Agreement 1 (Offer)

When is an agreement formed?

When there is an offer and acceptance

Some stuff about agreement

The court asks what the parties’ words and conduct would convey to a reasonable person in the other party's position.

Smith v Hughes (1871): (smt to do with oats) Unexpressed intention does not determine whether the parties agreed.

Agreement alone is not enough. Intention to create legal relations and consideration are also normally required.

What is an offer?

Expresses willingness to contract on specified terms and an intention to be bound upon acceptance.

What is an invitation to treat?

Invites an offer or further negotiation. A response does not in itself conclude a contract.

An ITT is different from an offer because it cannot be accepted and an ITT does not include a promise to be bound.

Example of an offer vs ITT (case example)

These two contrasting cases are useful to identify what constitutes an offer:

Storer v Manchester City Council (1974) -The offer was valid in this case. They were prepared to sell. The definite language and signed return of agreement established contract.

Gibson v Manchester City Council (1979) - There was an invitation to treat. They may be prepared to sell.

Background to the cases: Manchester City Council had a policy of permitting those in social housing to buy their homes. This policy existed whilst the council was under the control of the Conservatives, but the policy was revoked after Labour gained control. The council would honour any existing contracts to sell homes, so the issue in these cases was whether an offer existed.

Case example of an offer

Carlill v Carbolic Smoke Ball Co: 

• The company advertised a £100 reward for anyone who used its smoke ball as directed but still contracted influenza. 

• The definite conditions and the £1,000 bank deposit showed a serious intention to be bound.

• The Ad was a unilateral offer to anyone who fulfilled its conditions with knowledge of the offer 

• Mrs Carlill accepted by performing the conditions. The company did not require advance notice of acceptance.

What are the general points to an offer? OLD CARD

The form of an offer is normally not important

An offer can be made to one person or more than one person

An offer must be fully communicated to the offeree to be effective. R v Clarke (1927)

An offer must be certain in its terms. Scammell v Ouston (1941) (The phrase...). Guthing v Lynn (1831) (Promised to buy more if the horse was lucky?? Too uncertain).

An offer cannot be made out from a reply for information. Harvey v Facey (1893) (Harvey asked for the lowest house on sale, Facey said but did not agree to sell).

What are examples of ITT?

Advertisement, brochures and price lists:

Partridge v Crittenden (1968) advertisement for sale of rare birds was ITT.

Grainger & Son v Gough (1896) Price lists constitute an ITT.

Exception: Advertisements can amount to offers when they are actually unilateral offers. This is an important exception that will be discussed later in relation to Carlill v CSBC

Shop windows and shelves:

Pharmaceutical society of Great Britain v Boots Cash Chemists (1953) display of goods on a shelf in a 'self service' shop is an ITT.

Fisher v Bell (1961)- Display of a flick knife for sale in a shop window amounted to an ITT. Selling a flick knife was illegal. The lawyer said it was an ITT not an offer. The shop was let off.

What does 'extinguishing an offer' mean?

An offer can cease to exist in several different ways such as: acceptance, express rejection by the offeree, destroyed by a counter-offer, revocation, lapse of time and death.

What are the different ways an offer can be extinguished? (`)

1. Express rejection:

2. Counter-offers: Where the offeree makes a counter-offer, it has the effect of destroying the original offer.

E.g. Hyde v Wrench (1940) W offered to sell his farm to H for £1000. H rescinded with a counter offer and W rejected it. H wanted to accept the original offer. W was not open to the offer. H's counter-offer destroyed the original £1000 offer.

What are the different ways an offer can be extinguished? (2)

3. Revocation:

Payne v Cave (1789) à An offer can be withdrawn before acceptance.

Routledge v Grant (1828) à An offer can be withdrawn before it is accepted.

The Rules of Revocation;

•To be effective, the revocation must be communicated to the offeree.

•Revocation can be effective if the offeree learns of it through a reliable third party: Dickinson v Dodds (1876)

•An offer is withdrawn if the offeror makes a second (and different) offer: Pickfords v Celestica (2003)

•The postal rule does not apply to revocation of an offer: Byrne & Co v Leon Van Tienhoven & Co (1880)

If a deadline is stipulated and exceeded the offer will lapse. If a deadline is not specified the offer will lapse after a reasonable time (Ramsgate Victoria Hotel Co. v Montefiore (1866).

What are the different ways an offer can be extinguished? (3)

4. Death:

Death of Offeror

-If the offeree is aware of the death, the offer probably lapses: Coulthart v Clementson (1879)

-If the offeree is not aware of the death the offer will probably not lapse (unless it is a contract of personal services): Bradbury v Morgan (1862)

Death of offeree

- Offer will lapse: Duff's Executors' Case (1886)

What is a bilateral offer?

Bilateral offer: There are 2 strings representing the parties obligation. Each string has 1 end around the neck of the other party. Either party can pull on the string to demand performance of the obligation.

What is a unilateral offer?

Unilateral offer: There is only 1 string. The offeree can pull on the string around the offeror's neck, but there is no string for the offeror to pull on and no obligation for the offeree to perform. Accept these via action.

E.g. Carlill v CSBC An advertisement for a unilateral offer was not an ITT. There was a clear intention to be bound in this case.

Harvela Investments v Royal Trust co. of Canada (1985) Lord Diplock referred to unilateral offers as 'if contracts'. For example, if you fulfil the following conditions I promise to do x in return.

How do you revoke a Unilateral offer?

There are 2 rules governing the revocation of a unilateral offer that mae such a revocation different from the revocation of an ordinary offer:

1. Reasonable notice. Shuey v US (1875)

2. Part- performance. Daulia c Four Millbank Nominees (1978). Errington v Errington and Woods (1952)- A unilateral offer can't be revoked once the offeree has started the performance.