#2241 - What Are The Requirements Of An Offer And An Acceptance - Contract Law

Offers

What is an offer?

• Offer is

  • Manifestation of offeror’s willingness

    • to be bound by terms proposed to the offeree

      • as soon as the offeree accepts

BUT a party can deny the existence of a valid contract by saying offer was invalid because:

1. It was mistakenly made

• A party can only escape if the offer, taken from the viewpoint of an objective observer,

  • was one which is was reasonable to say the offeror meant X and not Y as he actually said.

• Q = Objectivity from whose point of view?

  • Howarth: three points of view

    • Detached Objectivity

      • Viewpoint of “fly on the wall”

      • Separate from either contracting parties

        • Objections:

          • Chen Wishart: does not meet the justification for objectivity (e.g. protect promises reasonable expectations)

          • Spencer: Only acceptable for law to force an agreement on party in rare circumstances

            • Surely unacceptable to force agreement neither wants on both parties.

    • “Promisor” objectivity

      • What a reasonable and honest promisor would perceive.

    • “Promisee” objectivity

      • What a reasonable and honest promisee would perceive.

  • Voster: problem with these classifications is that in bilateral contracts, both parties take on roles on promisor and promisee

  • Chen-Wishart:

    • Better idea is “actor objectivity” and “observer objectivity”

      • And hold that each party’s actions should be understood to the standard of what the reasonable and honest observer would perceive them to be.

• Q = What evidence should be taken into account?

  • Two types can contrasted

    • Skeleton Objectivity

      • Limits conduct that counts and prioritises them in strict hierarchy of value

        • Signed final writing in a contractual document

        • Unsigned final writing in contractual document

        • Other writing or speech

        • Non verbal conduct (nod, wink, contractual performance)

        • Silence of Omissions

          • Silence generally not held to be acceptance, even if intended.

          • Wishart: looks at the conduct itself, not the person conducting it

            • Examples tend to be specific rules on what conduct are “offers” or “invitations to treat”.

    • Contextual Objectivity – tends to be the way forward.

      • Investor Compensation Scheme Ltd v West Bromwich Building Society

        • Lord Hoffmann:

          • Takes into account the parties involved and absolutely everything parties could reasonably use that would have affected the way intent was understood.

            • Assesses the meaning of the person, not just the meaning of the conduct.

              • Hence is more realistic.

        • Chen Wishart: drawback is the extent of the evidence, which gives problems if of contradictory meaning.

2. B did not believe it was acceptance, regardless of the objective intention

• Must the offeree hold an actual belief that the offer has been accepted, or if a reasonable person would consider the offer accepted, would this suffice?

  • If A seems to accept...

    • And B actually believes there has been accepted

      • Trietel: then the objective test is satisfied and A will be bound per The Hannah Blumenthal [1983]

  • Me: This is not correct

    • The Hannah Blumenthal [1983]: B and A agreed a contract. A failed to take any action for a while, so B applied that the contract had been abandoned.

      • Lord Brightman:

        • The test is not wholly objective

        • To entitle B to rely on abandonment, B must show

          • That A acted in such a way so as to entitle B to assume that the contract was agreed to be abandoned

          • And that B did assume that this was so.

            • The state of mind of B is vital and only evidence showing A’s intentions which comes to the knowledge of B at the time is relevant.

    • This only suggests that we look at the objective test from the perspective of A

      • It does not mean that if A actually believes it to be have occurred that the objective test is satisfied

        • Merely that A also has to actually believe that B had agreed to abandon.

        • Confirmed by Lord Goff in The Leonidas D that this was the approach to follow.

• There is conflict over what should happen if B has no view on whether the agreement was accepted or not

  • The Golden Bear

    • Seems to suggest that if objectively it could be thought that there is acceptance,

      • Then the benefit of the doubt should go to B even if he appeared to have no view at the time

  • Trietel: This is wrong – as the purpose of the objective test is to protect B from prejudice if he relies on the purported acceptance

    • And if he has no view or does not actually believe it, then he hasn’t relied on it

      • Thus he should not be granted protection.

3. It was not an offer at all

• Supply of information

  • No offer made, even if communicates terms, unless X also communicates commitment to be bound by other’s acceptance of terms.

  • Gibson v Manchester CC [1979]: Manchester Council began selling off council houses, and responded to G’s enquiry saying a price they might be prepared to sell house. Council asked G to make a formal application which G did. Council in the interim changed political hands and stopped selling of houses.

