Offer

Question 1

What is an offer?

Answer 1

An expression of willingness to contract on certain terms on which offeror is prepared to be legally bound following acceptance.

Can be made in writing or orally and must be sufficiently certain.

Offeror - person making offer
Offeree - person to whom the offer is made.

Question 2

What does “sufficiently certain” mean when making a contract?

Answer 2

Offer must be sufficiently certain.

If offer contains terms of a contract but are uncertain (can’t be interpreted) - entire agreement might fail as there could be uncertainty as to the existence of any valid offer at all

CASE: Smammell & Nephew Ltd v Ouston

Courts will usually try to give effect to contracts whenever it is possible to do so.

CASE: Devani v Wells

Uncertain term - if the term is unimportant or irrelevant - a judge might simply ignore it and enforce the test of the agreement if the rest makes commercial sense.

Question 3

What are the legal rules in relation to a contract being “sufficiently certain”?

Answer 3

1. Uncertainty on central part of contract - whole contract will be void for uncertainty (Scammell & Nephew v Ouston)
2. Uncertainty on minor point of the he contract - strike out term and leave the rest of the contract (Nicolence v Simmonds)

Question 4

What are the two different types of contracts?

Answer 4

1. Unilateral
2. Bilateral

Question 5

What are unilateral contract?

Answer 5

It results from a unilateral offer.

Occurs when offeror says to offeree “IF you do something, then I promise to do something in return”

A promise in results for an act.

CASE: Errington v Errington Wood

Question 6

CASE: Errington v Errington Wood

Answer 6

Father in law brought son and daughter in law a house - he was the legal owner.

Promised that it couple paid mortgage instalment - he would transfer title.

Father in law died and the house transferred to wife.

Wife tried to end the agreement but court held it was valid.

Question 7

What is a bilateral offer?

Answer 7

Both parties have obligations.

A promise for a promise.

This type of contract is more common than unilateral.

Question 8

How can an offer be made?

Answer 8

Offer can be made orally, in writing or by conduct.

Offeror is indicating that they are willing to be bound if terms accepted.

Offeree must know about the offer as cannot accept if they are not aware - must be successfully communicated.

CASE: Taylor v Laird

An offer can be made to a group or to “all the world”

CASE: Carlill v Carbolic Smoke Ball

Question 9

CASE: Taylor v Laird

Answer 9

Captain resigned (ended contract of employment) but assisted crew in navigating ship home.

The captain had not communicated his offer to continue to work to his employers and therefore, they could not choose to accept / reject it.

Outcome: No contract

Question 10

CASE: Carlill v Carbolic Smoke Ball

Answer 10

Leading case in contract law and a good example of unilateral contract.

Defendants claimed they made a smoke ball that could cure and prevent illness.

Promised £100 to anyone who used smoke ball as directed and caught a flu - which Mrs Carlill did.

Defendants refused to pay out and said there was no contract because it was impossible to have a contract with the whole world.

Outcome: Valid contract as Mrs C had performed the condition and D had made an offer to the whole world.

Question 11

What is an Invitation To Treat?

Answer 11

It is an invitation to make an offer or to open negotiations.

Parties may want to negotiate before committing themselves to formal obligations.

Invitation to treat cannot be made into a valid agreement, simply by being accepted - unlike an offer.

An offer must be made in response to the invitation to treat - an invitation to treat alone does not create legal liability.

An objective approach will be used to try and establish whether a reasonable person would think the parties are intending to make an offer or an invitation to treat.

CASE: Harvey v Facey

Facey stipulating the price he would sell - if you decided to sell - was a response for information, not an offer.

Question 12

What are the different invitations to treat situations?

Answer 12

1. Advertisements.
2. Auctions.
3. Request for tenders.
4. Displays of goods for sale.
5. Mere statement of price.

Question 13

How is an advertisement an invitation to treat?

Answer 13

The legal principle is that the seller retains the choice as to whether to sell that item to the prospective purchaser.

CASE: Partridge v Crittenham
Held a person who advertised their bird for sale was not guilty of offering the bird for sale.
They are not offering to sell - the recipient of a newspaper could make an offer.

If there is a promise to be bound - the advert is seen as an offer rather than invitation to treat.

