Comprehensive Case Law on Contract Formation, Acceptance, and Revocation

Principles of Offer and Invitation to Treat

• Harvey v Facey (1893)

  • Core Principle: Offers must be clear, definitive, and indicate a mutual willingness to accept from both sides to give rise to an enforceable agreement.
  • Legal Distinction: A mere statement of the lowest cash price or a response to an inquiry does not constitute a legally binding offer to sell; it functions solely as an indication of price rather than an intention to contract.

• Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953)

  • Display as Invitation to Treat: The display of goods on shop shelves does not constitute an operative offer; it is an invitation to treat.
  • Locus and Moment of Acceptance: Acceptance occurs at the till when the cashier accepts the customer's offer to buy the goods, thereby allowing supervision of sales where required by statute.

• Fisher v Bell (1961)

  • Shop Window Displays: Displaying goods with a price tag in a shop window constitutes an invitation to treat, not a contractual offer for sale.
  • Statutory Application: The display of restricted items (such as flick knives) does not breach prohibitions against "offering for sale" under strict legal interpretation.

• Partridge v Crittenden (1968)

  • Status of Advertisements: Advertisements in periodicals, newspapers, or public media are generally treated as invitations to treat rather than offers to sell.
  • Commercial Rationale: Treating general advertisements as offers would expose the advertiser to contracts beyond their available inventory.

• Harris v Nickerson (1873)

  • Auction Advertisements: An auction advertisement does not normally guarantee that particular goods listed will actually be put up for sale.
  • Intention versus Binding Obligation: Public notices of an auction date or catalogue items are declarations of intent or invitations to treat, precluding claims for wasted expenses if lots are withdrawn.

• Wilson v Belfast Corporation (1921)

  • Internal Decisions and Resolutions: A published report of an internal corporate resolution does not necessarily amount to a contractual offer.
  • Lack of Direct Communication: Internal resolutions lack the requisite external promissory intention needed to create an offer open to acceptance by members of the public or employees.

Auction Sales

• Payne v Cave (1789)
  • Mechanism of Auction Formation: In an auction sale, bids represent individual offers, and offers are accepted at the fall of the hammer.
  • Right of Withdrawal: A bidder maintains the legal right to retract their offer at any point prior to the hammer falling, as no contract is formed until the auctioneer signals acceptance.

Unilateral Contracts and Acceptance by Conduct

• Carlill v Carbolic Smoke Ball Co (1893)

  • Unilateral Offers to the World: A clear, definite unilateral offer made to the public at large can ripen into a binding contract upon performance of its stated conditions.
  • Dispensation with Notification: In unilateral agreements, ordinary requirements to communicate acceptance are waived; performance of the specified conditions constitutes valid acceptance.

• Errington v Errington and Woods (1952)

  • Revocation of Unilateral Offers: In a unilateral contract, an offeror may be prevented from revoking the offer once the offeree has commenced performance.
  • Implied Obligation: The offer becomes irrevocable provided the offeree continues performance of the act, even if full performance has not yet concluded.

• Gibbons v Proctor (1891)

  • Reward Offers and Information: A reward offer may be validly accepted through performance, subject to the relevant knowledge requirements.
  • Timing of Knowledge: Information provided can satisfy the terms of an offer if the relevant condition is fulfilled by an agent or reaches the designated recipient after the party acting becomes aware of the reward.

• Billings v Arnott & Co Ltd (1945)

  • Promissory Notices: A sufficiently definite promise or formal notice published by an employer or contracting party may be accepted through conduct.
  • Acceptance through Action: Fulfilling the stipulations of an employer's notice without prior verbal or written communication constitutes full acceptance of the contractual terms.

The Postal Acceptance Rule

• Adams v Lindsell (1818)

  • Establishment of the Rule: The postal rule establishes that where acceptance by post is contemplated, acceptance is complete and effective the moment the letter of acceptance is placed in the post.
  • Contract Formation Moment: The contract is formed at the time of posting, regardless of whether or when the letter arrives at the offeror's address.

