Formation
Offers
What is a contract?
- A legally binding agreement between two parties
- A contract creates ‘positive obligations’
- Law which is freely created by two individuals but that is enforced judicially
Carlill v Carbolic Smoke Ball [1892]
- Carbolic offered money to anyone who caught a cold after using their products for 2
weeks, 3 times a day.
- Mrs Carlill caught a cold and claimed in court for £100.
- Courts held that the company had made an offer
- Clear intention to be bound (clear language used, they had the money in the
bank to give)
- Capable of clear acceptance (by using the product, this was how to accept)
- They argued it wouldn’t make commercial sense, they put it in the paper and
there could be thousands of people could see it. So objectively it wouldn’t make
commercial sense.
- Courts replied that they didn't offer it to everyone who read the paper, just those
who used the smokeball, and they were also sure it would work so surely they
shouldn’t have that many accepted offers
- For an agreement there must be an accepted offer
- This requires a “meeting of the minds” (both parties have to be agreeing to the same
thing, offer and acceptance have to be about the same subject matter)
- However, nobody knows that the parties intended when entering an agreement
- It is a matter of establishing intention
- This is objectively assessed
- Looks at what the parties have said and done to each other, and does this
support the contract?
- Did party A (offeror) intend to make the offer, and did party B intend to
accept that offer?
- OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd's Rep 700
- Offeror stated a price of $155,000 but B’s solicitor made a mistake, he
should have agreed and put £155,000, but the court concluded that’s
what they intended
- Moran v University College Salford (No 2) The Times, 23rd Nov [1993]
, - University accidentally gave an unconditional offer to Moran, but they
meant to reject him. Moran accepted it. Courts held that they had made a
contract. Objective assessment said that they made an offer which he
accepted.
- [T]he judicial task is not to discover the actual intentions of each party; it is to
decide what each was reasonably entitled to conclude from the attitude of the
other” – Gloag on Contract [1929]
What is an offer?
“An intimation, by words or conduct, of a willingness to enter into a legally binding contract,
and which in its terms expressly or impliedly indicates that it is to become binding on the
offeror as soon as it has been accepted by an act, forbearance or return promise on the part
of the person to whom it was addressed”
All definitions of offers work around these two principles
- Willingness to enter into a legally binding contract (willingness to be bound)
- Can become binding as soon as it is accepted
“Would you like to buy my car” - not an offer but an invitation to treat
- Doesn’t show a willingness to enter a contract.
- Not saying I will sell you my car
- Only raising the possibility
- Can become binding as soon as it is accepted
- Cannot become binding straight away
- If you say yes, all that is agreed is that we are both amenable to having a
contract at some point
- You know nothing about my car, other than it is a car
“Blue Ford Focus for sale, 1.8l, 20,000 miles, 2012 reg, £4000 cash or cheque only” - more
likely to be an offer
- Shows willingness to enter into a legally binding contract
- Can be agreed upon straight away, relevant information is there and whilst it may be
negotiated, the essence of the agreement is there.
If there is no intention to be bound upon acceptance, such statements are invitations to treat. If
there is no statement that can be accepted at all, just a tabling for discussion, this is an
invitation to treat.
Offers
What is a contract?
- A legally binding agreement between two parties
- A contract creates ‘positive obligations’
- Law which is freely created by two individuals but that is enforced judicially
Carlill v Carbolic Smoke Ball [1892]
- Carbolic offered money to anyone who caught a cold after using their products for 2
weeks, 3 times a day.
- Mrs Carlill caught a cold and claimed in court for £100.
- Courts held that the company had made an offer
- Clear intention to be bound (clear language used, they had the money in the
bank to give)
- Capable of clear acceptance (by using the product, this was how to accept)
- They argued it wouldn’t make commercial sense, they put it in the paper and
there could be thousands of people could see it. So objectively it wouldn’t make
commercial sense.
- Courts replied that they didn't offer it to everyone who read the paper, just those
who used the smokeball, and they were also sure it would work so surely they
shouldn’t have that many accepted offers
- For an agreement there must be an accepted offer
- This requires a “meeting of the minds” (both parties have to be agreeing to the same
thing, offer and acceptance have to be about the same subject matter)
- However, nobody knows that the parties intended when entering an agreement
- It is a matter of establishing intention
- This is objectively assessed
- Looks at what the parties have said and done to each other, and does this
support the contract?
- Did party A (offeror) intend to make the offer, and did party B intend to
accept that offer?
- OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd's Rep 700
- Offeror stated a price of $155,000 but B’s solicitor made a mistake, he
should have agreed and put £155,000, but the court concluded that’s
what they intended
- Moran v University College Salford (No 2) The Times, 23rd Nov [1993]
, - University accidentally gave an unconditional offer to Moran, but they
meant to reject him. Moran accepted it. Courts held that they had made a
contract. Objective assessment said that they made an offer which he
accepted.
- [T]he judicial task is not to discover the actual intentions of each party; it is to
decide what each was reasonably entitled to conclude from the attitude of the
other” – Gloag on Contract [1929]
What is an offer?
“An intimation, by words or conduct, of a willingness to enter into a legally binding contract,
and which in its terms expressly or impliedly indicates that it is to become binding on the
offeror as soon as it has been accepted by an act, forbearance or return promise on the part
of the person to whom it was addressed”
All definitions of offers work around these two principles
- Willingness to enter into a legally binding contract (willingness to be bound)
- Can become binding as soon as it is accepted
“Would you like to buy my car” - not an offer but an invitation to treat
- Doesn’t show a willingness to enter a contract.
- Not saying I will sell you my car
- Only raising the possibility
- Can become binding as soon as it is accepted
- Cannot become binding straight away
- If you say yes, all that is agreed is that we are both amenable to having a
contract at some point
- You know nothing about my car, other than it is a car
“Blue Ford Focus for sale, 1.8l, 20,000 miles, 2012 reg, £4000 cash or cheque only” - more
likely to be an offer
- Shows willingness to enter into a legally binding contract
- Can be agreed upon straight away, relevant information is there and whilst it may be
negotiated, the essence of the agreement is there.
If there is no intention to be bound upon acceptance, such statements are invitations to treat. If
there is no statement that can be accepted at all, just a tabling for discussion, this is an
invitation to treat.
