OFFER AND ACCEPTANCE - If tender states “highest/lowest tender will be accepted” = offer Termination of offer
- Contract concluded when best offer is communicated - Unless and until acceptance occurs, there’s no agreement ∴ may withdraw from negotiations
OFFER - Referential bid: a bid expressed as a margin to the highest bidder: e.g. X offers to pay - As long as offer remains open, may terminate
o Offer: Expression of willingness to contract on specified terms, with the intention to be £10,000 more than any other offer = price determined in reference to another 1) Revocation
binding upon acceptance
Harvela Investments Ltd v Royal Trust of Canada [1986] Payne v Cave [1989]
o Objective test of offeror’s intention: If reasonable person believed offeror implied, by
- H bid ‘$2,175,000’ - If not yet accepted, offer may be withdrawn
words/conduct, intention to be bound = valid offer
- L bid ‘$2,100,000 or $101,000 in excess of any other offer’ Offord v Davies [1862]
Intention to legally commit: - Accepted L’s bid - If offer open for a specified time period, offer ≠ binding so can be revoked
o To amount an offer, offeror must make a clear, unequivocal statement to regard - Court: referential bid = invalid, b/c invitation to submit tenders implies no
himself as legally bound to perform his promise if other party accepts offer referential bids Dickinson v Dodds [1876]
1. Storer v Manchester City Council [1974] - Revocation must be communicated to offeree, not necessarily by the offeror
à UK: Doesn’t allow referential bids as 2 firms use it against each other - Also may be revoked by a reliable third party
- Signed ‘agreement of sale’ ∴ clear intention to sell council house
- S did everything to bind himself to the sale = clearly accepted + legally bound 2) Supplying information: ‘This is how much I think it is, if you sell it for £X, I will buy it.’ o If offeree accepts offer in ignorance of revocation = binding
• Mere statement of price ≠ offer to sell, other party must still offer to buy Byrne v Van Tienhoven [1880]
2. Gibson v Manchester City Council [1979]
- “May be prepared to sell’ = invitation to treat (to make an offer to buy) Harvey v Facey (1893) - Revoked offer from overseas, but VT already accepted offer
- But G completed form w/o purchase price = no binding contract - Lowest price of Bumper Pen = £900 à only stated minimum price willing to sell - Court: revocation letter not received = offer not revoked ∴ contract still existed
à Test case for 350 similar prospective buyers, if enforced sales = undermines housing policy - H ready to pay £900
- Court: not offer, only statement of information o If started performance, cannot revoke offer
What if it is NOT an offer? Errington [1952]
1) Invitation to treat: ‘If you make me an offer, I may accept’ ≠ intended to be binding Clifton v Palumbo (1944) - Father promised: If son + daughter-in-law paid off mortgage instalments, they would
- Statement invites you to make an offer, where the party is then free to accept/reject - C prepared to pay for estate at £600, then raised price. inherit house
• Advertisements - P accepted £600 offer - After commencing payments, house later transferred to mother
- Court: No, £600 = statement of price of what the house was - Binding promise ∴ cannot withdraw offer
3. Partridge v Crittenden [1968]
- Included: ‘sufficient time shall be granted’ to examine + consider - Lord Denning: this was unless offeree left performance incomplete + unperformed
- P not allowed to offer wild birds for sale
- Court: invitation to treat, not an offer ∴ indicated a later binding contract would follow
à Bingham: ‘parties are masters of their own contractual fate’ – courts reluctant to let them
- Person responds by making an offer to buy o But where a later contract follows, there still can be contract to do something else: leave contracts when they agreed to the terms
WCC v Johnson [1993] Pitt v PHH Asset Management (1993)
o If FULL performance occurred, cannot revoke offer
- Notice displayed outside shop: ‘we will beat any TV shop by £20’ = offer - No contract for sale, but PHH agreed to not deal w/ any other parties once they
Luxar v Cooper [1940]
forwarded a draft contract for sale to Pitt
à But, ‘lower prices than Tesco’ ≠ specific enough ∴ not an offer - A said he would pay B if B sold property, B begun act + found 2 willing purchasers
3) Statement of intention: ‘If you sell your house for £X, then I will not buy it’ - A rejected them
