Contract Law - (1) Offer and Acceptance

Three Rules in Relation to Acceptance: total number of aspects to identifying whether there has been the communication of unequivocal acceptance needed to form a contract; covered in this element (3); covered in another element (1)

4; acceptance must be in response to the offer, acceptance must be unqualified, it may be necessary to follow a prescribed mode of acceptance; acceptance must be communicated

Requirements of a valid offer: Types of contracts: the most common type, where each party assumes an obligation to the other party by making a promise to do something, such as to sell an item to the other party in exchange for a payment.

Bilateral contract

Invitations to Treat: Invitations to Tender: Exception to the general rule: case where Bingham LG held that an invitation to tender could give rise to a binding contractual obligation to consider tenders in circumstances where 1) the tenders had been solicited from specified parties who were known to the requesting party, 2)there was an absolute deadline for submission, 3) the party requesting tenders had laid down absolute and non-negotiable conditions for submission.

Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990]

Termination of an offer: Lapse: Death of Party (Offeror): if offeree knows of death, then offer will lapse. if offeree does not know of death, then offer will probably not lapse. Case

Bradbury v Morgan

Acceptance must be Communicated: the Postal Rule: Does not apply to letters revoking offers: rule only applies to letters of acceptance, not to letters revoking an offer. Revocation of an offer must be received in order to be effective.

Byrne v Van Tienhoven (1880)

Termination of an offer: Revocation: Communication Essential: Revocation of an offer is effective only upon actual notice of it reaching the offeree. Where revocation is communicated by post it takes effect from the moment it is received by the offeree and not from the time of posting

Byrne v Van Tienhoven (1880)

Invitations to Treat: Advertisements: Exceptions to the general rule: The advertisement in this case was held to be a unilateral offer because there was a clear prescribed act (using the smoke balls in a specified manner for a specified period but nevertheless contracting influenza) performance of which constituted acceptance. Further, the defendant's intention to be bound was clearly demonstrated by their deposit of the £1,000 and the certainty of the language used in the advertisement. It was held that the facts established a contract under which the D were bound to pay the plaintiff £100.

Carlill v Carbolic Smoke Ball Co (1893)

Termination of an offer: Revocation: Communication of revocation in unilateral contracts made to the whole world: as there is no requirement for those embarking on performance to communicate their intention to accept to the offeror, the offeror may well have no knowledge of who/how many potential offerees may be responding, as in what case

Carlill v Carbolic Smoke Ball Co (1893)

Acceptance must be Communicated: Communication waived for unilateral contracts: The communication of acceptance is waived in a certain number of situations. The clearest example of this is in relation to unilateral offers where the need for communication is waived or is implied by conduct. What is authority for this general principle, where it was held that the advert amount to an offer, which was open to acceptance by performance of the acts required and there was no need for separate notification of acceptance to be given to the offeror.

Carlill v Carbolic Smoke Ball Co. (1893)

Termination of an offer: Revocation: of a unilateral offer: Exception: Case where the court explained how such a conclusion could be reached conceptually. Lord Justice Goff states that "the offeror is entitled to require full performance of the condition imposed, subject to the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied"

Daulia v Four Mill Bank Nominees Ltd [1978]

Termination of an offer: Revocation: Indirect Communication: Provided the offeror has shown, by words or conduct, a clear intention to revoke his offer and notice has reached the offeree, the revocation is effective. The means of communication does not matter, so the revocation will be effective even if communicated by a third party

Dickinson v Dodds [1876]

Termination of an offer: Revocation: Options: where the offeror gives an undertaking to keep the offer open for a stipulated period, he is not bound by this unless the offeree gives something of value (consideration) in return for the offeror's promise to keep the offer open for a period. If that is the case, then there is a separate binding contract known as an option and revocation within the period will be in breach of that contract.

Dickinson v Dodds [1876]

Termination of an offer: Lapse: Death of Party (Offeree): causes the offer to lapse - offeree's representatives cannot accept offer on behalf of offeree. Two cases (2)

Duff's Executor's Case; Kennedy v Thomassen

Requirements of a valid offer: which case lacks the requisite intention to be legally bound (*may* be prepared to sell); contrasted to which case which did demonstrate an intention to be bound (I *will* send you the agreement signed on behalf of the corporation in exchange)

Gibson v Manchester City Council [1979]; Storer v Manchester City Council [1974]

Termination of an offer: Revocation: of a unilateral offer: as acceptance in unilateral contracts is perceived as the complete performance of the act(s) required by the terms, then it remains possible to revoke the offer at any time prior to the completion of the required act

Great Northern Railway v Witham [1873]

Invitations to Treat: Invitations to Tender: Exception to the general rule: a displacement of the general principle has been firmly recognised where the invitation to tender expressly contains an undertaking to accept the highest or the lowest bid; this is a form of _ contract: the required act is making the highest/lowest bid and when this is carried out, the other party is bound

Harvela Investments Ltd v Royal Trust Co. of Canada (CI) Ltd [1985]; unilateral

Acceptance must be Communicated: the Postal Rule: Does not apply if it is not contemplated that post would be used: which case makes it clear that the postal rule is applicable only where it was reasonable in all the circumstances for the offeree to have used the post.

