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39.1.1 OFFER AND ACCEPTANCE, communication requires the offeree to know of…
39.1.1 OFFER AND ACCEPTANCE
39.1.1 Offer
offer
: a proposal (or promise) showing a willingness to contact on firm and definite terms
an offer is the beginning point of a contract
contract laws set out (1) what amounts to a contract (2) when a contract starts (3) when a contract ends
a offer is given to the offeree by the offeror.
it is up to the offeree whether or not they accept that offer
offer must be in its definite terms.
difficulty is in deciding whether a statement amounts to an offer or whether it's just a statement preparatory to an offer ~ known as an
invitation to treat
words such as 'might be able to' indicate uncertainty
acceptance of the offer forms the basis of a valid contract
An offer or an invitation to treat
an invitation to treat isn't like an offer and there for cannot be accepted to make a contract.
Gibson v Manchester City Council (1979)
Mr. Gibson was council tenant.
council wrote to him stating: "the corporation may be prepared to sell the house to you... if you would like to make formal application to buy your council house, please complete the enclosed application form".
he completed the application but the council refused to accept his application.
it was decided council's letter wasn't an offer - reason = it wasn't a definite proposal as it stated that the council 'may be prepared to sell the house', but not that it definitely would
his formal application was the offer that the council could accept or reject
Examples of invitations to treat
GOODS ON A SHOP WINDOW OR ON A SHOP SHELF
goods on a shelf or in a persons basket are an invitation to treat
the contents in the basket become an offer when the customer gives them to the cashier or self-service scanner
the shop then accepts/declines the customer's offer through their cashier or assistant at the self-service scanner
goods in shop windows are similar to those on the shelves. in the shop there's no obligation to sell the items to a potential customer
Fisher v Bell (1961)
shopkeeper displayed a flick-knife with a price tag in his shop window.
he was charged with 'offering a knife for sale', an offence under the Offensive Weapons Act 1959
Display of the knife in the window was an invitation to treat so the knife hadn't been offered for sale.
he was therefore not guilty of the offence
Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)
boots were charged with selling controlled pharmaceutical products other than under the supervision of a pharmacist
some items that had to be sold by a pharmacist were on a shelf for customers to select.
boots were found not guilty, as the offer was made by the customer at the till where there was a pharmacist present to approve the acceptance of the offer
ADVERTISMENTS
Adverts generally speaking, cannot be an offer & thus is only an invitation to treat
Partridge v Crittenden (1968)
C place an ad stating 'Bramblefinch Cocks, Bramblefinch Hens, 25s [£1.25] each'
he was prosecuted for 'offering for sale' a wild bird under the Protection of Birds Act 1954.
he wasn't guilty as the ad was not an offer but an invitation to treat
an offer leading to a contract would be made the the person responding to the ad.
however, if an ad contains a clear indication that there is an offer because it's expected to be taken seriously, then the court may decide it is an offer as well
this usually occurs in a unilateral contract rather than a bilateral contract
Unilateral contract
= in this type of contract there is an agreement to pay in exchange for performance, if the potential performer chooses to act. there is no obligation to perform to act
Carlill v Carbolic Smoke Ball Co. (1893)
company advertised a patent medicine, the smoke ball
ad stated that if you still got flu after using the smoke ball correctly the company would pay you £100
Mrs. Carlill did get flue after using the medicine correctly.
the court awarded her £100.
the promise was an offer that could be accepted by anyone who used the smoke ball correctly and still contracted the flue, because the ad was a unilateral offer
Bilateral contract
= this type of contract requires both offeror and offeree to do something. both parties have obligations
LOTS AT AN AUCTION
at auction bidder makes an offer that the auctioneer then accepts by banging his hammer.
this means that the lots available at an auction are an invitation to treat
British Car Auctions v Wrights (1972)
the auctioneers were prosecuted for offering to sell and unfit vehicle at an auction
however, prosecution failed because there was no offer, only invitation to treat
A REQUEST FOR INFORMATION
a request for info and a reply to such a request isn't an offer
this may be just a general enquiry such as when an item is displayed for sale does not have a price in it.
Harvey v Facey (1893)
Harvey wanted to but Facey's farm and sent a message: 'will you sell me Bumper Hall Pen [the farm]? State lowest price.'
Facey replied: 'lowest price acceptable £900.'
Harvey tried to buy the farm for £900 but couldn't as the reply was merely a reply to the request for info, not an offer
Who can make an offer?
offer can be made by anyone. this can be by an individual, a partnership, limited company or other organisation
offer made other than by an individual is made by an employee of the business or an agent
it can also be made through a notice or machine
Thornton v Shoe Lane Parking (1971)
Mr. Thornton put money into a machine an was given a ticket at the entrance to a car park
offer was made the the machine on behalf of the company owning the car park.
acceptance was made by putting the money into the machine
this was where the contract was made, which dictate what terms were in the contract - the terms displayed by the machine.
