot revoke a contract if the offeree had already started to perform it.

Background
A father had promised his son and daughter-in-law that if they paid the mortgage installments on a house, he would transfer it to them.

Lord Denning took the view that once the young couple had started to make the payments, the offer could not be withdrawn.

Confirmed later by Daulia v Four Milbank Nominees, 1978.

Question 40

What are the 4 ways to terminate an offer?

Answer 40

1) Revocation.
2) Lapses of time.
3) Failure to comply a condition.
4) death of one parties.

Question 41

What is the authority stating that an offer would lapse after a reasonable time?

Hint: Hotel

Answer 41

Ramsgate Victoria Hotel v Montefiore, 1866.

What is reasonable would depend on the offer and subject matter of the contract.

If the subject matter was perishable, then the offer would terminate after a short period of time.