Henthorn v Fraser [1892]

Acceptance must be Communicated: the Postal Rule: Does not apply to letters revoking offers: Case where it was held that a contract was made at 3:50pm when H posted his letter of acceptance. The acceptance took effect on posting. The revocation did not. So the acceptance was effective, even though the revocation was received before the acceptance was received.

Henthorn v Fraser [1892]

Acceptance must be Communicated: the Postal Rule: Does not apply if disapplied by offeror: However, it will not always be clear if the postal rule has been excluded by the offeror. In which case was it held that the actual communication was required by the use of the phrase 'by notice....to', thus disapplying the postal rule of the offer being accepted on posting

Holwell Securities v Hughes [1974]

Acceptance must be Communicated: the Postal Rule: Does not apply if it would lead to 'a manifest inconvenience and absurdity': Lawton LJ stated this in which case

Holwell Securities v Hughes [1974]

Acceptance must be Communicated: the Postal Rule: Does not apply if disapplied by offeror: It is always open to the offeror to redress the imbalance of the postal rule by requiring actual communication, so that he will only be bound if the posted acceptance reaches him, not from the moment it is properly posted. In which case did Bramwell LJ state that the postal rule could be avoided by the prudent offeror saying: 'your answer by post is only to bind if it reaches me.'

Household Fire Insurance v Grant [1879]

Acceptance must be Communicated: the Postal Rule: Applies even where the acceptance is delayed or lost in the post: Case where it was held that a contract was made at the moment the letter of allotment (i.e. the acceptance) was posted, even though it never reached the D

Household Fire and Carriage Accident Insurance Co. v Grant [1879]

Termination of an offer: Rejection: and counter-offers: Where an offeree makes a counter-offer, the original offer is deemed to have been rejected and cannot be subsequently accepted

Hyde v Wrench (1840)

Three Rules in Relation to Acceptance: Acceptance must be unqualified: and must correspond exactly with the terms of the offer; sometimes call the what rule

Hyde v Wrench; mirror image

Acceptance must be Communicated: the Postal Rule: Does not apply if it is not contemplated that post would be used: It has been held to be unreasonable to use the post when there is an implied condition that prompt acceptance is required. Case where the fact that the counter-offer was made by telegraph indicated an implied condition that prompt acceptance was required. The purported acceptance by letter, which reached the counter-offeror after the counter-offer had lapsed, was ineffective.

Quenerduaine v Cole (1883)

Three Rules in Relation to Acceptance: Acceptance must be in response to the offer: An offer is not accepted by doing the required act in ignorance of the offer. To create a contract, parties must reach an agreement: it is not enough that their actions happen to coincide. Case where a reward was offered for information leading to the arrest of people who murdered two police officers. C had seen this offer but he only gave the relevant information after he had been arrested for the crime and had forgotten the reward offer at that time. It was held that as such, he had not acted on the faith of, or in reliance upon, the offer.

R v Clarke (1927)

Termination of an offer: Revocation: Communication of revocation in unilateral contracts made to the whole world: Communication of revocation is almost impossible here, so it is likely that revocation is effective if the offeror takes reasonable steps to bring the revocation to the attention of all those who may have read the offer. Although there is no English authority on this point, some support for this proposition can be derived from which American authority

Shuey v United States 23

Invitations to Treat: Invitations to Tender: this action of inviting parties to tender is, as a general rule, deemed an invitation to treat

Spencer v Harding [1870]

Termination of an offer: Rejection: and counter-offers: it is very important to distinguish between a counter-offer and a request for more information, and the difference can be very slight; if the offeree responds with a RFI, then what happens to the original offer; an RFI is an _ _ couched in tentative language

Stevenson, Jacques & Co. v McLean (1880); remains open to acceptance; ancillary matter

In what case did Lord Denning state: "In contracts you do not look into the actual intent in a man's mind. You look at what he said and did. A contract is formed when there is, to all outward appearances a contract. A man cannot get out of a contract by saying: 'I did not intend to contract' if by his words he has done so"

