Offer and Acceptance

Essential elements of an offer

a)     The terms of the offer must be clear, certain and complete.

b)    The offer must be communicated to the other party.

c)     The offer must be made by written or spoken words or be inferred by the conduct of the parties.

d)    The offer must be intended as such before a contract can arise.

Storer v Manchester Corporation

the courts held that in contracts you do not look at 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.

Bowerman v Association of Travel Agents

the parties book a trip abroad with the defendant tour operator. Following the booking, the operator became insolvent. They placed a notice in their premises stating that those whose holidays have not commenced may be reimbursed. The notice was held by the courts to constitute a unilateral offer which was capable of acceptance when the plaintiff purchased the holiday.

Lefkowitz v Great Minneapolis Surplus Store

the defendants placed an advert for fur stoles in a newspaper. They stated the remaining stoles would be sold on a first-come, first-served basis. The shop refused to sell a stole to the plaintiff on the basis that the advert was only intended for women. However, the court held that the advert was sufficiently clear, definite and explicit and constituted a valid offer.

Tolan v Connacht Gold Cooperative Society

the COA confirmed that the subjective intentions of the parties is of no assistance when it comes to the task of interpreting documents which are said to either prove or disprove the existence of a concluded contract.

Carlill v Carbolic Smokeball Company

the defendant company made a “smoke ball” which was advertised as a medicinal product. To bolster this claim, the company offered in its advertising to pay £100 to any person who caught influenza having used the smoke ball. The advertisement went on to indicate that “as a mark of the manufacturer’s sincerity” the sum of £1000 had been deposited with a bank to meet any claims that might be made.

The plaintiff purchased a smoke ball and caught the flue regardless. The sought the promised payment but the company said the advert was not intended to create a contract. COA held the advert did constitute an offer and the sum of £1000 could have no other function than to persuade potential buyers that the offer was made seriously and intended to be binding if accepted.

Billings v Arnott

the defendant employer issued a notice in which they offered half salaries to any of their employees who joined the defence forces. The plaintiff was an employee of the defendant who informed them that he intended to accept their offer. The company replied that it could not release him because another employee from his department had already enlisted and he could not be spared.

Despite this refusal, the plaintiff joined the defence forces and later sued to recover the promised allowance. It was held that the company’s notice constituted a clear, definite and unconditional offer to its employees.

Minister for Industry and Commerce v Pim

A shopkeeper displayed a coat in a shop window with a notice that credit terms were available. The issue was whether displaying the coat amounted to an offer for sale. The court held that the display was not an offer, but merely an invitation to treat. It simply informed customers of the price and that credit facilities might be available

Pharmaceutical Society of Great Britain v Boots Cash Chemists

Boots operated a self-service shop. The question was whether a contract was formed when a customer took goods from a shelf or when the cashier accepted payment. The court held that the display of goods was an invitation to treat. The customer made the offer by presenting the goods at the checkout, and the cashier accepted it.

Leonard v PepsiCo

A Pepsi advertisement jokingly suggested that a Harrier fighter could be obtained for 7,000,000 Pepsi Points. The plaintiff attempted to claim the jet. The court held that no reasonable person would view the advertisement as a serious offer.

Harvey v Facey

Plaintiffs asked whether the defendant would sell property and at what price. The defendant replied: “lowest cash price £900”. Plaintiffs purported to accept but no contract existed. The statement of price was only information, not an offer.

Dooley v Egan

A supplier circulated a price list described as a “quotation”. The quotation stated it was for “immediate acceptance only”. The court held that these words showed an intention to be bound.

Henthorn v Fraser

The defendant offered to sell property and stated the offer would remain open for 14 days. The defendant later posted a revocation letter. Before receiving the revocation, the plaintiff posted an acceptance. The court held that the contract was formed when the acceptance was posted.

Dickinson v Dodds

The defendant offered to sell a house and promised to keep the offer open until a specified date. Before acceptance, the plaintiff learned from a third party, that the house had been sold elsewhere. The plaintiff then attempted to accept. It was held that no contract existed because the plaintiff knew the offeror no longer intended to sell.

Walker v Glass

An offer to sell land stated acceptance had to be made by payment of a deposit. Before the deposit was paid, the vendor revoked the offer. The purchaser had earlier expressed an intention to accept. It was held no contract existed – merely expressing an intention to accept was insufficient.

Daulia v Four Millibank Nominees

The Court of Appeal suggested obiter that once the offeree has begun performance, the offer becomes irrevocable.

Errington v Errington

A father promised to transfer a house to his son and daughter-in-law if they paid the mortgage instalments. The father died and his widow sought possession of the house. The couple had already begun making payments. It was held that the offer could not be revoked once performance had begun.

Parkgrange Investments v Shandon Park

Carroll J stated that a purchaser who ignores a deadline for acceptance risks the offer lapsing. Where no deadline exists, acceptance must occur within a reasonable time.

Commane v Walsh

A land sale offer remained open despite a four month delay. The nature of the transaction made the delay reasonable.

Lynch v Governors of St Vincents Hospital

A consultant accepted an offer several months after it was made. The court regarded the offer as still available given the surrounding circumstances.

Ramsgate Victoria Hotel v Montefiore

An offer to buy shares lapsed after several months passed without acceptance.

Tansey v College of Occupational Therapists

The plaintiff failed an examination twice and claimed a contractual right to a second re-sit based on examination materials. The examination board had changed its rules, limiting the number of re-sits. Murphy J accepted that an examination board could make a unilateral offer but held that the plaintiff could not rely on it because she was unaware of any such offer when enrolling.

