Contract Law
Lecture 3 – Acceptance
Need to know difference between offer and invitation to treat
Offer:
- Certain promise to be bound
- Clear and specified terms
- The conduct or words of the party show certainty
- There is no room for negotiation
Invitation to treat:
- There is room for negotiation
- There is an invitation for offers
- There is a request for information
- Lack of certainty
Test: the intention of the offeror as it would appear to a reasonable person
From offer to acceptance –
- Until the offer is accepted no contract but issue arise re offer:
- Is there a counter offer? Has the offer been withdrawn/revoked
- What about competing offers (battle of the forms)
- Revocation can take place prior to but not after acceptance communicated
- What about unilateral contracts?
- Does the offeor have to know about the offer?
Acceptance –
- ‘An unqualified expression of assent to the terms proposed by the offeror’ (Mck)
- Mirror principle
- Until acceptance no contract exists
- Offer on its own does not lead to contractual liability – not yet consensus ad idem (metting
of the mind) on objective view
Counteroffer: effect? How do you know there is one?
Hyde v Wrench (1840): termination by counteroffer or other rejection by offeree/ the proposal to
buy for £950 was a counteroffer; it had terminated the original offer so that the P purported
acceptance of it later was no more than a fresh offer BUT
- Offer to sell farm for 1000 – other party offered 950 – then send a letter saying they would
pay 1000
- Offeror never replied – no contract – was treated as a counteroffer
Stevenson, Jacques & Co v MacLean (1880): mere inquiry?
- Have to be careful because sometimes what can seem like an offer and acceptance can be
seen more closely on the facts and correspondence to be a mere inquiry for more
information
- Telex offered to sell a large quantity of warrants for iron for 40 shillings a ton, the offer to be
open until Monday. On monday, S replied aksing ‘whether you would accept forty for
, Contract Law
delivery over two months, or if not, longest limit you would give’, Held: was not a counter
offer just a mere inquiry
- Sought to rely on Hyde but court rejected it – it was just an inquiry and not a rejection of the
offer
- The P succeed and claimed damages
- The Ps had accepted the offer prior to revocation – they were simply asking a question
Gibson v Manchester – where is the offer?
- Specific performace was sought by the claimants
- No binding contract because no offer capable of acceptance had been made
- Equivocal language ‘may be prepapred to sell’
- Statements were merely invitation to treat and not offers
- Lord Denning look at totality of the transaction
- Public policy?
Battle of the forms:
- This occurs where parties do business together, but while appearing to go through the
process of offer and acceptance, they exchange paperwork which in fact leads to a written
(and perhaps unwritten) dispute over whose terms are to govern the deal
BRS v Arthur Crutchley Ltd (1968)
- Storage of valuable whiskey, limited clause, application of classical analysis of offer/counter-
offer/acceptance
- General principle: the latest shot in a battle of the forms tends to prevail, because the
doctrine of counter-offer dictates that it represents the current offer on the table between
the parties and terminates earlier ones
Butler Machine Tool Co v Ex-cell (1979) – battle of forms case
- Commercial parties often try to gain strategic advantage by using their own standard forms
- When forms sent back and forth it is difficult to ascertain at what point agreement was
reached
- Looks at all the documents to see if agreement was reached on all material terms
- The battle is won by the party who put forth the lastest t and c that are not objected to by
the other party
- It was found that the sellor could not live up to the uplift because his terms could not prevail
- P were sellers who offered to sell a machine tool for 75000 deliver in 10 months
- Offer said to be on sellers terms which ‘shall prevail over any terms… in buyers orders’
- Buyers order contained different terms and tear off slip stating acceptance on terms and
conditions ‘stated thereon’
- Sellers returned slip with covering letter stating were accepting in accordance with their
original quote. Late delivery – sellers claim price variation clause not in buyers terms
- CA find for buyers on classical analysis: buyers order was a counter offer because no mirror.
