CH: OFFER AND ACCEPTANCE

Offer
 An offer is where one party shows that he/she is happy to contract with
another party (or more than one party) on fixed terms (or terms that
one able to be fixed) at that specific time.
 In other words, court is trying to find a willingness from a party (e.g a
communication in writing or orally) to contract on specific terms.
 Chen-Wishart defined an offer “a manifestation (whether orally, in
writing, or by conduct) by the offeror of a willingness to be bound by the
terms proposed to the offeree (the addressee), as soon the offeree
signifies acceptance of the term”.
 So, it’s an expression of willingness to be found on stated terms if
accepted by the other party.
 An offer can be expressed (either in writing or orally) or implied.
 Datec Electronics Holdings Ltd v United Parcels Service Ltd (2007): if a
package exceeds a certain value, UPS had the right to not carry the
package. Here the package did exceed that value, but they decided to
carry the package anyways. Subsequently, the package got lost so the
owner of package sued. The company said that the owner could not sue
because their company policy dictates that they don’t carry packages
over a certain value.
HELD: it was held that UPS had impliedly offered to carry the package
anyways so were liable for damages for the lost package.
 Only the person to who the offer was made can accept that offer
(Lambert v Lewis 1982)

Invitation to treat
 An inv to treat is an inv for customers to submit ab offer, and willingness
to deal.
 It’s not always easy to see the diff b/w an offer and an inv to treat.
 Gibson v Manchester City Council (1979): In this case it appeared as
though hence was an offer, but it was held to have been an inv to treat.
Gibson lived in a house owned by the Conservative Council. The council
offered Gibson the chance to buy the house; the council offered a price
saying they “may be prepared to sell the house” to him and he must fill
out a “formal application” to purchase it (which he did). The HOL held
 that there was no contract. The conservative council had not actually
made an offer to Gibson to buy the house, but made an inv to treat i.e
they were simply showing their willingness for Gibson to buy the house.
 If someone sends a catalogue of goods that is an inv to treat and not an
offer.
 Grainger and sons v Gough (1896): Lord Herschell said that “the
transmission of such a price list does not amount to an offer” coz if it did
the company may not be able to fulfil the contract due to a limited
stock.
 Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953): it
was held that goods on display in a shop is an inv to treat.
 Fisher v Bell (1961): it was decided “the display of an article with a price
on it in a shop window is merely an inv to treat”.
 Thornton v Shoe Lane Parking ltd (1971): In automated transactions such
as with vending machines the seller (the machine) is making an offer and
the customer accepts that offer by paying for the goods.
Company Shares:
 When a company announces they have shares available to purchase
that’s an inv to treat.
 But if they send out applications for people to buy shares that is an offer
as happened in (National Westminster Bank Plc v IRC 1995).
Advertisement:
 Partridge v Crittenden (1968): it was held that usually adv is not seen as
an offer.
 Carlill v Carbolic Smoke Ball Co (1893): it was held that adv in que was a
unilateral contract making an offer to world at large.
Tenders
 A tender is an open offer “to make an offer”.
For example, if u want 10 laptops u can send a tender notice to the
newspaper listing ur requirements u want from the laptops.
Manufacturers can then make u offer/bid, and the highest offer/bid will
win the tender. (i.e deal/contract)
 Spencer v Harding (1870): it was held that adv a sale by tender was seen
as the defendant showing neediness to negotiate; it doesn’t prove he
was ready to sell. Thus, the advert was an inv to treat.
  In the case of Harvela Investments ltd v Royal Trust Co. of Canada
(1896): two companies (Harvela and Outerbridge) were requested to
submit tenders for the purchase of some shares. The D’s stated that the
highest bid will be binding. Harvela bid 2.175m dollars and Outerbridge
bid 2.1m dollars or 101K dollars more than any other offer (a referential
bid). The D accepted Outerbridge’s offer and Harvela sued.
HELD: it was held that the referential bid could not be allowed, so
Harvela were successful. As the D’s were bound to accept the highest
bid, the referential bid didn’t have a fix amount attached to it and as
such could not be accepted or even submitted.
Auctions
 The Sale of Goods Act 1975, sec.57, essentially states the bids in auction
are offers. When the hammer falls at the end of an auction that is
acceptance of the offer i.e accepting the bid
 Si it is up to the auctioneer whether to sell an item or not (with
unlimited exceptions).
 The auctioneer is simply inv offers so is making an inv to treat.
 However, where there’s an auction ‘without reserve’ the auctioneer is
making an offer to sell to the highest bona fide bidden Warlow v
Harrison 1859: Hence the bidder was the owner and thus not a bona fide
bidder.
 If this auction is “without reserve”, the auctioneer is bound by the
highest bid irrespective of the amount: (Barry v Davies)
Offer has to be communicated
 For there to be a valid offer there needs to be a communication of
promise from the offeror to the offeree.
 Forman and Co. Proprietary Ltd v Ship Liddesdale 1900: The parties
agreed on the repairs of the ship. The repairers continued with a load of
repairs which were not covered by the initial agreement.
HELD: it was held that no offer had been communicated to the ship
owners regarding the additional repairs, so there was nothing for them
to accept. Therefore, there was no binding contract. For there to be a
valid offer there needs to be a communication of promise from the
offeror to the offeree.
  Exception in Gibbons v Proctor (1891): A reward was offered to anyone
who provided certain info. The person who ended up supplying the info
was not aware of the reward available.
HELD: it was held that the person who still entitled to the reward, So,
despite there being no communication of the offer to the person, he was
still able to “accept it”. This appears to go against the principle than an
offer was must be communicated.
Acceptance
⇒ It can be difficult to identify if there has been acceptance where the parties
have undertaken lots of negotiation.

⇒ Andrews: "[A]n acceptance is an unequivocal expression of willingness to be

accede, without qualification, to the terms contained in the offer."

⇒ Mckendrick: "An acceptance is an unqualified expression of assent to the

terms proposed by the offeror."

⇒ For there to be acceptance there must be a definite and unqualified assent

to the offer, and on the terms indicated in the offer.

Mirror Image Rule

⇒ An acceptance has to mirror the terms of the offer.

⇒ 1) The acceptance must be final

 If no final answer is given to the offer, there is no acceptance (and,

therefore, no contract).
 Merely "intending to place an order" is not enough to show
acceptance: OTM v Hydranautics [1981] .
 A request for more information is also not acceptance: Stevenson v
McLean (1880).
⇒ 2) The acceptance must unqualified and unconditional

 When introducing extra terms to a contract the other party must accept
those extra terms.
  If a party says "yes" to an offer, but say that using your own terms, then
this is NOT acceptance; that would be a counter-offer.
 If you have a counter offer then you need to find an acceptance of that
counter-offer. If you do not have an acceptance by the other party,
then you have another counter-offer.
o An interesting case on counter-offers is Tinn v Hoffmann & Co.
(1873): Facts: The plaintiff wrote to the defendant asking for the
price of 800 tons of iron. The defendant offered the iron to the
plaintiff at 69 shillings per ton and asked for a reply "by return"
(thus, that was a contractual term). Held: It was held that since
the offer was not in fact accepted "by return" (i.e. by return of
post), there was no contract. In other words, there was no
acceptance because it had not complied with the mirror image
rule. However, Honeyman J did say - obiter - that a telegram,
verbal message, or any other means of return that was at least as
fast as a letter written "by return" of post would have been
sufficient

 If an offer is rejected it cannot later be accepted: Hyde v Wrench (1840).

Note, a counter-offer is also seen as a rejection of an offer. So a party
will be unable to accept an initial offer if they have made their own
counter-offer.
 A request for information (as seen in the case of Stevenson v McLean
(1880)) is NOT a counter-offer.