• Self-service + shop window displays
- Parties may communicate that they intend to do something ≠ intended to be binding - Court: A not liable to pay, despite his refusal prevented the sale
- Shops invite you to make them an offer = invitation to treat
≠ offer
- Offer + acceptance occurs at the till
Harris v Nickerson (1873) o Unilateral offers: To revoke, offeror must take reasonable steps to notify the people likely to
4. Pharmaceutical Society v Boots [1953] - Advertisement to auction furniture, but withdrew items before auction sale accept:
- Display of goods = invitation to treat ≠ offer, only a declaration of intention ≠ binding Shuey v United States (1875) à persuasive authority b/c American case
- Browse + makes offer to buy goods at till, shopkeeper may accept/reject this offer - Advertised reward for info on wanted criminal in newspapers
- Shops may reject offer, not compelled to sell goods at the ‘displayed’ price - 6 months later: President cancelled reward, published in a similar way
- Otherwise we’d never be able to swap anything in our basket Unilateral vs. Bilateral contracts - P gave info, unaware of cancellation
5. Fisher v Bell [1960] • Unilateral: Promise in return for an act - Court: offer made by general advertisement > personally to him, should have realized it
- Shopkeeper displayed flick knife in window - ‘If…’ contract = promise, e.g. ‘£100 will be paid to anyone who finds my dog’ might be withdrawn in some way
- Offensive Weapons Act 1959: prohibited offering offensive weapons for sale - Offer made to whole world + if performed, offeror bound:
§ Revocation must be widespread + to the same audience who initially read the offer
- Court: displayed knife for sale in window = invitation to treat, not offer Carlill v Carbolic Smoke Ball Co [1893] § Cannot revoke in a different way to the advertisement
∴ shopkeeper got away with it - Offered £100 to anyone who used their ‘smoke ball’ product + still had influenza
2) Rejection: Offer may be rejected by offeree, expressly / counter-offer
after 2 weeks
o BUT, display ≠ always an invitation to treat: - Implicit rejection: ‘I do accept offer for £1000, but I will for £900’ = terminates £1000 offer
- C fulfilled condition = accepted ∴ CSB were bound to pay reward
Thornton v Shoe Lane Parking [1970] - Counter offer = automatically rejects initial offer ∴ you cannot accept it again:
- Not a mere puff: as deposited £1000 in bank account for advertisement
- T parked car in SLP lot, received ticket from machine. - To be valid, acceptance must correspond exactly with initial offer
- Ticket conditions (on a notice): exempted SLP from liability of injury caused to à Some offers can be exhausted once accepted - If response introduces new terms/varies terms ≠ valid
customer whilst in the lot, but T was injured Hyde v Wrench (1840)
- Court: offer made once machine is ready to receive money + acceptance when Soulsbury (2007) - Sell firm for £1000. Said no, offered for £950, then later accepted £1000.
customer puts coins in + contract concluded when ticket arrived - Divorced. Promised to pay £100,000 in will for wife, if she didn’t sue him for not - Court: £1000 offer no longer existed
∴ if saw notice before he took the ticket, customer bound by terms paying child support. - Once you reject an offer by a counter-offer, you cannot accept again
- Court: unilateral offer ∴ liable to pay promised sum.
• Auctions 3) Failure to comply with a condition: E.g. where job offers made subject to: good references,
- Offeror asks for bids = invitation to treat *For unilateral offers, ask: criminal record checks, medical reports
- Each bid = offer to buy at price offered 1. What conduct did offeror specify was required? Financings Ltd v Stimson [1962]
- Acceptance = fall of auctioneer’s hammer 2. Did offeree do this? - S signed agreement to buy car on hire purchase terms. Before F signed, car was stolen.
3. If offeree PARTLY performed, did offeror intervene to prevent offeree completing = No longer in same condition when the offer was made ∴ offer cannot be accepted
British Car Auctions v Wright
performance?
- Charged with offering an unroadworthy car for sale 4) Lapse of time: If no termination date, may lapse after ‘reasonable’ time has passed
4. Did offeror change their mind + withdraw offer? Before/after offeror started
- But car sold at auction = invitation to treat, not an offer Montefiore
performance?
