Formation of a Contract: Offer and Acceptance

Vocabulary flashcards covering the elements of contract formation, definitions of offers and invitations to treat, rules regarding auctions, and all related legal case precedents from the lecture notes.

Five Elements of a Valid Contract

Offer, acceptance, consideration, intention to enter into legal relations, and capacity to contract (added by Niki Tobi, J.C.A., in Orient Bank v. Bilante Intl.).

Capacity to Contract

The fifth element required for a valid contract, added by Niki Tobi, J.C.A., in Orient Bank v. Bilante Intl.

Offer

A definite undertaking or promise made by one party with the intention that it shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed.

Offeror

The party who makes an offer to an offeree.

Offeree

The party to whom an offer is addressed.

David Ejinyi v. Amusa Adio

A legal case where joint owners of landed property disputed ownership, and the court held that the defendant failed to establish that the plaintiff agreed to sell his interest in the property.

Olaopa v. Obafemi Awolowo University

A case where an architect prepared designs, sketch drawings, and sent a bill following a meeting about university property development, but both trial and appeal courts held that no offer had been made.

Carbolic Smoke Ball Co. v. Carlill

A case establishing that an offer can be made to the whole world, enabling anyone interested to step forward and form a contract by accepting it.

Bowen, L.J.

The judge in Carbolic Smoke Ball Co. v. Carlill who stated that an offer may be made to the whole world and created into a contract by anyone who accepts it.

Express Offer

An offer made when the offeror directly communicates the terms of the offer to the offeree.

Implied Offer

An offer inferred from conduct or action, such as a bus stopping at a bus stop to pick up passengers.

Nigerian National Supply Company v. Agricor Incorporations of USA

A case in which the court held that an offer regarding a consignment of rice paid for by the NNSC had been made and accepted impliedly.

Brodgen v. Metropolitan Railway Co.

A legal precedent demonstrating that an offer can be accepted by conduct instead of expressly.

Major Oni v. Communications Associates

A legal precedent cited alongside Brodgen v. Metropolitan Railway Co. establishing that acceptance of an offer can occur by conduct.

Invitation to Treat

An offer to receive offers; a preliminary move in contract creation that carries no legal obligations and cannot be accepted to bind the maker.

Berliet Nig. Ltd. V. Francis

A case where the Court of Appeal held that a managing director's letter stating 10% of shares should be owned by workers was an invitation to treat, and the employee's payment was an offer that was rejected.

Auction Request for Bids

An invitation to treat made by an auctioneer, where the submitted bids are offers and acceptance occurs when the hammer falls.

Payne v. Cave

A common law case establishing that in an auction, bids are offers and acceptance takes place when the auctioneer's hammer falls.

Section 58(2) of the Sale of Goods Act 1893

A statutory provision applicable in all northern and eastern states supporting the common law position on auction bids and acceptance.

Harris v. Nickerson

A case establishing that an advertisement to hold an auction does not legally bind the advertiser to actually hold the auction.

Adebaje v. Conde

A case establishing that if an auctioneer chooses to accept bids, he is legally bound to accept the highest bid once the hammer falls.

Reserve Price (Auctions)

A minimum price set on an auctioned item that has no legal effect on a bidder if it is not communicated during the auction.

Felthouse v. Bindley

A case in which a bidder obtained a horse at an auction because an uncommunicated reserve price was never stated during the auction.

Referential Bid

An invalid bid where a bidder offers to pay a fixed sum higher than whatever the highest bidder offers.

Harvela Investments Ltd. v. Royal Trust Company of Canada

A case establishing that referential bids are not permitted in auctions because they defeat the entire purpose of an auction.