Acceptance by Conduct
⇒ With unilateral contracts acceptance is always done by conduct: see, for
example, Carlill v Carbolic Smoke Ball Co [1893].

⇒ With Bilateral contracts sometimes conduct can amount to acceptance too

e.g. in a shop no words may be spoken but a transaction can be done.
⇒ Even where the contract is more complex it may be possible for conduct to
amount to acceptance: Brogden v Metropolitan Railway (1877).

⇒ Acceptance should be made in the manner prescribed by the offer: see, for
example, Haughland Tankers AS v RMK Marine [2005]: Facts: The offer, in this
case, indicated that for there to be acceptance a notice must be given in 6
months, and a commitment fee must be paid within these 6 months. The
claimant gave a notice but no commitment fee. Held: It was held there was no
acceptance by the claimant because they didn’t accept in the manner
prescribed by the offer.

Acceptance by Silence
⇒ Brogden v Metropolitan Railway (1877): this case shows that the
reasonable person must be able to tell there was some intention to
accept where there is acceptance by silence.

⇒ In some cases acceptance by silence is possible e.g. in unilateral contracts to

the world, like in Carlill v Carbolic Smoke Ball Co [1893], acceptance is made
through performance of the contract.

⇒ In bilateral contracts, almost always it will be the case that silence cannot
amount to acceptance

Felthouse v Bindley (1862) : Facts: A man negotiated to buy his nephew’s

horse. He offered a price and said if he hears nothing back he will presume the
horse is his. The nephew did not reply, but he did tell an auctioneer to take the
horse off an auction it was being sold on. The auctioneer did not do so and it
was subsequently sold to someone else. The man sued the auctioneer
believing he had a contract to buy the horse from the nephew. Held: It was
held that there was no contract because acceptance had not been
communicated to the man → you have to manifest your acceptance in some
way

 Robert Goff J in The Leonidas D [1985]: "We have all been bought up to
believe it to be axiomatic that acceptance of an offer cannot be inferred
from silence, save in the most exceptional of circumstances."
  In Vitol SA v Norelf Ltd [1996] it was suggested this "exceptional
circumstance" would be where the silence was a "clear and
unequivocal" acceptance.

Acceptance by Post
⇒ The general rule is that acceptance is complete as soon as you post the
letter i.e. if you are made an offer and said acceptance must be made by post,
your acceptance is complete when your letter is put in the letterbox.

Adams v Lindsell (1818): Facts: The defendant offered the plaintiff (i.e.
claimant) some wool by post and asked for a reply “in course of post”. The
defendant sent the letter to the wrong address so got to the plaintiff later than
expected. The plaintiff, as soon as receiving the letter, replied accepting the
defendant's offer. But, due to the delay, the defendant thought the plaintiff
didn't want the wool so sold it to someone else. The plaintiff sued the
defendant for breach of contract. Held: It was held that acceptance happens at
the time the letter is posted, so the defendant was in breach of contract (the
postal rule).

⇒ Limitations to the postal rule:

 The postal rule only applies to acceptance.

 The postal rule only applies when it is reasonable for acceptance to be
sent by post.
 If the offeror asks for acceptance to be made in a particular way, that
can circumvent the postal rule: Holwell Securities Ltd v Hughes [1974].

⇒ Bal v Van Staden (1902): the court held you cannot rely on postal
acceptance if you know there are disruptions to the postal system e.g. if you
know there is a postal strike you cannot rely on the postal rule .

Acceptance by Electronic Communication

⇒ In Entores v Miles Far East Corp [1955], Denning said acceptance - with
electronic communication - only happens when it has been received.
⇒ In Pretty Pictures v Quixote Films Ltd [2003], the court held that you can
exclude acceptance by electronic communication if you want your contract
written.

⇒ Also see the case of In The Brimnes [1975]: it was held that acceptance
occurred when the telex was received during the office hours (even though
nobody actually read it until the following day). So there was acceptance when
it was received, despite the fact it had not been read at that time.