o Auction ‘without reserve’ = unilateral OFFER to the highest/lowest bidder - Offered to buy shares in June, accepted in November = offer lapsed
• Bilateral: Promise for a promise: ‘I will give you £100 if you find my dog’ - Court: entitled to refuse
6. Warlow v Harrison [1858]
= Obligation on both sides, e.g. pay money to stop, expects goods in return - ‘Reasonable time’ depends on facts of case: e.g. subject matter (perishable)
- Held auction of horse ‘without reserve’
- Auctioneer bound to sell to the highest bona fide bidder - To be valid offer, must be communicated to offeree: - Value of shares fluctuates rapidly = offer terminates after short while
o NOT bound by an offer they are unaware of: 5) Death: If offeror dies before acceptance, offer is revoked UNLESS other party accepts offer in
• Invitations to tender
- Announcements inviting tenders ≠ offer Taylor v Laird (1856) ignorance of death/it’s not a personal services contract
Spencer v Harding - Former captain provided navigation services for voyage w/o shipowners request Bradbury v Morgan (1862)
- Tenders to provide goods/services = invitations to suppliers to offer a particular price - Claimed compensation for services - M = deceased’s representative
- Party inviting bids then selects a bid - Court: offer was not communicated ≠ binding - B had no knowledge of death + continued to supply goods
, ACCEPTANCE Examples Battle of the forms
o Acceptance: Treitel = ‘final and unqualified assent to all terms of an offer’ 1. Wrongly addresses letter: acceptance letter not received due to offeree’s error, not - Battle of forms: Parties try to conclude contract by exchange of forms w/ incompatible terms
o Requirements: circumstance. Neither lost in post/delayed. ∴ postal acceptance rule doesn’t apply. - A makes offer on form w/ A’s standard terms, B ‘accepts’ on form w/ B’s standard terms. Both conflict.
§ Acceptance must correspond with offer 2. Posted acceptance. Uses quicker method, email, to cancel acceptance. Email arrives - Each communication = counter-offer
before letter: Acceptance accepted once it is posted = binding - Final counter-offer = contract formed “Last shot approach”
R v Clarke [1927] à Australian case
- Reward offered for info leading to arrest of murderers 3. Offeree writes ‘£600 is too little. I am prepared to sell for £650’. Receives no answer,
but later writes “I have considered your offer and accept it as £600”: C counter-offered Butler Machine Tool Corp. v Ex-Cell-O Corp (1979)
- C charged + gave info to clear himself
with £650, so original offer was rejected. - Seller offered to sell machine tool w/ price variation clause
- No intention to earn reward when performed act b/c didn’t know about it
4. D telephones “I have just seen your advertisement”. M says: “I withdraw my offer”. D: - Buyer placed order w/ different terms = counter-offer
VS.
“my clerk has just left the office to post my acceptance” - Seller signed + returned tear-off slip
Gibbons v Proctor [1861] - Exception
- Revocation was not communicated to offeree before phone call, so offer still exists - Late delivery
- Entitled to claim reward for giving information, despite being unaware of offer
- Once letter is posted = binding, depends if clerk posted yet - Court: seller accepted buyer’s terms b/c signed slip
- Policy: court wants to encourage + reward beneficial acts
Telegraph acceptance rule à Denning: ‘mirror image rule’ out-of-date b/c court construed an agreement out of a disagreement
o Motive for acceptance = irrelevant:
- Where it is reasonable to use telegraphs, acceptance occurs when acceptance is handed - Suggests: “looking at totality of documents”
Williams v Cowardine
in to the person authorized to take telegraphs - Conflicting terms may be removed + replaced by a reasonable compromise = ↑ FLEXIBLE
- Gave info to ease her conscience b/c believed she would not live long
- Entitled to reward b/c must have known of reward, despite not wanting it Bruner v Moore (1903), [1904] 1 Ch 305 Mirror image approach: Contract forms when offer made by 1 party is accepted by other party
- 2 Americans register patent for sewing machine 1. Unsuitable: Some situations don’t fit within this rule
§ Must be communicated - Telegraph accepted once given to clerk to telegraph - B/c offer + acceptance = suggests agreement
§ By appropriate method
- But may be no contract:
Offer cannot be accepted by silence 3) Instantaneous communication o Specific rules contradict objective intention: e.g. no acceptance by silence, ads = invitations to
Felthouse à Authority Telexes treat
- If I don’t hear from you, I will consider the horse mine at £30 - When acceptance is received = contract exists - B/c NO offer + acceptance = suggests no agreement
- Nephew didn’t reply, but asked auctioneer to withdraw horse from auction Brinkibon Ltd v Stahag (1982) - BUT there may be a contract:
- Auctioneer forgot instruction + sold horse to another party - Acceptance sent by telex out of office hours o Lack of actual consensus overcome by: objective test, last spot approach, interpret to fix
- Court: no contract, b/c nephew never communicated intention to accept - Left on answering machine ≠ instantaneous means of communication uncertainty
- Court: Acceptance only effective once office hours re-opened
Offer can be accepted by conduct: 2. Insufficient
Brogden v Metropolitan Railway [1877] Telephones - Lacks other formation requirements: certainty, intention to create legal relations, consideration etc.
