OFFER

R v Clarke [1927]
Facts

 The claimant, under investigation for the murder of 2 police officers, gave
evidence which led to the conviction of another person, the actual murderer
 There had been a reward of £1000 to anyone who gave such evidence

Issue

 Could the claimant claim the reward, given that he had said in his interview that
we was cooperating “exclusively in order to clear his name”

Decision

 Claim failed, no recovery

Reasoning

 It is necessary to act in reliance of a unilateral offer when accepting it. Mr

Clarke was not acting upon the offer.

Grainger & Son v Gough [1896] AC 325 HL

Facts

The defendant wine merchant circulated a catalogue which contained a price list for
its products. The claimant ordered a number of bottles of wine from the catalogue
and, when the defendant refused to deliver these at the stated price, alleged that a
contract had been formed.
Issue

The issue was whether the price list constituted an offer to sell wine at a certain price
(in which case the contract was fully formed and the claimant had a valid claim), or
an invitation to treat (in which case no contract had been formed).

Held

Rejecting the claim, the House of Lords held that the price list must be construed not
as an offer, but as an invitation to treat. In reaching this conclusion, it reasoned that
to interpret the list as an offer would mean that in theory the defendant would be
obliged to deliver an unlimited quantity of wine at the stated price, upon receipt of an
order. This would be unreasonable, and would not reflect the intentions of the parties
as the merchant’s stock is necessarily limited, and it would not be possible for him to
carry out such an order. Both reasonableness and objective intention are key to
distinguishing between an offer and an invitation to treat. On this basis, the list was
interpreted an invitation to customers to offer to buy wine at the stated price, which
the merchant may then accept or reject. In this case, the defendant was not bound to
deliver the wine ordered by the claimant.

The question of when a contract is concluded arises at auctions. At an auction, an auctioneer will
invite bids on an item (a lot), people will bid and once the bidding ceases the auctioneer brings
down his hammer and the highest bidder is sold the item.

Fisher v Bell (1960)

A shopkeeper displayed a flick knife with a price tag in the window. The Restriction of
Offensive Weapons Act 1959 made it an offence to 'offer for sale' a 'flick knife'. The
shopkeeper was prosecuted in the magistrates' court but the Justices declined to convict on
the basis that the knife had not, in law, been 'offered for sale'.

This decision was upheld by the Queen's Bench Divisional Court. Lord Parker CJ stated: "It
is perfectly clear that according to the ordinary law of contract the display of an article with a
price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale
the acceptance of which constitutes a contract."

Partridge v Crittenden (1968)

It was an offence to offer for sale certain wild birds. The defendant had advertised in a
periodical 'Quality Bramblefinch cocks, Bramblefinch hens, 25s each'. His conviction was
quashed by the High Court. Lord Parker CJ stated that when one is dealing with
advertisements and circulars, unless they indeed come from manufacturers, there is business
sense in their being construed as invitations to treat and not offers for sale. In a very different
context Lord Herschell inGrainger v Gough (Surveyor of Taxes) [1896] AC 325, said this in
dealing with a price list:

"The transmission of such a price list does not amount to an offer to supply an unlimited
quantity of the wine described at the price named, so that as soon as an order is given there is
a binding contract to supply that quantity. If it were so, the merchant might find himself
involved in any number of contractual obligations to supply wine of a particular description
which he would be quite unable to carry out, his stock of wine of that description being
necessarily limited."

Completion

There is a statutory definition of contracts formed at auction sales.

S57(2):A sale by auction is complete when the auctioneer announces its completion by the fall of
the hammer, or in other customary manner; and until the announcement is made any bidder may
retract his bid.

The auctioneer's action is the acceptance of the bidder's offer. Therefore, the original call for bids
is an invitation to treat.

Reserves

A reserve price may be set by the seller and if this price is not met the lot will be withdrawn and
not sold.

S57(3):A sale by auction may be notified to be subject to a reserve or upset price, and a right to
bid may also be reserved expressly by or on behalf of the seller.

