Contract Short Notes
Offer and Acceptance
Offer
An offer is an objective manifestation of intention by the offeror of a willingness to be
bound by the terms proposed to the offeree – upon acceptance of the terms.
- An offer must be clear and certain – Storer cf Gibson
Offer vs Invitation to Treat
Advertisements
- a newspaper advertisement is an invitation to treat Patridge v Crittenden
o EXCEPTION: Unilateral contracts Carlill v Smoke Ball
Display of a product in a shop
- is an invitation to treat (Fisher v Bell)
- sending a price-list (menu) to someone is an invitation to treat (Grainger & Sons)
- Display of goods on shelves amount to an invitation to treat (Boots Cash Chemist)
o Problem: non-self-service counter in supermarket (Prof. W. Poole)
- EXCEPTION: Vending machines (Shoe Lane Parking)
Auctions
- Advertisement that an auction will take place on a certain day is merely an invitation
to teat (Harris v Nickerson)
- A bid by a purchaser is the offer – s57(2) SOGA 1979
- The fall of the hammer indicated acceptance (ibid)
- EXCEPTION: ‘Without Reserve’ Harlow v Harrison
o increases bidders’ expectations that
(1) The auction will take place (2) No minimum price will be set (3) Item will
be sold to the highest bidder
- Without Reserve’ creates a unilateral contract- a promise made to whosoever
should perform the action of making the highest bona fide bid (Warlow v
Harrison)
o the acceptance was the highest bid – the auctioneer is obliged to accept
Barry v Davies
Tenders
- Invitation to tender is an invitation to treat (Spencer v Harding)
- Offer is the bid. Acceptance is made by the invitor on one of the tenders (ibid)
- EXCEPTION: if invitor expressly binds themselves to accept a certain bid (i.e.
highest/lowest bid) – same Warlow reasoning applies
Unilateral/Collateral contract to consider bid Blackpool v Blackpool
Referential Bids are not accepted when Invitor declares he will accept highest bid (Harvela
Investments)
1
, - Rationale: unilateral offer selling to the highest bidder had the purpose of
ascertaining the highest amount each party can pay (1) referential bid would
frustrate purpose. (2) What if both parties submitted a referential bid?
Analysing parties’ intentions
- Objective Approach Smith v Hughes – old oats case.
- Rose v Pim – horse-beans case.
Ad Idem ‘Meeting of Minds’ – this is also viewed objectively - Ove Arup
- A person’s conduct may indicate his consent to a contract even though he had no
such intention, or he believed he was consenting to different terms
No Obligation to notify:
- if a party knows that the other mistakenly believes he is buying something that the
seller did not promise, he is under no obligation to notify him and the buyer
becomes bound by the contract (Smith v Hughes)
Exception – Snapping Up Cases
- when the mistake relates to the terms of the contract – rather than the substance
they are contracting for
- where one party purports to accept an offer which he knows it was not the other’s
true intention to make
Hartog v Colin & Shields hare skins at a fixed price ‘per pound’ when he really meant ‘per
peace’. mistake was obvious - parties were never ad idem.
- Difference with Smith: Buyer is Smith is making a bad deal, but here the buyer is
making a mistake as to the terms of the deal itself.
Unilateral Offers
What is it?
- A unilateral contract is one in which the acceptance expected to take the form of a
specified action (Carlill v Smoke Ball)
Acceptance of unilateral offers:
- communication of is not required (ibid)
- Strict View - Acceptance of a unilateral offer takes place upon completion, thus
offeror can withdraw the offer until then (Luxor v Cooper) – sell property commission
case
o Rationale – if offeree walks half Brooklyn bridge, he is not bound to continue,
why should offeror be bound? – Wormser
- Relaxed view - Acceptance takes place when performance begins - Once the
performance of the condition has already begun, it is too late for the offer to be
withdrawn Errington v Errington; Chitty.
- Promise not to prevent performance: By producing advert, offeror makes an implied
promise that completion of performance will not be prevented (Daulia Ltd v Four
Millbank
Knowledge of offer is required:
2
, - a party claiming the reward must have known about the offer prior to performance
(Williams v Carwardine) (R v Clarke
- McKendrick – submits that a mixed motive should be accepted as valid acceptance.
- Land has special rules – governed by (LRA 2002)
Withdrawal of Unilateral
- Must be done in the same manner offer was advertised (Shuey v United States)
Responses to an Offer
(1) Counter-Offer
- puts an end to the original offer and replaces it with a new one Hyde v Wrench
- BUT: an inquiry is not a counter offer; it does not terminate the offer Stevenson,
Jacques & Co v McLean
Battle of the forms
- Arthur Crutchley – driver accepted by conduct
- Butler Machine Tool - Counter-offer reasoning – buyers terms were so
different that they couldn’t amount to an acceptance of seller’s offer.
(2) Rejection
- Hyde v Wrench
(3) Withdrawal of offer (Revocation)
- Up until the moment at which an offer is accepted, the offeror may withdraw it
Routledge v Grant
o Even if he said offer will be available for a certain period.
o Unless if C gave consideration (£1) in return for promise that offer will
remain available till X day - Mountford v Scott
- Communication
- Revocation be communicated to offeree Brye & Co v Van Tienhoven.
Acceptance before communication will be valid.
- Communication need not be either formal or direct.
o Being told by a third party that x sold property to someone else is sufficient
(Dickinson v Dodds) – they need not be authorised.
(4) Lapse of Time
- Where an offer is not limited in duration, it lapses after the expiration of a
‘reasonable time’, which depends on circumstances (Ramsgate Victoria Hotel v
Montefiore)
ACCEPTANCE
(1) Communication
- Acceptance must be communicated to the offeror; it is effective only from the
moment of such communication.