- B supplied coal + altered draft agreement which was sent by MR - Acceptance must be communicated
- Contract by telephone can be simultaneous formed in 2 places: Treat as a face-to-face 3. Misleading
- Signed + returned it
- Objective approach may enforce agreements that does not reflect genuine consensus
- MR kept in drawer for 2 years, never stamped Apple Corp Limited v apple Computer [2004] - Contracts too vague/incomplete, but courts gap-fill/interpret
- Coal ordered + supplied, then dispute arose - Telephone conversation between England + US
- Court: Binding contract - Court: contract formed both sides Revocation of acceptance = no English authority
- Came into existence when coal ordered by M + supplied by B • If revoked by telegram/telephone, offeror receives before acceptance letter
- Both parties acted as if there was a contract + fulfilled their parts à Denning: If telephone goes ‘dead’, offeror must call back to complete acceptance VS.
Email Countess of Dunmore v Alexander (1830)
Exceptions to need for communication
- No contract electronically until buyer received acknowledgement of his acceptance - Lord Craigie (dissent): b/c postal rule, better that offeree cannot revoke
1) Where the offeror has waived the requirement of communication
Carlill v Carbolic Smoke Ball Allianz insurance Co-Egypt v Aigaion Insurance Co SA [2008]
- Offer stated completing act constitutes an acceptance = prescribed mode of - Re-insurance contract
acceptance - Allianz had series of emails w/ broker
- Court: emails = clear intention to create a contract ∴ contract formed
2) Post acceptance rule
Adams v Lindsell [1818] - Email is an offer, but including sender’s email address ≠ a signature
- L made offer by post to sell wool, asked for reply by post J Pereira Fernandes SA v Mehta [2006]
- Offer sent on 2nd sept, arrived on 5th - M emailed: give repayment schedule before petition heard
- A posted acceptance, but L assumed offer was rejected + sold to 3rd party - But did not sign email
- Court: acceptance made at the time letter was posted - JP agreed by telephone
- M did not fulfil terms of his email
*Postal rule only applies to ACCEPTANCE, NOT revocation of an offer by post! - Court: valid offer + acceptance by email + telephone
- ‘Offer was ACCEPTED by letter at the time the letter was posted’ - But, M did not sign email
- Postal acceptance takes effect upon posting, not delivery - If signed name/initials = sufficient signature
o For Postal Rule to apply: 4) Prescribed mode of acceptance
§ Acceptance by post must be reasonably expected means of acceptance, e.g. - If specifies only 1 method of acceptance, other ways = offeror entitled to refuse purchase:
previously communicated by post Henshaw
§ Properly stamped + addressed - E offered to buy H’s flour, requested acceptance only by wagon
§ Must be posted, not delivered - H sent acceptance by mail + arrived late
§ Applies where acceptance letter received after notice of revocation of offer sent - Court: ≠ binding, E entitled to refuse purchase
Henthorn v Fraser [1892]
§ Applies if acceptance letter never received by offeror - Offeree uses equally quick method = acceptance likely to be binding:
Household Fire Insurance v Grant [1879] Tinn v Hoffman
- Letter never received - Offeree instructed to reply ‘by return of post’
- G’s name remained on shareholder’s name, bound to pay share - Honeyman J: As long as other means is quicker than the prescribed method
- Court: letter WAS posted = binding contract, regardless if lost/delayed - Principle applied in:
Why? à Risk falls on offeror! Manchester diocesan council [1970]
1. Limits power to r evoke offer before acceptance 1. Didn’t clearly state ‘post is the only way of acceptance’ ∴ can use other
2. Protect offeree: Stops offeror revoking whilst acceptance in transit advantageous methods
3. If lost/delayed letter, offeror would be the first to enquire why no reply was received 2. Posted acceptance to wrong address, sent to different MC address
- Court: didn’t say ONLY that address, just said ‘reply to his offer’
- If offer doesn’t state prescribed mode, means which offer was sent: e.g. offer by
telegram = implied acceptance should be equally speedy means.