Some auctions may take placewithout reserve, meaning no reserve is set and the lot is sold to
the highest bidder.

Warlow v Harrison (1859) 1 E & E 309

Facts:

A public auction of a horse,without reserve, was advertised by the defendant, an auctioneer. The
plaintiff bid 60 guineas and the owner of the horse bid 61 guineas. There were no further bids
and the defendant put down his hammer on the bid for 61 guineas. The plaintiff claimed the
horse should be his as he was the highest bona fide bidder.

Issue:

Was there a contract for sale?

Held:

The advertisement , as it included the wordswithout reserve, was an offer to sell to the highest
bona fide bidder. The defendant was in breach of that promise. It was an offer of a unilateral
contract as the defendant bound himself to sell to the highest bidder.

The plaintiff had performed the required act (made the highest bid). However, because the
hammer had not been put down on the plaintiff's bid there was no acceptance of his offer.
Therefore, there was no contract for the sale.

The plaintiff was only entitled to sue the defendant for the loss of the opportunity to buy the
horse.
 Payne v Cave (1789)
The defendant made the highest bid for the plaintiff's goods at an auction sale, but he withdrew
his bid before the fall of the auctioneer's hammer. It was held that the defendant was not bound
to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any
time before the auctioneer signified acceptance by knocking down the hammer. Note: The
common law rule laid down in this case has now been codified in s57(2) Sale of Goods Act 1979.

Partridge v Crittenden (1968)

It was an offence to offer for sale certain wild birds. The defendant had advertised in a
periodical 'Quality Bramblefinch cocks, Bramblefinch hens, 25s each'. His conviction was
quashed by the High Court. Lord Parker CJ stated that when one is dealing with
advertisements and circulars, unless they indeed come from manufacturers, there is
business sense in their being construed as invitations to treat and not offers for sale. In a
very different context Lord Herschell inGrainger v Gough (Surveyor of Taxes) [1896] AC 325,
said this in dealing with a price list:
"The transmission of such a price list does not amount to an offer to supply an unlimited
quantity of the wine described at the price named, so that as soon as an order is given there
is a binding contract to supply that quantity. If it were so, the merchant might find himself
involved in any number of contractual obligations to supply wine of a particular description
which he would be quite unable to carry out, his stock of wine of that description being
necessarily limited."

Carlill v Carbolic Smoke Ball Co (1893)

An advert was placed for 'smoke balls' to prevent influenza. The advert offered to pay £100 if
anyone contracted influenza after using the ball. The company deposited £1,000 with the
Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but
contracted influenza. It was held that she was entitled to recover the £100. The Court of
Appeal held that:
(a) the deposit of money showed an intention to be bound, therefore the advert was an offer;
(b) it was possible to make an offer to the world at large, which is accepted by anyone who
buys a smokeball;
(c) the offer of protection would cover the period of use; and
(d) the buying and using of the smokeball amounted to acceptance.

Harvey v Facey (1893)

The plaintiffs sent a telegram to the defendant, "Will you sell Bumper Hall Pen? Telegraph
lowest cash price".
The defendants reply was "Lowest price £900".
The plaintiffs telegraphed "We agree to buy... for £900 asked by you".
It was held by the Privy Council that the defendants telegram was not an offer but simply an
indication of the minimum price the defendants would want, if they decided to sell. The
plaintiffs second telegram could not be an acceptance.
Gibson v MCC (1979)
The council sent to tenants details of a scheme for the sale of council houses. The plaintiff
immediately replied, paying the £3 administration fee. The council replied: "The corporation
may be prepared to sell the house to you at the purchase price of £2,725 less 20 per cent.
£2,180 (freehold)." The letter gave details about a mortgage and went on "This letter should
not be regarded as a firm offer of a mortgage. If you would like to make a formal application
to buy your council house, please complete the enclosed application form and return it to me
as soon as possible." G filled in and returned the form. Labour took control of the council
from the Conservatives and instructed their officers not to sell council houses unless they
were legally bound to do so. The council declined to sell to G.
In the House of Lords, Lord Diplock stated that words italicised seem to make it quite
impossible to construe this letter as a contractual offer capable of being converted into a
legally enforceable open contract for the sale of land by G's written acceptance of it. It was a
letter setting out the financial terms on which it may be the council would be prepared to
consider a sale and purchase in due course.

