LAW OF CONTRACT
Offer
An offer is a statement of willingness to contract on specified terms, with an intention
that if the offer is accepted, it shall become a binding contract. There are specific offers,
made to an identified person and only he can accept the same, as was held in Moran v
University College of Salford, where the defendant was given an unconditional offer by
mistake, which he accepted. The court held it created a binding contract and he was
eligible to admission to the university.
General offers on the other hand are made, are made to the whole world or a group of
people as seen in Carlil v Carbollic Smoke Ball Co. here Ds were manufacturers of a
smoke ball that would prevent influenza if inhaled. They put up an advertisement in the
newspaper stating that if anyone caught the flu once they inhaled the smoke ball, they
would receive 100 pounds. C did as stipulated and still caught flu, but was refused the
payment. The court held that the defendants made an offer to the whole world and once
accepted became a binding contract. A similar position is visible in Bowerman v
Association of British Travel Agents.
ITT
This is an indication that a party is willing to receive offers, still open to negotiations. Or
an inducement to others to make offers which the other party may or may not accept. It is
evident in Gibson v Manchester City Council, where the claimant wished to purchase a
council house and inquired for the price. Once he received the price, he noted the
condition of the footpath and requested for a reduction. Later, the laws changed and the
council communicated it was no longer willing to sell the house. The court held the
council had not made an offer, but an ITT.
Advertisements for unilateral contracts are treated as offers as in Carlil.
Advertisements for bilateral contracts are treated as ITTs (such as magazine ads).
Patridge v Crittenden, shows this when the seller of bramble finche hens and
cocks placed an advert in a magazine, a protected species. He was arrested on the
grounds of having offered for sale a protected species, but the court did not find
him guilty as his advert was an ITT. Graigner sons v Gough shows the same
position.
Displays of goods in shops are treated as ITTs. In Fisher v Bell, D was charged
with a criminal offence of having offered for sale flick knives. The court stated
the display of an article was not an offer but an ITT.
For self service stores, it is an ITT. This was held in Pharmaceutical Society of
Great Britain v Boots Cash Chemist.
Price indications are treated as ITTs. In Harvey v Facey, Cs asked if D would sell
to them Bumper Hall pen at the lowest price. The reply was 900 pounds. C then
agreed to buy it at the stated price. The court held the indication of price was just
a statement and not an offer.
For vending machines (Thornton), timetables and tickets, the position is unclear.
In Denton v GN Railway, it was held that timetables and adverts were offers. In
, Wilkie v LPTB, it was concluded that the bus running a service makes an offer
and the passenger accepts by being available to board it. In Thornton v Shoe Lane
Parking, which cleared things up, it was found that the passenger asking for a
ticket makes an ITT, and the issue of the ticket is an offer.
Auctioneers request for bids is an ITT. Established by S57(2) of The Sale Of
Goods Ac, states that a contract arises upon the fall of the hammer and a bidder
can withdraw his offer at any given time before the fall of the hammer. This was
evident in Payne v Cave. In Harris v Nickerson, the court held that the advert for
the auction was an ITT not an offer.
Termination of bilateral offers
1. An offer will lapse once the offeree rejects it.
2. An offer can be terminated due to lapse of time, where the offeror can stipulate
specified time or it can be read as reasonable time, depending on the
circumstances. In Ramsgate Victoria Hotel v Montefoire, a buyer made requests
to buy shares in the company, and did hear from them for 5 months. Thereto, they
demanded for a payment and the court held 5 months was too long and the offer
had lapsed.
3. An offeror can revoke his offer at any given time before it is accepted, as in
Payne. This must be communicated as was established in Bryne v Van Teinhaven,
where a Cardiff retailer wrote to another in New York offering goods for sale,
who immediately accepted the offer. The letter reached 3 days later. The Cardiff
retailer revoked his offer, but the letter did not reach before the New York co.
telegraphed acceptance, and the revocation was ineffective. It can be
communicated by a reliable 3rd party, as was held in Dickinson v Dodds (sale of
house).
4. Counter offers. In Hyde v Wrench, an offer to sell land was made at 1000 pounds
and the buyer offered 950 pounds. The seller then changed his mind and did not
wish to sell. The buyer later opted to buy at the original price, but the court held
his new proposal terminated the initial offer. It is important to note request for
information are not counter offers. In Stevenson v Mclean, C wrote to D asking
whether delivery would be made in 2 months, and later refused to sell. The court
held it was not a counter.
Termination of unilateral offers
1. They can not be revoked once operations have commenced as in Errington v
Errington (mortgage, revoke the contract.)
