Law - 6 Contract - Offer and Acceptance PDF

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Summary

CONTRACT – OFFER AND ACCEPTANCEA contract is a legally enforceable agreement entered into by 2 or more parties, containing the rights and the obligations of each party. - Failure to perform entitles other party to sue in court of law. - Gives assurance that promises made will be performed. - Written...

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CONTRACT – OFFER AND ACCEPTANCE A contract is a legally enforceable agreement entered into by 2 or more parties, containing the rights and the obligations of each party. • Failure to perform entitles other party to sue in court of law. • Gives assurance that promises made will be performed. • Written, oral, deed (with seal) Agreement arises when one party makes the offer and the other party accepts the offer.

Offer (Pg 63) Specific Offeree

An offer is an expression of willingness to contract on certain terms without any room for negotiation, made with the intention that, upon acceptance by the offeree, a binding agreement is formed. For an offer to be effective, the offer must be communicated to the offeree. Offer is made on the day the offeree knows about the offer.

Unilateral Contracts

In a unilateral contract, the offeror may not know the offeree’s identity immediately. Carlill v Carbolic Smoke Ball Co. (1892) – Although the offer is made to the world, the contract is made is that limited portion of the public who came forward to perform the condition on the faith of the advertisement.

Invitation to Treat (not offer)

It is an expression of willingness to enter into negotiations with a view of contracting. There is a degree of uncertainty as there are factors within the “offer” that are not confirmed. Generally, an advertisement does not constitute an offer – seller is assumed by the law to not have the intention to be bound by anyone who wants to buy the good. At law an invitation to treat is an invitation to commence negotiations or to make an offer. Accordingly, acceptance of an invitation to treat does not lead to a contract. Partridge v Crittenden (1968) – advertised to sell cocks and hens for 25 shillings but was not prosecuted under legislation of forbidden sale of wild animals since ad was an IOT S14 Electronic Transactions Act: ads for sale online are IOT UNLESS ad clearly indicates intention to be bound Display of goods and prices in a shop are also usually considered to be an invitation to treat. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constituted an invitation to treat and the sale took place at the counter in the presence of the pharmacist. Affirmed by the Singapore High Court in Chwee Kin Keong & Others v Digilandmall.com Pte Ltd (2004).

Provision of Information (not offer)

A mere response to a request for information does not constitute an offer. Harvey v Facey (1893) – The court held that there was no contract because provision of information was not an offer.

Termination of Offer (Pg 75) The general rule is that an offer can be withdrawn at any time prior to acceptance. When an offer is withdrawn, the offer is said to be revoked. • A revocation of an offer must be communicated to the offeree. • Revocation is only effective when the offeree receives notice of the revocation (whether by offeror or by reliable third party.) Byrne v Van Tienhoven (1880) – It was held that the revocation was not effective until letter of revocation was received by the plaintiff. Since the offer was accepted prior to the revocation, there was a valid contract. A reliable third party can also communicate a valid revocation. Dickinson v Dodds (1876) The English Court of Appeal that Dodds had validly withdrawn his offer to sell the house to Dickinson even though the notice of the sale was made through a third party. Withdrawal

A Fresh Offer supercedes the earlier offer: Banque Paribus v Citiback NA (1989) – The Singapore High Court held that the first offer which had not been accepted was withdrawn successfully. If offer is opened for a fixed period – stacking on top of Dickinson v Dodds Routledge v Grant (1828) It was held that it was permissible for Grant to withdraw his offer during the six weeks period despite the implied assurance that the offer would remain open during this period. The rationale is that an offeree cannot enforce an offeror’s promise to keep his offer open unless there is separate contract supported by consideration to do so, such contracts are called options. – Tay Joo Sing v Ku Yu Sang (1994) Unilateral Contracts? In Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to act. In Dickinson Trading (S) Pte Ltd v Transmarco Ltd (1989), obiter dictum à the offeror in a unilateral contract has an obligation not to revoke the offer after the offeree has embarked on the performance of the conditions. An offer can also be terminated when an offeree rejects then offer. Rejection may be made in writing, orally or by conduct. Once communicated, a rejection extinguishes the offer and the offer cannot be revived by offeree.

Rejection and counter offer

Lapse of time

A counter offer is construed as rejecting the initial offer. Thus, anything less than an unconditional acceptance may be viewed as a counter offer which rejects the original offer. Hyde v Wrench (1840) – The court held that there was no contract because Hyde’s reply was a counter offer, which extinguishes the earlier offer. The Masters Stelios’; Monvia Motorship Corporation v Keppel Shipyard (Pte) Ltd ) (1983) When the response is an inquiry or a request of information, it should not be construed as an offer. If the offer is opened for a specified period (stated), a purported acceptance after that period would be effective since the offer had lapsed. In certain circumstances, the court may imply that the offeror has specified the period of offer even if he has not done so expressly: Wee Ah Lian v Teo Siak Weng (1992). When no specified period of time is expressed, an offer would lapse after a reasonable amount of time, (depending on the facts of the case). Ramsgate Victoria Hotel Co v Montefiore (1866) – the court held that Montefiore could refuse to take up the shares because his offer had lapsed after a reasonable time.

Failure of Condition

An offer may be made conditional such that if the condition is not met, the offer is automatically terminated. Financings Ltd v Stimson (1962) – The English Court of Appeal held that Stimson was not bound to the contract because there was an implied condition that at the time of acceptance by the plaintiff, the car would be in substantially the same state as when the offer was made by Stimson. The condition was broken and therefore the offer was no longer available for acceptance.

Death

Dickinson v Dodds (1876) à if the man who makes an offer dies, the offer cannot be accepted after he is dead. Bradbury v Morgan (1862) à the court held that the death of an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. Reynolds v Atherton (1921) à Offeree dies before acceptance, this offer cease to be capable of

acceptance.