Harvela v Royal Trust (1985)

Royal Trust invited offers by sealed tender for shares in a company and undertook to accept
the highest offer. Harvela bid $2,175,000 and Sir Leonard Outerbridge bid $2,100,000 or
$100,000 in excess of any other offer. Royal Trust accepted Sir Leonard's offer. The trial
judge gave judgment for Harvela.
In the House of Lords, Lord Templeman stated: "To constitute a fixed bidding sale all that
was necessary was that the vendors should invite confidential offers and should undertake
to accept the highest offer. Such was the form of the invitation. It follows that the invitation
upon its true construction created a fixed bidding sale and that Sir Leonard was not entitled
to submit and the vendors were not entitled to accept a referential bid."

Spencer v Harding Law Rep. 5 C. P. 561

The defendants advertised a sale by tender of the stock in trade

belonging Eilbeck & co. The advertisement specified where the
goods could be viewed, the time of opening for tenders and that
the goods must be paid for in cash. No reserve was stated. The
claimant submitted the highest tender but the defendant refused
to sell to him.

Held:

Unless the advertisement specifies that the highest tender would

be accepted there was no obligation to sell to the person
submitting the highest tender. The advert amounted to an
invitation to treat, the tender was an offer, the defendant could
choose whether to accept the offer or not.

Errington v Errington Woods [1952] 1 KB 290 Court of

Appeal

A father-in-law purchased a house for his son and daughter-in-

law to live in. The house was put in the father's name alone. He
paid the deposit as a wedding gift and promised the couple that if
they paid the mortgage instalments, the father would transfer the
house to them. The father then became ill and died. The mother
inherited the house. After the father's death the son went to live
with his mother but the wife refused to live with the mother and
continued to pay the mortgage instalments. The mother brought
an action to remove the wife from the house.

Held:

The wife was entitled to remain in the house. The father had
made the couple a unilateral offer. The wife was in course of
performing the acceptance of the offer by continuing to meet the
mortgage payments. Under normal contract principles an offer
may be revoked at any time before acceptance takes place,
however, with unilateral contracts acceptance takes place only on
full performance. Lord Denning held that once performance had
commenced the Mother was estopped from revoking the offer
since it would be unconscionable for her to do so. Furthermore
there was an intention to create legal relations despite it being a
family agreement.

Shuey v. United States (1875)

Facts: The United States used newspapers to

publicize a reward for the arrest of an accomplice in
the murder of President Lincoln. The offer was later
revoked in the same manner. Shuey, unaware of the
revocation, gave information that led to the arrest of
the accomplice. She was given a smaller reward.

Issue: How may a general offer that is made to

unknown persons via the mass media be revoked?

Rule: An offer of a reward made by means of a

published proclamation can be revoked in the
manner in which it was made or through similar
publicity. There is no legal duty to satisfy’ an acceptor
who does not know of the revocation.

Bradbury v Morgan (1862)

JM Leigh requested Bradbury & Co to give credit to HJ Leigh, his brother. JM Leigh
guaranteed his brother's account to the extent of £100. Bradbury thereafter credited
HJ Leigh in the usual way of their business. JM Leigh died but Bradbury, having no
notice or knowledge of his death, continued to supply HJ Leigh with goods on credit.
JM Leigh's executors (Morgan) refused to pay, arguing that they were not liable as
the debts were contracted and incurred after the death of JM Leigh and not in his
lifetime. Judgment was given for the plaintiffs, Bradbury.

Byrne v Van Tienhoven (1880)

1 Oct. D posted a letter offering goods for sale.
8 Oct. D revoked the offer; which arrived on 20 Oct.
11 Oct. P accepted by telegram
15 Oct. P posted a letter confirming acceptance.
It was held that the defendant's revocation was not effective until it was received on 20 Oct.
This was too late as the contract was made on the 11th when the plaintiff sent a telegram.
Judgment was given for the plaintiffs.

