Please enable JavaScript.
Coggle requires JavaScript to display documents.
OFFER AND ACCEPTANCE (L2 p.1) - Coggle Diagram
OFFER AND ACCEPTANCE (L2 p.1)
CONTRACT AS AN ACTIONABLE PROMISE
An objective test is applied
Lord Denning - 'in contracts you do not look into the actual intent in a man's mind. you look as what he said and did' (Storer v Manchester City Council (1974) 1 WLR 1403, p.1408)
Storer v Manchester City Council (1974) 1 WLR 1403
P had signed the form sent to him by the council
The only missing details were the date that his lease would end and the date upon which he would start paying a mortgage
Had an offer therefore been made to him by the council?
Court of appeal; 'parties to negotiations may, via words and conduct, make it clear that they do intend to be bound even though there are other terms yet to be agreed
The city council refused to sell premises to the Plaintill (p), a sitting tenant
The object test has been confirmed in more recent cases
In the supreme court in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co. KG (UK production) (2010) UKSC 14, (2010) 1 WLR 743 as 45 Lord Clarke SCJ;
'Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. it depends not upon their subjective state of mind, but upon a consideration of what was communicated between then by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded, or the law requires as essential for the formation of legally binding relations
Also confirmed in
Marks and Spencer plc v BNP Paribas Service Trust Co (Jersey) Ltd (2015) UKSC 72
Wells v Devani (2019) UKSC 4, (2019) 2 WLR 617
The courts look at external, objective evidence (what the parties said and did at the time) - would the reasonable person say that the parties were in agreement?
Agreement = consensus ad idem - meeting of minds
This is voluntary nature of contract law distinguishes it from other areas of law (e.g., tort) in which obligations are imposed by law. Here the parties voluntarily assume contractual obligations
To conclude that there is a contract giving rise to enforceable obligations, we must first identify the existence of a binding agreement between the parties
UNILATERAL AND BILATERAL CONTRACTS
BILATERAL
Example - Jen promises £25 to Patrick if he will promise to clean Jens office (obligation on both sides)
Most contracts are bilateral; a bilateral offer is made by one party to another
Offer of a promise for another offer of a promise
All parties assume an obligation under the contract
UNILATERAL
Offer of a promise for an act
Example - Jen loses her dog, offers a reward of £100 to anyone who will bring the dog safely home
One party (Jen) assumes an obligation under the contract, no obligation on person (b) who finds the dog
OFFER
Offer v Invitation to Treat (ITT)
Offer = final and certain, and binds the party making it. if accepted, a contract is formed
Invitation to treat = when a party is inviting others to make offers. if further negotiations are required, it is not an offer, there is no intention to be bound
Carlill v Carbolic Smoke Ball Co (1893)
D advertised the product
'£100 reward to be paid by D to any person who contracts influenza after having used the carbolic smoke ball three times for two weeks....'
'£1000 is deposited with the Alliance Bank, showing our sincerity in the matter'
Deposit meant intention to be bound, as long as conditions fulfilled
Advertisements are offers if they are unilateral
An offer may be expressed or implied
Expression may be in writing, in words or may be inferred from conduct
An offer can be made to an individual or group of people
Harvey v Facey (1983) AC 552
Harvey sent a telegram to Facey 'will you sell us Bumper Hall Pen? Telegraph lowest cash price answer paid'
Facey replied by telegraph 'lowest price for Bumper Hall Pen £900'
Harvey replied 'we agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. please send us your title details in order thar we may get early possession'
So, an offer must be
Clear / certain
An expression of terms that are certain
Capable of acceptance
An offer is an expression of willingness to enter into a contract with the intention that it shall become binding on the offeror as soon as it is accepted by the offeree
At least two parties
Offeror - person who makes the offer
Offeree - person who accepts or rejects the offer
WHERE WE MUST DISTINGUISH BETWEEN OFFERS AND INVITATIONS TO TREAT
ADVERTS
Partridge v Crittenden (1968) 1 WLR 1204
Advert selling bramble finches ('offering for sale')
s6(1) Protection Of Birds Act 1954 made this illegal
Court held that he was not guilty because his advert was an ITT, not an offer