To whom can an offer be made?
an offer can be made to:
(1) a named individual [Gibson v Manchester City Council 1979]
(2) a group of people
(3) the work at large [Carlill v Carbolic Smokeball Co. 1893]
offer can be targeted at a specific individual and may be condition on another contract being made
example of which had disastrous consequences was the Hoover Free Flights fiasco
~ the offer was to give a free flight if you bought a Hoover product costing more than £100
~ the offer was obviously taken up by many people who realised this was a flight to the US for £100, with a free Hoover product
~ Hoover nearly went bankrupt as a result - it sold £30 million work of its product but had to pay £5o million for the flights
Communicating the offer
offer comes into existence when it is communicated to the offeree
Taylor v Laird 1856
Taylor gave up the captaincy of a ship overseas
he worked as an ordinary crew member on the ship in order to get back to England, but received no wages.
ship owner had not received any communication of his offer to work as an ordinary crew member
therefore, there was no contract for the payment of wages on this voyage.
exact timing can be critical
Stevenson v McLean (1880)
on saturday the offeror offered to sell iron to the offeree.
the offer was stated to be open until Monday
on Monday at 10 a.m. the offeree sent a telegram asking if he could have credit terms, but got no reply
at 1:25 p.m. the offeror sent a telegram, 'sold iron to third party' arriving at 1:46 p.m.
the offeree sued for the breach of contract but the offeror argued that the query about credit ended the offer so there could be no acceptance
it was decided that the query about credit did not end the offer, so a binding contract was made at 1:34 p.m.
How can an offer end?
an offer can come to an end in the following ways:
1) revocation
2) rejection
3) lapse of time
4) death
5) acceptance
DEATH
effect of death, whether it be the offeror or the offeree is dependent on which party died and the contract involved.
if the offeree dies then the offer ends, & those dealing with his estate cannot accept on his half. the executors or administrators of his estate can make a new offer, as the offeror
if the offeror dies then the offeree can accept until the offeree learns of the offeror's death.
this obviously isn't the case if the offer is to perform some personal service such as to provide person tuition
REVOCATION
Offer can be revoked at any time before acceptance.
offeror must communicate the revocation to the offeree before the revocation can take effect, as in
Routledge v Grant (1828)
this can have implication where there is an offer to the whole world
in these circumstances, the offer can end in 3 ways:
(1) set a time limit in the offer, such as by stating 'reward' will only be able to be paid until a specific date
(2) the expiry of a reasonable time
(3) publish revocation of the offer in the same way as the original offer was made
Routledge v Grant (1828)
grant had offered his house for sale, stating that the offer would remain open for 6 weeks
when he told Routledge that he no longer wished to sell the house. this was effective revocation of the offer, even though it was within the 6 week period.
Routledge could no longer accept the offer as it had ended
offeree can make separate contract with offeror to keep offer open or to only sell to them.
this is called a collateral contract an can happen if the offeror refuses to sell the item with the agreed period or sells to another person.
revocation must be communicated by a reliable person, not necessarily the offeror
in
Routledge v Grant 1828
the offeror communicated revocation of the offer to the offeree
in
Dickson v Dodds 1876
the offeree heard of the revocation from a reliable source. this was effective communication of revocation
Dickson v Dodds (1876)
Dodds offered to sell houses to Dickson
When a reliable person known to both of them told Dickson Dodds had withdrawn the offer, this was effective revocation
where conduct indicated acceptance, the offer cannot be revoked when the expected conduct continues
Errington v Errington and Woods (1952)
father bought an paid deposit for a house for his son & daughter-in-law to live in
offer was that son and his wife would pay the mortgage instalments and then house would be transferred to them
instalments continued to be paid as expected until the fathers death
offer could not then be revoked because of the continuing conduct.
REJECTION
Once offer is rejected this end the offer
offer can be rejected in 2 ways:
(1) specifically responding to the offer by saying 'no'
(2) making a
counter offer
e.g. a different price or delivery date
Hyde v Wrench (1840)
Wrench offered to sell his far for £1000 to Hyde
Hyde replied with counter offer of £950
Wrench rejected this counter offer
Hyde then replied that he accepted wrench's earlier offer to sell for £1000
But because counter offer ended Wrench's earlier offer, Hyde couldn't accept it
Wrench could've accepted Hyde's offer of £1000 but chose not to do so.
sometimes there's enquires during negotiations i.e. Stevenson v McLean. these are treated as request for info rather than counter offers
although a counter offer operates as a rejection of the offer, request for info does not. therefore the offeree can accept the offer following the request for info
if offer is made to more than one person, rejection by one person doesn't mean that the other offerees can no longer accept the offer
rejection must be communicated to the offeror before it takes effect in revocation
LAPSE OF TIME
offer can end by lapse of time.
if a fixed period for duration of the offer is stated, then as soon as that expires the offer is no longer available to accept
problems arise when do expiry date is set. in this case the time is a reasonable time which obviously will vary depending on the nature of the offer
Ramsgate Victoria Hotel v Montefiore (1866)
on june 8th Montefiore offered to buy shares at a fixed price in the hotel
on november 23rd his offer was accepted but he no longer wanted them as the share price had fallen; he refused to pay
it was held the long delay between the offer an acceptance meant the offer had lapsed and could no longer be accepted so he didn't have to pay for the shares
ACCEPTANCE
there is no acceptance if the response to the offer is 'yes, if...' or yes, but....' this would be a counter offer unless it is just a request for info
it must be acceptance of the whole offer & all the terms in it
acceptance must be positive and unqualified
communication requires the offeree to know of the existence of the offer