Offer and Acceptance

Question 1

Explain what is meant by an offer?

Answer 1

Offer and Acceptance – One of them has to make an offer which the other has accepted.

An offer is a statement of terms by which the offeror is willing to be bound. If accepted there is a legally binding agreement between the parties.

Question 2

Explain what is meant by an invitation to treat?

Answer 2

An offer may be defined as a statement showing a desire to contract on certain terms and to be legally bound by those terms. On the other hand, an invitation to treat is only inviting the party to make an offer. With an invitation to treat there is no intention that your statement will create a binding contract, whereas with an offer there is.

Question 3

Explain what kind of offers are invitations to treat?

Answer 3

As a general principle, goods displayed in shops, advertisements, auctions, tenders, negotiations concerning the statements of price are invitations to treat.

Question 4

What is a unilateral contract?

Answer 4

A unilateral contract is a contract agreement in which an offeror promises to pay after the occurrence of a specified act.

. In unilateral contracts there is no requirement that the offeree communicates an intention to accept, since acceptance is through full performance.

Question 5

What is an example of a unilateral contract?

Answer 5

Typical cases of unilateral offers are advertisements of rewards (e.g., for the return of a lost dog).

Question 6

Which case relates to a unilateral contract?

Answer 6

Carlill v Carbolic Smoke Ball co [1893]

Unilateral Contract
Invitation to Treat

As seen in Carbolic Smoke Ball Co, the Court of Appeal held that Mrs Carlill was entitled to the reward as the advert constituted an offer of a unilateral contract which she had accepted by performing the conditions stated in the offer.

Question 7

Carlill v Carbolic Smoke Ball co [1893]

Why was Mrs Carlill entitled to the reward?

Answer 7

The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert constituted an offer of a unilateral contract which she had accepted by performing the conditions stated in the offer. The court rejected all the arguments put forward by the defendants for the following reasons:

1. The statement referring to the deposit of £1,000 demonstrated intent and therefore it was not a mere sales puff.
2. It is quite possible to make an offer to the world.
3. In unilateral contracts there is no requirement that the offeree communicates an intention to accept, since acceptance is through full performance.
4. Whilst there may be some ambiguity in the wording this was capable of being resolved by applying a reasonable time limit or confining it to only those who caught flu whilst still using the balls.
5. The defendants would have value in people using the balls even if they had not been purchased by them directly.

Question 8

What is the leading case for offer and acceptance?

Answer 8

Gibson v Manchester City Council (1979).

Issue(s)
Was there a completed contract between Gibson and the Council?

Decision
The House of Lords held in favour of the Council. The Council never made an offer to Gibson which he could have accepted. Words like ‘may be prepared to sell’ were too equivocal to constitute an offer. The mortgage letter explicitly stated that it was not a firm offer. There was therefore no completed contract between the parties.

Question 9

What is a bilateral contract?

Answer 9

A bilateral contract is a contract in which both parties exchange promises to perform. One party’s promise serves as consideration for the promise of the other.

Question 10

What is the leading case for invitation to treat?

Answer 10

INVITATION TO TREAT

An invitation to make an offer or begin negotiations

Boots v Pharmaceutical Society

Goods on the shelf constitute an invitation to treat not an offer. A customer takes the goods to the till and makes an offer to purchase. The shop assistant then chooses whether to accept the offer. The contract is therefore concluded at the till in the presence of a pharmacist.

Question 11

Which case relates to Goods in shops / invitation to treat?

Answer 11

GOODS IN SHOPS

Fisher v Bell

Goods on display in shops are generally not offers but an invitation to treat. The customer makes an offer to purchase the goods. The trader will decide whether to accept the offer:
The defendant had a flick knife displayed in his shop window with a price tag on it. Statute made it a criminal offence to ‘offer’ such flick knives for sale. His conviction was quashed as goods on display in shops are not ‘offers’ in the technical sense but an invitation to treat. The court applied the literal rule of statutory interpretation.

Question 12

Which case relates to advertisements?