Storer v Manchester City Council [1974]

Acceptance must be Communicated: Communication sent during ordinary office hours: In which case did the Court of Appeal conclude that a telex that had been sent during ordinary office hours (between 17:30 and 18:00), but not been seen by office staff until the following Monday, was effective when received

The Brimnes [1975]

Acceptance must be Communicated: Emails: the High Court decision in which case settled the debate surrounding the treatment of emails, expressing the view that the postal rule is inapplicable to emial communications, therefore an acceptance by email is not effective when sent, but only when received (i.e when the email arrives on the offeror's email server)

Thomas v BPE Solicitors [2010]

Acceptance must be Communicated: Ordinary office hours: which case made clear that the definition of 'office hours' will depend on the particular context of the communications. Whether the meaning should be determined subjectively or objectively is uncertain.

Thomas v BPE Solicitors [2010]

Requirements of a valid offer: Types of contracts: one party makes an offer or proposal in terms which call for an act to be performed by one or more other parties. Does not involve mutual promises - only the party making the offer assumes an obligation. Only actual performance of the required act will constitute acceptance.

Unilateral contract

Requirements of a valid offer: What things equal offer and acceptance (agreement) (2)

clear and certain offer displaying an intention to be bound; unequivocal acceptance

Invitations to Treat: Auction Sales: Auctions 'without reserve': in this case, the seller promises to sell to the _ bidder whatever that bid turns out to be; if the sale of the item in question is expressed to be 'without reserve' the auctioneer may be sued for breach of contract if he refuses to sell to whom

highest; the highest bone fide bidder

Requirements of a valid offer: the court takes an _ approach to ascertain whether there was an intention to be bound; what matters is what a _ man would say the parties intended; what was actually in the minds of the people who wrote the letters is _

objective; reasonable; irrelevant

In order for there to be a binding contract, which elements must be present (3)

offer and acceptance; intention to create legal relations; consideration

Termination of an offer: Revocation: of a unilateral offer: Exception: an exception to the rule may apply where the offeree has _ _ the obligation and is willing and able to complete - if it would undoubtedly cause hardship to the offeree to allow the offeror to withdraw the offer in such circumstances; case where Lord Denning said "where performance has begun and it would be inequitable for offeror to revoke, then offeror must give offeree opportunity to complete the required act"; case which confirmed this, and added "not only must you allow completion, but you cannot do anything to prevent completion"

partly performed; Errington v Errington & Woods; Dualia v Four Mill Bank Nominees

Termination of an offer: Lapse: an offer may lapse and thus become incapable of acceptance by which ways (3)

passage of time; death of one of the parties; non-fulfilment of a condition precedent

Termination of an offer: Lapse: Passage of time: an offer will lapse through a passage of time where a) acceptance is not made within _ _ by offeror; or b) if there is not one, then if acceptance is not made within a _ time; case

period prescribed; reasonable; Ramsgate Victoria Hotel v Montefiore

Termination of an offer: Ways an offer can come to an end (3)

rejection; lapse; revocation

Invitations to Treat: Auction Sales: the bidder makes an offer which the auctioneer is then free to accept or reject; similarly the bidder may revoke his offer at any time before the hammer falls. "A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may retract his bid"

s.57 Sale of Goods Act 1979

Acceptance must be Communicated: the Postal Rule: applies even where what (1); does not apply if what (5)

the acceptance is delayed or lost in the post; if not contemplated post would be used, if manifestly inconvenient/absurd, to letters revoking offers, if incorrectly addressed, if disapplied by offeror

Invitations to Treat: Advertisements: Exceptions to the general rule: the general rule concerning advertisements does not apply where the advertisement amounts to a _ offer.

unilateral

Acceptance must be Communicated: the Postal Rule: Key case which held that where post is deemed to be a proper means of communication, the acceptance takes effect from the moment the letter of acceptance is properly posted - not from the moment it is received by the offeror; however, note that a letter is not properly posted by putting it into the hands of a postman who is only authorised to deliver letters

Adams v Lindsell [1818]; London and Northern Bank ex p. Jones [1900]

Invitations to Treat: Auction Sales: Auctions 'without reserve': approach as per Warlow v Harrison has been approved by the Court of Appeal where

Barry v Davies [2000]

Acceptance must be Communicated: Communication by instantaneous means: Where an acceptance is made by an instantaneous mode of communication, the general rule is that the acceptance takes place at the moment the acceptance is received by the offeror; confirmed in what

Entores v Miles Far East Corporation [1955]; Brinkibon v Stahag Stahl [1983]

Termination of an offer: Revocation: of a unilateral offer: Exception: Case where a father agreed to give his house to his son and daughter-in-law if they paid off the mortgage on the house. Act required: paying off a building society mortgage loan. The couple had made several payments towards paying ofs the loan when the father sought to revoke the offer. The court held that the promise could not be revoked after the couple had started to pay the instalments and as long as they continued to be paid.