Sellers accepted by returning tear off slip
- Lawton and Bridge came to the same conclusion as Denning albeit with different reasoning
Lecture 3 – Acceptance
Need to know difference between offer and invitation to treat
Offer:
- Certain promise to be bound
- Clear and specified terms
- The conduct or words of the party show certainty
- There is no room for negotiation
Invitation to treat:
- There is room for negotiation
- There is an invitation for offers
- There is a request for information
- Lack of certainty
Test: the intention of the offeror as it would appear to a reasonable person
From offer to acceptance –
- Until the offer is accepted no contract but issue arise re offer:
- Is there a counter offer? Has the offer been withdrawn/revoked
- What about competing offers (battle of the forms)
- Revocation can take place prior to but not after acceptance communicated
- What about unilateral contracts?
- Does the offeor have to know about the offer?
Acceptance –
- ‘An unqualified expression of assent to the terms proposed by the offeror’ (Mck)
- Mirror principle
- Until acceptance no contract exists
- Offer on its own does not lead to contractual liability – not yet consensus ad idem (metting
of the mind) on objective view
Counteroffer: effect? How do you know there is one?
Hyde v Wrench (1840): termination by counteroffer or other rejection by offeree/ the proposal to
buy for £950 was a counteroffer; it had terminated the original offer so that the P purported
acceptance of it later was no more than a fresh offer BUT
- Offer to sell farm for 1000 – other party offered 950 – then send a letter saying they would
pay 1000
- Offeror never replied – no contract – was treated as a counteroffer
Stevenson, Jacques & Co v MacLean (1880): mere inquiry?
- Have to be careful because sometimes what can seem like an offer and acceptance can be
seen more closely on the facts and correspondence to be a mere inquiry for more
information
- Telex offered to sell a large quantity of warrants for iron for 40 shillings a ton, the offer to be
open until Monday. On monday, S replied aksing ‘whether you would accept forty for
, Contract Law
delivery over two months, or if not, longest limit you would give’, Held: was not a counter
offer just a mere inquiry
- Sought to rely on Hyde but court rejected it – it was just an inquiry and not a rejection of the
offer
- The P succeed and claimed damages
- The Ps had accepted the offer prior to revocation – they were simply asking a question
Gibson v Manchester – where is the offer?
- Specific performace was sought by the claimants
- No binding contract because no offer capable of acceptance had been made
- Equivocal language ‘may be prepapred to sell’
- Statements were merely invitation to treat and not offers
- Lord Denning look at totality of the transaction
- Public policy?
Battle of the forms:
- This occurs where parties do business together, but while appearing to go through the
process of offer and acceptance, they exchange paperwork which in fact leads to a written
(and perhaps unwritten) dispute over whose terms are to govern the deal
BRS v Arthur Crutchley Ltd (1968)
- Storage of valuable whiskey, limited clause, application of classical analysis of offer/counter-
offer/acceptance
- General principle: the latest shot in a battle of the forms tends to prevail, because the
doctrine of counter-offer dictates that it represents the current offer on the table between
the parties and terminates earlier ones
Butler Machine Tool Co v Ex-cell (1979) – battle of forms case
- Commercial parties often try to gain strategic advantage by using their own standard forms
- When forms sent back and forth it is difficult to ascertain at what point agreement was
reached
- Looks at all the documents to see if agreement was reached on all material terms
- The battle is won by the party who put forth the lastest t and c that are not objected to by
the other party
- It was found that the sellor could not live up to the uplift because his terms could not prevail
- P were sellers who offered to sell a machine tool for 75000 deliver in 10 months
- Offer said to be on sellers terms which ‘shall prevail over any terms… in buyers orders’
- Buyers order contained different terms and tear off slip stating acceptance on terms and
conditions ‘stated thereon’
- Sellers returned slip with covering letter stating were accepting in accordance with their
original quote. Late delivery – sellers claim price variation clause not in buyers terms
- CA find for buyers on classical analysis: buyers order was a counter offer because no mirror.
Sellers accepted by returning tear off slip
- Lawton and Bridge came to the same conclusion as Denning albeit with different reasoning
