Offer and Acceptance Cases (Detailed) LLB Law

core cases from Offer and Acceptance module as according to Leicester University

(Offer) Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

• Shows us what an offer looks like

• Legal issue: Whether CSBC were under contractual obligation

• CSBC manufactured Carbolic Smoke Ball for flu treatment for sale to public, and advertised claiming it would PREVENT the flu

• Advert stated “If anyone buys the smoke ball and uses it 3 times a day for 2 weeks, as directed, and still catches the flu, we will pay you £100”

• Advert also stated that to show sincerity, the company deposited £1,000 with the Alliance Bank

• Mrs Carlill bought a Smoke Ball and used it as directed, and still caught flu

• She claimed £100 from CSBC

• Court ordered CSBC to pay as they’d shown an intention to be bound by specific terms through their unilateral contract, which Carlill accepted

(Offer) Harvey v Facey [1983] AC 552

• Demonstrates what a request for more information looks like

• Legal issue: Whether a contract was formed between the parties

• H to F telegraph: Will you sell us this land? Telegraph lowest cash price.

• F response: “Lowest price… £900”

• H response: I accept. I now own this land, and we have a contract to prove it.

• Court held no contract - F’s answer simply an answer to a question. There were no details, precise terms, or intention to be bound.

• Therefore there was no ‘offer’ to accept, meaning no contract was formed.

(Offer) Blue v Ashley [2017] EWHC 1928

• Demonstrates intention is necessary to form a contract

• A hired B as a strategic financial adviser for his company

• Blue suggested Ashley meet other corporate finance specialists and hire them as well

• They meet at a PUB

• Lots of drinking occurred

• Jokey banter about whether B could raise the company’s share price from £4 to £8, and what incentive he should be given to achieve this

• A: Let’s say £15 million if the price gets to £8 in 3 years

• B took this seriously and when the share price hit £8, he sued for £15m

• Court ruling: No contract. There was no intention to be bound - the purpose of the very informal occasion was not to enter a contract, and the terms were not clear enough - no performance measurement standards, how long the share price had to stay above £8, the £15m was fixed arbitrarily, no reasonable businessperson would commit in this manner. Contracts can be formed on social occasions but not like this.

(Inv. to treat) Partridge v Crittenden [1968] 1 WLR 1204

• Legal issue: Did an advert constitute as an offer?

• Partridge prosecuted with trying to unlawfully sell a protected wild bird

• He advertised it in a magazine: “Quality British… Bramblefinch cocks, Bramblefinch hens, 25s each.”

• A buyer responded to advert by letter and asked for a Bramblefinch hen, enclosing a cheque for 25s

• Partridge was charged and convicted of unlawfully offering the bird for sale

• The conviction was quashed in appeal

• Court held: Advert was only an invitation to treat, not an offer for sale

• Not commercially viable to treat all adverts as offers - there could be a potentially unlimited amount of acceptances, which is not commercially viable

• Even if the word ‘offer’ is used in an advert, it is unlikely to be treated as such

• Fisher v Bell [1961] was applied as evidence - display of articles in a shop window was not an offer to sell

(Inv. to treat) Pharmaceutical Soc of Great Britain v Boots Cash Chemists [1952] 2 QB 795

• Issue: when does a contract arise in a self-service shop?

• Boots was sued with argument that they sell drugs to the public whilst unsupervised by a chemist (which is illegal)

• Boots argued that proper supervision was supplied as the contract was formed at the till, where a properly qualified chemist resided

• Court held: Contract doesn’t arise when customer picks drugs up off shelf - they present item to cashier (a qualified chemist) as an ‘offer’ which the cashier then accepts

(Responses) Hyde V Wrench [1840] 3 Beav 334; 49 ER 132

• Legal issue: whether a contract had been formed

• Shows us that legal effect of counter-offer is to ‘kill’ original offer

• W offered to sell H his farm for £1,000

• H responded by offering £950 instead

• H heard nothing back

• H changed his mind and said he’d buy it for £1,000

• Court held: counter offer is equivalent to rejection of the first offer, therefore the first offer no longer existed when Hyde wished to accept it

(Response) Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401

• Demonstrates a ‘battle of the forms’ case, where both parties (businesses) agree on what they are exchanging, but are using their own standard terms to operate

• e.g. Business A: We’ll sell you this car (With 1 year warranty). Business B: We’ll accept that car (With 18 months warranty).