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Offer and Acceptance
Offer
An offer is an objective manifestation of intention by the offeror of a willingness to be
bound by the terms proposed to the offeree – upon acceptance of the terms.
- An offer must be clear and certain – Storer cf Gibson
Offer vs Invitation to Treat
Advertisements
- a newspaper advertisement is an invitation to treat Patridge v Crittenden
o EXCEPTION: Unilateral contracts Carlill v Smoke Ball
Display of a product in a shop
- is an invitation to treat (Fisher v Bell)
- sending a price-list (menu) to someone is an invitation to treat (Grainger & Sons)
- Display of goods on shelves amount to an invitation to treat (Boots Cash Chemist)
o Problem: non-self-service counter in supermarket (Prof. W. Poole)
- EXCEPTION: Vending machines (Shoe Lane Parking)
Auctions
- Advertisement that an auction will take place on a certain day is merely an invitation
to teat (Harris v Nickerson)
- A bid by a purchaser is the offer – s57(2) SOGA 1979
- The fall of the hammer indicated acceptance (ibid)
- EXCEPTION: ‘Without Reserve’ Harlow v Harrison
o increases bidders’ expectations that
(1) The auction will take place (2) No minimum price will be set (3) Item will
be sold to the highest bidder
- Without Reserve’ creates a unilateral contract- a promise made to whosoever
should perform the action of making the highest bona fide bid (Warlow v
Harrison)
o the acceptance was the highest bid – the auctioneer is obliged to accept
Barry v Davies
Tenders
- Invitation to tender is an invitation to treat (Spencer v Harding)
- Offer is the bid. Acceptance is made by the invitor on one of the tenders (ibid)
- EXCEPTION: if invitor expressly binds themselves to accept a certain bid (i.e.
highest/lowest bid) – same Warlow reasoning applies
Unilateral/Collateral contract to consider bid Blackpool v Blackpool
Referential Bids are not accepted when Invitor declares he will accept highest bid (Harvela
Investments)
1
, - Rationale: unilateral offer selling to the highest bidder had the purpose of
ascertaining the highest amount each party can pay (1) referential bid would
frustrate purpose. (2) What if both parties submitted a referential bid?
Analysing parties’ intentions
- Objective Approach Smith v Hughes – old oats case.
- Rose v Pim – horse-beans case.
Ad Idem ‘Meeting of Minds’ – this is also viewed objectively - Ove Arup
- A person’s conduct may indicate his consent to a contract even though he had no
such intention, or he believed he was consenting to different terms
No Obligation to notify:
- if a party knows that the other mistakenly believes he is buying something that the
seller did not promise, he is under no obligation to notify him and the buyer
becomes bound by the contract (Smith v Hughes)
Exception – Snapping Up Cases
- when the mistake relates to the terms of the contract – rather than the substance
they are contracting for
- where one party purports to accept an offer which he knows it was not the other’s
true intention to make
Hartog v Colin & Shields hare skins at a fixed price ‘per pound’ when he really meant ‘per
peace’. mistake was obvious - parties were never ad idem.
- Difference with Smith: Buyer is Smith is making a bad deal, but here the buyer is
making a mistake as to the terms of the deal itself.
Unilateral Offers
What is it?
- A unilateral contract is one in which the acceptance expected to take the form of a
specified action (Carlill v Smoke Ball)
Acceptance of unilateral offers:
- communication of is not required (ibid)
- Strict View - Acceptance of a unilateral offer takes place upon completion, thus
offeror can withdraw the offer until then (Luxor v Cooper) – sell property commission
case
o Rationale – if offeree walks half Brooklyn bridge, he is not bound to continue,
why should offeror be bound? – Wormser
- Relaxed view - Acceptance takes place when performance begins - Once the
performance of the condition has already begun, it is too late for the offer to be
withdrawn Errington v Errington; Chitty.
- Promise not to prevent performance: By producing advert, offeror makes an implied
promise that completion of performance will not be prevented (Daulia Ltd v Four
Millbank
Knowledge of offer is required:
2
, - a party claiming the reward must have known about the offer prior to performance
(Williams v Carwardine) (R v Clarke
- McKendrick – submits that a mixed motive should be accepted as valid acceptance.
- Land has special rules – governed by (LRA 2002)
Withdrawal of Unilateral
- Must be done in the same manner offer was advertised (Shuey v United States)
Responses to an Offer
(1) Counter-Offer
- puts an end to the original offer and replaces it with a new one Hyde v Wrench
- BUT: an inquiry is not a counter offer; it does not terminate the offer Stevenson,
Jacques & Co v McLean
Battle of the forms
- Arthur Crutchley – driver accepted by conduct
- Butler Machine Tool - Counter-offer reasoning – buyers terms were so
different that they couldn’t amount to an acceptance of seller’s offer.
(2) Rejection
- Hyde v Wrench
(3) Withdrawal of offer (Revocation)
- Up until the moment at which an offer is accepted, the offeror may withdraw it
Routledge v Grant
o Even if he said offer will be available for a certain period.
o Unless if C gave consideration (£1) in return for promise that offer will
remain available till X day - Mountford v Scott
- Communication
- Revocation be communicated to offeree Brye & Co v Van Tienhoven.
Acceptance before communication will be valid.
- Communication need not be either formal or direct.
o Being told by a third party that x sold property to someone else is sufficient
(Dickinson v Dodds) – they need not be authorised.
(4) Lapse of Time
- Where an offer is not limited in duration, it lapses after the expiration of a
‘reasonable time’, which depends on circumstances (Ramsgate Victoria Hotel v
Montefiore)
ACCEPTANCE
(1) Communication
- Acceptance must be communicated to the offeror; it is effective only from the
moment of such communication.
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