#19865 - Offer And Acceptance Unilateral Contracts - Contract Law

Offer and acceptance: unilateral contracts

Carlill v Carbolic Smoke Ball Co – C undertook use of the smoke ball. C had no obligations, so this was a unilateral contract.

Another example of a unilateral contract is if I say ‘I’ll pay you x amount if you ever manage to climb Everest’. I am the only one with an obligation – you have not promised to pay Everest and therefore I cannot sue if you don’t. I am only bound to pay once you fully complete the conditions I lay out.

The test for a unilateral contract is whether a reasonable person in the position of A would think they were being asked to simply go ahead and do the act rather than promise to do it.

Motive and Ignorance

Motive is usually irrelevant. In Williams v Carwardine, a woman knew of an offer for a reward for information leading to a conviction of murder. She provided the info, but not because she wanted the reward, but because she wanted to ease her conscience. Obviously, she was still entitled to the reward.

What about ignorance? Where A does the required act, but doesn’t know (or has forgotten) about the offer, there was no contract. There are, however, arguments to support the conclusion that if an offer has been made to the world, people even in ignorance of it who do the act should be entitled to the reward.

Gibbons v Proctor suggests the offeree need only know of the offer at the moment before the act is complete. In that case, A gave information to B, who gave it to C, who gave it to O. Although initially unaware, before the info got to O, A found out there was a reward for it. The courts held a contract existed between A and O and thus A was entitled to reward.

Revoking an offer of a unilateral contract

The contract is only binding when the act is fully complete which leads to an obligation on O’s part. So, can O revoke the offer at any point before this? If the offer was to walk 5 miles, can O really drive past after 4.95 miles and call out ‘offer revoked’?

If O has benefitted from A’s partially completed work, A can recover the value in an action in unjust enrichment (Morrison Shipping v R). So, if O says ‘if you grind 2kg of coffee beans I’ll pay you 500’ and then revokes the offer after A grinds 1kg, A can recover the value of his work through an action.

A possible solution is to say O can’t revoke the offer once A has begun performing it – this would be an implied promise. In practice, the courts will only use this when it’s needed to give ‘business efficacy to the transaction (i.e. to make the contract work) OR because the parties, being reasonable, did intend that promise.

In Luxor v Cooper, O offered A money if A introduced O to X and X proceeded to buy O’s cinemas (A would get commission from the sale). X was willing to buy the cinemas, but O changed their mind. A...