HoL referred to Grainger & Sons v William Lane Gough (Surveyor of Taxes) (1896) AC 325 - here, D had sent out a wine catalogue and list; HoL found this was an ITT. Cannot be an offer as not feasible to satisfy every order placed
GOODS IN SHOPS
The general rule si that goods for sale in shops are invitations to treat (ITT)
Fisher v Bell (1961) 1 QB 394
S1(1) Restriction of Offensive Weapons Act 1959 - it is a criminal offence to 'offer for sale'
However, shopkeeper not guilty because knives in the window were ITT not an offer, Customer made the offer to the shopkeeper
Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern Ltd) (1953) 1 QB 401
Same if self serive shop
Customer makes offer to shopkeeper who can accept or reject
Good public policy reason for this - each time you picked something up off a shelf you could be accepting
Automatic Machines - Thorton v Shoe Lane Parking (1971) 1 QB 163
Acceptance is activation of the machine (i.e., the motorist driving into the car park, so ticket is an issued ticket
Offer = proprietor of the machine is ready to receive the money
Automatic machines which issued tickets outside a car park made a standing offer
Acceptance = customer puts money into the slot
Terms of the offer = contained in notice on or near the machine, customer then bound by these NB, not printed by terms on ticket, if different as too late
CALLS FOR TENDERS
BUT - exception ti the rule = specific bid; Harvella Investments Ltd v Royal Trust Co of Canada Ltd (1986) AC 207
If a call for tenders states a specific bid e.g., highest will be chosen then this = offer
Offeror has made a unilateral offer; highest bidder bound
Spencer v Harding (1870) LR 5 CP 561
A call for tender is an ITT, not an offer
The submitted tender constitutes an offer
AUCTIONS
The fall of the gavel is indication of acceptance (Payne v Cave (1789))
If an auction item does not have a reserve price, then the auctioneer's call for bids is an offer, and the item must be sold to the highest bidder
If an auction has a reserve price, then the auctioneers call for bids is an ITT. the bidder makes the offer which the auctioneer can either reject or accept
Barry v Davies (2001) auctioneer = unilateral offer; Davies bid - acceptance
UNCERTAIN OFFERS
Compare
Gibson v Manchester City Council (1979) (HoL)
Storer v Manchester City Council (1974) (CoA)
Words such as 'might' 'may' or 'perhaps' could indicate that this is an ITT and that the party did not intend to be bound
If the wording of an offer is not clear and certain, then it cannot be a valid offer
ENDING AN OFFER
It only needs acceptance to form the contract
An offer can be accepted whilst it remains open
An offer is binding
It is terminated when
4) Counter offer
3) Offeree rejects the offer
5) Death of the offeror or offeree
6) Offer is revoked or withdrawn
2) Offer is subject to a condition, and this does not occur
1) The offeror specifies the duration of the offer
COUNTER OFFER
Hyde v Wrench (1840) 3 Beav 334
D (Wrench) offered to sell his farm for £1000 and C (Hyde) responded by offering to buy it for £950 = counteroffer and C becomes new offeror. When D rejected it, C tried to accept the original offer, but this had been rejected by C's counteroffer and was therefore dead and could not be accepted
A genuine request for information is not a counteroffer - Stevenson, Jacques & Co v Mclean (1880) 5 QBD 346 - D offered to sell iron to C at 40s per ton, C required further info on payment and subsequently accepted original offer
A counter offer ends the original offer
REVOCATION OF AN OFFER
Revocation latter must reach offeree before offer is accepted
AND 2) the revocation does not have to be communicated by the offeror themselves; Dickinson v Dodd (1876) 2 Ch D 463
10th June - D (Dodd) offered to sell house to C (Dickinson) for £800; an offer left open until Friday 12 June, 9am
11th June - D sold house to someone else and that evening C was informed of that sale by third party (Dodd's friend, reliable person)
C delievered formal letter of acceptance to D's house.
HELD; C was aware at the time he accepted the offer that Dodd no longer intended to sell to him, it has been reliably communicated
BUT 1) a withdrawal must be communicated to the offeree; Byrne & Co v Leon Van Teinhoven (1879) LR5 CPD 344
8th Oc - D wrote again revoking the offer
11th Oct - C received offer letter and immediately telexed acceptance; confirmed by post 15th Oct
20th Oct - revocation reached C
1st Oct - D wrote to C offering to sell 1000 tons of tinplate at a fixed price
Revocation is possible at any time before acceptance (no later) Payne v Cave (1789) 100 ER 502