To distinguish between whether it is an offer or invitation to treat:
- bilateral contract = invitation to treat
- unilateral contract = offer

Question 14

How is an auction an invitation to treat?

Answer 14

Auctions with a reserve - the holding of an auction request for bids by auctioneer his invitation to treat.

“Reserve” is a minimum price at which auctioneer is permitted to sell item.
The bidder responds by making an offer and auctioneer accepts by bringing hammer down.

Auctions without reserve is not an invitation to treat - it is viewed as I offer (unilateral contract)

The auctioneer, who promises to sell to the highest bidder, in return for the act of making the highest bid.

If auctioneer refuses to sell to highest bidder - breach of contract.

CASE: Barry v Heathcote Ball

Question 15

CASE: Barry v Heathcote Ball

(Invitation to treat / auction)

Answer 15

Machines placed for auction without reserve.

The auctioneer removed the item when it was obvious that the highest bid would not reach value of item.

Claimant successfully claimed and entitled to machines.

Question 16

How is an request for tenders an invitation to treat?

Answer 16

Tendering - person submits bit or quotation in the hope of securing a contract as a result of that bid.

CASE: Spencer v Harding

If the wording in the request promises to accept a tender which meets the requirements - might be seen as a valid offer.

CASE: Havvela Investments v Royal Trust Co of Canada

CASE: Blackpool & Fylde Aero Club v Blackpool Borough Council

Question 17

CASE: Spencer v Harding

(Invitation to treat / request for tenders)

Answer 17

Held that sending out requests for tenders was an invitation to treat.

Companies that respond to the request and make a tender are making an offer.

The original requester then accept or reject.

Question 18

CASE: Havvela Investments v Royal Trust Co of Canada

(invitation to treat / request for tenders)

Answer 18

In the case, the request for tenders clearly indicated that the tender with the highest bid would be accepted.

Therefore, this made it a valid unilateral offer, instead of an invitation to treat.

Question 19

CASE: Blackpool & Fylde Aero Club v Blackpool Borough Council

(invitation to treat /request for tenders)

Answer 19

The local authority sent invitations to tender to several parties.

The invitations specified a date and time by which all tenders to be received.

The claimant posted through letterbox and letterbox checked.

Held that the implied promise was an invitation and the claimant received damages for the loss of opportunity.

Question 20

How is displays of goods for sale an invitation to treat?

Answer 20

Courts confirmed that goods for sale was an invitation to treat.

CASE: Fisher v Bell
Held a knife on display was not “offered for sale” but an invitation to treat.

CASE: Pharmaceuticals Society GB v Boots
Held that the sale (offer and acceptance) of medicines took place at checkout - under supervision of pharmacist.

Placing goods on shelves is not an offer to sell - but an invitation to treat.

Customers then make an offer to buy when they’re at checkout.

Question 21

Is transport an offer or invitation to treat?

Answer 21

Originally seen that the company running the bus service is offering a service, which is then accepted by the passenger.

CASE: Wilkie v London Passenger

Now, “pay as you enter” buses, are more likely to be seen as making an offer on entering the bus and tendering fee - the driver then accept or reject.

Tickets obtained in advance - offer and acceptance takes place at the time the ticket is brought.

Question 22

Are vending machines and websites, making offers or invitations to treat?

Answer 22

Vending machines are deemed to be an unilateral offer.

CASE: Thornton v Shoe Lane Parking
Offer - owner of the machine and hold it out ready to receive the money
Acceptance - when customer put money in the machine.

Websites advertise the goods for sale - this is an invitation to treat not offer.

Offer is when the customer fills in payment details and the acceptance is when order is confirmed.

Reg 11 Electronic Commerce (EC Device) Regulations 2002
- seller must acknowledge receipt of order without delay.
- makes clear they initial order acknowledgment is not acceptance
- protects against pricing mistakes

Question 23

Are negotiations leading up to offer an offer or invitation to treat?

Answer 23

Not regarded as offers.

CASE: Clifton v Palumbo
Held statement - “ I am prepared to sell sestets for £xx” was not an offer, but a statement as to price.

CASE: Gibson v Manchester City Council
Held that a letter stating “may be prepared” at a specified price was an invitation to treat.

Question 24

What is a sales puff?

Answer 24

A statement which cannot give rise to legal consequences.

