A Level Law- Offer and Acceptance

Offer definition

An offer is an expression of willingness to enter a contract on certain terms, if accepted then an offer can become a contract.

Offer cases

Gibson v Manchester City Council

- the offer must be definite in its terms, words like might be prepared to, or may be able to indicate uncertainty.

- 'he may be prepared to sell the house to you' wasn't an offer

Invitation to Treat (ITT) definition

An invitation to treat is an indication of willingness to negotiate, it may encourage others to make offers, an ITT is not an offer and therefore cannot be accepted.

Examples of ITT

- Goods in a shop window or on a shelf, in a shop the offer is made by the customer e.g Fisher v Bell (knife in the window

- Advertisements and brochures, usually ITTs they become offers if the person viewing contacts them, e.g Partridge v Crittenden (birds were being offered)

- Request for information, a general enquiry or an indication of the price of goods by itself is not an offer e.g. Harvey v Facey- H asked about the price of a farm but couldn't buy from that reply since it was only a reply

- Auctions, bidder makes the offer which is accepted by the bang of the hammer e.g. British Car Auctions v Wright.

ITT advertisement exception

If an advert contains a clear indication that there is an offer then it can be an offer and not an ITT.

Carlill v Carbolic Smoke Ball Co- A company published an advert stating that it would pay £100 to anyone who used its smoke ball and became ill with £1000 placed in deposit. Court decided it was an offer since it had clear wording and the willingness of the deposit.

Who can makes an offer?

An offer can be made by anyone (individual, business), it can be made through notice or even a machine (Thornton v Shoe Lane Parking)

Offeror- the person making an offer to another

Offeree- the person to whom an offer is made

Bilateral contract- both offeror and offeree promise to do something with obligations under the contract

Unilateral contract- only one party assumes an obligation

Making an offer

An offer comes into existence when it is communicated to the offeree, it cannot be accepted if they don't have knowledge.

Ending an offer: revocation

An offer can be withdrawn/ revoked by the offeror at any time before it has ben accepted.

As long as their is communication from someone that the offer has been withdrawn (reliable person).

Dickinson v Dodds- D sold his house to someone else before he could sell it to D, D found out from another person, the test is whether a reasonable person would consider the information accurate.

Ending an offer: Rejection

Once an offer is rejected it cannot be accepted by the person rejecting the offer since it has ended. A counter offer is treated as a rejection of an offer.

Hyde v Wrench- W offered to sell his farm and H counter offered the price and then tried to accept the original price. Court said the counter offer had ended the offer.

A mere enquiry during investigations will not be treated as a counter offer(Stevenson v McLean).

Ending an offer: Lapse of time

If a fixed period for the duration of the offer is stated then it ended when that is over. Otherwise it will end after a reasonable period of time has passed.

Ramsgate Victoria Hotel v Montefiore- the court decided that 5 months was too long for M's offer.

Ending an offer: death

If the offeree dies then the offer ends and those dealing with his or her estate cannot accepted the offer.

Acceptance can still take place until the offeree learns of the offeror's death (obviously not for a personal service)

Ending an offer: Acceptance

Once an offer has been accepted there is in principle a legally binding contract, the offer is now ended.

Acceptance definition

Acceptance of an offer means unconditional agreement to all terms of that offer, it must be a mirror image of that offer (match it exactly).

Stevenson v McLean- a counter offer didn't count as acceptance since it wasn't a mirror image of the original offer.

Acceptance of an offer: communication

- acceptance must be communicated to the offeror, silence alone isn't acceptance.

Felthouse and Bindley: 'If I hear no more from you, I shall consider the horse mine at £30' No contract due to inactivity or silence.

- can be in any from provided it is communicated (words, writing, positive conduct)

- if a party asks for acceptance in a particular way then it will normally have to be through that method.

Yates v Pulleyn: acceptance was made through post instead of registered delivery, court said it was effective. (equally effective and not disadvantageous)

Acceptance of an offer: By Post

Postal Rule: acceptance takes place the moment the letter is posted (only applied if the use of post is reasonable).

Adams v Lindsell: A letter was delayed and the seller sold to someone else but the court held that acceptance had taken place the moment the letter was posted.

- the postal rule can be avoided by stating in the offer that there will be no contract unless the letter is actually received (Holwell Securities v Hughes)

Acceptance of an offer: Electronic methods

- electronically, the communicator has responsibility to make sure the message gets through

Entores v Miles Far East: CoA decided that acceptance took place when and where it was received, inside working hours.

- messages received outside of working hours will take effect when the offeree reasonably can expect it to be communicated to the offeror.

Thomas v BPE Solicitors: High Court decided that the email took effect at 6pm on Friday since it could have ben completed and 6pm was not seen as out of hours.

Evaluation- Uncertainty on what an offer is

DIS- It can be difficult to understand what an offer or a ITT is. Even when an item says offer to sell, as was the case in Fisher v Bell, it sent on offer but only invitation to negotiate, creates uncertainty for lay people.

ADV- However, some would argue its important to maintain a distinction so that shops have the option to decline offers, especially in age related products.

Evaluation- Unclear on request for info and counter-offers

DIS- Hard to distinguish what is merely a request for information like in Stevenson v McClean and what is a counter offer, Hyde v Wrench. A counter offer is a way of ending a offer but this is unclear and seems unfair to someone trying to negotiate a lower price.

ADV- A consequence of this is lay people might expect that someone could go back and accept to first offer since we only really expect judges go be all to interpret specific language.

Evaluation- Law is unclear about how long a time lapse is

DIS- The idea that the amount of time an offer can be open for is undecided makes the law unclear, Routledge v Grant. The words reasonable time are subjective and not having a set period of time creates uncertainty for claimants and defendants.

ADV- However some would argue that this uncertainty encourages people to clarify this at the time of making the offer, which is a good policy.

Evaluation- The postal rule is rarely used and archaic.

DIS- The postal rule from Adams v Lindsell is not really fit for todays society. The idea that there is acceptance before the post is received is illogical and unfair on the offeror. The postal rule highlights the incremental nature of the law and how making law on a case by case basis can mean illogical rules stand as good law when they shouldn't.

ADV- Some would argue the postal rule provides some degree of certainty for the offeree, since they now that once they have posted it, they have communicated their acceptance.