Offer

Question 1

Introduction to offer / acceptance

Answer 1

In cases of contract law, the courts may intervene for several reasons. One reason for court involvement is when there is a dispute as to whether there is a contract between the parties at all. Parties may dispute the fact of agreement or might wish to argue despite the agreement, it is unenforceable. The typical basis for deciding whether there has been agreement between the parties, derives from classical law of contract which developed from the late 18th and early 19th century case law. This is the rules of ‘offer’ and ‘acceptance’.

Question 2

What is an offer

Answer 2

An offer may be defined as a definite indication by one person that they are prepared to contract with another on certain terms, which are fixed, or capable of being fixed, at the time the offer is made. Thus, an offer is an indication of willingness to contract on the specified terms, without further negotiation.

Question 3

Why important to distinguish between offer and ITT

Answer 3

Once a statement or action is categorised as an offer, then the party who made the statement or did the action has put themselves in the position where they can become legally bound by acceptance. Therefore, it is important that behaviour which may have some of the characteristics of an offer should not be treated as such if, viewed objectively, that was not what was intended. Sometimes a person will wish to simply open negotiations, rather than make an offer. This preliminary communication is referred to as an ‘invitation to treat’.

Question 4

Two similar cases for offer / ITT

Answer 4

Gibson v MCC
Storer v MCC

Question 5

Gibson facts

Answer 5

Mr Gibson was a tenant of a house owned by MCC. Council decided that it wished to give its tenants the opportunity to purchase the house. Mr Gibson wished to take advantage of this opportunity and started negotiations with the Council. He received a letter that indicated a price that stated ‘The Corporation may be prepared to sell the house to you’ at that price. Letter instructed Mr G, if he wished to make a formal application, to complete the form and return it. He did this. However, at this point local elections took place and Council changed to Labour party control. Immediately reversed this policy and refused to proceed with the sale. Lord Diplock described the wording that they ‘may be prepared’ as fatal to the argument that the council was making a solid contractual offer. House of Lords held that there was no contract as the language was not sufficiently definite to amount to an offer and this was simply an invitation to treat.

Question 6

Storer facts

Answer 6

This case had very similar facts. MCC refused to proceed with the sale of the council property. The terms had been agreed. It was found that as Mr Storer had signed and returned a document titled ‘Agreement for Sale’, this document was deemed to be sufficiently definite to amount to an offer from the Council that Mr Storer had accepted.

Question 7

Difference between Storer and Gibson

Answer 7

Differences between the cases seemed to rest on the wording of the documents that had been returned. As Storer’s document for the agreement for sale was sufficiently clear and certain, this could constitute a valid contractual offer. However, Gibson had not yet received or returned such a document, but was in more initial stages with the wording being too vague.

Question 8

In Gibson, who proposed different approach than offer / acceptance

Answer 8

It was proposed by Lord Denning MR in the Court of Appeal that you should look at the correspondence as a whole and the conduct of the parties to see whether there was an agreement for everything that was material. However this was rejected by the House of Lords.

Question 9

Intro to ITT

Answer 9

As mentioned when discussing Gibson and Storer, a preliminary communication may be found to be an invitation to treat, rather than an offer. It is important to be able to distinguish between an invitation to treat and an offer to determine whether there has been an agreement formed between the parties. There are several areas whereby communications are treated as an ITT rather than an offer. These are:
1. Display of goods
2. Advertisements
3. Auctions
4. Tenders

Question 10

Display of goods general position

Answer 10

An area whereby difficulty may arise is in relation to the display of goods in a shop window, on the shelves of supermarkets or where there are self-service areas. The general position from case law suggests that the display of goods within a shop are invitations to treat, rather than an offer

Question 11

Display of goods cases

Answer 11

Pharmaceutical Society of GB v Boots
Fisher v Bell

Question 12

PSGB v Boots facts

Answer 12

S18 of the pharmacy and Poisons Act made it an offence to sell certain medicines unless under the supervision of a registered pharmacist. Boots introduced a system whereby some of these medicines were made available to customers on a self-serve basis. There was no supervision until the customer went to the cashier. At this point a registered pharmacist would supervise the transaction and could intervene if necessary. Court of appeal held for the defendant. Decided that the sale was made at the cash desk where the customer made an offer to buy, which could be accepted or rejected by the cashier. The reason for this decision was that it was not acceptable to say the contract is complete when goods are put into a basket, because the customer may change their mind

Question 13

Fisher v Bell facts

Answer 13

The defendant shopkeeper displayed in his shop window a flick knife accompanied by a price ticket. He was charged with offering for sale of a flick knife contrary to s1(1) Restriction of Offensive Weapons Act 1959. The issue before the court was whether the display constituted an offer. The Court held it did not, but the display was merely an invitation to treat. Lord Parker had no doubt as to this contractual position, he found: “It is clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract”

Question 14

Advertisements general position

Answer 14

The general position in relation to advertisements is that they are an invitation to treat

Question 15

Cases advertisements

Answer 15

Partridge
Carlill v Carbolic Smoke Ball Co

Question 16

Partridge facts

Answer 16

The defendant published an advertisement stating “Bramblefinch cocks, Bramblefinsh hens, 25s each. However, under the Protection of Birds Act 1954, it was unlawful to offer for sale any wild live bird. It was held the offence had not been committed because the advertisement was an invitation to treat and not an offer. The court relied heavily on Fisher, and appeared to feel this kind of advertisement should be treated in the same wat as the display of goods with a price attached. Lord Parker further argued that if this was an offer it would mean everyone who replied would be accepting this, and therefore entitle to a bramblefinch. It may be assumed that the advertiser did not have an unlimited supply of the birds, therefore this was not what he was intending. The advertisement was an invitation to treat.

