Offer & Acceptance
Introduction
- For agreement to take place, offeror needs to make offer & offeree needs to
communicate unequivocal acceptance
- Bilateral: both parties assume an obligation to each other
- Unilateral: one party makes offer or proposal in terms which call for an act to be
performed by 1+ parties
- Unilateral doesn’t involve mutual promises - only the person making an offer
assumes an obilgation
- Other party accepts offer by performing required act in accordance w/
requirements of offer - hence creating unilateral contract
Structure for offer & acceptance
1. Identify whether communciation is offer or invitation to treat
2. Is there a counter-offer? Or request for further information? What is the effect of a
counter-offer or request for further info on the original offer?
3. Acceptance: is it in response to the offer?
4. Is the acceptance unqualified - i.e. does it correspond exactly with the terms of the offer?
Where acceptance does not mirror offer, it raises question whether it is a counter-offer or
a request for further information
5. Was acceptance made using a valid mode?
6. Is acceptance communicated? Determined by mode of acceptance used by offeree. If
sent by post, then discussion of postal rule & associated issues = relevant. If
instantaneous, then leads to discussion of rule in Entores v Miles Far East
Corporation & all related issues
7. Wdas the offer open at the point of acceptance? Need to check whether offer had been
terminated either as a result of rejection, lapse or revocation.
Requirements for a valid offer
- Valid offer must be clear & certain & display intention to be bound
- Requirements clearly illustrated in case of Storer v Manchester City Council -
contrasted with Gibson v Manchester City Council
Invitations to treat
- Offer must be distinguished from invitation to treat
- If offer made, offeror is effectively undertaking to be contractually bound by terms of offer
in event of unconditional acceptance being made by offeree
- Invitation to treat: first step in negotiations which may/may not lead to firm offer by one
of the parties
- Cannot be accepted to form a binding contract
, - Invitation to treat: advertisements, display of goods for sale, tenders, auctions, websites
(exceptions)
End of Offer
- Rejection, lapse or revocation
- In each case, offer loses legal effect & becomes incapable of acceptance
Valid Acceptance Rules
1. Only the person/people to whom an offer is made can accept the offer
2. Acceptance must be unqualified - i.e. must be a mirror image of offer corresponding
exactly with terms of offer
3. Manner of communication of acceptance - any manner whatsoever
a. But if offeror prescribes a mode of acceptance either expressly or by
implication & offeree communicates in different mode, then this raises question
whether communication of acceptance in other manner will suffice
4. Acceptance must be communicated to offeror
a. Is it possible for a contract to come into existence where person other than
offeree informs offeror of acceptance
- Is offer still open at time when offeree accepts - if offer terminated, then cannot accept
Mode of Acceptance
- If offeror makes it clear that will not be bound unless acceptance is communicated in a
precise way & by no other, then only acceptance by that mode will suffice
- Unless prescribed mode of acceptance is mandatory, another mode of acceptance
which is no less advantageous to the offeror will bind him
- IF method prescribed for benefit of offeree, then offeree can waive stipulation for his
benefit & use alternative mode - provided alternative method does not disadvantage
offeror
Acceptance must be communicated
- Acceptance is effective from the time it is communicated to the offeror
- Where acceptance is made by post, it takes effect from the moment the letter of
acceptance is properly posted
- Postal rule: authority for exception = Adams v Lindsell
- Applies even where letter is delayed/lost in post (Household Fire & Carriage
Accident Insurance Co v Grant)
- Exceptions to postal rule:
1. If letter not properly posted
2. If not contemplated that post would be used
3. If it would be manifestly inconvenient/absurd
4. If letter incorrectly addressed
5. If offeror has ousted postal rule
- Postal rule does not apply to letters revoking offers
,Acceptance communicated using instantaneous means
- Acceptance takes place at moment received by offeror (Entores v Miles Far East
Corporation)
- Mondial Shipping v Astarte Shipping: acceptance received at start of business on day if
acceptance sent outside ordinary office hours
- Thomas v BPE Solicitors: email to be treated like other forms of instantaneous
communications - therefore email acceptance is effective when received (i.e. when email
arrives on offeror’s email server)
- Case also established meaning of ‘ordinary office hours’ - depends on context of
parties prior communications
Introduction
- Offer & acceptance + intention to create legal relations + consideration = binding