- Contract concluded when best offer is communicated - Unless and until acceptance occurs, there’s no agreement ∴ may withdraw from negotiations
OFFER - Referential bid: a bid expressed as a margin to the highest bidder: e.g. X offers to pay - As long as offer remains open, may terminate
o Offer: Expression of willingness to contract on specified terms, with the intention to be £10,000 more than any other offer = price determined in reference to another 1) Revocation
binding upon acceptance
Harvela Investments Ltd v Royal Trust of Canada [1986] Payne v Cave [1989]
o Objective test of offeror’s intention: If reasonable person believed offeror implied, by
- H bid ‘$2,175,000’ - If not yet accepted, offer may be withdrawn
words/conduct, intention to be bound = valid offer
- L bid ‘$2,100,000 or $101,000 in excess of any other offer’ Offord v Davies [1862]
Intention to legally commit: - Accepted L’s bid - If offer open for a specified time period, offer ≠ binding so can be revoked
o To amount an offer, offeror must make a clear, unequivocal statement to regard - Court: referential bid = invalid, b/c invitation to submit tenders implies no
himself as legally bound to perform his promise if other party accepts offer referential bids Dickinson v Dodds [1876]
1. Storer v Manchester City Council [1974] - Revocation must be communicated to offeree, not necessarily by the offeror
à UK: Doesn’t allow referential bids as 2 firms use it against each other - Also may be revoked by a reliable third party
- Signed ‘agreement of sale’ ∴ clear intention to sell council house
- S did everything to bind himself to the sale = clearly accepted + legally bound 2) Supplying information: ‘This is how much I think it is, if you sell it for £X, I will buy it.’ o If offeree accepts offer in ignorance of revocation = binding
• Mere statement of price ≠ offer to sell, other party must still offer to buy Byrne v Van Tienhoven [1880]
2. Gibson v Manchester City Council [1979]
- “May be prepared to sell’ = invitation to treat (to make an offer to buy) Harvey v Facey (1893) - Revoked offer from overseas, but VT already accepted offer
- But G completed form w/o purchase price = no binding contract - Lowest price of Bumper Pen = £900 à only stated minimum price willing to sell - Court: revocation letter not received = offer not revoked ∴ contract still existed
à Test case for 350 similar prospective buyers, if enforced sales = undermines housing policy - H ready to pay £900
- Court: not offer, only statement of information o If started performance, cannot revoke offer
What if it is NOT an offer? Errington [1952]
1) Invitation to treat: ‘If you make me an offer, I may accept’ ≠ intended to be binding Clifton v Palumbo (1944) - Father promised: If son + daughter-in-law paid off mortgage instalments, they would
- Statement invites you to make an offer, where the party is then free to accept/reject - C prepared to pay for estate at £600, then raised price. inherit house
• Advertisements - P accepted £600 offer - After commencing payments, house later transferred to mother
- Court: No, £600 = statement of price of what the house was - Binding promise ∴ cannot withdraw offer
3. Partridge v Crittenden [1968]
- Included: ‘sufficient time shall be granted’ to examine + consider - Lord Denning: this was unless offeree left performance incomplete + unperformed
- P not allowed to offer wild birds for sale
- Court: invitation to treat, not an offer ∴ indicated a later binding contract would follow
à Bingham: ‘parties are masters of their own contractual fate’ – courts reluctant to let them
- Person responds by making an offer to buy o But where a later contract follows, there still can be contract to do something else: leave contracts when they agreed to the terms
WCC v Johnson [1993] Pitt v PHH Asset Management (1993)
o If FULL performance occurred, cannot revoke offer
- Notice displayed outside shop: ‘we will beat any TV shop by £20’ = offer - No contract for sale, but PHH agreed to not deal w/ any other parties once they
Luxar v Cooper [1940]
forwarded a draft contract for sale to Pitt
à But, ‘lower prices than Tesco’ ≠ specific enough ∴ not an offer - A said he would pay B if B sold property, B begun act + found 2 willing purchasers
3) Statement of intention: ‘If you sell your house for £X, then I will not buy it’ - A rejected them
• Self-service + shop window displays
