Offer and Acceptance

'A contract is an agreement which gives rise to obligations which are enforced or recognized by law. The factor which distinguishes contractual [relations] from other obligations is that they are based on the agreement of the contracting parties.'1

To enter a legally binding bilateral contract there must be an offer and an acceptance. An offer is defined by Paul Richards in the Law of Contract as: 'An expression of a willingness to contract on certain terms made with the intention that a binding agreement will exist once the offer is accepted.'

For an offer to be valid it must be communicated. This might seem rather obvious, however circumstances in real life may be more blurred as illustrated by the case ofTaylor v Laird (1856) 1H & N 266; 25 LJ Ex 329. The captain of a ship, employed for a trading and exploring voyage, refused to go any further and resigned his command. He subsequently helped to work the ship home and wanted to claim his wage for this work. It was held however that he could not do so as his offer to help bring the ship home was not communicated, therefore there had been no opportunity to accept or reject his offer.

A distinction must be noted between an offer and a request for information. This distinction can be shown by the case of Harvey v Facey [1893] AC 552 in which a telegraph was sent stating:

'Will you sell us Bumper Hall Pen? Telegraph lowest cash price'

the responded replied: 'Lowest price Bumper Hall Pen for 900'

they then replied with: 'We agree to buy Bumper Hall Pen for 900'

It was held that the reply to the lowest cash price was not an offer, it was simply a statement as to the minimum price he would sell the Bumper Hall Pen, it was just a response to a request for information. The final telegraph was an offer which was not accepted.

The offer might be confused further with invitation to treat. There is a clear distinction between the two however as an invitation to treat shows a willingness to enter into negotiations rather than a willingness to enter into a legally binding contract. This can be illustrated by the case

of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1952] 2All ER 456 in which it was held that the goods on the shelves are an invitation to treat and the offer occurs at the checkpoint, at which point the customer offers to buy a certain good for a certain price and then Boots either accepts or rejects the offer. Rather than vice versa whereby it is Boots making an offer by putting the goods on a shelve and the customer accepting this offer by moving the goods into the basket.

Ac c e p t a n ce o f an Of f er
The second part of a contract is the acceptance of an offer. Acceptance was defined by Treitel as 'a final unqualified expression of assent to all the terms of an offer'. As with offer, acceptance has to be communicated in order for it to be valid as illustrated by Lord Denning in Entores v Miles Far East Corporation [1955] 2 QB 327 The communication of acceptance can be in writing, orally or inferred from conduct. There can be an acceptance only when there is an offer however. In the absence of such offer there can be no acceptance, therefore no legally binding contract can be formed.

The manner in which an acceptance is communicated is important as it might make it invalid. Unless requested by the offeror for a certain mode of communication to be used, in Tinn v Hoffman and Co. (1873) 29 LT 271 it was stated that an equally expeditious mode or more expeditious as the mode used to communicate the offer can be used. InManchester Dioceasan Council for Education v Commercial and General Investment Ltd [1969] 3All ER 159 Buckay J states: 'I am of the opinion that acceptance communicated to the offeror by any other mode which is no less advantageous to him will conclude the contract.'

In Adams v Lindsell (1818) 1 B & Ald 681 the postal rule was established, the validity of which still stands as shown in modern times by the case of Brinkibon Ltd v Stahag Stahl und

Stahlwarenhandelsgesellscaft GmbH [1983] 2 AC 34. The postal rule states that an offer is accepted as soon as the letter of acceptance has been posted. Hence, although a letter might be received on the 18th of November, if it was sent on the 17th of November, the acceptance of the offer occurs on

the 17th rather than the 18th. It is not clear whether the postal rule applies to emails as such a case has no precedent. However, there are reason to believe that the postal rule may apply to emails. In the case of Entores it was stated that instantaneous forms of communication are as if they were in each others presence. This was developed further in the Brimmes case whereby it was decided that instantaneous forms of communication are as if they were in the presence of each other as far as it is within a business day. It can be argued therefore that an e-mail is an instantaneous form of communication as it is received within seconds of being sent. As such it may be suggested that the principles of the Entores andBrimmes might be applied to email communications as well.

Definition of Offer A person is said to have made a proposal when he signifies to another his willngness to do something with a view to obtain assent of that other. It indicates that upon acceptance by the offeree, the offeror will be bound thereby. HOW AN OFFER IS MADE Express Offer Implied Offer