contract
Objective Approach to Agreement
- When determining whether agreement exists, court is not concerned with inward mental
intent of parties, but rather with what a reasonable person would say was the intention of
the parties, having regard to all circumstances
- Law applies an objective test when comes to identifying agreement
Requirements for a Valid Offer
Certainty of Offer
- Must be clear & certain
- Illustrated in Gibson v Manchester City Council [1979]
Intention to be bound
- Offeror must show intention to be legally bound
- In Gibson, wording ‘may be prepared to sell’ used by City Treasurer was deemed to lack
the requisite intention to be legally bound
- Storer v Manchester City Council [1974] - ‘if you will sign the agreement & return it to me
I will send you the agreement signed on behalf of the corporation in exchange’ - did
demonstrate intention to be bound
- Court takes objective approach to ascertaining whether there was intention to be bound-
what matters is what a reasonable person would say the parties in Gibson & Storer
intended, on the basis of their letters
- What was actually in the minds of the people who wrote the letters is not relevant
Unilateral & Bilateral Contracts
- Unilateral: only actual performance of the required act will constitute acceptance
, Summary
- Offer must be clear & certain
- Offeror must show intention to be legally bound - words such as ‘may be prepared to
sell’ do not show this
- Two kinds of contract - unilateral & bilateral contracts
- Bilateral more common - each party assumes an obligation to the other party by making
a promise to do something, i.e. sell item to other party in exchange for payment
- Unilateral less common - one party makes offer or proposal in terms which call for act to
be performed by 1+ other parties - only actual performance of required act will constitute
acceptance
Invitations to Treat
- Invitation to treat = first step in negotiations which may/may not lead to a firm offer by
one of the parties
- Usually takes form of invitation to make an offer
- Offer is undertaking to be contractually bound by terms of that offer in event of an
unconditional acceptance being made by offeree
- Invitation to treat cannot be accepted to form a binding contract
Advertisements
- Partridge v Crittenden [1968]: General rule: adverts regarded as statements inviting
further negotiations or invitations to treat
- Reasoning: advertiser may have limited supplies of goods in question - if advert was
offer, could be accepted by larger number of people than advertiser was able to supply -
would result in advertiser breaching 1+ contracts
- Exception: does not apply where advertisement amounts to a unilateral offer
Carlill v Carbolic Smoke Ball Co (1893)
- Essentially - twin requirements of a unilateral offer - both a prescribed act AND a clear
intention to be bound
Displays of goods
- Fisher v Bell [1961]: General rule: price-marked goods are not offer for sale but
invitation to treat
- Regardless of whether shop actually expressly designates that goods are an offer -
‘special offer’ = still no more than an invitation to treat
Invitations to tender
- Where a party (usually company or public body) wishes to purchase a major item or
service
- Requestor invites tenders (offers) from those interested in supplying goods/services
required
- Spencer v Harding [1870] - general rule: is an invitation to treat
- I.e. invitation to interested parties to make offers to be considered
Introduction
- For agreement to take place, offeror needs to make offer & offeree needs to
communicate unequivocal acceptance
- Bilateral: both parties assume an obligation to each other
- Unilateral: one party makes offer or proposal in terms which call for an act to be
performed by 1+ parties
- Unilateral doesn’t involve mutual promises - only the person making an offer
assumes an obilgation
- Other party accepts offer by performing required act in accordance w/
requirements of offer - hence creating unilateral contract
Structure for offer & acceptance
1. Identify whether communciation is offer or invitation to treat
2. Is there a counter-offer? Or request for further information? What is the effect of a
counter-offer or request for further info on the original offer?
3. Acceptance: is it in response to the offer?
4. Is the acceptance unqualified - i.e. does it correspond exactly with the terms of the offer?
Where acceptance does not mirror offer, it raises question whether it is a counter-offer or
a request for further information
5. Was acceptance made using a valid mode?
6. Is acceptance communicated? Determined by mode of acceptance used by offeree. If
sent by post, then discussion of postal rule & associated issues = relevant. If
instantaneous, then leads to discussion of rule in Entores v Miles Far East
Corporation & all related issues
7. Wdas the offer open at the point of acceptance? Need to check whether offer had been
terminated either as a result of rejection, lapse or revocation.
