lecture # 3 offer - vlc

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Lecture # 3

Offer

By: Salik Aziz Vaince

[0313-7575311]

Introduction

For a contract to exist, usually one party must have made an offer, and the other must have accepted

it. Once acceptance takes effect, a contract will usually be binding on both parties.

The person making an offer is called the offeror, and the person to whom the offer is made is called

the offeree.

A communication will be treated as an offer if it indicates the terms on which the offeror is prepared

to make a contract, and gives a clear indication that the offeror intends to be bound by those terms if

they are accepted by the offeree. An offer may be express or implied.

- The most important feature of a contract is offer and acceptance.

- Consensus ad idem (meeting of minds) or concurrence of wills.

- Court cannot read minds. Contract will be made when the parties have met such a requirement.

Unilateral and bilateral contracts

Most contracts are bilateral. This means that each party takes on an obligation, usually by promising

the other something. By contrast, a unilateral contract arises where only one party assumes an

obligation under the contract.

Smith v Hughes (1871) LR 6 QB 597 is a famous English contract law case. In it, Blackburn J set out his

classic statement of the objective interpretation of people's conduct when entering into a contract.

Rejecting that one should merely look to what people subjectively intended, he said,

"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 party, and that other party upon that

belief enters into the contract with him, the man thus conducting himself would be equally bound as if

he had intended to agree to the other party's terms."

Facts: Mr. Hughes was a racehorse trainer. Mr. Smith brought him a sample of oats (Annual grass of

Europe), and Hughes ordered forty to fifty quarters of oats at 34 shillings a quarter. Sixteen quarters

were sent to start with. But when they arrived, Hughes said they were not the oats he thought they

were. He had apparently wanted old oats (which are the only ones racehorses can eat), and he was

getting new, green oats. In fact, Smith's sample was of green oats. Hughes refused to pay and Smith

sued for breach of contract, for the amount delivered and for damages for the amount for oats that

were still to be delivered.

The jury at the County Court of Surrey holden at Epsom, initially held for Mr. Hughes that there was a

mistake on his part, but were directed by the judge that if Mr. Hughes was under a mistake about the

oats (thinking they were old when they were green oats) and Mr. Smith had known it, they should find

in Mr. Hughes' favor. Mr. Smith appealed.


Judgment: The Court of the Queen's Bench found that the jury had been misdirected and ordered a

retrial. Leaning in Mr. Smith's favor, they held that the question was not merely whether the parties

were at consensus ad idem, but what they had communicated by their conduct and words to one

another. Mr. Smith was held to be under no duty to inform Mr. Hughes of his possible mistake about

the kind of oats, reaffirming the old idea of caveat emptor (buyer beware). A unilateral mistake is

therefore in principle no ground for rescission of a contract.

- Used to determine whether an agreement exists between two parties.

- Indication of one person to another.

- Offer and acceptance formula developed in the 19th century, identifies parties of one mind.

Definition of Offer

An expression of willingness to contract on certain terms; made with the intention that it shall become

binding as soon as it is accepted by the person to whom it is addressed the offeree.

An offer is a statement of the terms on which the offeror is willing to be bound.

It is the present contractual intent to be bound by a contract with definite and certain terms

communicated to the offeree.

May refer to directly as letter, newspaper, fax, email and even conduct as long as it communicates the

basis on which the offeror is prepared to contract.

Minimum requirements for an offer:

- Delivery date

- Price

- Terms of payment/date of payment

- Detail description of the item/fair description or service

• Otherwise it may be seen as an advertisement

An offer may be made to a:

- Specific person

- Group of persons

- An individual

Offers to the public at large

In most cases, an offer will be made to a specified person, though offers can be addressed to a group

of people, or even to the general public. A contract arising from an offer to the public at large is usually

a unilateral contract.

Carlil Vs. Carbolic Smokeball Co. Ltd. (1893)

The carbolic company set out in advertisement. £100 reward will be paid by the carbolic smoke ball

company to any person who contracts the increasing epidemic 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 other.

£1000 is deposited with the Alliance Bank showing our sincerity in the matter.

Mrs. Carlill saw the advertisement, bought one of the balls and used it in accordance with the

instructions. She contracted the flu. She claimed £100 from the carbolic smoke ball company. Mrs.