- Parties may communicate that they intend to do something ≠ intended to be binding - Court: A not liable to pay, despite his refusal prevented the sale
- Shops invite you to make them an offer = invitation to treat
≠ offer
- Offer + acceptance occurs at the till
Harris v Nickerson (1873) o Unilateral offers: To revoke, offeror must take reasonable steps to notify the people likely to
4. Pharmaceutical Society v Boots [1953] - Advertisement to auction furniture, but withdrew items before auction sale accept:
- Display of goods = invitation to treat ≠ offer, only a declaration of intention ≠ binding Shuey v United States (1875) à persuasive authority b/c American case
- Browse + makes offer to buy goods at till, shopkeeper may accept/reject this offer - Advertised reward for info on wanted criminal in newspapers
- Shops may reject offer, not compelled to sell goods at the ‘displayed’ price - 6 months later: President cancelled reward, published in a similar way
- Otherwise we’d never be able to swap anything in our basket Unilateral vs. Bilateral contracts - P gave info, unaware of cancellation
5. Fisher v Bell [1960] • Unilateral: Promise in return for an act - Court: offer made by general advertisement > personally to him, should have realized it
- Shopkeeper displayed flick knife in window - ‘If…’ contract = promise, e.g. ‘£100 will be paid to anyone who finds my dog’ might be withdrawn in some way
- Offensive Weapons Act 1959: prohibited offering offensive weapons for sale - Offer made to whole world + if performed, offeror bound:
§ Revocation must be widespread + to the same audience who initially read the offer
- Court: displayed knife for sale in window = invitation to treat, not offer Carlill v Carbolic Smoke Ball Co [1893] § Cannot revoke in a different way to the advertisement
∴ shopkeeper got away with it - Offered £100 to anyone who used their ‘smoke ball’ product + still had influenza
2) Rejection: Offer may be rejected by offeree, expressly / counter-offer
after 2 weeks
o BUT, display ≠ always an invitation to treat: - Implicit rejection: ‘I do accept offer for £1000, but I will for £900’ = terminates £1000 offer
- C fulfilled condition = accepted ∴ CSB were bound to pay reward
Thornton v Shoe Lane Parking [1970] - Counter offer = automatically rejects initial offer ∴ you cannot accept it again:
- Not a mere puff: as deposited £1000 in bank account for advertisement
- T parked car in SLP lot, received ticket from machine. - To be valid, acceptance must correspond exactly with initial offer
- Ticket conditions (on a notice): exempted SLP from liability of injury caused to à Some offers can be exhausted once accepted - If response introduces new terms/varies terms ≠ valid
customer whilst in the lot, but T was injured Hyde v Wrench (1840)
- Court: offer made once machine is ready to receive money + acceptance when Soulsbury (2007) - Sell firm for £1000. Said no, offered for £950, then later accepted £1000.
customer puts coins in + contract concluded when ticket arrived - Divorced. Promised to pay £100,000 in will for wife, if she didn’t sue him for not - Court: £1000 offer no longer existed
∴ if saw notice before he took the ticket, customer bound by terms paying child support. - Once you reject an offer by a counter-offer, you cannot accept again
- Court: unilateral offer ∴ liable to pay promised sum.
• Auctions 3) Failure to comply with a condition: E.g. where job offers made subject to: good references,
- Offeror asks for bids = invitation to treat *For unilateral offers, ask: criminal record checks, medical reports
- Each bid = offer to buy at price offered 1. What conduct did offeror specify was required? Financings Ltd v Stimson [1962]
- Acceptance = fall of auctioneer’s hammer 2. Did offeree do this? - S signed agreement to buy car on hire purchase terms. Before F signed, car was stolen.
3. If offeree PARTLY performed, did offeror intervene to prevent offeree completing = No longer in same condition when the offer was made ∴ offer cannot be accepted
British Car Auctions v Wright
performance?
- Charged with offering an unroadworthy car for sale 4) Lapse of time: If no termination date, may lapse after ‘reasonable’ time has passed
4. Did offeror change their mind + withdraw offer? Before/after offeror started
- But car sold at auction = invitation to treat, not an offer Montefiore
performance?