    • Lord Diplock:

• Council had never made an offer, as explicitly said in their correspondence - only given information in order to start next round of negotiations

  • Which was G making a formal application (i.e. an offer) to buy

    • Which they could then consider and accept or reject

      • Ergo, No acceptance by council, so no contract.

• Lord Russell:

  • Words “may” can’t be construed as an offer

• Displays of goods

  • PSGB v Boots [1953]:

    • Lord Goddart CJ:

      • Well-established principle that the mere exposure of goods for sale by a shopkeeper

        • indicates to the public that there is an invitation to treat but this does not amount to an offer to sell

          • 99 times out of 100 he probably will sell

            • But he still has the option to say “no”.

      • Ordinary principles of common sense and commerce must prevail

        • And holding that self service is an offer to sell is contrary to those principles and would entail serious results.

  • Chen Wishart: Problems:

    • Offer could be made by having goods on sale

      • And Courts could delay acceptance until customer brings item to cash desk

    • Shops work on “take it or leave it” – so if customer tries to negotiate, can be taken as counter offer which courts could reject

      • Traders shouldn’t be allowed to refuse to contract nor refuse to contract on the stated facts (Criminal Law attaches penalties to such conduct)

    • Common sense attitude taken that offers are “while stocks last”

• Advertisements

  • Fisher v Bell [1961]: Knife displayed as “for sale” in window with price attached.

    • Lord Parker CJ:

      • Seems absurd that knives can’t be sold, hired, rented etc. but can be put in shop windows

        • Unfortunately, isn’t an offer

          • But an invitation to treat

            • Thus no conviction.

  • Patridge v Critten [1968]: D inserted an advert into a magazine which was distributed to its readers stating “Bramblefinch cocks, Bramblefinch hens 25s”. Criminal proceedings started cos trade was illegal.

    • Lord Parker CJ:

      • Advertisements, unless from a manufacturer, ought to be treated as invitations to treat, not binding contracts on acceptance.

        • Otherwise, a merchant sending out a price list as an “offer”

          • would be bound to supply an unlimited quantity upon the sending of an order, which would constitute acceptance

      • Thus, if the order is the offer, the advert the invitation to treat

        • Then the seller can reject or accept as appropriate to his supplies

          • And thus common sense prevails.

  • Chen Wishart: only acquitted cos court rigidly applied “invitation to treat” doctrine”

    • Could get round Lord Parker’s problem by implying common sense term that merchant supplies are only “while stocks last”.

• “Challenge” Advertisements

  • Courts will occasionally hold that some advertisements are offers

  • Carhill v Carbolic Smoke Ball Co. [1893]: Advertisement: 100 reward to anyone who uses smoke ball as directed yet still catches influenza. C catches influenza despite using ball as directed and sues D.

    • Bowen LJ:

      • Intention of the advertisement was to be read by the public

        • And the public would read it in such a manner as to construe it as an offer of 100

          • if they used the smoke ball as directed and then contracted influenza.

        • Thus, not a mere puff, but an offer.

          • Cos extravagance of promise is no reason in law why he shouldn’t be made to pay up.

      • Equally, communication of acceptance is not always necessary

        • If I lose a dog, and put a notice out promising a reward for finding the dog

          • I don’t expect every person to write me a note saying they have accepted my offer

        • It is implied by the nature of the transaction that I only require them to find the dog

          • and give notification of it to me that they have performed the condition.

• Tenders

  • Invitation to tender for particular project is merely an invitation to treat

    • Offer is made by the persons submitting the tenders

      • Acceptance is made when person inviting tenders accepts one of them.

  • Blackpool and Flyde Aero Club Ltd v Blackpool BC [1990]: BBC invited sealed bids for lowest concession, if met the deadline. Offer did not arrive in time from BFAC owing to post not being emptied at the Town Hall at the time stated. BBC did not consider the BFAC’s offer.

    • Bingham LJ:

      • Tendering procedure weighted heavily in favour of inviter.

        • Can invite from whoever he chooses, can accept whatever offer he wants, can ignore the expense and effort that has been put into a bid

        • BUT if invitee submits conforming bid

          • There is a contractual obligation between the invitee and inviter

            • that the inviter will consider the tender along with the rest if received before the deadline.

      • Duty to consider =...