Carlill brought a claim to court. She contended that it was a contract between her and company. So

they ought to pay.

The company argued it was not a serious contract.

Held: The court of appeal rejected the company’s arguments and held that there was a fully binding

contract for £100 with Mrs. Carlill.

Offer must possess the following features

- It must be made with an intention to enter into a contractual relationship.

- It must not be a loose talk.

- It must be made to obtain the assent of the offeree.

- It must be definite and clear.

Example: Suppose Sijjal offers to sell his property to Huma against £10, 00000.

The act to showing interest of Sijjal in selling the property is offer.

- Sijjal is offeror

- Huma is offeree

- Property is called subject matter.

- An offer may be accepted until it expires or until it is withdrawn by the offeror. An offeror is

allowed to withdraw an offer (orally or written) at any time before it is accepted an is delivered

back to the offeror.

- Offeree has no right on offer.

- Doing nothing is a rejection of the offer.

How long does an offer last?

An offer may cease to exist under any of the following circumstances.

Reasonable length of time

Where the offeror has not specifies how long the offer will remain open, it will laps after the

reasonable length of time. it may depends upon the means of the communication of offer and

acceptance.

Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109

The defendant offered to purchase shares in the claimant company at a certain price. Six months later

the claimant accepted this offer by which time the value of the shares had fallen. The defendant had

not withdrawn the offer but refused to go through with the sale. The claimant brought an action for

specific performance of the contract.

Held: The offer was no longer open as due to the nature of the subject matter of the contract the offer

lapsed after a reasonable period of time. Therefore there was no contract and the claimant's action for

specific performance was unsuccessful.

Failure of the precondition

Some offers are made subject to certain conditions, if such conditions are not in place, the offer may

laps.

Financings Ltd -v- Stimson; CA 17-Jul-1962


Facts: A purchaser signed a hire purchase agreement for a motor vehicle in early March 1961. A clause

in the agreement provided that when the form was signed by the purchaser it would become binding

‘upon acceptance by signature’ of an officer of the finance company. An officer of the finance company

did not sign the agreement until late March 1961 and in the intervening period the purchaser returned

the vehicle due to dissatisfaction with its condition and performance and the vehicle was subsequently

stolen resulting in damage.

Held: The purchaser’s signature on the hire purchase agreement form was ‘in law not an agreement,

but only an offer by [the purchaser] to enter into a hire purchase agreement with a . . Finance

Company.’ There was implied a condition into the offer that the subject matter of the offer must

remain in substantially the same condition it was in at the time of the offer, failing which the offer

lapses.

Pearson LJ said: ‘The judge found in terms that this car suffered severe damage before the acceptance

and that there was substantial depreciation as the result. On that basis it seems to me that we should

by implication read into this offer, in order to give the transaction that business efficacy which the

parties must have intended it to have, an implied condition that this offer was capable of acceptance

only if the car remained in substantially the same condition with substantially the same value. That

condition in this case was not fulfilled because the car was severely damaged and its value was

substantially depreciated. Therefore, when the [plaintiffs] purported to accept it . . it was an offer

which was no longer capable of acceptance, and therefore no agreement was concluded.’

Donovan LJ agreed, and said: ‘Who would offer to purchase a car on terms that if it were severely

damaged before the offer was accepted, he, the offeror, would pay the bill? . . The county court judge

held that there must, therefore, be implied a term that until acceptance the goods would remain in

substantially the same state as at the date of the offer; and I think that this is both good sense and

good law.’

Lord Denning MR held that it was not necessary for any particular action to be taken to manifest a

revocation of an offer, so long as the intention is clear.

Death of offeror

Death (or incapacity) of the offeror terminates the offer.

Not applicable on option contract. (Option contract is a type of contract that protects an offeree from

an offeror’s ability to revoke the contract)

Bradbury v Morgan (1862) held that the deceased offeror's estate was liable on the offer of a

guarantee after the death of the offeror

Invitation to treat

Offer distinguished from Invitation to treat. If an individual is merely feeling his way towards making an

offer or has stated an intention only, this amount to an invitation to treat only.

Whether an act is construed as an offer or an invitation to treat is dependent on the intention of the

parties.

Shop and self-service situations: The display of goods in a shop amounts only to an invitation to

treat/not an offer.


