Offer and Acceptance

What happens when a valid offer is accepted and is communicated?

A binding contract comes into existence

What is meant by an offer?

A proposal (promise) showing willingness to a contract on firm and definite terms

What is an offeror?

The person who makes the offer

What is an offeree?

The person to whom the offer is made

Who can an offer be made to and of which form of communication are they made?

Can be made to an individual, group or even the whole world

Can be written, but verbally is also allowed

What are the 2 rules for offers?

They must be definite

They must be certain

What is meant by offers must be definite?

The offeror must be bound to it. Otherwise people could find themselves bound by things they only meant casually

What is meant by offers must be certain?

The terms of the contract must be certain, it must be clear what is exactly being offered

An “invitation to treat" is not an offer because it is not definite.

Which case shows this?

Gibson V Manchester City Council

• There was not an offer available for the selling of a house, therefore there was no contract

• The house was an invitation to treat

What is meant by an invitation to treat?

A preliminary step before an offer

e.g. a statement that a person is willing to negotiate, but is not yet making an offer

Give 2 examples of invitations to treat which are commonly used?

• Most shop displays or supermarket shelves

• Most Advertisements selling goods

How does the case of Partridge V Crittenden show an invitation to treat?

Partridge V Crittenden

• Crittenden placed an advert stating that they were selling bramble finches

• He was prosecuted for “offering for sale a wild bird” under Protection of birds act

• He was not guilty as the advertisement was not an offer, but an invitation to treat→ Any offer leading to a contract would be made by the person responding to the advertisement

What is meant by a bilateral offer? (most contracts are like this)

One party makes an offer to another known party who then must communicate his acceptance. Each party must then do what is promised

An advertisement MAY be an unilateral offer.

What is meant by an unilateral offer?

A firm offer is made to a specified person or to the whole world (in the case of adverts, anyone could see the offer)

The offeree does not need to accept the offer, but if they perform the act required, then a contract exists e.g. lost pet rewards (wording is important in adverts like these)

One party needed to do the action of acceptance

How does the case of Carlill V Carbolic Smoke ball show an advert being an unilateral offer?

Carlill V Carbolic Smoke ball

• The company advertised a medicine, the smoke ball

• The advert stated that if someone used it correctly, and still got the flu, then the company would pay £100 to them

• Mrs Carlill did get the flu after using the smoke ball correctly

• The court awarded her £100 as the promise was offer that could be accepted as she used it correctly and still got the flu

• Advert was a unilateral offer

Which case shows that goods in a shop window are invitations to treat?

Fisher V Bell

• A shopkeeper displayed a flick-knife in his shop window for sale

• He was charged with offering a knife for sale

• The display of the knife was an invitation to treat, not an offer→ not guilty of the offence

Which case shows that lots at auctions are invitations to treat?

British car auctions V Wright

• Auctioneers were prosecuted for offering to sell an unfit vehicle at an auction

• However, the prosecution failed because there was no offer

• Held as an invitation to treat, as the bids are the actual offers

Which case shows that requests for information are invitations to treat?

Harvey V Farey

• Harvey wanted to buy Farey’s farm and sent a message “State the lowest price”

• Farey replied with a value and Harvey tried to buy the farm

• The reply was merely a reply to the request for information (lowest price) and therefore it was held as an invitation to treat

When does an offer come into existence?

When it is communicated to the offeree (NO offer if the offeree doesn’t know about it)

How does the case of Taylor V Laird show communication?

Taylor V Laird

• C decided to give up being captain of a ship and worked as an ordinary crew member in order to get back to England

• He then claimed wages from the ship owner

• He was not entitled to wages as there was no communication with the ship owner that he was working as an ordinary crew member

As long as an offer is open, it can still be accepted.

What are the 3 ways an offer can come to an end?

• Revocation

• Rejection/ Counter-offer

• Lapse of time

What is revocation?

An offer being withdrawn at any time before acceptance by the offeror, unless the offeree has given something to keep the offer open e.g. a deposit

It must be communicated

How does the case of Routledge V Grant show revocation?