• Seller sent form offering to manufacture and sell a machine tool for over £75k on their standard terms and conditions

• Which included a price variation clause^

• Buyer replied and agreed to buy at this price, but said it was subject to their own standard terms and conditions (Which did not include a pvc clause)

• This^ is the equivalent of a counter-offer

• Buyer included a tear-off slip that said ‘we accept on the buyer’s terms’ that they invited seller to return

• Seller returned it thereby accepting buyer’s offer

• Court held: the contract was on the buyer’s terms

(Communication) Entores v Miles Far East Cpn [1955] 2 QB 327

• Demonstrates that rule for instantaneous communication is that acceptance occurs at the point the offeror receives it

• If offeree knows that offeror has not heard the words of acceptance, or has not received the message, they must send it again

• Entores were based in London, and defendants were based in Amsterdam

• Entores wanted to serve an action for damages, but complications arose where it was vital to know when and where the contract had been formed

• Court noted there was 1 exception to rule: Where it is the offeror’s fault that they did not receive the communication ← if the offeree reasonably believes the acceptance was heard, the offeror is bound to the contract

(Communication) Thomas v BPE Solicitors [2010]

• Demonstrates receipt rule for instantaneous communication

• Email received in inbox at 6pm on a work day but not read

• Effective acceptance at 6pm even though offeror had not read it

• Court: it was working hours so it was not unreasonable

(Communication) The Brimnes

• Demonstrates instantaneous communication rule

• Telex acceptance received in machine at 5:45pm

• Offeror left office early without checking machine

• Acceptance occured at 5:45pm

(Communication) Holwell Securities Ltd v Huges [1974]

• Demonstrates that offeror can exclude the postal rule in the offer

• Offer to sell land stated that acceptance must be by ‘notice in writing’

• ^This wording excluded the postal rule

• Acceptance would only be communicated when letter received

• Court also noted that the postal rule will not apply where it would ‘manifest inconvenience or absurdity’ e.g. with perishable goods

(Communication) Felthouse v Bindley [1862] 142 ER 1037

• Negotiations between uncle and nephew for sale of horse

• Nephew to Uncle: I know you want to buy the horse for £30 but I wont accept less than 30gn

• U to N: I’ll split the difference and pay you £30 15s, and “If I hear no more about him, I’ll consider the horse mine at £30 15s”

• N doesn’t reply

• Court held: No contract to sell horse, otherwise U would have basically been imposing a contract on N

• e.g. you can’t go around saying “If you don’t protest in the next 5 seconds I’m going to take your sandwich as my own”

• Exceptions: where both parties agree to it, where 2 businesses have an established practice of dealing with each other, or where offeree (rather than offeror) uses silence as acceptance

(Communication) Re Selectmove [1995] 1 WLR 474

• Demonstrates that silence can be legally assumed as acceptance so long as the offeree suggests it

• A company offered to pay its tax bill in monthly instalments

• Tax collector technically didn’t have authority to accept, so instead said that they can assume he accepted if they heard no more from him

• This type of acceptance can be regarded as an express but conditional acceptance which only takes effect upon to expiry of a given period of time without an express rejection

(Communication) Brogden v Metropolitan Railway Co. [1977] LR 2 App Cas 666

• Demonstrates acceptance by conduct

• B offered to sell coal to MRC

• B was their usual supplier

• They sent a draft contract to MRC, who put it in a drawer and forgot about it

• Parties proceeded to carry out the agreement anyway

• Was held to be an offer and acceptance, as MRC was accepting B’s services

(Communication) Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd’s Rep 334

• The court was asked whether a binding contract had been concluded between an applicant for an investment in property bonds and the insurance company offering them

• Abbey took out a policy on behalf of Rust, then sent her a policy of insurance

• She did not respond to it or raise an objection to it for seven months

• Court held: She had accepted it

(Revocation) Dickinson v Dodds [1876] LR 2 Ch. D 463

• Demonstrates that an offer can be revoked at any time before acceptance, so long as it is communicated to the offeree

• Demonstrates that a ‘promise’ without consideration is not binding (unless it is contained in a deed)

• Legal issue: Whether Dickinson had validly accepted Dodds’ offer to create a binding offer

• Dodds made offer to sell land to Dickinson

• Promised to keep the offer open until 9am on Friday

• Dodds sold the land to a 3rd party before the Friday deadline

• Dickinson still tried to accept the offer, both in person and in writing, even after being told by his (Dickinson’s) agent that the land had been sold

• Court held: Revocation allowed because Dickinson did not give consideration for the promise, there was no consensus ad idem, and that it was sufficient communication of revocation as Dickinson had been informed that the land had been sold

(Consensus ad idem) Smith v Hughes [1871] LR 6 QB 597

• Legal issue: Whether there was consensus ad idem between the parties, and whether there was now a binding contract between them

• Farmer negotiating sale of oats to a racehorse trainer

• Trainer thought he was buying old oats (which are better for horses)

• Farmer was selling new oats (less valuable)

• They agreed to sell and buy oats, and agreed on a price

• Farmer gave a sample of the (new) oats that he was selling with the trainer

• Trainer never looked at the sample

• Trainer agreed to purchase the oats after having the sample for 2 days

• When farmer delivered the oats, the trainer saw that they were new and refused to pay

• Farmer sued for contract price

• Court held: Trainer had to pay. Application of the objective test would tell us that any reasonable person would assume that based on external appearances, there was consensus ad idem, as one would assume the trainer had looked at the sample of oats that the farmer had left