Contract Law

Four basic ingredients of a contract

Offer

Acceptance

Consideration

Intention to create legal relations

Offer

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

Case for offer

Biggs v Boyd Gibbons

Announcement “For a quick sale, I will accept 26,000”. This was an offer which could be accepted to form a contract

Invitation To Treat

Preparatory to an offer

Indication of willingness to negotiate. It may encourage others to make offers. An ITT is NOT an offer and therefore CANNOT be accepted

Forms of Invitation to Treat

Goods in a shop window or on a shelf

Advertisements and brochures

A request for information

Auctions

Case for goods in a shop window/shelf (ITT)

Fisher v Bell

Case for advertisements and brochures (ITT)

Partridge v Crittenden (1968)

Case for request for information (ITT)

Harvey v Facey (1893)

Case for Auctions (ITT)

British Car Auctions v Wright (1972)

Can an advertisement with a clear indication of an “offer” be considered an offer and not an ITT

Yes

Case for an advertisement being an offer

Carllill v Carbolic Smoke Ball Co (1983)

Case for an offer being made through a notice or machine (e.g parking meter)

Thornton v Shoe Lane Parking

When does an offer come into existence

When communicated to the offeree

Case for making an offer

Inland Revenue Commission v Fry

How can an offer be terminated?

Revocation

Rejection

Lapse of time

Death

Acceptance

Revocation explanation

An offer can be revoked (withdrawn) by the offeror at any time before it has been accepted. The offeror must communicate the revocation to the offeree before it is effective

Case for revocation

Routledge v Grant

Does revocation have to come from the offeree directly

No, it can come from another “reliable source”

Case for “reliable source” communicating revocation

Dickinson v Dodds

Can an offer be accepted following rejection

No

Case for counter-offer being treated as a rejection of offer

Hyde v Wrench

Is an enquiry during negotiations counted as a counter offer?

No

Case for enquiry not being a counter-offer?

Stevenson v McLean

Lapse of time explanation

If a fixed period for the duration of the offer is stated then as soon as that expires there is no offer to accept. Where the offeror has not specified how long the offer should remain open, it will lapse after a reasonable length of time has passed. (Offers are not available forever). NO exact definition of a reasonable time but Ramsgate Victoria Hotel v Montefiore the Court decided that 5 months was too long for M’s offer to buy shares to remain open

Rules on acceptance following death

If the offeree dies then the offer ends and those dealing with his or her estate cannot accept the offer. When an offeror dies, acceptance can still take place until the offeree learns of the offeror’s death. However, obviously not the case where the offer is to perform a service (e.g paint a portrait). The people responsible for the deceased’s affairs will be obliged to complete contract if offer is accepted before offeree knows the offeror is dead.

Acceptance definition

Unconditional agreement to all the terms of that offer

Rules on matching terms of the offer for acceptance

Acceptance must match the terms of the offer exactly (a mirror image of the offer). Any variation of the qualification of the offer will amount to a counter-offer unless it can be regarded as a request for information.

Case for not matching terms in acceptance qualifying as a counter offer

Stevenson v McLean

Case for acceptance having to be communicated, and silence not being enough

Felthouse v Bindley

In what forms can acceptance come in

Generally any form, provided it is definite and communicated to the offeror. In words, writing or positive conduct.

Case for acceptance taking place by conduct

Broaden v Metropolitan Railway

What if the offeror asks for acceptance in a particular way?

Acceptance must usually be by that method for it to be valid. However, the Courts are prepared to waive the requirement stated if the method of acceptance used was “equally effective” and did not disadvantage the offeror

Case for acceptance being asked for in a particular way but using a method “equally effective”

Yates v Pulleyn

The postal rule

When acceptance is communicated by the post, acceptance takes place the moment the letter is posted. This only applies to reasonable post (usual or expected means of communication, stamped, addressed and proof of postage) and does not apply to offers, counter-offers or withdrawing an offer

Case for postal rule

Adams v Lindsell

Case for postal rule applying even if letter is never received

Household Fire Insurance v Grant

How can the postal rule be avoided?

Stating in the offer that there will be no contract unless the acceptance is actually received

Case for avoidance of postal rule

Holwell Securities v Hughes

Does the postal rule apply in instant mode of communication (text message, email)

No

Case for postal rule not applying for electronic forms of communication

Brinkibon v Stahag Stahl

Rule on electronic messages being received outside working hours