Contract Notes on Offer and Acceptance PDF

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OfferObjective test v Subjective test Scriven Bros v Hindley  Subjective intention of the parties is relevant when the offeree is at fault to note that the offeror has a mistake  An auction catalogue was misleading, which D (purchaser) did not find out the mistake of P (auctioneer)  It was held t...

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Offer

Objective test v Subjective test 1. Scriven Bros v Hindley  Subjective intention of the parties is relevant when the offeree is at fault to note that the offeror has a mistake  An auction catalogue was misleading, which D (purchaser) did not find out the mistake of P (auctioneer)  It was held that no contract was concluded as the product that the auctioneer wanted to sell and the product that the defendant wanted to purchase is not consistent 2. Smith v Hughes  If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other part, and that other party upon that believe enter into the contract with him, the man thus conducting himself would be equally bound as if he has intended to agree to the other party’s terms. 3. RTS Flexible Systems Ltd v Molkerei Alois Midler GmbH & Co (2010)  Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. 4. Centrovincial Estates plc v Merchant Investors Assurance Co (1983)  “... it is contrary to the well-established principles of contract law to suggest that the offeror under a bilateral contract can withdraw an unambiguous offer, after it has been accepted in the manner contemplated by the offer, merely because he has made a mistake which the offeree neither knew nor could reasonably have known when he accepted it.” Per Slade LJ

Distinguishing Offer and Invitation to Treat 5. Gibson v Manchester City Council  Manchester City Council (MCC) was a conservative led council, had in place policy that allowed tenants who lived in a council home to purchase that home off from the council

 Mr. Gibson sent an application form to the council and would like to purchase his home  Council responded to his application that they “may (lack of certainty) prepared to sell the house for £2180”  Is the statement an offer that Mr. Gibson could then accept?  No. the statement is too uncertain and it is merely an invitation to treat  Mr. Gibson queried the purchase price due to condition of a path  Council refused to change the price  The council then changed hands politically to labour council  The labour council cancelled out the policy and Mr. Gibson couldn’t purchase  Mr. Gibson then argued that he was in a contract with the council  However, as the word “may” is not certain, the court held that there was no contract  To determine whether there is an offer, factors like existence of clear and precise offer should be examined. 6. Storer v Manchester City Council  Same facts as above  Contract differed: “If you will sign the agreement and return it to me, I will send you the agreement signed on behalf of the council in exchange.”

Display of goods in retail outlets 7. Pharmaceutical Society of GB v Boots  Display of goods merely invitation to treat, when the customer got the product from the shelves, the contract was not yet formed  It was formed when the cashier accepted the “offer”

Advertisements 8. Partridge v Crittenden  Advertisement: Bramble finch cocks and hens for sale  Does this constitute an ‘offering for sale’ of live birds and hence contrary to the Protection of Birds Act 1954?  The court say that the advertisement does not show any intention to be bound  Legislation do not define meaning of offer, common law meaning of offer is therefore referred  Sufficient intention to be bound once the terms of the offers are unequivocally accepted 9. Fisher v Bell  Display of knife is merely an invitation to treat instead of an offer

Mirror image rule  A definite offer must be mirrored by a definite acceptance unequivocally and clearly 10. Carlill v Carbolic Smoke Ball co  Smoke Ball Co placed an ‘advert’ where it promised to pay £100 to any person who caught influenza after suing the smoke ball for 2 weeks (performance of specified act)  “100 will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic of influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball...” Defence: the plaintiff did not inform us she intended to take up the offer.  If you do something, we will give you an amount of money  The offer should be a unilateral one, the nature of it does not require the offeree to inform the offeror that he or she is acting as the contract states  Very different wording and very different nature  Smoke Ball Co stated in the advert that £1,000 had been placed in bank account to honour any claims made (intention to be bound)  Mrs. Carlill used the smoke ball as prescribed and aught influenza  Smoke Ball Co refused to pay  Not an offer  Merely sale puffer, not intended to be bound  Unilateral contract  Promise in exchange for an act is what sets a unilateral contract aside from a bilateral contract  Nature of these words, the requirement of specified acts

Tenders 

General Rule – adv of an auction slae is generally only an invitation to treat & Advertisement was merely a declaration to inform potential purchaser– Harris v Nickerson (1873) LR QB 286 11. Exception: An express promise is made to accept the most competitive bid  Harvela Investments 12. Necessary to consider if it is submitted successfully  Blackpool and Glyde Aero Club Ltd