Dickinson v Dodds (1876)

Dodds offered to sell his house to Dickinson, the offer being open until 9am Friday. On
Thursday, Dodds sold the house to Allan. Dickinson was told of the sale by Berry, the estate
agent, and he delivered an acceptance before 9am Friday. The trial judge awarded
Dickinson a decree of specific performance. The Court of Appeal reversed the decision of
the judge.
James LJ stated that the plaintiff knew that Dodds was no longer minded to sell the property
to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the
offer." This was evident from the plaintiff's own statements. It was clear that before there was
any attempt at acceptance by the plaintiff, he was perfectly well aware that Dodds had
changed his mind, and that he had in fact agreed to sell the property to Allan. It was
impossible, therefore, to say there was ever that existence of the same mind between the
two parties which is essential in point of law to the making of an agreement.

Hyde v Wrench (1840)

6 June W offered to sell his estate to H for £1000; H offered £950
27 June W rejected H's offer
29 June H offered £1000. W refused to sell and H sued for breach of contract.
Lord Langdale MR held that if the defendant's offer to sell for £1,000 had been
unconditionally accepted, there would have been a binding contract; instead the plaintiff
made an offer of his own of £950, and thereby rejected the offer previously made by the
defendant. It was not afterwards competent for the plaintiff to revive the proposal of the
defendant, by tendering an acceptance of it; and that, therefore, there existed no obligation
of any sort between the parti
ACCEPTANCE

Entorres v Miles Far East [1955] 2 QB 327 Court of Appeal

The claimant sent a telex message from England offering to

purchase 100 tons of Cathodes from the defendants in Holland.
The defendant sent back a telex from Holland to the London office
accepting that offer. The question for the court was at what point
the contract came into existence. If the acceptance was effective
from the time the telex was sent the contract was made in
Holland and Dutch law would apply. If the acceptance took place
when the telex was received in London then the contract would
be governed by English law.

Held:

To amount to an effective acceptance the acceptance needed to

be communicated to the offeree. Therefore the contract was
made in England.

Henthorn v Fraser [1892] 2 Ch 27

Contract – Postal Rule – Contract Formation – Specific Performance – Acceptance –
Offer

Facts

The complainant and the defendant had been negotiating the purchase price of
houses. An original offer to buy the houses for £600 had been rejected. The
defendant, Mr Fraser, handed the complainant, Mr Henthorn, a note that detailed an
option to sell the property for £750, which would be valid for 14 days. While this offer
was being considered, another buyer was interested and the defendant concluded a
contract with them instead. The next day, the defendant then withdrew the offer to
the complainant by post. This note did not reach Mr Henthorn until 5pm. In this time,
Mr Henthorn had already responded to the offer by post with an unconditional
acceptance to buy the houses for £750. But, this was not delivered to Mr Fraser until
the office was closed and he did not read this acceptance until the morning.

Issues
The issue in this case concerned the revocation of the offer. This was completed
before the postal acceptance of the offer was received. It was for the court to decide
whether the acceptance of the offer was valid or if the contract had been revoked
successfully before the acceptance.

Held

The court held that the offer was valid and an order for specific performance made
for £750 to purchase the property. The postal rule in Adam v Lindsell would apply,
which stated that it would be reasonable for acceptance of an offer to take place by
post. However, this rule would not apply to the revocation of an offer. Post was a
way of communicating offer acceptance, but the acceptance itself is completed as
soon as it is posted. This was reasonable to expect since both parties lived in
different towns.

Adams v Lindsell (1818) 106 ER 250

The defendant wrote to the claimant offering to sell them some

wool and asking for a reply 'in the course of post'. The letter was
delayed in the post. On receiving the letter the claimant posted a
letter of acceptance the same day. However, due to the delay the
defendant's had assumed the claimant was not interested in the
wool and sold it on to a third party. The claimant sued for breach
of contract.