2. They can only be revoked as long as the same method is used to notify the
interested parties, this was held in Shuey v USA, where an offer for information
on commission of a crime in exchange for a reward could only be revoked via a
similar advert.
, Acceptance
This is the unconditional and unqualified assent to all terms stipulated in the offer. To
illustrate unconditional acceptance, we look at Tins v Hoffman, where one party offered
to sell 1200 tonnes of coal and the other party ordered 800 tonnes. The court held there
was no unconditional acceptance and therefore no valid contract emerged.
Implied acceptance
The conduct of party can imply he accepted the offer, but only if he intended to. This is
evident in Brogden v Metropolitan Rail, where the court held accepting deliveries of the
supply of coal amounted to a valid acceptance, thus forming a binding contract.
Silence would not amount to acceptance
Merely remaining silent, will not amount to valid acceptance as in Felthouse v Bindley,
regarding the sale of a horse, and the uncle made a statement that, ‘if I don’t hear from
you, I will assume the horse is mine.’ The court held that there was no contract as the
nephews silence was not acceptance.
However, if the offeree indicates that silence should be considered as acceptance he will
be bound, as was held in Re Selectmove.
Communicating acceptance
The general position is that acceptance must be communicated. It does not take effect if
not communicated, and this was established in Entores v Far East Corp. L. Denning
explained that if party A shouts out and offer to party B across a river and party B yells
back acceptance but it is drained by an overflying aircraft, then there is no contract.
If the method of acceptance is not specified, the offeree can respond by an equally
efficient method. In Tins, the court held that where the offeree was asked to reply by post
any faster method would be okay.
Acceptance by post
The general rule here is that acceptance by post is valid upon posting, established in
Adams v Lindsell. The postal rule thus will apply even if the letter doesn’t reach the
offeror. Held in Household Fire Insurance v Grant, where a buyer buys shares in a
company and a letter of allotment was sent to him by post, which did not reach him. The
court held that a contract still arose.
The postal rule applies effectively when:
Letter should be place in the hands of the post masters hands or someone
authorised to receive letters.
Use of the postal rule must be reasonable in the circumstances. In Henthorn v
Fraser, D gave a letter to C in Liverpool and went back to Birkenhead. C went
back home and posted a letter of acceptance, and the court held this was
reasonable.
Offer
An offer is a statement of willingness to contract on specified terms, with an intention
that if the offer is accepted, it shall become a binding contract. There are specific offers,
made to an identified person and only he can accept the same, as was held in Moran v
University College of Salford, where the defendant was given an unconditional offer by
mistake, which he accepted. The court held it created a binding contract and he was
eligible to admission to the university.
General offers on the other hand are made, are made to the whole world or a group of
people as seen in Carlil v Carbollic Smoke Ball Co. here Ds were manufacturers of a
smoke ball that would prevent influenza if inhaled. They put up an advertisement in the
newspaper stating that if anyone caught the flu once they inhaled the smoke ball, they
would receive 100 pounds. C did as stipulated and still caught flu, but was refused the
payment. The court held that the defendants made an offer to the whole world and once
accepted became a binding contract. A similar position is visible in Bowerman v
Association of British Travel Agents.
ITT
This is an indication that a party is willing to receive offers, still open to negotiations. Or
an inducement to others to make offers which the other party may or may not accept. It is
evident in Gibson v Manchester City Council, where the claimant wished to purchase a
council house and inquired for the price. Once he received the price, he noted the
condition of the footpath and requested for a reduction. Later, the laws changed and the
council communicated it was no longer willing to sell the house. The court held the
council had not made an offer, but an ITT.
Advertisements for unilateral contracts are treated as offers as in Carlil.
Advertisements for bilateral contracts are treated as ITTs (such as magazine ads).
Patridge v Crittenden, shows this when the seller of bramble finche hens and
cocks placed an advert in a magazine, a protected species. He was arrested on the
grounds of having offered for sale a protected species, but the court did not find
him guilty as his advert was an ITT. Graigner sons v Gough shows the same
position.
Displays of goods in shops are treated as ITTs. In Fisher v Bell, D was charged
with a criminal offence of having offered for sale flick knives. The court stated
the display of an article was not an offer but an ITT.
For self service stores, it is an ITT. This was held in Pharmaceutical Society of
Great Britain v Boots Cash Chemist.
Price indications are treated as ITTs. In Harvey v Facey, Cs asked if D would sell
to them Bumper Hall pen at the lowest price. The reply was 900 pounds. C then
agreed to buy it at the stated price. The court held the indication of price was just
a statement and not an offer.
For vending machines (Thornton), timetables and tickets, the position is unclear.
In Denton v GN Railway, it was held that timetables and adverts were offers. In
, Wilkie v LPTB, it was concluded that the bus running a service makes an offer
and the passenger accepts by being available to board it. In Thornton v Shoe Lane
Parking, which cleared things up, it was found that the passenger asking for a
ticket makes an ITT, and the issue of the ticket is an offer.
Auctioneers request for bids is an ITT. Established by S57(2) of The Sale Of
Goods Ac, states that a contract arises upon the fall of the hammer and a bidder
can withdraw his offer at any given time before the fall of the hammer. This was
evident in Payne v Cave. In Harris v Nickerson, the court held that the advert for
the auction was an ITT not an offer.
Termination of bilateral offers
1. An offer will lapse once the offeree rejects it.
2. An offer can be terminated due to lapse of time, where the offeror can stipulate
specified time or it can be read as reasonable time, depending on the
circumstances. In Ramsgate Victoria Hotel v Montefoire, a buyer made requests
to buy shares in the company, and did hear from them for 5 months. Thereto, they
demanded for a payment and the court held 5 months was too long and the offer
had lapsed.
3. An offeror can revoke his offer at any given time before it is accepted, as in
Payne. This must be communicated as was established in Bryne v Van Teinhaven,
where a Cardiff retailer wrote to another in New York offering goods for sale,
who immediately accepted the offer. The letter reached 3 days later. The Cardiff
retailer revoked his offer, but the letter did not reach before the New York co.
telegraphed acceptance, and the revocation was ineffective. It can be
communicated by a reliable 3rd party, as was held in Dickinson v Dodds (sale of
house).
4. Counter offers. In Hyde v Wrench, an offer to sell land was made at 1000 pounds
and the buyer offered 950 pounds. The seller then changed his mind and did not
wish to sell. The buyer later opted to buy at the original price, but the court held
his new proposal terminated the initial offer. It is important to note request for
information are not counter offers. In Stevenson v Mclean, C wrote to D asking
whether delivery would be made in 2 months, and later refused to sell. The court
held it was not a counter.
Termination of unilateral offers
1. They can not be revoked once operations have commenced as in Errington v
Errington (mortgage, revoke the contract.)
2. They can only be revoked as long as the same method is used to notify the
interested parties, this was held in Shuey v USA, where an offer for information
on commission of a crime in exchange for a reward could only be revoked via a
similar advert.
, Acceptance
This is the unconditional and unqualified assent to all terms stipulated in the offer. To
illustrate unconditional acceptance, we look at Tins v Hoffman, where one party offered
to sell 1200 tonnes of coal and the other party ordered 800 tonnes. The court held there
was no unconditional acceptance and therefore no valid contract emerged.
Implied acceptance
The conduct of party can imply he accepted the offer, but only if he intended to. This is
evident in Brogden v Metropolitan Rail, where the court held accepting deliveries of the
supply of coal amounted to a valid acceptance, thus forming a binding contract.
Silence would not amount to acceptance
Merely remaining silent, will not amount to valid acceptance as in Felthouse v Bindley,
regarding the sale of a horse, and the uncle made a statement that, ‘if I don’t hear from
you, I will assume the horse is mine.’ The court held that there was no contract as the
nephews silence was not acceptance.
However, if the offeree indicates that silence should be considered as acceptance he will
be bound, as was held in Re Selectmove.
Communicating acceptance
The general position is that acceptance must be communicated. It does not take effect if
not communicated, and this was established in Entores v Far East Corp. L. Denning
explained that if party A shouts out and offer to party B across a river and party B yells
back acceptance but it is drained by an overflying aircraft, then there is no contract.
If the method of acceptance is not specified, the offeree can respond by an equally
efficient method. In Tins, the court held that where the offeree was asked to reply by post
any faster method would be okay.
Acceptance by post
The general rule here is that acceptance by post is valid upon posting, established in
Adams v Lindsell. The postal rule thus will apply even if the letter doesn’t reach the
offeror. Held in Household Fire Insurance v Grant, where a buyer buys shares in a
company and a letter of allotment was sent to him by post, which did not reach him. The
court held that a contract still arose.
The postal rule applies effectively when:
Letter should be place in the hands of the post masters hands or someone
authorised to receive letters.
Use of the postal rule must be reasonable in the circumstances. In Henthorn v
Fraser, D gave a letter to C in Liverpool and went back to Birkenhead. C went
back home and posted a letter of acceptance, and the court held this was
reasonable.