Auctions 13. British Car Auctions

 Auctions are generally incitation to treat, however, when there is a condition that the highest bidder would get the product, then it is an unilateral offer 14. Barry v Davie  Auction for sale without reserve is an offer by the auctioneer to sell to the highest bidder

Mere statement of prices 15. Harvey v Facey  No contract for sale as D’s telegram was not an offer to sell

Auctions 16. Byrne v Tienhoven  Withdrawal of the offer was ineffective as contract had been constructed b/w the parties when C decided to accept it by telegram 17. Dickinson v Dodds  D promised to keep the offer for C till Friday, D then sold the house to a 3rd party on Thursday and communicated to C through a friend, D sued for specific performance and breach of contract  The court held that the promise has no legal biding effect. The time when D revoked the offer, C has not yet accepted it, the revocation of offer by communication through a friend was valid 18. Manchester Diocesan Council for Education  Method of acceptance prescribed for a tender was not mandatory  If an offeror wishes it to be mandatory, they have to be explicit  An equally effective method of acceptance would be enough to form a valid contract  The court held that sending it to the defendant’s solicitor is already effective to form a contract

Acceptance

Acceptance by conduct 19. Carlill v Carbolic Smoke Ball (as Case No. 10)

Prescribed method 20. Manchester Diocesan Council for Education (as Case No. 18)

21. Aroca Seiquer (x)

Counter offer vs Mere inquiry of information 22. Hyde v Wrench  No binding contract as there the original offer was destroyed by the counteroffer, the initial offer by Wrench of £1,000 was cancelled 23. Stevenson, Jacques & Co v Mclean  D (seller): sell for 40s. Net cash, open till Monday  C (Buyer): Please wire whether you would accept forty for delivery over two months, or if not longest limit you would give  D didn’t reply and sold the iron to another party  D did not inform C of his act, did not revoke the offer  C accepted the offer on Monday morning  As C’s telegram message is merely a inquiry for information, it did not kill of the offeror’s initial offer  The revocation of acceptance is also not communicated  Therefore, the contract between C and D was binding

Battle of forms 24. Butler v Ex-Cell-O Corporation  Battle of forms  Seller: Condtition only qualified as accepted when the terms in the quotation were met and prevailed over any of the buyer;s terms  Buyers responded to the offer with hier own terms and condtiosn, excluding the price variation clause in the seller’s terms  Response section for the seller was included

 Seller signed and returned the slip with a cover letter saying that the delivery will be made with their original quotation  Delivery made, sellers increased the price in line with their initial terms, buyers refused to pay  Buyer’s appeal allowed which seller by signing the slip, accepted by terms and condition proposed by the buyer which exclude the variation clause 25. OKA Electronics Ltd (x) 26. Au Wing Cheung v Roseric Ltd (x)

Acceptance by silence 

General rule of acceptance by silence  Acceptance of an offer will not be implied from mere silence on the part of the offeree and that an offeror cannot impost a contractual obligation upon the offeree but stating that, unless the latter expressly rejects the offer 27. Felthouse v Brindley  Offer cannot be accepted by silence 28. Vitol SA v Norelf Ltd [1996] AC 800  “Our law does in exceptional cases recognize acceptance of an offer by silence” per Lord Steyn, citing the case of Rust v Abbey life Assurance Co Ltd [1979] 2 Lloyd’s Rep  E.g., Course of dealing b/w the parties may give rise to the inference that silence amounts to acceptance

Acceptance by ignorance of the offer 29. Williams v Carwadine  Once shown that the offer has been communicated to the other party, a person who knows of the offer may do the act required for acceptance with some motive other than of accepting the offer 30. Tinn v Hoffman  Mr. Hoffman offer to sell iron to Mr. Tinn  Mr. Tinn offered to buy iron from Mr. Hoffman on similar terms without noticing his offer  No contract was formed  There must be a definite offer which is mirrored by a definite acceptance  Cross-offers which are identical do not create a contract unless or until they are accepted 31. R v Clarke

 R was charged with murder, in order to protect himself, he gave information to the police which led to the conviction of the murder  There was a reward offered for information leading to the conviction of people who committed the murder  R claimed for the reward  Court held he was not accepting the reward as he did not provide information relying on the offer with reward of the unilateral contract with the precedent derived from Case No. 30

Unilateral contracts 32. Daulia Ltd  C want to purchase property from D, agreed terms orally without written contract  C fulfilled D’s request but D refused to complete the sale of the property  Unilateral contract exists but could not be effective as it does not comply to the law  Once the offeree has begun performance, the offer comes into effect and could no longer be revoked by the offeror to the contract 33. Errington  Father bought a house with a mortgage for his son and daughter-in-law  Father promised to transfer the legal title for the property to them if they paid off all the mortgage payments  Couple didn’t make promise in return but after the father died, some repayments had been made  Other family members claimed the possession of the house but the claim failed  Lord Denning stated that the promise would not be binding if the act was left incomplete and unperformed  Therefore, as long as the couple continued to make all the mortgage payments until it was fully paid off, then the father’s promise to transfer the house to them would still be binding

Communications must reach the offeror 34. Entores  Lord Denning LJ concluded that the postal rule will not apply to fax by distinguishing the speed of communication by post and by fax, saying that “Communications by these means are virtually instantaneous and stand on a different footing.”