o Auction ‘without reserve’ = unilateral OFFER to the highest/lowest bidder - Offered to buy shares in June, accepted in November = offer lapsed
• Bilateral: Promise for a promise: ‘I will give you £100 if you find my dog’ - Court: entitled to refuse
6. Warlow v Harrison [1858]
= Obligation on both sides, e.g. pay money to stop, expects goods in return - ‘Reasonable time’ depends on facts of case: e.g. subject matter (perishable)
- Held auction of horse ‘without reserve’
- Auctioneer bound to sell to the highest bona fide bidder - To be valid offer, must be communicated to offeree: - Value of shares fluctuates rapidly = offer terminates after short while
o NOT bound by an offer they are unaware of: 5) Death: If offeror dies before acceptance, offer is revoked UNLESS other party accepts offer in
• Invitations to tender
- Announcements inviting tenders ≠ offer Taylor v Laird (1856) ignorance of death/it’s not a personal services contract
Spencer v Harding - Former captain provided navigation services for voyage w/o shipowners request Bradbury v Morgan (1862)
- Tenders to provide goods/services = invitations to suppliers to offer a particular price - Claimed compensation for services - M = deceased’s representative
- Party inviting bids then selects a bid - Court: offer was not communicated ≠ binding - B had no knowledge of death + continued to supply goods
, ACCEPTANCE Examples Battle of the forms
o Acceptance: Treitel = ‘final and unqualified assent to all terms of an offer’ 1. Wrongly addresses letter: acceptance letter not received due to offeree’s error, not - Battle of forms: Parties try to conclude contract by exchange of forms w/ incompatible terms
o Requirements: circumstance. Neither lost in post/delayed. ∴ postal acceptance rule doesn’t apply. - A makes offer on form w/ A’s standard terms, B ‘accepts’ on form w/ B’s standard terms. Both conflict.
§ Acceptance must correspond with offer 2. Posted acceptance. Uses quicker method, email, to cancel acceptance. Email arrives - Each communication = counter-offer
before letter: Acceptance accepted once it is posted = binding - Final counter-offer = contract formed “Last shot approach”
R v Clarke [1927] à Australian case
- Reward offered for info leading to arrest of murderers 3. Offeree writes ‘£600 is too little. I am prepared to sell for £650’. Receives no answer,
but later writes “I have considered your offer and accept it as £600”: C counter-offered Butler Machine Tool Corp. v Ex-Cell-O Corp (1979)
- C charged + gave info to clear himself
with £650, so original offer was rejected. - Seller offered to sell machine tool w/ price variation clause
- No intention to earn reward when performed act b/c didn’t know about it
4. D telephones “I have just seen your advertisement”. M says: “I withdraw my offer”. D: - Buyer placed order w/ different terms = counter-offer
VS.
“my clerk has just left the office to post my acceptance” - Seller signed + returned tear-off slip
Gibbons v Proctor [1861] - Exception
- Revocation was not communicated to offeree before phone call, so offer still exists - Late delivery
- Entitled to claim reward for giving information, despite being unaware of offer
- Once letter is posted = binding, depends if clerk posted yet - Court: seller accepted buyer’s terms b/c signed slip
- Policy: court wants to encourage + reward beneficial acts
Telegraph acceptance rule à Denning: ‘mirror image rule’ out-of-date b/c court construed an agreement out of a disagreement
o Motive for acceptance = irrelevant:
- Where it is reasonable to use telegraphs, acceptance occurs when acceptance is handed - Suggests: “looking at totality of documents”
Williams v Cowardine
in to the person authorized to take telegraphs - Conflicting terms may be removed + replaced by a reasonable compromise = ↑ FLEXIBLE
- Gave info to ease her conscience b/c believed she would not live long
- Entitled to reward b/c must have known of reward, despite not wanting it Bruner v Moore (1903), [1904] 1 Ch 305 Mirror image approach: Contract forms when offer made by 1 party is accepted by other party
- 2 Americans register patent for sewing machine 1. Unsuitable: Some situations don’t fit within this rule
§ Must be communicated - Telegraph accepted once given to clerk to telegraph - B/c offer + acceptance = suggests agreement
§ By appropriate method
- But may be no contract:
Offer cannot be accepted by silence 3) Instantaneous communication o Specific rules contradict objective intention: e.g. no acceptance by silence, ads = invitations to
Felthouse à Authority Telexes treat
- If I don’t hear from you, I will consider the horse mine at £30 - When acceptance is received = contract exists - B/c NO offer + acceptance = suggests no agreement
- Nephew didn’t reply, but asked auctioneer to withdraw horse from auction Brinkibon Ltd v Stahag (1982) - BUT there may be a contract:
- Auctioneer forgot instruction + sold horse to another party - Acceptance sent by telex out of office hours o Lack of actual consensus overcome by: objective test, last spot approach, interpret to fix
- Court: no contract, b/c nephew never communicated intention to accept - Left on answering machine ≠ instantaneous means of communication uncertainty
- Court: Acceptance only effective once office hours re-opened
Offer can be accepted by conduct: 2. Insufficient
Brogden v Metropolitan Railway [1877] Telephones - Lacks other formation requirements: certainty, intention to create legal relations, consideration etc.