Routledge V Grant

• Grant had offered his house for sale, stating that the offer would remain open for 6 weeks

• When he told Routledge that he no longer wished to sell the house, this was an effective revocation of the offer, even though it was within the 6 week period

• Routledge could no longer accept the offer as it had ended

Does it matter if the revocation is communicated by a 3rd party (not the offeror) and which case shows this?

As long as the 3rd party is a reliable source, it can be communicated via a 3rd party

Dickinson V Dodds

• A reliable person told Dickson that the offer had been withdrawn

• This was effective revocation

What is meant by rejection and how might it take place?

If the offeree says “No” or the offeree makes a counter-offer which rejects the last offer

Which case shows a rejection by a counter offer?

Hyde V Wrench

• Wrench offered to sell his farm for a price to Hyde

• Hyde replied with a counter offer of a lower price

• Hyde then replied that he accepted Wrench’s earlier offer of the price

• It was held that the counter-offer ended Wrench’s original offer, Hyde could not accept the original offer

When will an offer end due to a lapse of time?

If a fixed period for the duration of the offer is stated, then as soon as that expires, there is no offer to accept

Which case shows a lapse of time ending an offer?

Ramsgate V Montefiore

• Montefiore offered to buy shares at a fixed price in a hotel

• His offer was accepted 5 months after he offered to buy shares, by then Montefiore was no longer interested as the share price had fallen and he refused to pay

• It was held that the long delay between the offer and acceptance meant the offer had lapsed and could no longer be accepted

What is meant by an acceptance?

This ends an offer, because once the offeree has accepted, a contract exists, so the offeree cannot change his mind and reject or try to negotiate the offer

What are the 2 rules for acceptance?

Must be unqualified

Must be communicated to the offeror

What is meant by the acceptance must be unqualified?

All the terms must be accepted, no “ifs or buts”

What is meant by the acceptance must be communicated to the offeror? (which method isn’t allowed?)

Any method of communication will be valid except silence

Which case shows that silence cannot be communication?

Felthouse V Bindley

• There was discussions about the purchase of a horse

• The final letter from the offeree stated “if I hear no more, I consider the horse mine” - There was no further response

• The court decided there was no contract as an offer cannot be accepted silence or inactivity on the part of the offeree

If the offeror required a particular method of acceptance, would the offeree be able to use a different method?

No, if the offer requires a particular manner of acceptance, it must usually be complied with for a valid acceptance

Which case shows that if a particular method of communication is needed, it must be complied with?

Yates V Pulleyn

• An option to purchase land was required to be agreed in writing sent by “registered delivery”

• It was sent via regular post and it was held that there was no acceptance

What is the Postal rule?

Acceptance by post takes place as soon as the letter is posted- at the moment the reply is sent

Which case shows the postal rule?

Adams V Lindsell

• Lindsell wrote a letter to sell wool and was asking for a reply from Adams

• The letter was delayed in the post, on receiving the letter, Adams posted a letter of acceptance on the same day, however because of the delay, Lindsell assumed that Adams did not want to wool and sold it to someone else

• It was held that there was valid acceptance as it takes place as soon as the letter was sent in the post

What 3 requirements must be met for the Postal rule?

• If post is the usual or expected means of communication

• The letter must be properly addressed and stamped

• The offeree must be able to prove the letter was posted

Does the postal rule apply for electronic methods of communication? (Use Article 11 of the E-commerce regulations 2002)

It states where a buyer is required to give his consent through technological means (such as clicking an icon), the contract is made when the buyer has received from the service provider electronic acknowledgement of receipt of the acceptance

Which case showed the original rule on electronic communication?

Brinkibon V Stahl

• The court held that out-of-hour messages are only effective once the office is re-opened, it is only accepted when the offeror is aware of the acceptance (Postal rule is the exception to this rule)

What did the case of Thomas V BPE Solicitors say in terms of electronic communication via email?

Thomas V BPE Solicitors

• An acceptance was sent by an email by the offeree’s solicitor to the offeror’s solicitor on an evening on a Friday, but the offeror’s solicitor had not read it as he had gone home

• The offeree’s solicitor assumed that the offeror’s solicitor had read the email, but it had not been read till the weekend

• It was held that the email had taken effect at 6PM on Friday as this was when the offeror’s solicitor could and reasonably expect to have read the email