Answer 12

ADVERTISEMENTS

Partridge v Crittenden

Advertisements are also generally invitations to treat:

The defendant placed an advert in a classified section of a magazine offering some bramble finches for sale. S.6 of the Protection of Birds Act 1954 made it an offence to offer such birds for sale. He was charged and convicted of the offence and appealed against his conviction.

Question 13

What is an offer?

Answer 13

OFFER

Statement of terms by which the offeror is willing to be bound

Question 14

What is acceptance?

Answer 14

Unequivocal assent to the terms of the offer

Must be communicated

Question 15

Name 4 ways of acceptance?`

Answer 15

Unilateral offer

Postal Rule

Auctions

Counter offer

Acceptance

Question 16

What is the postal rule?

Answer 16

Acceptance valid from the moment of posting providing the letter is stamped and addressed correctly

Question 17

Which case relates to the postal rule?

Answer 17

Adams v Lindsell

It was agreed that the parties will use the post as a means of communication the postal rule will apply. The postal rule states that where a letter is properly addressed and stamped the acceptance takes place when the letter is placed in the post box

There was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box.

Question 18

Explain how acceptance is concluded at auctions?

Answer 18

AUCTIONS

Acceptance comes at the fall of the hammer

Heathcote Ball v Barry

he claimant had submitted the highest (and only) bids at an auction stated to be without reserve. The items were two Alan Smart engine analysers which were worth £14,000. The claimant had submitted bids of £200 each. The auctioneer refused to sell them at that price. The claimant brought an action for breach of contract claiming damages of £27,600.

Held:

The claimant was entitled to damages. Where an auction takes place without reserve the auctioneer makes a unilateral offer which is accepted by submitting the highest bid. There was thus a binding contract and the claimant entitled to damages covering the loss of bargain.

Question 19

Explain how acceptance is concluded in unilateral contracts?

Answer 19

UNILATERAL CONTRACTS

Acceptance may be through performance

Carbolic Smoke Ball

Question 20

Explain a counter offer?

Answer 20

A counter offer is where an offeree responds to an offer by making an offer on different terms. This has the affect of destroying the original offer so that it is no longer open for the offeree to accept.

Hyde V Wrench

Question 21

Explain which case relates to a counter offer?

Answer 21

Hyde v Wrench (1840)

The court dismissed the claims and held that there was no binding contract for the farm between Mr Hyde and Mr Wrench. It was stated that when a counter offer is made, this supersedes and destroys the original offer. This original offer is no longer available or on the table. In this case, when Mr Hyde offered £950, he cancelled the £1,000 offer and could not back track and accept

Question 22

Which case relates to distinguishing a counter offer and enquiry?

Answer 22

Must be distinguished from an enquiry

Stevenson v MacLean

The court heard the complainant was only inquiring for more information about whether the terms of the offer could be changed; there was no specific wording to indicate that it was a counter offer or rejection. This was in contrast to Hyde v Wrench. This meant that the offer made by the defendant was still valid and the second telegram by the complaint formed a binding contract. While the promise of the offer remaining open until Monday was not itself binding and an offeror can revoke this at any time, there had been no revocation communicated to the complainant in this case.

Question 23

when can you terminate an offer?

Answer 23

TERMINATION OF OFFERS

An offer may be terminated any time before acceptance

Question 24

Which case relates to Lapse of time - termination?

Answer 24

LAPSE OF TIME

An offer will lapse after a reasonable time

Routledge v Grant

Question 25

Which case relates to revocation?

Answer 25

REVOCATION

Must be communicated – may be through reliable third party i.e estate agent

Dickinson v Dodds

Question 26

List 3 ways to terminate an offer?

Answer 26

• reject
• lapse of time
• revocation

Question 27

which case states that Silence will not amount to acceptance:

Answer 27

Felthouse v Bindley

A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don’t hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether a valid contract existed between the nephew and the uncle.

Held:

There was no contract. You cannot have silence as acceptance.

Question 28

which case relates to acceptance through conduct:

Answer 28

Brogden v. Metropolitan Railway Co.

The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid.

Held:

The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.

Question 29

State the rule of acceptance

Answer 29

The terms of the acceptance must exactly match the terms of the offer.

If the terms differ this will amount to a counter offer and no contract will exist: