Chapter 3: Offer and Acceptance
The formation of a valid contract requires the agreement of the parties. This agreement
normally consists of an offer by one party (the offeror) and a corresponding acceptance
by the other party (the offeree)
Consensus ad The contracting process in terms of offer and acceptance
idem A contract only exists if
o One party (the offeror) has made an offer (offer, Antrag, aanbod)
o The other party (the offeree) has accepted this offer by way of an
acceptance (acceptation, Annahme, aanvaarding)
By identifying an offer and a corresponding acceptance, it becomes clear
from which exact moment in time the contract comes into existence
Before the acceptance
o No one is bound to do anything under the contract
After the acceptance
o One party (in case of a unilateral contract) is bound
o Both parties (in case of bilateral contract) are bound
The relative importance of the offer and acceptance model
o Applied in both civil law and common law jurisdictions
o Indispensable when the parties are at distance from each other
Offer and o Article 1113 CC
acceptance o Article 6:217 BW
model o German law does not specifically have a provision that deals with
offer and acceptance, but other provisions refer to contract
formation and formation model
o English law (case law)
What constitutes an offer?
European law Article 2:201 (1) PECL
A proposal amounts to an offer if:
(a) it is intended to result in a contract if the other party accepts it,
And
(b) it contains sufficiently definite terms to form a contract
The offer must be such that it creates a contract if accepted by the other
party
o Offer indicates the intention of the offeror to be bound
o Offer indicates the terms by which the offeror is willing to be
bound (price of the goods and possibly the time of delivery)
If both these requirements are not met, there is no offer at all
An invitation to the other party to enter into negotiations
o Only if the invitee finds such an invitation attractive enough, it
can decide to make an offer itself, leaving it to the original inviter
to either reject or accept it
Binding offer
o It is decisive how the proposal would be understood by a
reasonable person in the position of the offeree
o Could such a reasonable person believe that an offer was made?
o The criterion needs to be substantiated by reference to case law
, Definitiveness
o The offer must also contain sufficiently definite terms
o Parties need to agree on what they consider as vital
Example
In case of sales contract, this will include the good to be sold and the
price, delivery can be left behind for example
Any agreement that is too vague or incomplete will not be regarded as
a binding contract
Gibson v Manchester City Council (1979)
o A reasonable person in the position of Mr. Gibson could not have
believed that the Council’s letter, only containing the price of the
house, was an offer that only needed to be accepted by the
offeree in order to form a contract
Buying Coca- Cola from the vending machine, parking car using the ticket
machine
French and
English law
Dutch law
nature of these
announcements: advertiser
demonstrates a serious
intention to be bound to
potential respondents
no trouble finding an offer that is
accepted when the other party
performs the act for service or
product was offered
Unilateral contract
Thornton v Shoe Lane Parking (1971), per Lord Denning
o The offer is made when the proprietor of the machine holds it
out as being ready to receive the money
o The acceptance takes place when the customer puts his money
into the slot
French law o Article 1114 CC
English law o It requires an expression on the willingness on the part of offeror
to be bound by terms of the contract that it proposes and it must
be specific certain terms for that contract (definition from the
textbook by Nicole)
German, No specific definition of what is offer and acceptance
Dutch law Dutch law
o Offer is a legal act (rechtshandeling)
o Article 6:213 BW (contract as a multilateral legal act= more than
one legal act is needed for the contract to come into existence:
contract= legal act of the offer+ legal act of the acceptance)
o Article 3:33 BW (definition of a legal act)
German law
, Offer is a type of declaration of intention (Willenserklarung)
Display of Goods and Advertisements
Does o An offer does not have to be directed towards a specific person
advertisemen o It can also be addressed to the general audience
t constitute an o Proposal to the public amounts to an offer if the offeree could
offer? reasonably believe that an offer was made
The outcome of this test differs from one jurisdiction to another
An advertisement offering to sell a specific property at a certain price
does not in principle not qualify to be interpreted by potential offerees as
anything else than an invitation to enter into negotiations, whereby
matters such as the price, additional conditions of the purchase and the
prospective buyer may be of importance
French and German and
Dutch view English view
Protection of a customer against
Advantage of the seller, who can
a seller who advertises at a low
still decide after the
price to lure people into his shop
advertisement was published
or onto his website and then
whether he wants to deal with
makes up some excuses for not
the interested party or not
selling them
Since an advertisement can be
read by anyone, the advertiser
An offer will automatically fail
cannot be expected to sell to all
when the stock is finished
interested parties as stocks are
always limited
Art. 2:201 (3) PECL
‘A proposal to supply goods or services at stated prices made by a
professional supplier in a public advertisement or a catalogue, or by a
display of goods, is presumed to be an offer to sell or supply at that price
until the stock of goods, or the supplier’s capacity to supply the service,
is exhausted’
Dutch and An advertisement in general treated as a binding offer
French law Exception: interei personem contract
Dutch law
Hofland v Hennis (1981)
Holding
o An offer is binding in the same way as if it had been made to a
particular person
o Exception: If the personal qualities of the other party are of
interest to the offeror, as is undoubtedly the case in employment
contracts and credit agreements
French law
The formation of a valid contract requires the agreement of the parties. This agreement
normally consists of an offer by one party (the offeror) and a corresponding acceptance
by the other party (the offeree)
Consensus ad The contracting process in terms of offer and acceptance
idem A contract only exists if
o One party (the offeror) has made an offer (offer, Antrag, aanbod)
o The other party (the offeree) has accepted this offer by way of an
acceptance (acceptation, Annahme, aanvaarding)
By identifying an offer and a corresponding acceptance, it becomes clear
from which exact moment in time the contract comes into existence
Before the acceptance
o No one is bound to do anything under the contract
After the acceptance
o One party (in case of a unilateral contract) is bound
o Both parties (in case of bilateral contract) are bound
The relative importance of the offer and acceptance model
o Applied in both civil law and common law jurisdictions
o Indispensable when the parties are at distance from each other
Offer and o Article 1113 CC
acceptance o Article 6:217 BW
model o German law does not specifically have a provision that deals with
offer and acceptance, but other provisions refer to contract
formation and formation model
o English law (case law)
What constitutes an offer?
European law Article 2:201 (1) PECL
A proposal amounts to an offer if:
(a) it is intended to result in a contract if the other party accepts it,
And
(b) it contains sufficiently definite terms to form a contract
The offer must be such that it creates a contract if accepted by the other
party
o Offer indicates the intention of the offeror to be bound
o Offer indicates the terms by which the offeror is willing to be
bound (price of the goods and possibly the time of delivery)
If both these requirements are not met, there is no offer at all
An invitation to the other party to enter into negotiations
o Only if the invitee finds such an invitation attractive enough, it
can decide to make an offer itself, leaving it to the original inviter
to either reject or accept it
Binding offer
o It is decisive how the proposal would be understood by a
reasonable person in the position of the offeree
o Could such a reasonable person believe that an offer was made?
o The criterion needs to be substantiated by reference to case law
, Definitiveness
o The offer must also contain sufficiently definite terms
o Parties need to agree on what they consider as vital
Example
In case of sales contract, this will include the good to be sold and the
price, delivery can be left behind for example
Any agreement that is too vague or incomplete will not be regarded as
a binding contract
Gibson v Manchester City Council (1979)
o A reasonable person in the position of Mr. Gibson could not have
believed that the Council’s letter, only containing the price of the
house, was an offer that only needed to be accepted by the
offeree in order to form a contract
Buying Coca- Cola from the vending machine, parking car using the ticket
machine
French and
English law
Dutch law
nature of these
announcements: advertiser
demonstrates a serious
intention to be bound to
potential respondents
no trouble finding an offer that is
accepted when the other party
performs the act for service or
product was offered
Unilateral contract
Thornton v Shoe Lane Parking (1971), per Lord Denning
o The offer is made when the proprietor of the machine holds it
out as being ready to receive the money
o The acceptance takes place when the customer puts his money
into the slot
French law o Article 1114 CC
English law o It requires an expression on the willingness on the part of offeror
to be bound by terms of the contract that it proposes and it must
be specific certain terms for that contract (definition from the
textbook by Nicole)
German, No specific definition of what is offer and acceptance
Dutch law Dutch law
o Offer is a legal act (rechtshandeling)
o Article 6:213 BW (contract as a multilateral legal act= more than
one legal act is needed for the contract to come into existence:
contract= legal act of the offer+ legal act of the acceptance)
o Article 3:33 BW (definition of a legal act)
German law
, Offer is a type of declaration of intention (Willenserklarung)
Display of Goods and Advertisements
Does o An offer does not have to be directed towards a specific person
advertisemen o It can also be addressed to the general audience
t constitute an o Proposal to the public amounts to an offer if the offeree could
offer? reasonably believe that an offer was made
The outcome of this test differs from one jurisdiction to another
An advertisement offering to sell a specific property at a certain price
does not in principle not qualify to be interpreted by potential offerees as
anything else than an invitation to enter into negotiations, whereby
matters such as the price, additional conditions of the purchase and the
prospective buyer may be of importance
French and German and
Dutch view English view
Protection of a customer against
Advantage of the seller, who can
a seller who advertises at a low
still decide after the
price to lure people into his shop
advertisement was published
or onto his website and then
whether he wants to deal with
makes up some excuses for not
the interested party or not
selling them
Since an advertisement can be
read by anyone, the advertiser
An offer will automatically fail
cannot be expected to sell to all
when the stock is finished
interested parties as stocks are
always limited
Art. 2:201 (3) PECL
‘A proposal to supply goods or services at stated prices made by a
professional supplier in a public advertisement or a catalogue, or by a
display of goods, is presumed to be an offer to sell or supply at that price
until the stock of goods, or the supplier’s capacity to supply the service,
is exhausted’
Dutch and An advertisement in general treated as a binding offer
French law Exception: interei personem contract
Dutch law
Hofland v Hennis (1981)
Holding
o An offer is binding in the same way as if it had been made to a
particular person
o Exception: If the personal qualities of the other party are of
interest to the offeror, as is undoubtedly the case in employment
contracts and credit agreements
French law