In Re Irvine

A father died before acceptance was posted. Since acceptance had not been completed before death, no contract arose.

In Re Whelan

The deceased had guaranteed a firm’s bank account. The bank continued making advances after his death. Advances made before the bank learned of the death were recoverable from the estate. Advances made after notice of death were not.

Hyde v Wrench

Defendant offered to sell land for £1000. Plaintiff replied offering £950. Later attempted to accept the original £1000 offer but it was held that there was no contract. The £950 proposal was a counter-offer which destroyed the original offer.

Swam v Miller

The purchaser offered £4,750 for the property. The vendor replied accepting $4750 plus £50 annual rent. It was held that there was no contract because the vendor introduced a new term.

Wheeler v Jeffrey

The parties negotiated an agency agreement. The plaintiff purported to accept but added a commencement date. It was held that mentioning the commencement date introduced a new term and amounted to a counter-offer.

O’Mahoney v Promontoria

Settlement negotiations took place through correspondence. One side argued later documents amounted to counter-offers. The court examined the correspondence as a whole and found that agreement had already been reached on the essential terms.

s58 of the Sale of Goods Act 1893

each bid is an offer. Acceptance occurs when the auctioneers hammer falls and until then a bid may be withdrawn. The auctioneer is generally not obliged to accept any bid.

Harris v Nickerson

The auctioneer advertised goods for auction. The plaintiff travelled to attend but the goods were withdrawn before sale. It was held there was no contract but it was an invitation to treat.

Barry v Davies

The auction was advertised without reserve. The highest bidder offered $200. The auctioneer refused to sell but the court held that the highest bidder succeeded.

Tkachuk Farms Ltd

Bidding on the owner’s behalf was held to be contrary to the agreement.

Warlow v Harrison

It was held (obiter) that in a genuine auction without reserve, the highest bona fide bidder may sue if the auctioneer refuses to sell.

Harvela Investments v Royal Trust of Canada

The defendants promised to accept the highest bid. The plaintiff bid a fixed amount. A rival bidder submitted a “referential bid” ($100,000 more than any other bid). It was held that the plaintiff succeeded. The referential bid was invalid unless expressly permitted. A promise to accept the highest bid can amount to a binding offer.

Blackpool & Fylde Aero Club v Blackpool FC

Invitation to tender required tenders to be submitted by a deadline. The plaintiff submitted a compliant tender. The defendant failed to consider it due to an administrative error. The defendant was held liable.

Smart Telecom v RTE

RTE invited sealed bids and stated the contract would be awarded to the highest bidder. Smart Telecom submitted both a fixed bid and a referential bid. It was held the referential bid was invalid. RTE’s invitation amounted to an offer capable of acceptance by a compliant highest bid.

Acceptance

Acceptance is a final and unequivocal agreement to the terms of an offer. There are two requirements:

1.     There must be agreement to the offer.

2.     Acceptance must generally be communicated to the offeror.

Acceptance must be accompanied by a genuine intention to accept.

Butler Machine Tool v Ex-Cell-O

Seller’s form included a price variation clause. The buyer’s order used different terms. The seller returned the acknowledgment slip. It was held that a contract was formed on the buyer’s terms.

Chichester Joinery v John Mowlam

The parties exchanged conflicted standard terms. The goods were delivered and accepted. It was held that acceptance occurred through conduct.

Buchanan v Brook Walker & Co Ltd

P claimed not to have read the contractual terms but held terms formed part of the contract.

G Percy Trentham Ltd v Archital Luxfer Ltd

construction work proceeded despite incomplete documentation. The defendant argued no contract existed and succeeded.

Brogan v Metropolitan Railway

acting under proposed contractual terms can amount to acceptance.

Anglia Television v Clayton

Held 2 conditions are necessary:

1.     A clear offer capable of acceptance

2.     Conduct referable solely to acceptance of that offer

Western Electric Ltd

Occupiers entered premises before formally accepting the offer. Held occupation constituted acceptance by conduct. Behaviour consistent only with acceptance may create a contract.

Felthouse v Bindley

Uncle wrote offering to buy nephew’s horse. Said that silence would mean acceptance. Nephew did not reply. Held no contract.

Russell & Baird v Hoban

Plaintiff stated acceptance would be assumed if no reply within 3 days. Held no contract.

Re Selectmove

Silence may occasionally amount to acceptance, where, viewed objectively, it can reasonably be interpreted as assent.

Rust v Abbey Life Assurance

Previous dealings between parties may create an expectation that silence is sufficient.

Adams v Lindsell

Defendants offered to sell wool by letter. Due to a postal error, the offer arrived late. Plaintiffs posted acceptance immediately. Before receiving it, defendant sold the wool to someone else. It was held that the contract was formed the moment the acceptance was posted.

Household Fire Insurance v Grant

The defendants applied for shares. The company posted acceptance, but the acceptance letter was lost and never arrived. It was held that the contract was still formed.

Kelly v Cruise Catering

The employment contract involved parties in Dublin and Oslo. The employee signed and posted acceptance from Dublin. The issue was where the contract was formed for jurisdiction purposes. The contract was formed in Dublin.

Sanderson v Cunningham

The plaintiff sought insurance from a London insurer. Acceptance was issued from London. Therefore, the contract was formed in London.

Holwell Securities v Hughes

The defendant granted an option exercisable by giving “notice in writing”. The plaintiff posted acceptance, but the letter never arrived. It was held that there was no contract.