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Rules of offer and acceptance - Coggle Diagram
Rules of offer and acceptance
Offer
Certainty
An offer will not be valid if there's any doubt about any of the terms on which the parties are contracting.
There are exceptions such as where they have already started performing the contract - Foley v Classique Coaches Ltd
This protects the offeree when they are on unequal footing or if they are unaware of what they are accepting.
Counter offers
An offeree can counter offer the original offer by adding new terms. This then becomes the offer and the original offeror can either accept or reject them.
The original offer becomes a disqualified acceptance and no contract is formed.
If the offeree accepts the offer but changes the terms, it becomes a counter offer and will amount to a rejection
Hyde v Wrench [1840]
Communication of offers
The offeree must be aware of the offer in order to accept it
If an offer is withdrawn it must be effectively communicated to the offeree
Difference between an offer and an invitation to treat
An offer is a question requiring an answer of acceptance or rejection, and is possible to be withdrawn normally before it has been accepted.
An invitation to treat is merely a proposition indicating willingness to consider offers made by others and is therefore not binding once someone has accepted, as technically they are making the offer - technically people at shop counters could refuse to sell goods if they wanted to.
Request for information
A request for further information or a mere enquiry about some part of the contract will not amount to a counter offer and does not destroy the offer, although it may depend on the phrasing of the statement.
Stevenson v McLean [1880]
Types of offer
How
In writing
By conduct
Orally
To who
Specific individual
Group of people
The world at large - Carlill v The carbolic Smoke Ball
Must be
Precise
Capable of acceptance as it stands
Clear - the wording often affects whether it is classified as an offer or not
Often a question requiring an answer of acceptance or rejection and can be withdrawn before acceptance
Termination of offers
Revocation of an offer can take place at any time before acceptance. Routledge v Grant [1828
A promise to keep an offer open for a certain period of time is not binding unless supported by consideration.
Revocation
Communicated to offeree - Byrne v Van Tienhoven [1880]
Made by reliable third party - Dickinson v Dodds [1876]
Unilateral offer cannot be withdrawn while offeree is performing - Errington v Errington and Woods [1952]
Acceptance of the offer by the offeree - If offer accepted unconditionally, contract has been formed and offer ends
Lapse of time - cannot be accepted after the expiration of that limit.
Death of one of the parties
Death of offeree causes offer to cease automatically.
If offeree knows of death of the offeror, the offer will have lapsed and cannot be accepted
If offeree does not know of offeror's death, a calid acceptance may be binding on the deceased's executors, If there is any personal element in the offer, if automatically lapses on death of offeror.
Failure of a conditions present - cannot be accepted if condition fails.
Acceptance
Postal rule
Acceptance by post - acceptance by post is effected as soon as the letter is validly posted. This is the main exception of the general rule regarding communication of acceptance.
Instantaneous forms of communication
Despite communication being virtually instantaneous with modern technology available, the time and place at which the contract comes into existence isn't always straightforward.
Contents are not always communicated instantaneously (voicemails aren't communicated until they're heard)
There are multiple views on emails and whether general acceptance rules should apply to their acceptance, the evidence points towards avoiding the postal rule due to the many variables.
There must be communication of the acceptance
Can be loosely defined
Only the genuine offeree can communicate acceptance to the offeror, ar another specially authorised person may.
Can be expressed in writing, speech or conduct
Silence cannot be deemed consent
Battle of the forms
Hyde v Wrench established that a counter offer destroys the original offer, and new terms must be accepted for a contract to consequently exist. Terms set out in the final document, which may be accepted by conduct, will be incorporated into the contract.
Butler Machine Tools Co. Ltd v Ex-Cell-O-Corporation, showed how the last shot approach can be used to determine which party's standard terms prevail.
Conventional approach = known as the 'last shot' principle. This views communications about conditions in a contract that conflict in nature as constituting counter offers.
Contracts that are practised using the 'battle of the forms' can result in instances where contracting parties dispute the content of the contract, even after commitment has been displayed by both parties through delivery or commencing performance. This was shown in G. Percy Trentham v Archital Luxfer Ltd.
A 'battle of the forms' takes place where both parties have a standard form contract. Conflict and confusion arises around the exact terms upon which the contract is based.
Acceptance or request for information
A request for information wont amount to an acceptance, but it also wont amount to a counter offer and therefore will not destroy the offer.
Whether something said during negotiations is a counter offer or not depends on the phrasing of the statement.
A request for information doesn't mean that the offeror is entitled to treat the offer as ended and make a deal elsewhere.
Rules of acceptance
There are generally 4 rules to acceptance.
1 - Is it clearly communicated?
2 - Is it a counter-offer?
3 - Is it a request for information?
4 - Does it correspond directly with the offer?
Known as the 'mirror-image' rule.
Acceptance or counter offer
Where new terms are added by the offeree, no contract is formed, it is a qualified acceptance.
If the offeree accepts and changes terms, it will amount to a rejection and a counter offer.