Requirements for a valid offer
- Valid offer must be clear & certain & display intention to be bound
- Requirements clearly illustrated in case of Storer v Manchester City Council -
contrasted with Gibson v Manchester City Council
Invitations to treat
- Offer must be distinguished from invitation to treat
- If offer made, offeror is effectively undertaking to be contractually bound by terms of offer
in event of unconditional acceptance being made by offeree
- Invitation to treat: first step in negotiations which may/may not lead to firm offer by one
of the parties
- Cannot be accepted to form a binding contract
, - Invitation to treat: advertisements, display of goods for sale, tenders, auctions, websites
(exceptions)
End of Offer
- Rejection, lapse or revocation
- In each case, offer loses legal effect & becomes incapable of acceptance
Valid Acceptance Rules
1. Only the person/people to whom an offer is made can accept the offer
2. Acceptance must be unqualified - i.e. must be a mirror image of offer corresponding
exactly with terms of offer
3. Manner of communication of acceptance - any manner whatsoever
a. But if offeror prescribes a mode of acceptance either expressly or by
implication & offeree communicates in different mode, then this raises question
whether communication of acceptance in other manner will suffice
4. Acceptance must be communicated to offeror
a. Is it possible for a contract to come into existence where person other than
offeree informs offeror of acceptance
- Is offer still open at time when offeree accepts - if offer terminated, then cannot accept
Mode of Acceptance
- If offeror makes it clear that will not be bound unless acceptance is communicated in a
precise way & by no other, then only acceptance by that mode will suffice
- Unless prescribed mode of acceptance is mandatory, another mode of acceptance
which is no less advantageous to the offeror will bind him
- IF method prescribed for benefit of offeree, then offeree can waive stipulation for his
benefit & use alternative mode - provided alternative method does not disadvantage
offeror
Acceptance must be communicated
- Acceptance is effective from the time it is communicated to the offeror
- Where acceptance is made by post, it takes effect from the moment the letter of
acceptance is properly posted
- Postal rule: authority for exception = Adams v Lindsell
- Applies even where letter is delayed/lost in post (Household Fire & Carriage
Accident Insurance Co v Grant)
- Exceptions to postal rule:
1. If letter not properly posted
2. If not contemplated that post would be used
3. If it would be manifestly inconvenient/absurd
4. If letter incorrectly addressed
5. If offeror has ousted postal rule
- Postal rule does not apply to letters revoking offers
,Acceptance communicated using instantaneous means
- Acceptance takes place at moment received by offeror (Entores v Miles Far East
Corporation)
- Mondial Shipping v Astarte Shipping: acceptance received at start of business on day if
acceptance sent outside ordinary office hours
- Thomas v BPE Solicitors: email to be treated like other forms of instantaneous
communications - therefore email acceptance is effective when received (i.e. when email
arrives on offeror’s email server)
- Case also established meaning of ‘ordinary office hours’ - depends on context of
parties prior communications
Introduction
- Offer & acceptance + intention to create legal relations + consideration = binding
contract
Objective Approach to Agreement
- When determining whether agreement exists, court is not concerned with inward mental
intent of parties, but rather with what a reasonable person would say was the intention of
the parties, having regard to all circumstances
- Law applies an objective test when comes to identifying agreement
Requirements for a Valid Offer
Certainty of Offer
- Must be clear & certain
- Illustrated in Gibson v Manchester City Council [1979]
Intention to be bound
- Offeror must show intention to be legally bound
- In Gibson, wording ‘may be prepared to sell’ used by City Treasurer was deemed to lack
the requisite intention to be legally bound
- Storer v Manchester City Council [1974] - ‘if you will sign the agreement & return it to me
I will send you the agreement signed on behalf of the corporation in exchange’ - did
demonstrate intention to be bound
- Court takes objective approach to ascertaining whether there was intention to be bound-
what matters is what a reasonable person would say the parties in Gibson & Storer
intended, on the basis of their letters
- What was actually in the minds of the people who wrote the letters is not relevant
Unilateral & Bilateral Contracts
- Unilateral: only actual performance of the required act will constitute acceptance
, Summary
- Offer must be clear & certain
- Offeror must show intention to be legally bound - words such as ‘may be prepared to
sell’ do not show this
- Two kinds of contract - unilateral & bilateral contracts
- Bilateral more common - each party assumes an obligation to the other party by making
a promise to do something, i.e. sell item to other party in exchange for payment
- Unilateral less common - one party makes offer or proposal in terms which call for act to
be performed by 1+ other parties - only actual performance of required act will constitute
acceptance
Invitations to Treat
- Invitation to treat = first step in negotiations which may/may not lead to a firm offer by
one of the parties
- Usually takes form of invitation to make an offer
- Offer is undertaking to be contractually bound by terms of that offer in event of an
unconditional acceptance being made by offeree
- Invitation to treat cannot be accepted to form a binding contract
Advertisements
- Partridge v Crittenden [1968]: General rule: adverts regarded as statements inviting
further negotiations or invitations to treat
- Reasoning: advertiser may have limited supplies of goods in question - if advert was
offer, could be accepted by larger number of people than advertiser was able to supply -
would result in advertiser breaching 1+ contracts
- Exception: does not apply where advertisement amounts to a unilateral offer
Carlill v Carbolic Smoke Ball Co (1893)
- Essentially - twin requirements of a unilateral offer - both a prescribed act AND a clear
intention to be bound
Displays of goods
- Fisher v Bell [1961]: General rule: price-marked goods are not offer for sale but
invitation to treat
- Regardless of whether shop actually expressly designates that goods are an offer -
‘special offer’ = still no more than an invitation to treat
Invitations to tender
- Where a party (usually company or public body) wishes to purchase a major item or
service
- Requestor invites tenders (offers) from those interested in supplying goods/services
required
- Spencer v Harding [1870] - general rule: is an invitation to treat
- I.e. invitation to interested parties to make offers to be considered