A statement that a reasonable person would not take seriously.

Question 25

How is an offer terminated?

Answer 25

Offers not continued indefinitely and will end. Once ended, no longer be turned into a contractual agreement by acceptance. The four main circumstances are: 1. Offerer withdraws offer (revocation). 2. Offeree rejects offer. 3. Lapse of time. 4. It is accepted.

Question 26

How can an offer be terminated by revocation?

Answer 26

Offeror withdraws offer. Bilateral offers (CASE: Payne v Cave) - the offerer generally able to revoke offer at any time prior to acceptance. This rule can be displaced - e.g online auctions. The offeree must be informed of revocation. Until the offeree knows, they are free to accept offer. Acceptance is valid as soon as it is posted. Revocation is valid when it is the received (not when it is posted) CASE: Byrne v Van Tienhoven Offeror can also revoke first offer by implication by making a second offer before the first offer is accepted. CASE: Pickfolds v Celestica Ltd

Question 27

CASE: Byrne v Van Tienhoven (Offer terminated by revocation)

Answer 27

1. Defendant posted letter - making an offer 2. Defendant posted letter - revoking earlier offer 3. Claimant received letter and immediately replied accepting offer by telegram 4. Claimant sent letter to confirm telegram 5. Claimant received letter of revocation Held that contract formed on at stage 3 when offer was accepted - revocation arrived too late.

Question 28

CASE: Pickfolds v Celestica Ltd (Offer terminated by revocation)

Answer 28

Claimant issuer quotation (offers) for removal works. First quote - price per load Second quote - complete job Defendant tried to accept first quotation. Held that this offer had been revoked by second and therefore no longer available. Defendants “acceptance” of the first offer was considered to be a counteroffer.

Question 29

What are the two legal issues arising from terminating an offer by revocation?

Answer 29

1. When contract is unilateral (not bilateral) If offer can be revoked at anytime before acceptance - acceptance being completed act - technically it can be removed. CASE: Errington v Errington Woods Held that promise could not be revoked as long as they continued to pay the instalments on mortgage. Indicates that revocation of an unilateral offer cannot take place once offeree begins the acts of acceptance. 2. How revocation is communicated to be valid in unilateral offer Viewed that reasonable steps should be taken to bring revocation to attention of the affected individual. CASE: Shirley v United States Held that placing notices of revocation in same place as original offers was acceptable.

Question 30

How can an offer be terminated by rejection of offer?

Answer 30

Reject = offer ended. Offeree cannot go back on their rejection - they cannot revive or reinstate offer unless other party agrees. If offeree responds with another offer containing new terms - this is a counteroffer. Counteroffer reverses the position of parties - the original offeree becomes new offeror. CASE: Hyde v Wrench Counteroffers must be distinguished from mere “requests for further information” - this does not end the offer. For example, to clarify details on element not addressed in offer. However, if addressed in offer then it would be viewed as a counteroffer. CASE: Stevenson, Jacques & Co v McLean

Question 31

CASE: Hyde v Wrench (Offer terminated by rejection of offer)

Answer 31

Defendant offered to sell farm and claimant made a counteroffer which was declined. Claimant then offered original offer but the defendant rejected. Claimant sued defendant. Court held that it was not a contract.

Question 32

CASE: Stevenson, Jacques & Co v McLean (Offer terminated by rejection of offer)

Answer 32

Defendant offered to sell some iron to claimant for cash. Claimant asked whether they could have credit terms. Claimant accepted offer when they received a reply. Meanwhile, defendant had sold iron to someone else without informing claimant. Held that it was a request for information so the original offer was still open for claimant to accept.

Question 33

How can lapse of time terminate an offer?

Answer 33

If offer open for specified period - the offer ends when period expires. If not time specified - offer will enter after a “reasonable time” “Reasonable time” - decided by court on facts of the case. CASE: Ramsgate Victoria Hotel v Mortefore Offer to buy shares made on 8 June Acceptance was 23 November. Held it was too late and offer had lapsed (shares can change value quickly)

Question 34

How can an offer be terminated by the death of offeror?

Answer 34

Offer ends if it relates to personal services which they had agreed to provide. If offer was non-personal - may have to complete promise. If death was notified to offeree before acceptance - estate will not be bound.