Acceptance in Unilateral Contracts

⇒ Acceptance occurs through performance of the contract: see the case
of Carlill v Carbolic Smoke Ball Co [1893].

⇒ Partial performance of a contract may also amount to acceptance: see the

case of Errington v Errington (1952): Facts: A man promised his children that if
they paid the mortgage on his house then the could have it. The children
began to pay some of the mortgage, but the man died. A representative of the
dead father said there had been no agreement to do this and, therefore, he
could withdraw his offer as performance had only partially been
performed/accepted (i.e. only part of the mortgage had been paid). Held: The
Court of Appeal did not think that the offer had been withdrawn. Thus, partial
performance of the contract (i.e. partial payment of the mortgage) could
equate to acceptance here.

⇒ Denning: “The father’s promise was a unilateral contract – a promise of the

house in return for their act of paying the instalments. It could not be revoked
by him once the couple entered on performance of the act, but it would cease
to bind him if they left it incomplete and unperformed”

Acceptance in Ignorance of an Offer

⇒ For example, think of a situation of where there is an offer of £1000 for the
return of your lost cat. And there are posters around town saying there is this
reward for your cat's return. Then, let's say, someone who had not seen the
reward had returned the cat to you knowing that it belonged to you. Would
he/she be able to get the reward anyway?

 The answer is maybe.

  See, for example, the case of Gibbons v Proctor (1891).

Termination of an Offer
⇒ The general rule is that you can withdraw an offer any time before it is
accepted (even if there was a specified time set for the offer to remain open
for e.g. Routledge v Grant (1828)).

⇒ If you want to revoke an offer it must be communicated before it can be

effective e.g. Byrne v van Tienhoven (1880).

The revocation of an offer need not come from the offeror e.g. Dickinson v
Dodds (1876): Facts: Dodds offered Dickinson his house for sale on 10th June
and that offer was to remain open for 2 days. On 11th June a third party
informed Dickinson that Dodds was offering the house for sale to someone
else. Dickinson quickly tried to accept the offer but discovered it had already
been sold. Dickinson sued for breach of contract. Held: The Court of Appeal
held that Dickinson could not accept the offer because it was clear Dodds had
withdrawn his offer despite the fact he had not said it (a third party had)

⇒ An offer can be terminated expressly or impliedly.

⇒ Lapse of time → if there is no specified time that the offer will remain open
for, it will be an offer open for a reasonable time (what is a reasonable time for
the offer to remain open for is decided on a case by case basis) e.g. Ramsgate
Victoria Hotel v Montefiore (1866) held the 5 month wait before accepting to
buy shares was a lapse of time making the offer no longer existing.

⇒ Failure of a condition → if an offer contains a condition and that condition

failes then there is no contract e.g. Financings Ltd v Stimson [1962]: Facts: A
man was looking to buy a car from a car dealer, but there was a condition that
required the consent of a finance company for it to go ahead. Two days after
getting his car it was stolen. The question for the court was who owned the
contract? Held: There was no contract due to a falure of the condition (i.e. the
consent of the finance company for it to go ahead).

Revocation of Acceptance
⇒ As soon as there has been acceptance of an offer you have a contract, which
entails rights and obligations. If you breach these rights and obligations the
other party can sue for breach of contract.

 In other words, you cannot revoke acceptance e.g. Soulsbury v

Soulsbury [2008] confirms you cannot revoke acceptance in England
and Wales. Although, in Scotland it may be possible to revoke
acceptance in some circumstances.
 You cannot revoke postal acceptance by using a faster method of
communication in England, but you can in Scotland (Dunmore v
Alexander (1830)).
⇒ Exception: some consumer contracts do allow the person who accepted the
contract to change his mind e.g. a provision found in section 67 of the
Consumer Credit Act 1974.

 This is to ensure consumer fairness.