Offer & Acceptance
In order for there to be a binding contract, these three elements must be present.
Offer and Acceptance
• For a contract to exist, one party (the offeror) needs to make a clear and certain offer
displaying an intention to be bound and the other party (the offeree) needs to communicate
an unequivocal acceptance.
Clear and certain offer displaying an intention to be bound + Unequivocal acceptance =
Offer and acceptance ie agreement
The objective approach to agreement
• The court is not concerned with mental intent of the parties but rather with what a reasonable man
would say was the intention of the parties, having regard to all the circumstances.
Storer v Manchester City Council
Lord Denning stated:
“In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did.
A contract is formed when there is, to all outward appearances a contract. A man cannot get out of a
contract by saying: ‘I did not intend to contract’ if by his words he has done so.”
Offer and acceptance shows a ‘meeting of minds’: but the law applies an objective test when it
comes to identifying agreement.
, Valid Offers
Certainty of offer
An offer must be clear and certain.
Gibson v Manchester City Council
• The City Treasurer wrote to a tenant saying that the council ‘may be prepared to sell the house
to you at £2,180. If you would like to make a formal application to buy your council house please
complete the form and return it to me as soon as possible’.
• Tenant completed and returned the form.
• Council changed its policy on the sale of council houses. Tenant was advised that Council was
unable to proceed with his application.
• The tenant brought his action claiming that the Council’s letter was an offer which he had
accepted by returning the application form.
• HELD: There was no binding contract because there was never an offer made by the Council. The
Council’s letter stating that it ‘may be prepared to sell’ was not sufficiently clear and certain to be an
offer. It was merely the first step in negotiations, lacking the requisite intention to be legally bound.
Intention to be bound
An offeror must also show an intention to be legally bound.
Gibson v Manchester City Council
• Demonstrates the importance of an intention to be legally bound.
• Wording ‘may be prepared to sell’ (emphasis added) used was deemed to lack the intention to be
legally bound.
Contrasted with similar case of Storer v Manchester City Council:
• Words = ‘If you will sign the agreement and return it to me I will send you the agreement signed
on behalf of the corporation in exchange’
• Demonstrate an intention to be bound.
Court takes an objective approach to ascertaining whether there was an intention to be bound.
Unilateral and bilateral contracts
Two kinds of contract:
• unilateral contracts
• bilateral contracts.
,Bilateral contracts
• Most common.
• Each party assumes an obligation to the other party by making a promise to do something.
Unilateral contract
• One party makes an offer or proposal in terms which call for an act to be performed by one or
more other parties.
• For instance, the offer may call for specific lost property to be returned in exchange for a reward.
• A unilateral contract does not involve mutual promises – only the party making the offer assumes
an obligation. Only actual performance of the required act will constitute acceptance.
Unilateral and bilateral contracts
Bilateral contract
Example: In 10 days time, you will deliver a watch to me, and I will pay you £100.
• Both parties make a promise. One party promises to pay £100. The other party promises
to deliver a watch.
• The offer can be accepted by an unequivocal communication of acceptance, at which point each
party would be bound to do what it promised to do.
Unilateral contract
Example: If you deliver a watch to me in the next 10 days, I will immediately pay you £100.
• Only one party makes a promise – the party promising to pay £100. The other party does not make
any promise.
• The offer is accepted by performance of the required act – by delivering a watch. At that point, the
other party becomes bound to pay the £100
, Invitation to treat
An offer must be distinguished from a mere invitation to treat.
• Invitation to treat is a first step in negotiations which may or may not lead to a firm offer
by one of the parties.
• Usually takes the form of an invitation to make an offer.
Offer = undertaking to be contractually bound by the terms of that offer if unconditional acceptance
being made by the offeree.
Invitation to treat = cannot be accepted to form a binding contract.
Invitation to treat
• Advertisements
• Displays goods
• Invitations to tender
• Auctions
Advertisements
General rule: Advertisements are regarded as statements inviting further negotiations
or invitations to treat
Partridge v Crittenden
Good reasons for this – The advertiser may have limited supplies of the goods in question.
Exception to the general rule
General rule does not apply where the advertisement = a unilateral offer.
Carlill v Carbolic Smoke Ball Co
• Defendants = proprietors of a medical preparation called ‘The Carbolic Smoke Ball’,
• Issued an advertisement in which they offered to pay £100 to any person who used one
of their smoke balls in a specified manner for a specified period but who nevertheless still
contracted influenza.
• Defendants also said they had deposited £1,000 in a named bank ‘shewing our sincerity
in the matter’.
• Claimant, on the faith of the advertisement, bought one of the balls and used it in the manner
and for the period prescribed. Nevertheless, she contracted influenza.
• HELD: the facts established a contract – defendants were bound to pay the plaintiff £100.
• Advert in this case held to be a unilateral offer.
• There was a clear prescribed act (using smoke balls for a specified period but contracting influenza)
performance of which constituted acceptance.
