L2301 Week 4 Lesson 2: Offers distinguished from other statements –

Continuation

b) Goods displayed in Self-service stores

The same principle that applies in advertisements applies in self-service stores.

See Pharmaceutical society of Great Britain v Boots Chemist [1953] ALL ER

456

Facts: Customers took items they wanted to buy from open shelves, put them in
a wire basket and proceeded to the till to pay.

The Applicant contended that the chemist was selling drugs to customers
without pharmaceutical supervision. They argued that a contract of sale was
concluded when a customer accepted the chemists offer to sell goods displayed
on shelf by selecting the item they want from the shelve and putting it in a
basket.

Issue: whether the display of goods on shelves in a self-service store constitutes

an offer to sell by the store owner.

Held that: A self-service system amounts to merely an invitation to the

customer to make an offer to buy. The customer’s offer is accepted at the
cashier’s desk when they make payment for items picked, and the chemist takes
the money.

As a general rule therefore an advertisement or the display of goods on a shelf

in a self-service store is an invitation to the public to do business and NOT an
offer.

Rationale for the principle:

If an advert were an offer, the shopkeeper:

i. would be prohibited from selecting his customers;

- yet he has a right to choose his customers.

Remember signage that says RIGHT OF ADMISSION RESERVED.

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 In terms of the law of contract, every person has the freedom to contract
with anyone they want. They cannot be forced to contract with someone
they do not want to contract with. This is called Freedom of Contract.

ii. Would be liable to contracts of sale even after he ran out of stock.

iii. Would be bound to sell at displayed price even if there was a mistake
in the pricing.

iv. Shopkeeper may not be selling everything on display.

Eg. old typewriter displayed on window to decorate the shop.

Exercise:

- A goes to Shoprite and takes a bottle of tomato sauce with a price tag of
M7.50 from the shelf. When he arrives at a till to pay for it, the cashier
informs him that the bottle was incorrectly marked, the correct price is
M12.00 and he will have to pay M12.00 for it. A insists on buying the
bottle of tomato sauce for M7.50.
- Is the shopkeeper obliged to give him the bottle for M7.50 or is A obliged
to pay M12.00?
- Why?

Exception: to general rule that an advert is not an offer, but invitation to do

business:

At the end of the day, the question is whether the advertisement or the display
of goods with price tags etc meets the requirements of a valid offer.

If the - nature of the advert,

- its wording
- and surrounding circumstances
indicate that it was intended to be offer, then it will be treated as such.

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That is, as long as the advert shows animus contranhendi, and is complete and
certain (unequivocal) and communicated to the offeree, then it is a valid offer.

See Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256

Facts: The Smoke Ball Company published an advertisement (in the press) for
a ‘Carbolic Smoke Ball cure’ which they claimed would prevent influenza if it
was used as directed. The advert further stated that the Smoke Ball Company
would pay 100 Pounds to any person who contracted influenza after proper use
of this device.

Moreover, the advert indicated that the company had deposited an amount of
1000 pounds with a specified bank to ensure their sincerity. They gave the name
and address of the bank.

Mrs. Carlill, relying on the advert, bought and used the product, carefully
following all the instructions and still contracted influenza. She sued the Smoke
Ball Company for 100 Pounds

Issue:
Whether the advertisement constituted a valid offer by Smoke Ball Co. which
had been accepted by Mrs. Carlill.

Therefore, if a binding contract had been concluded between the parties.

Principle: the advertisement was framed in a way that had all aspects of an
offer. It had specific terms of performance, was certain and definite, it contained
details of the bank engaged to show the intention to be bound by acceptance of
an offeree, therefore it constituted an offer.

Held: The court held that the Plaintiff was entitled to recover the 100 Pounds as
there was a binding contract between the parties.

- The principles that apply in advertisements apply to a large extent in like

manner to auctions, tenders, circulars, price tickets.

c) Call for bids at an auction

An auction is a public sale in which goods are sold to the highest bidder.
(Google).

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The terms on which the auction is to be held, including whether the auctioneer
or bidder is the offeror, may be laid down by the seller or auctioneer as the
organizer of the sale.

These are called conditions of the sale. They are read out at the beginning of
the sale to bring them to the notice of the buyers. After these, the conditions
become binding on the bidders.

The conditions of sale will state whether an auction is ‘with reserve’ or ‘without
reserve’.

An auction with reserve is an auction with a reserve price (a hidden minimum

price that the seller is willing to accept for the item).

In the auction with reserve, by calling out bids, the auctioneer does not make
an offer to sell. He is calling for offers to buy. So the bidder is the offeror.

- Each bid is an offer to buy.

- Hence he (auctioneer/ seller) is entitled to reject some offers made by the
bidders.
- Acceptance in symbolized by the fall of the auctioneer’s hammer.

An item of sale may not be sold if the final bid is not high enough to satisfy the
seller.

In other words, an auction with reserve gives the seller the right to confirm the
high bid at the conclusion of the sale – it is subject to confirmation.

An auction ‘without reserve’ is an auction in which the item for sale will be
sold regardless of price.

The property is sold to the highest bidder, regardless of the price.

In an auction ‘without reserve’, by calling for bids, the auctioneer makes an

offer to sell to the highest bidder. The auctioneer is the offeror.

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 - The making of the highest bid is regarded as acceptance and concludes
the sale.

d) Invitation for tenders

A party who calls for tenders generally does not make an offer, but invites other
people to submit offers to him.

He therefore has a right to accept or reject the tenders submitted.

Exception:

If the invitor undertakes to accept a specific form of tender, he is regarded as

making an offer.

- Eg that he will accept a tender with certain specifications made at the

lowest price.

Exercise

Would you consider the following offers to the public to be valid?

a) Y writes with chalk as follows on the window of his car: ‘This car for
sale: M20 000 cash. Phone owner on +266 5809 2166’

b) X puts a sign on his car window: ‘This car for sale to the first person who
gives M 20 000cash. Phone owner on +266 2221 3127’.

Prepared by: Dr. M. Kulehile

Faculty of Law
National University of Lesotho
Roma

Date : 15 November 2022