Errington v Errington & Woods [1952]

Acceptance must be Communicated: Where the offeree merely intended to accept, but did not communicate his intention to the offeror, there is no contract. As a general proposition, the rule that silence cannot amount to acceptance seems a sensible one. Case where the court held that the nephew had not communicated his intention to sell the horse to F (i.e. his acceptance of the offer), and so there was no contract.

Felthouse v Bindley [1862]

Termination of an offer: Lapse: Non-fulfilment of a condition: if offer subject to a condition, then failure of offeree to fulfil condition prevents acceptance taking place. Case in which customer's offer to take a motor car under a hire purchase agreement was subject to implied term that car remained in same condition up to time of acceptance (eg not damaged/stolen)

Financings Ltd v Stimson [1962]

Invitations to Treat: Display of goods for sale: The general rule is that price-marked goods displayed in a shop window are not an offer for sale but an invitation to treat

Fisher v Bell [1961]

Acceptance must be Communicated: the Postal Rule: Does not apply if the acceptance is incorrectly addressed: the rule may be displaced if the acceptance is incorrectly addressed, the rationale being that the offeree, by his own carelessness, has lost the benefit of the postal rule.

Getreide-Import Gesellschaft v Contimar [1953]

Requirements of a valid offer: which case clearly illustrates that an offer must be clear and certain, where it was held by the HoL that there was no binding contract because there was never an offer made by the Council whose letter said that it "may be prepared to sell" (a house for 20% cheaper)

Gibson v Manchester City Council [1979]

Three Rules in Relation to Acceptance: Prescribed mode of Acceptance: case where Buckley J said "If an offeror intends that he shall be bound only if his offer is accepted in some particular manner, it must be for him to make this clear"; however, unless the prescribed mode of acceptance is made mandatory, another mode of acceptance which is no less advantageous to the offeror will bind him

Manchester Diocesan Council for Education v Commercial and General Investments [1970]; Tinn v Hoffman [1873]

Acceptance must be Communicated: Communication sent outside ordinary office hours: in which case was it held that a telex sent at 23:41 on a Friday was deemed received at the start of business on the following Monday, so the charterers were clearly in breach of contract

Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995]

Name of the person making the offer; name the person to whom the offer is made

Offeror; offeree

Invitations to Treat: Advertisements: the general rule regarding advertisements is that they are regarded as statements inviting further negotiations or invitations to treat

Partridge v Crittenden [1968]

Invitations to Treat: Auction Sales: the general rule in relation to auction sales is that the auctioneer's request for bids is an invitation to treat

Payne v Cave [1789]

Termination of an offer: Revocation: the offeror may withdraw (i.e revoke) his offer at any time before acceptance; however an offer cannot be revoked after _ _

Payne v Cave [1789]; valid acceptance

Acceptance must be Communicated: Third-Party Communication of Acceptance: it is possible for a contract to come into existence where a third-party has informed the offeror of the fact of acceptance. However, no contract will arise if the communication is made by a third-party without the authority of the offeree in circumstances indicating that the offeree's decision to accept was not yet regarded by him as irrevocable. Case where it was held that there was no contract because the committee had not communicated an acceptance of P's offer to take the post. The purported acceptance, made without authority, was not binding on the committee.

Powell v Lee [1908]

Invitations to Treat: Auction Sales: Auctions 'without reserve': analysis of this case suggests that where the sale is expressed to be without reserve, there are in fact two contracts. Bilateral: bidder makes an offer which is capable of acceptance/rejection by the auctioneer (determines who is entitled to the goods). Unilateral: based on the promise that the auction will be without reserve. If the goods are withdrawn from sale there is a breach of this unilateral contract and the highest bona fide bidder is entitled to be compensated by the payment of damages. The highest bidder is not, however, entitled to the goods since this is dictated by the bilateral contract for sale

Warlow v Harrison (1859)

Three Rules in Relation to Acceptance: Prescribed mode of Acceptance: If the method was prescribed for the benefit of the offeree, the offeree can waive a stipulation for his benefit and use an alternative mode - provided the alternative method chosen does not disadvantage the offeror.

Yates Building Co. Ltd v Pulleyn & Sons (York) Ltd [1975]

Invitations to Treat: Website: regarded as equivalent to what, and therefore an invitation to treat

a display of goods or advertisement