Held:

There was a valid contract which came in to existence the

moment the letter of acceptance was placed in the post box.

This case established the postal rule. This applies where post is
the agreed form of communication between the parties and the
letter of acceptance is correctly addressed and carries the right
postage stamp. The acceptance then becomes effective when the
letter is posted.
Holwell Securities v Hughes [1974] 1 WLR 155

Dr Hughes granted Holwell Securities an option to purchase his

house for £45,000. The option was to be exercisable 'by notice in
writing' within 6 months. Five days before the expiry, Holwell
posted a letter exercising the option. This letter was never
received by Hughes. Holwell sought to enforce the option relying
on the postal rule stating the acceptance took place before the
expiry of the option.

Held:

By requiring 'notice in writing', Dr Hughes had specified that he

had to actually receive the communication and had therefore
excluded the postal rule.

Countess of Dunmore v Alexander (1830) 9 S.

190
Contract law – Formation of contract

Facts

The Countess of Dunmore (C) was looking to change servant and wrote to Lady
Agnew (LA) requesting information on the character of one of her servants,
Alexander. LA responded and recommended Alexander, stating that she would
accept the proposed wage. C accepted this and sent a letter to LA, acknowledging
the agreement. LA was away from her residence but had the letter forwarded to the
appropriate address. She acknowledged the letter and sent this on to Alexander. A
day later, C wrote to LA stating that she no longer needed Alexander. LA forward the
second letter by express post and both letters were delivered to Alexander at the
same time. After C refused to house or pay Alexander, Alexander brought an action
against her on the basis that there had been a completed contract and C had
breached the terms.

Issue

C argued that as the two letters were received at the same time, Alexander had
proper notice that she was not required. The issue for the court to consider was
whether a party, who accepts an offer is entitled at the same moment to retract its
acceptance.

Held

The court held that there was no completed contract and therefore Alexander was
not entitled to the wages for which she had claimed. The court found that as the two
letters were received at the same time by Alexander, there could be no contract but
notably stated that if one had arrived in the morning and the other in the afternoon,
this would have been different (as per Lord Balgray). As a result of the circumstance,
C was allowed to revoke her offer.
Taylor v Allen [1966]
Facts

 The claimant took his car out for a drive, claiming he was covered by an
insurance company’s temporary cover notice

Issue

 Could driving the car constitute acceptance of the notice of 15 days of cover

Decision

 No contract

Reasoning

 Although a contract can be accepted by conduct, it may not be accepted by such

conduct if it is not clear that the parties both intended there to be such an
agreement
Pyrene Co Ltd v Scindia Steam Navigation Co
Ltd [1954] 2 QB 402
Contract law – Sale of goods – Shipping contracts

Facts

The plaintiff delivered a fire tender which was sold by a contract of sale. As the
tender was being lifted onto the ship, before it crossed the rail on the ship, it was
dropped and subsequently damaged. As per the contract of sale between the
parties, the possession of the property had not passed at this stage. A bill of lading
had been drawn up but was not issued. The sellers sued the owners of the ship for
the cost to repair the tender. The owners of the ship admitted liability but argued their
liability would be limited by the Hague Rules, Article 4 (5).

Issue

The sellers of the tender claimed that as the goods had not crossed the rail of the
ship, the incident had occurred off of the ship and therefore outside the scope of
the Hague Rules. Further to this, because the bill of lading had not been conveyed,
these terms had not been included in the contract between the parties. Lastly, the
seller argued that even if the term had been included in the contract, they could not
be applied in the agreement between the ship-owners and themselves.

Held

The court held that limited liability under the Hague Rules did extend to the loading
of the cargo on to the ship. Moreover, it was found that the bill of lading was
irrelevant and the contract could be regarded as the incomplete bill of lading on the
basis that all three parties were deemed to have a benefit from the agreement. As a
result of this finding, the plaintiffs could only recover £200 as per the Hague
Rules which were considered to be included in the contract.