#4603 - Offer - GDL Contract Law

• Agreement – for an offer to exist the offeror must make a clear and certain offer and the other party (offeree) needs to communicate an equally clear acceptance

TREITEL – ‘Expression of willingness to contract on specified terms made with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed’

Bilateral/Unilateral

• Bilateral - most common – both parties assume an obligation to each other – promise to do something

• Unilateral – one party makes an offer or proposal in terms which call for an act to be performed by one of more other parties

  • Doesn’t involve mutual promises – only one party assumes an obligation

  • Offer cannot be accepted by promising to perform – only by actual performance

Must be:

1. Certain

2. Communicated to offeree

3. Must show intention to enter into legal relationship

Certainty of offer

Cases:

1. Gibson v Manchester City Council

Vs.

2. Storer v Manchester City Council

• Language to Storer was clear/certain whereas in Gibson there was no binding contract because he was never made an offer by the council – ‘may be prepared to sell’

Invitations to treat are NOT AN OFFER

• Fisher v Bell – defendant displayed a flick-knife in his shop window – but not convicted under the Restriction of Offences Weapons Act 1959 – because it was merely an invitation to treat

  • If display in shop was an offer - then the shopkeeper would be compelled to sell the goods to anyone who picked it up

• Pharmaceutical Society of GB v Boots Cash Chemists self-service shop – selling medicines without chemist’s supervision – but – not guilty because chemist at every till where the contract took place

  • Logic – would be inconvenient for shoppers as whenever they pick up an item – would constitute an acceptance

  • And the shopkeeper has chance to refuse sail

ADVERTISEMENTS

• Regarded as statements inviting further negotiations or invitations to treat

• Partridge v Crittenden– notice read ‘Bramblefinch, cocks and hens, 25s each’ – placed in the classified advertisements page of a periodical – accused of trying to unlawfully offer sale of a wild live bird – BUT wasn’t an offer so not guilty

• Advertisement by an auctioneer that certain good would be sold at a specified location on a specific date – invitation to treat Harris v Nickerson

• Grainger & Son v Gough – wine-lists circulated by a wine merchant – nothing more than an invitation to treat, as inevitably stocks of wine would be limited but – obiter statements by judge – if a supplier is also a manufacturer, there be an inference that there is an offer on the basis that theoretically he might have limited supplies

Exceptions:

• It’s different where the offer is unilateral

  • Carlill v Carbolic Smoke Ball CO advert offering to pay 100 to anyone who got the flu having used it – said they had deposited 1000 in the bank to demonstrate their sincerity – claimed it had been a joke – but court claimed that a unilateral offer had been made

  • But Leonard v. Pepsico Inc. (US) Pepsi tokens – teenager collected 7 mill as required by advert to win a jet – court held that it had clearly been a joke – not clear/certain

INVITATIONS TO TENDER:

• Similar to invitations to treat – only in specialist areas

• Spencer v Harding - circular sent round – stock offered to tender – could reject bids even if highest – proclamation of intention – invitation to treat

But - if there is a clear undertaking to accept the highest or lowest bid – then there is an obligation

• Harvela Investments Ltd v Royal Trust Co.– invitation to submit sealed bids

• Blackpool & Fyle Aero Club Ltd v Blackpool Borough Council– promised to ‘consider’ all applications by a deadline – didn’t consider one – breach of contractual obligation to consider – had made a unilateral offer to consider

AUCTION:

• Auctioneer’s request for bids is an invitation to treat

• Payne v Cave - bidder makes an offer which the auctioneer is then free to accept or reject – acceptance is communicated by the fall of the hammer

• Auctions ‘without reserve’ – special consideration – will sell to the highest bidder

  • If the auctioneer refuses they may be sued for breach of contract – when the sale is expressed to be without reserve there are in fact two contracts:

1. Usual bilateral contract the same as usual auction – bidder makes an offer which auctioneer rejects or accepts – this one determines who is entitled to the goods

2. Unilateral contract based on the promise that the auction will be without reserve – if a reserve is then applied and the goods withdrawn then there is a breach of unilateral contract and the highest bona fide bidder is entitled to be compensated

• They are not however, entitled to the goods themselves – as this is dictated by 1)

• Approved in Barry v Davies

  • Davies withdrew when realised there were no higher bidders (Barry had bid 400 for machines”

  • There was no reserve – made unilateral offer to accept the highest bid

  • Barry made 28,000 as compensation for loss

WEBSITES

• Electronic equivalent of displays, advertisements etc. – generally constitutes an invitation to treat -so offer will come from the customer

• Mispricing will not result in the supplier having to fulfil a contract at the misquoted price

• What if the supplier misquotes and the offer has been accepted:

  • This would constitute a contract – BUT – not if the buyers either knew or ought reasonably to have known there had been such a mistake - the case law says that there is no binding contract in this situation – Hartog v Colin and Shielfs vs. taking advantage

  • Also – electronic confirmation of an order might just be that – may not constitute an acceptance – often in T&A that acceptance not made until the items are dispatched

  • Even if no contractual liability – suppliers may have other criminal liability (Consumer Protection leg.)

Communication of the offer

• May be communicated: orally, written, by conduct - Taylor v. Laird

• Must be unconditional and correspond with the exact terms proposed by the offer

Counter-offers: if when responding in a form purporting to an acceptance, the offeree alters the terms contained in the offer, or adds a new term – the response will constitute a ‘counter-offer’

• Rejects the original offer

• Hyde v Wrench 6^th June W offered to sell H a farm for 1,000, H made a counter-offer of 950. On 27 June W rejected the counter-offer – then H made a purported acceptance of the offer of 6^th June – invalid as that offer had already been rejected

• Butler Machine Tool Co v Ex-cell-o Corporation - plaintiff offered to sell a machine on their own terms and conditions – buyers placed an order on different t&c’s – included a tear off acknowledgement of receipt which the sellers signed – court held that this was a counter-offer and the sellers had accepted it

Request for further information:

• Different to counter-offer – clarifying the extent and terms of the offer or ascertaining if the offeror would consent to change certain aspects – original offer still open

• Stevenson, Jacques & Co. v McLean – merely a request for information and so when the plaintiffs accepted offer it was binding

REVOCATION

• Offer can be revoked up until time of acceptance – but must be communicated to those who the offer was made to

• Routledge v Grant– offer to sell house, acceptance to be in 6 weeks – could revoke during those 6 weeks

Options

• Where the offeror gives an undertaking to keep the offer open he is not bound by it – unless the offeree has given consideration for it – creates 2^nd contract called an ‘option’

Communication = essential

• Communicated at the time it is received not the time it is sent out

• Byrne v Van Tienhoven T sent out offer and then revocation – B send out offer after the revocation sent, but didn’t receive revocation until after offer sent – so contract was binding – revocation inoperative as didn’t reach in time

Revocation can be communicated by a third party

Dickinson v Dodds (D) offered to sell house to (P), with offer to be left open until 12^th June – on the 11^th June, (P) was informed by (X) that (D) had offered/agreed to sell property to (Y). (P) then delivered acceptance to (P) . HELD – undertaking to keep offer open not binding as P had given no consideration for it – no need for express withdrawal of offer – sufficient that he knew from third party before making an offer – no contract

Revocation of a unilateral offer

• Any time before complete performance – Great Northern Railway...