Question 17

Carlill facts

Answer 17

In this case, the manufacturer of a smoke ball published an advertisement in a newspaper stating that any person who purchased their product and subsequently became ill after use, would be entitled to a £100 reward. The advert stated that the company had demonstrated sincerity by placing £1000 into a bank account for this purpose. The claimant, Mrs Carlill purchased some smoke balls and despite proper use, she fell ill and attempted to claim the £100 reward. Carbolic argued that they could not be bound as the advert was an invitation o treat, rather than an offer, and it was a mere puff. However, the courts held in favour of Mrs Carlill. Took the view that the inclusion of the statement about £1000 deposit demonstrated they intended to create a binding obligation. Held this was a unilateral offer to the world at large. Should be noted that this is an offer which would constitute a unilateral contract.

Question 18

Tenders general position

Answer 18

Confusion may arise when someone decides to put work out on tender. This means potential contractors are invited to submit quotations or bids. The invitation may be issued to the world or to specific parties. The general position is that this will amount to an invitation to treat and the person who put out the tender will be free to accept or reject any of the responses

Question 19

Tenders general position case and facts

Answer 19

Spencer v Harding – the defendants advertised a sale by tender and found that unless the advertisement specifies that the highest tender would be accepted, for example, there is no obligation to sell to the person submitting the highest tender. The advert was an for tender was invitation to treat, the response was an offer and the defendant could choose to accept or reject it.

Question 20

Tender exceptions

Answer 20

1. if the invitation indicates that the highest bidder, or as appropriate, the lowest quotation, will definitely be accepted
2. If the wording indicates that all tenders will be considered

Question 21

Case for highest bidder acceptance and facts

Answer 21

Harvela Investments Ltd, the Royal Trust invited offers by sealed tender and undertook to accept the highest offer. Harvela bid a fixed sum and the competing party bid a lower fixed sum or alternatively £100,000 in excess of the highest other offer. The defendant accepted the competing party’s offer, despite the fix sum being less that Harvela’s bid. The House of Lords held that the referential bid was invalid and therefore the defendant was bound to accept the claimants offer.

Question 22

Case for all tenders considered and facts

Answer 22

Blackpool Fylde Aero Club Ltd v Blackpool Borough Council. Council had invited tenders for the operation of pleasure flights from an airfield. Tenders were to be placed in a designated box by specified deadline. Plaintiff complied with this requirement, however due to an oversight on the part of the defendants employees, the plaintiff’s tender was not removed from the box until after the deadline and was ignored in the Council’s deliberations. The club claimed that all tenders should have been considered. The court held it was reasonable to expect that the tender should be considered.

Question 23

Auctions general position

Answer 23

The Sale of Goods Act 1979 makes it clear that in relation to the sale of goods by auction, the bids constitute offers that are accepted by the fall of the hammer. The same is the case in relation to any other type of sale by auction. The normal position will be that the auctioneer will be entitled to reject any of the bids made and will not be obliged to sell to the highest bidder. Thus, generally an auction is treated as an invitation to treat

Question 24

Auctions general position case and facts

Answer 24

Harris v Nickerson

In this case, Harris attended an auction to buy furniture advertised in the auction catalogue. However, on the day, the furniture seen had been withdrawn rom the catalogue by the auctioneer. Claimant sought to recover his expenses wasted in attending the auction. The court held that the advertisement was merely an invitation to treat, with the goal of informing purchasers the sale was taking place.

Question 25

Exception to auctions

Answer 25

However, auctions without reserve are different. A reserve price is the minimum price set by the seller

Question 26

Case for without reserve

Answer 26

Barry v Heathcote Ball. Here the claimant attended an auction to bid for two new machines which were worth around £14,000 each. Sale was to be without reserve. When they came up for sale there were no bids apart from the claimant who bid £200 for each machine. The auctioneer refused to accept and withdrew the machines from the sale. Claimant sued for breach of contract. Court found that an auctioneer that conducts a sale without reserve is making a binding promise to sell to the highest bidder.

Question 27

How to terminate an offer

Answer 27

Revocation
Lapse of time
Rejection
Counter Offer
Death

Question 28

Revocation

Answer 28

• An offer can be revoked any time before acceptance (Grant)
• Must be communicated to be effective (Byrne)
• Communication of the withdrawal of the offer can be made by a third party (Dodds).
• Offeror to take reasonable steps to communicate the revocation (Shuey), but not if aware performance of stipulated act underway (Errington)

Question 29

Lapse of time

Answer 29

If the offer does not specify a date, the offer will be held open for a reasonable time and then will lapse (Montefiore).

Question 30

Rejection / Counter

Answer 30

Revocation must be received by the offeree.

Wrench v Hyde - W offered to sell property to Hyde for £1000. H offered £950. W rejected. Hyde later offered £1000. When W refused to sell, H sued for breach of contract. It was found that a counter-offer cancels the original offer.