- B supplied coal + altered draft agreement which was sent by MR - Acceptance must be communicated
- Contract by telephone can be simultaneous formed in 2 places: Treat as a face-to-face 3. Misleading
- Signed + returned it
- Objective approach may enforce agreements that does not reflect genuine consensus
- MR kept in drawer for 2 years, never stamped Apple Corp Limited v apple Computer [2004] - Contracts too vague/incomplete, but courts gap-fill/interpret
- Coal ordered + supplied, then dispute arose - Telephone conversation between England + US
- Court: Binding contract - Court: contract formed both sides Revocation of acceptance = no English authority
- Came into existence when coal ordered by M + supplied by B • If revoked by telegram/telephone, offeror receives before acceptance letter
- Both parties acted as if there was a contract + fulfilled their parts à Denning: If telephone goes ‘dead’, offeror must call back to complete acceptance VS.
Email Countess of Dunmore v Alexander (1830)
Exceptions to need for communication
- No contract electronically until buyer received acknowledgement of his acceptance - Lord Craigie (dissent): b/c postal rule, better that offeree cannot revoke
1) Where the offeror has waived the requirement of communication
Carlill v Carbolic Smoke Ball Allianz insurance Co-Egypt v Aigaion Insurance Co SA [2008]
- Offer stated completing act constitutes an acceptance = prescribed mode of - Re-insurance contract
acceptance - Allianz had series of emails w/ broker
- Court: emails = clear intention to create a contract ∴ contract formed
2) Post acceptance rule
Adams v Lindsell [1818] - Email is an offer, but including sender’s email address ≠ a signature
- L made offer by post to sell wool, asked for reply by post J Pereira Fernandes SA v Mehta [2006]
- Offer sent on 2nd sept, arrived on 5th - M emailed: give repayment schedule before petition heard
- A posted acceptance, but L assumed offer was rejected + sold to 3rd party - But did not sign email
- Court: acceptance made at the time letter was posted - JP agreed by telephone
- M did not fulfil terms of his email
*Postal rule only applies to ACCEPTANCE, NOT revocation of an offer by post! - Court: valid offer + acceptance by email + telephone
- ‘Offer was ACCEPTED by letter at the time the letter was posted’ - But, M did not sign email
- Postal acceptance takes effect upon posting, not delivery - If signed name/initials = sufficient signature
o For Postal Rule to apply: 4) Prescribed mode of acceptance
§ Acceptance by post must be reasonably expected means of acceptance, e.g. - If specifies only 1 method of acceptance, other ways = offeror entitled to refuse purchase:
previously communicated by post Henshaw
§ Properly stamped + addressed - E offered to buy H’s flour, requested acceptance only by wagon
§ Must be posted, not delivered - H sent acceptance by mail + arrived late
§ Applies where acceptance letter received after notice of revocation of offer sent - Court: ≠ binding, E entitled to refuse purchase
Henthorn v Fraser [1892]
§ Applies if acceptance letter never received by offeror - Offeree uses equally quick method = acceptance likely to be binding:
Household Fire Insurance v Grant [1879] Tinn v Hoffman
- Letter never received - Offeree instructed to reply ‘by return of post’
- G’s name remained on shareholder’s name, bound to pay share - Honeyman J: As long as other means is quicker than the prescribed method
- Court: letter WAS posted = binding contract, regardless if lost/delayed - Principle applied in:
Why? à Risk falls on offeror! Manchester diocesan council [1970]
1. Limits power to r evoke offer before acceptance 1. Didn’t clearly state ‘post is the only way of acceptance’ ∴ can use other
2. Protect offeree: Stops offeror revoking whilst acceptance in transit advantageous methods
3. If lost/delayed letter, offeror would be the first to enquire why no reply was received 2. Posted acceptance to wrong address, sent to different MC address
- Court: didn’t say ONLY that address, just said ‘reply to his offer’
- If offer doesn’t state prescribed mode, means which offer was sent: e.g. offer by
telegram = implied acceptance should be equally speedy means.
