Chapter 1 Offer AND Invitation TO Treat PDF

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CHAPTER 1 – OFFER AND INVITATION TO TREAT Offer vs Invitation to treat 1. Gibson v Manchester City Council [1979] Issue: Whether there was already a valid contract between Gibson and the sale of the council house The House of Lords: No valid contract. The letters were simply in reply to one another. Ratio: Offer must be definite, certain. There needs to be a clear and definite promise to be bound. (v.s. Storer v Manchester City Council [1974]: If you will sign the Agreement and return to me, I will send you the Agreement signed on behalf of the Council in exchange) 2. Harvey v Facey [1893]  Did not constitute offer  Merely asking the lowest price =/= an intention to be bound  ~ Clifton v Palumbo [1944]: “I am prepared to offer you my estate for 600000 pounds” =/= definite to constitute offer Categories of Offers/Invitation to treat (A) Advertisement, Brochures, Catalogues, Price lists and menus  Generally, an invitation to treat Partridge v Crittenden [1968]: Wild birds for sale on advertisement Grainger & Son v Gough [1896]: Wine merchant’s catalogue and price list  It only constitute an invitation to treat due to limited stock theory  *** If made clear unlimited supply available  may have constituted an offer  Exception Unilateral contract Carlill v Carbolic Smoke Ball Co [1893]  Advertisement constitutes offer  requested the performance of an act  The deposit of £1000 shows sincerity and intention to create legal relations  Same as some advertisement giving reward for the return of a property (B) Shop displays: Shelves and windows  Shelves  Display of goods on shelves did not amount to offering for sale Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953]: Display of drugs and medicines on shelves  Justification: (1) The shopkeeper can choose to sell or not (2) Put it back to the shelves = breaking the contract? 

Windows  General rule: Did not amount to the an offer to sell Fisher v Bell [1961]: Display of knife (HK case) HKSAR v Wan Hon Sik [2001]: Pirated CDs  Exceptions If it is made clear that the shopkeeper was willing to sell to anyone paying the displayed price  constitutes an offer Chapelton v Barry Urban District Council [1940]: deckchairs at beachside Thornton v Shoe Lane Parking Ltd [1971]: Vending machines (by the judge)

(C) Websites  Generally: Constitutes an invitation to treat (freedom to contract)  Exception: Language used, how they present the advertisement (mentioned by the judge in Chwee Kin Keong v Digilandmall.com Pte Ltd [2004]) (D) Tenders  Generally: Constitutes an invitation to treat (freedom to contract) Spencer v Harding [1869-70]  Exception (i) A promise to accept the most competitive bid Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986]  promise to accept the offer of whichever party made the highest bid  Referential bid ($xxx in excess of another offer) would not the accepted. (HK Case) Lobley Co Ltd v Tsang Yuk Kiu [1997]  There is an obligation to accept the highest conforming tender (ii) A promise to consider bids which conform to the bid conditions Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990]  placing the tender at 11am in letter box but the defendant failed to check  It was held that the defendant must consider all bids which conform to the bid condition as this is an unilateral contract (E) Auctions  General rule: The request for bid is only an invitation to treat. (Bid: offer/Acceptance: fall of the hammer/any other customary manner) (s.60(b) of the Sales of Goods Ordinance) Harris v Nickerson [1872-73] British Car Aunction Ltd v Wright [1972]  even if the advertisement contains the language “offer” still ITT  Exception: Auctions advertised as being “without reserve”  no reserve price, promise to sell to the highest bidder Warlow v Harrison [1859]  Implies a unilateral contract based on the promise  Breach  can only claim damages but not the property Barry v Davies [2000] Kwok Lai Ting v Highes & Hough [1922] Termination of offers (A) Revocation  At any time before it is accepted (Offord v Davies [1862])  Only being on “option contract” (offerors agree to keep the offer open for a certain period of time) (Holwell Securities Ltd v Hughes [1974])  Postal rule does not apply! Byrne & Co v Leon Van Tienhoven Co [1880]: Revoked on 8 Oct, received on 20 Oct, accepted on 11 Oct  There was a binding contract  Revocation can be communicated by a reliable third party (Dickinson v Dodds [1875-76]): Selling land, involved third party to communicate  but creates uncertainty about “reliability” and “What point the offer was revoked”  Special cases

 Revocation sent to companies Effective when “opened in the ordinary course of business or would have been so opened if the ordinary course was followed” (Eaglehill Ltd v J Needham (Builders) Ltd [1973])  Offeree’s conduct Offeree moved without informing  last-known address will be effective Fail to read  still effective (Tenax Steamship Co Ltd v The Brimnes (Owners) (The Brimnes) [1975])  Made to the public Communicate by the same means  reasonable steps to bring it to attention (Shuey v US 92 US 73 [1875])  Implied revocation Making second and differing offer  implies revoking the first offer (Pickfords Ltd v Celestica Ltd [2003]) (B) Lapse of time  Reasonable period  depends on the circumstances of each case  Nature of the subject matter (Perishable? Price fluctuation?)  Method of communication to make offer (Email, fax fast means of communication) (C) Death  Death of the offeror  Depends on the power of the executors to continue the will (Coulthart v Clementson [1879-80])  Personal service: offer automatically terminated  Open available in market: may be bound if the offer is accepted without knowledge of the offeror’s death  Death of the offeree  General rule: The executors cannot accept the offer after the offeree’s death (Reynolds v Atherton [1921]) (Kennedy v Thomassen [1929])  Especially for personal service  offer cannot be accepted (D) Incapacity  Offeror Would not be bound if such mental incapacity was known to the offeree before he purported to accpet  Offeree Mentally incapacitated after accepting the offer  binding  Companies Altering articles of association (Companies Ordinance (Cap.32)) may lose capacity to contract (renders the offer terminated) (E) Change of circumstances  Might be sufficient to cause the offer to impliedly lapse (Nielsen v Dysart Timbers Ltd [2009])...