Acceptance (Pg 67) General rule for effective acceptance:

CommN of Acceptance

Knowledge of Offer

An acceptance must be made in writing, orally or by conduct. It must be communicated to the offeror. Whatever its form, the communication constitutes an acceptance only if it is an unconditional expression of assent to the terms of the contract without any room for negotiations. (i.e. no ‘but’, ’provided that’, ‘if’) Conditional Acceptance is treated as no acceptance. Struttart Auto Pte Ltd Shwu Yong (2005) Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept the offer. William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward because when giving the information sought by the police, she had done so with knowledge of the reward even though her motive for giving the information was her own remorse. Cross Offers: Both parties made the same offer to each other but neither party knows the proposition of the other party at that time – Tinn v Hoffman & Co (1873) – the court held that cross offers did not make a contract. The reasoning appears to imply that the lack of consensus or meeting of minds between the parties at the time of making the offers. For an acceptance to be effective, it must be communicated to the offeror. If in writing, it must be physically received by the offeree, and if orally, heard by the offeree. obiter dictum in Entores Ltd v Miles Far East Corporation (1955) Waiver The may arise in the case where the offer is made to the whole world and waives communication of acceptance. In such a situation, the offeree relies on this waiver to accept by silence and the contract may be accepted by anyone, creating a unilateral contract. Carlill v Carbolic Smoke Ball Co. (1892) Silence For this to be effective, both parties must agree to it. Felthouse v Bindley (1862) – It was held that there was no contract between the two parties. The plaintiff had no right to impose a condition that a sale contract would come into existence if the defendant remained silent.

Exceptions

In a case where the parties agree that the offeree would have a positive obligation to communicate only if he wishes to reject the offer, is rare. Southern Ocean Shipbuilding Co Ltd v Deutsche Bank AG (1993) Midlink Dev Pte Ltd v Stansfield Grp Pte Ltd (2004) The Postal Rule *** only for letter of ACCEPTANCE, not letters of withdrawals The acceptance is deemed to have been effective as soon as the letter is posted regardless as to when it reaches the offeror or whether it reaches him at all. Adams v Lindsell (1818) – the court held that the acceptance was communicated and the contract was formed as soon as the plaintiff posted the acceptance letter. Lee Seng Heng v Guardian Assurance Co Ltd (1932) Exception It should only be applied where it is clear that parties agree that acceptance should be sent by post. An offer sent by telegram should not attract the postal rule: Quenerduaine v Cole (1883). The postal rule can be avoided when parties expressly provide for it then acceptance should be received physically. Conditions of the postal rule: • Properly stamped and addressed • Consistency in communication methods: All by posts • Offeror’s condition for receiving acceptance clearly states that acceptance to be received physically for it to be effective

Instantaneous Communications Receipt Rule: Another name related to the general rule, mainly for Email/Fax/Voice-Mail acceptances, that acceptance is valid upon receipt NOTE: s13(2) & (3) of ETA does not clarify the meaning of receipt. It can be receipt by system or actual retrieval by the offeror. Problem of delayed transmission of acceptance for instantaneous communication because the time that message reaches the machine may not be the time that the offeree reads message

s11 ETA states that an offer or acceptance can be sent electronically in the form of an electronic record. - s13 ETA states that s13(1a) The time of dispatch = the time when the information is sent from my information system located in my place of business s13(1b) The time of receipt = the time when the information enters my information system located in my place of business (If information is able to enter, it is presumed to be retrievable by addressee s13(4) ETA) Receipt of non-emails (not stated in statute, maybe claimed by profs à WITHIN business hours: time of receipt is upon reaching machine OUTSIDE business hours: time of receipt is start of next business day -

Exceptions

There is no impact on the conditions for an effective acceptance. It does not affect the general rule of effective acceptance. Mainly it is about fax and email (non-instantaneous communication/ instantaneous transmission) The time of receipt does not suggest effective acceptance. - s14 ETA states that The default rule for online transactions is that an “offer” of goods/services via internet will only be considered as an invitation to treat. 1. One cannot argue that there is no room for any negotiation. 2. There is an absence of a two way communication between the 2 parties. 3. If the offeror makes it clear that he intends to be bound by what he proposed online, it then will constitute an offer.

By phone à General rule apply i.e. Effective acceptance only when it is received by offeror. Just need to answer “yes” or “no” for effective acceptance. By near-instantaneous communications/instant messagingà General rule apply i.e. Effective acceptance only when it is received by offeror. Entores Ltd v Miles Far East Corporation (1955) By Fax à General (receipt) rule apply i.e. Effective acceptance occurs when offeror is aware of the information about the fax. OR Effective acceptance occurs when receipt occurs and that the offeror is aware of it if it is sent to a non-designated address. Email à General (receipt) rule apply i.e. Effective acceptance occurs when he physically sees the content of the email. Sometimes the header of the email may already suggest the information, leading to effective acceptance. OR Effective acceptance occurs when receipt occurs and that the offeror is aware of it if it is sent to a non-designated address. Post à In the case when postal acceptance rule does not apply due to inconsistency in communication methods or other conditions, general rule applies and effective acceptance occurs when the offeror sees the post and knows about the acceptance.

Termination of Acceptance Termination of Acceptance

Acceptance cannot be revoked or withdrawn unless revocation of acceptance communicated before the acceptance itself is communicated. Wenkhiem v Arndt (1873)

Obiter Dictum - in passing something that is said

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a judge’s expression of opinion uttered in court or in a written judgement, but not essential to the decision and therefore not legally binding as a precedent.

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an incidental remark....