In order for there to be a binding contract, these three elements must be present.
Offer and Acceptance
• For a contract to exist, one party (the offeror) needs to make a clear and certain offer
displaying an intention to be bound and the other party (the offeree) needs to communicate
an unequivocal acceptance.
Clear and certain offer displaying an intention to be bound + Unequivocal acceptance =
Offer and acceptance ie agreement
The objective approach to agreement
• The court is not concerned with mental intent of the parties but rather with what a reasonable man
would say was the intention of the parties, having regard to all the circumstances.
Storer v Manchester City Council
Lord Denning stated:
“In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did.
A contract is formed when there is, to all outward appearances a contract. A man cannot get out of a
contract by saying: ‘I did not intend to contract’ if by his words he has done so.”
Offer and acceptance shows a ‘meeting of minds’: but the law applies an objective test when it
comes to identifying agreement.
, Valid Offers
Certainty of offer
An offer must be clear and certain.
Gibson v Manchester City Council
• The City Treasurer wrote to a tenant saying that the council ‘may be prepared to sell the house
to you at £2,180. If you would like to make a formal application to buy your council house please
complete the form and return it to me as soon as possible’.
• Tenant completed and returned the form.
• Council changed its policy on the sale of council houses. Tenant was advised that Council was
unable to proceed with his application.
• The tenant brought his action claiming that the Council’s letter was an offer which he had
accepted by returning the application form.
• HELD: There was no binding contract because there was never an offer made by the Council. The
Council’s letter stating that it ‘may be prepared to sell’ was not sufficiently clear and certain to be an
offer. It was merely the first step in negotiations, lacking the requisite intention to be legally bound.
Intention to be bound
An offeror must also show an intention to be legally bound.
Gibson v Manchester City Council
• Demonstrates the importance of an intention to be legally bound.
• Wording ‘may be prepared to sell’ (emphasis added) used was deemed to lack the intention to be
legally bound.
Contrasted with similar case of Storer v Manchester City Council:
• Words = ‘If you will sign the agreement and return it to me I will send you the agreement signed
on behalf of the corporation in exchange’
• Demonstrate an intention to be bound.
Court takes an objective approach to ascertaining whether there was an intention to be bound.
Unilateral and bilateral contracts
Two kinds of contract:
• unilateral contracts
• bilateral contracts.
,Bilateral contracts
• Most common.
• Each party assumes an obligation to the other party by making a promise to do something.
Unilateral contract
• One party makes an offer or proposal in terms which call for an act to be performed by one or
more other parties.
• For instance, the offer may call for specific lost property to be returned in exchange for a reward.
• A unilateral contract does not involve mutual promises – only the party making the offer assumes
an obligation. Only actual performance of the required act will constitute acceptance.
Unilateral and bilateral contracts
Bilateral contract
Example: In 10 days time, you will deliver a watch to me, and I will pay you £100.
• Both parties make a promise. One party promises to pay £100. The other party promises
to deliver a watch.
• The offer can be accepted by an unequivocal communication of acceptance, at which point each
party would be bound to do what it promised to do.
Unilateral contract
Example: If you deliver a watch to me in the next 10 days, I will immediately pay you £100.
• Only one party makes a promise – the party promising to pay £100. The other party does not make
any promise.
• The offer is accepted by performance of the required act – by delivering a watch. At that point, the
other party becomes bound to pay the £100
, Invitation to treat
An offer must be distinguished from a mere invitation to treat.
• Invitation to treat is a first step in negotiations which may or may not lead to a firm offer
by one of the parties.
• Usually takes the form of an invitation to make an offer.
Offer = undertaking to be contractually bound by the terms of that offer if unconditional acceptance
being made by the offeree.
Invitation to treat = cannot be accepted to form a binding contract.
Invitation to treat
• Advertisements
• Displays goods
• Invitations to tender
• Auctions
Advertisements
General rule: Advertisements are regarded as statements inviting further negotiations
or invitations to treat
Partridge v Crittenden
Good reasons for this – The advertiser may have limited supplies of the goods in question.
Exception to the general rule
General rule does not apply where the advertisement = a unilateral offer.
Carlill v Carbolic Smoke Ball Co
• Defendants = proprietors of a medical preparation called ‘The Carbolic Smoke Ball’,
• Issued an advertisement in which they offered to pay £100 to any person who used one
of their smoke balls in a specified manner for a specified period but who nevertheless still
contracted influenza.
• Defendants also said they had deposited £1,000 in a named bank ‘shewing our sincerity
in the matter’.
• Claimant, on the faith of the advertisement, bought one of the balls and used it in the manner
and for the period prescribed. Nevertheless, she contracted influenza.
• HELD: the facts established a contract – defendants were bound to pay the plaintiff £100.
• Advert in this case held to be a unilateral offer.
• There was a clear prescribed act (using smoke balls for a specified period but contracting influenza)
performance of which constituted acceptance.
