Offers and Invitation to Treat

Definition of a contract

A contract is a legally binding agreement between parties where consideration (something for something) is given and an offer and acceptance takes place. There must be intention to create legal relations. It can be expressed (in writing) or it can be by verbal agreement and/or by implication (by actions).

A bilateral contract is…

• Most common

• Between 2 parties

• Exchange of promises (consideration)- that two parties will act is what makes the contract enforceable in law

• An agreement where both parties promise to perform an act in exchange for the other parties act

A unilateral contract is…

• Only one party has to do anything

• For example: Lost dog- reward of £100, the £100 is the only promise, the way the offer is accepted is by completion of the act.

• Anybody can choose to accept this/ the offer is universal

• One party makes a promise in exchange for a specific act done by a party

There are four elements to a contract

1. Offer

2. Acceptance

3. Intention to create legal relations

4. Consideration

Privity of contract

Only those who are parties to a contract are bound by it and can benefit

Acceptance

The act of agreeing to an offer and becoming bound to the terms of the contract. A final and unconditional agreement to all terms.

Consideration

Something of value offered or received in the contract. There must be consideration for a contract to exist

Intention to create legal relations

The parties expressly or impliedly agree the contract is legally binding and therefore enforceable in court

Invitation to treat

An indication that one person is willing to negotiate a contract with another, but that they are not yet willing to make a legal offer.

Enforceable

A legally binding contract is enforceable. This means that a court can order the parties to live up to the tern of the contract

Offer

The person making an offer is called offeror.

The person receiving the offer is called an offeree.

An offer is a statement of intention to be legally bound if the other party should agree to your terms. Terms should be clearly stated.

The offer must be capable of being accepted

There can be a timeframe on the offer

A contract is formed when the offer is accepted.

Invitations to Treat

This is an indication that you are willing to enter into negotiations, but not yet entering a legal offer.

This can be a basis of an offer

Advertisements are invitations to treat

• You buying it is the offer

• A confirmation email is not always acceptance- more just a confirmation that you’ve made an offer

  Partridge v Crittenden (1968)

  There was an advert for wild birds for sale in the newspaper. It was a criminal offence under the protection of the birds. The D was not guilty as he was not giving out an offer, it was only an invitation to treat

Goods in a shop window are an invitation to treat

Fisher v Bell (1961)

A shop keeper advertised a knife in the window. It was an offence to offer such knives for sale. Goods in windows are an invitation to treat.

Goods on shelves are an invitation to treat

ITT benefits customers, you don’t have to buy the goods if you put them in your basket. If they were offers you wouldn’t be able to change your mind. The seller also has a right to refuse.

Pharmaceutical Society of Great Britain v Boots (1952)

Boots were prosecuted for offering a medicine without a pharmacist present by displaying them on shop shelves- this is an ITT NOT an offer. As its an ITT they can reject selling at the till

Vending machines

This is an offer not an ITT

The vending machine has no means of accepting or rejecting your offer

Putting money in= acceptance

Car parks

A contract is formed when a customer enters a carpark via an automatic gate. A cost of a car park is an offer

Chapelton v Bary UDC (1940)

The council provided deck chain with a small fee. C sat on the chair, but refused to pay. The price is the offer, sitting on a chair is accepting the offer.

Carlill v Carbolic Smoke Ball CO (1892)

Advertisement for a smoke ball in a paper that would cure influenza. The advert states that if the product didn’t work there was a £100 reward for the customer. The medicine didn’t work so C tried to claim for her £100. The company claimed that it was just ‘advertisement fluffing’. This is a unilateral contract, that can be universally accepted or rejected by anyone.

Making an enquiry

An enquiry for more information is not an offer. Nor is a reply to that an enquiry an offer.

Harvey v Facey (1893)

C wanted to buy some land and sent a message: “Will you sell [land]? Send lowest cash price”. D replied: “Lowest cash price is £900”. C replied: “We agree to buy [the land] for £900”.

This is not a contract this is an enquiry and responding to an enquiry.

Certainty of language

An offer is only an offer if it is clear and defined.

Gibson v Manchester City Council (1979)

Mr Gibson wanted to buy his council house and asked them how much it would cost. They replied that they “may be prepared to sell the house to you… If you would like to make your formal application to buy your council house, please complete the enclosed application form”.

C made an enquiry and d responded with an invitation to treat= NOT A CONTRACT

Communicating an offer

An offer cannot be accepted if you don’t know about it.

Taylor v Laird (1856)

Taylor gave up captaincy of a ship overseas, but in order to get back to England worked as an ordinary crew member. He received no wages for the work he did. The ship owner did not receive any communication of his offer to work.

There was no contract as he was not informed of the offer.

Ending an offer: Withdrawal

Routledge v Grant (1828)D contacted C in writing offering to purchase the lease of the claimants home, with an offer and a time frame of 6 weeks. However, during the 6 weeks, before c responded, d withdrew his offer. C still tried to accept the original offer, despite knowing the offer had been withdrawn.

Ending an offer: Counter offer

• Stevenson v McLean (1880)

• D offered to sell iron to C for “40s, net cash, open till Monday”

• On Monday morning C sent telegram to D: “Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give”

• On Monday, C then sent a telegram to D stating acceptance of D’s offer

• Later that day, D, having not yet received C’s acceptance, telegrammed C stating that iron had been sold

• C sued D for breach of contract

A counter offer cancels out the original offer and there is not a contract.

Ending an offer: lapse of time

Ransgate Victoria Hotel v Montefiore (1866)

D offered to purchase shares in the claimants company at a certain price. C took six months ti respond, by which the price of the shares had fallen. D did not buy the shares.

Other ways to end an offer:

• Rejection

• Death

• Lapse of time

• Counter offer

• Withdrawal