Postal rule and its exceptions 35. Adams  Postal rule established in this case

 Acceptance occurs when the letter of acceptance is placed - “the post might be sued as a man of communicating the acceptance of the offer, the acceptance is complete as soon as it is posted  Limitations to postal rule 1) Reasonable for the offeree to use the post 2) Offeror can avoid the operation of the rule by stating that the acceptance will only be effective when it actually reaches him 3) The rule has not been adopted in many other cases where the parties are not dealing face-to-face 4) Postal rule ought not to apply when it would lead to “manifest inconvenience and absurdity” (Howell Securities Ltd v Hughes [1975] 1 WLR 155) 36. Quenerduaine  Acceptance that are made by unreasonable means will not conclude a contract  An offer was made by defendant by telegram while the plaintiff accepted it by post  The issue was that if it was reasonable to accept the offer by post.  The court held that the postal rule was not applicable as the method of acceptance was considered as unreasonable.  The mode of acceptance should be as instantaneous as using a telegram. 37. Re London & Northern Bank  The plaintiff’s employee gave the acceptance letter to a postman who was not authorized to receive letters, whereas the offeree posted a revocation of offer in the morning.  The acceptance arrived the district office at night. As the post was not properly posted, no contract is formed. 38. Henthorn v Fraser [1892] 2 Ch 27  It was held that the postal rule only applies when it is reasonable to use post 39. Holwell Securities  Specification made by the offeror in contract may not conclude a contract  The offeror included a clause stipulating option must “be exercised by notice in writing to the Intending Ventor” in six months. The offeree posted the letter in the time limit; however, the post was lost and the offeror never received the post. Under this situation, the postal rule was not applicable as there was an implied term.  Due to the limitations of the application of the postal rule, even if acceptance is posted by post, there are still limitations that protect the interest of both parties and no problems will be resulted. 40. Getreide Import  14 days were granted to the offeree to appeal the decision and the appeal would be classed 24 hours after it is received. However, as the letter of acceptance was wrongly addressed and the time limit was also exceeded, the court held that no contract is formed 41. Household Fire & Carriage Accident Insurance Co. v. Grant (1879) 4 EX D 216

 Even if the acceptance post was delayed or lost and was not received by the offeror, a contract is still formed.  Lord Thesiger LJ mentioned that “(…) the contract is made as complete and binding as if the acceptor had put his letter into the hands of a messenger”.  He also mentioned that “(…) I see no better mode than that of treating the post office as the agent of both parties.” 42. Brinkibon  Telex message of acceptance sent outside office hour  Should not be considered as an instantaneous means of communication  Acceptance only effective when the office re-opened  Lord Wilberforce: “No universal rule can cover all such cases”  The court followed the Entores case, stating that the postal rule cannot be applied this circumstance. Both cases considered fax as an instantaneous messaging tool, and therefore, the general rule instead of the postal acceptance rule was applied.

Termination of offer

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Offer can be withdrawn before it is accepted and the revocation of the offer require attention of the offeree 43. Dickson v Dodds [1876] 2 Ch D 463  D offered to sell a house to the claimant for £800, the offer to be left open till Friday  On Thursday, D sold the house to a 3rd party and C was informed by a 3rd party  C still sent the acceptance letter on Friday  The court held that no contract had been concluded b/w the parties as the offer had been withdrawn before it was accepted 44. Byrne v Van Tienhoven (18880) 5 CPD 344  D sent C an offer on 1st Oct 1879  Offer received by C on 11th Oct  Immediate acceptance sent  But D sent a revocation of offer at the same time on 8th Oct, which reached C on 20th Oct  The court held that the contract was formed on 11th Oct  Terminating an offer: 5 principal methods 1) Offer may be withdrawn 2) Offer can be terminated by a rejection by the offeree 3) Offer may be terminated by a lapse of time 4) Offer which is stated to come to an end if a certain event occur cannot be accepted after that event has actually taken place 5) Offer may be terminated by the death of the offeree...