• Household Fire and Carriage Accident Insurance Co v Grant (1879)

  • Lost Acceptance: A postal acceptance may be legally effective even if the letter never arrives at its destination.
  • Risk Allocation: The risk of non-delivery or delay in the postal service falls upon the offeror who initiated or permitted communication via the post.

• Henthorn v Fraser (1892)

  • Reasonableness Criterion: The postal rule applies exclusively where using the post is reasonable and within the contemplation of both parties.
  • Application Boundary: If negotiations were carried out in person, posting an acceptance is only valid from the moment of dispatch if the post was an authorized and reasonable mode of communication.

Acceptance by Conduct, Cross-Offers, and Instantaneous Communications

• Brogden v Metropolitan Railway Co (1877)

  • Acceptance by Conduct: Acceptance need not be express; it can be inferred from the parties' mutual conduct.
  • Execution through Performance: Acting upon an amended, unexecuted contract by ordering and delivering goods according to its terms establishes a binding contract on those terms.

• Tinn v Hoffman (1873)

  • Cross-Offers: Simultaneous cross-offers do not create a binding contract because neither party has accepted the other's offer.
  • Absence of Consensus Ad Idem: Even if two independent offers contain identical terms and cross each other in the mail, there is no meeting of the minds without a reciprocal acceptance.

• Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH (1983)

  • Instantaneous Communication: The timing and validity of acceptance communicated through instantaneous means (such as telex) depend upon the specific circumstances.
  • General Rule and Context: While instantaneous acceptances are generally effective upon receipt within normal business hours, variations depend on the intentions of the parties, sound business practice, and fault regarding failed transmissions.

Revocation, Withdrawal, and Lapse of Offers

• Byrne & Co v Leon Van Tienhoven & Co (1880)

  • Communication of Revocation: The revocation of an offer is effective only when it is actually communicated to and received by the offeree.
  • Exclusion of Postal Rule: The postal rule applies strictly to acceptances; it does not protect letters of revocation, which have no legal effect upon mere dispatch.

• Dickinson v Dodds (1876)

  • Revocation via Reliable Source: An offer may be revoked where the offeree learns reliably that the offeror has acted inconsistently with the offer remaining open.
  • Indirect Revocation: Direct communication from the offeror is not strictly required; notification from a reliable third party that the property has been sold terminates the offeree's power of acceptance.

• Routledge v Grant (1828)

  • Withdrawal Before Acceptance: An offer can generally be withdrawn at any time prior to acceptance, even if the offeror explicitly promised to keep it open for a specified period.
  • Requirement of Consideration: A promise to keep an offer open is unenforceable unless supported by separate consideration (creating an enforceable option contract).

• Ramsgate Victoria Hotel Co v Montefiore (1866)

  • Lapse of Time: An offer lapses after an unreasonable period has elapsed if no specific expiration deadline was stipulated.
  • Implied Termination: Offers cannot remain open indefinitely; an attempted acceptance after a prolonged delay is invalid as the offer has already lapsed.

Counter-Offers and the Battle of the Forms

• Hyde v Wrench (1840)

  • Termination by Counter-Offer: A counter-offer normally terminates and extinguishes the original offer.
  • Inability to Revive: Once a counter-offer is made, the original offer is dead and cannot subsequently be accepted unless re-tendered by the original offeror.

• Stevenson, Jacques, & Co v McLean (1880)

  • Request for Information versus Counter-Offer: A mere inquiry or request for information does not constitute a counter-offer.
  • Preservation of Original Offer: An offeree's inquiry regarding flexible terms, credit, or delivery options leaves the original offer intact and open to subsequent acceptance.

• Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd (1979)

  • Battle of the Forms: Where commercial parties exchange inconsistent standard terms during contract negotiations, the dispute is typically resolved by determining which party fired the "last shot."
  • Application of Rules: Submitting an order form containing distinct terms acts as a counter-offer; returning an acknowledgement slip agreeing to those terms completes acceptance on the buyer's terms.