Fisher v bell (1961)

Facts: The Defendant displayed a flick knife in the window of his shop next to a ticket bearing the

words "Ejector knife – 4s." Under the Restriction of Offensive Weapons Act 1959, section 1(1), it was

illegal to manufacture, sell, hire, or offer for sale or hire, or lend to any other person, amongst other

things, any knife "which has a blade which opens automatically by hand pressure applied to a button,

spring or other device in or attached to the handle of the knife". On 14 December 1959, the Claimant, a

chief inspector of police force, brought forward information against the Defendant alleging the

Defendant has contravened section 1(1) by offering the flick knife for sale. This loophole was closed by

Restriction of Offensive Weapons Act 1961 Ban on Flick Knives: which inserted after the words “offers

for sale or hire” the words “or exposes or has in his possession for the purpose of sale or hire”.

Held: High Court: At first instance, the Prosecutor submitted that the Defendant has displayed the

knife and ticket in the window with the object of attracting a buyer, and that this constituted an offer

of sale sufficient to create a criminal liability under section 1(1) of the Act. The Defendant ( ) submitted

that this was not sufficient to constitute an offer. The judges at first instance found that displaying the

knife was merely an invitation to treat, not an offer, and thus no liability arose. The Prosecutor

appealed the judges' decision.

Court of Appeal: The court upheld that, although the display of a knife in a window might at first

appear to "lay people" to be an offer inviting people to buy it, and that it would be "nonsense to say

that [it] was not offering it for sale", whether an item is offered for the purpose of the statute in

question must be construed in the context of the general law of the country. He stated that the general

law of the country clearly established that merely displaying an item constituted an invitation to treat.

He also read the statute on an exclusive construction noting that other legislation prohibiting the sale

of weapons referred to "offering or exposing for sale" (emphasis added). The lack of the words

exposing for sale in the Restriction of Offensive Weapons Act 1959 suggested that only a true offer

would be prohibited by the Act. The court dismissed the appeal.

Harvey v. Facey, [1893] A.C. 552

Facts: Facey (D) was in negotiations with the Mayor and Council of Kingston regarding the sale of his

store. Harvey (P) sent Facey a telegram stating: “Will you sell us Bumper Hall Pen? Telegraph lowest

cash price-answer paid.” On the same day, Facey sent Harvey a reply by telegram stating: “Lowest

price for Bumper Hall Pen £900.” Harvey sent Facey another telegram agreeing to purchase the

property at the asking price. D refused to sell and P sued for specific performance and an injunction to

prevent Kingston from taking the property. The trial court dismissed on the grounds that an

enforceable contract had not been formed and P appealed. The Supreme Court of Jamaica reversed

and D appealed.

Issue: Is a statement of the minimum price at which a seller would sell an offer?

Holding and Rule: No. A mere statement of the minimum selling price is an invitation to treat and not

an offer to sell.

The court held that by replying to P’s question regarding the lowest price of the property, D did not

make an affirmative answer to the first question regarding his willingness to sell. The court held that D

had made an invitation to trade and not an offer.


Disposition: Reversed, judgment of trial court restored.

Gibson v Manchester city council

Facts: Conservative ruling party of Manchester City Council had a policy of selling council houses to

tenants.

After the elections, the Labor Party gained control of the council, repealing selling policy. The Labor

Party however agrees to honor all previous agreements.

Gibson was in the negotiating stage and gave a letter from council that they “may be prepared to sell

at a price of 2,725 less 20% freehold” stating that the letter was not a firm offer of a mortgage. -Gibson

was invited to make formal application for purchase and to fill in form.

Gibson completes and returns form, leaving the price blank due to repairs which are needed on the

house.

Council states that they took repairs into fixing the price, Gibson asks for process to continue.

Issue: Do the words “may be willing to sell” consist of a contract?

Rules: “May be willing to sell" did not constitute an offer from the council, and so no binding contract

had yet been formed.

The processes of negotiations must be distinguished from the actual establishment of a contract

Analysis: Since the council’s reply did not consist of an affirmative statement declaring a contract, and

instead uses the wording of “may be willing to sell”, no contract was established.-The court held that

the Council's letter was not an offer as the letter stated that "The Corporation may be prepared to sell

the house to you" and that "If you would like to make formal application to buy your Council house,

please complete the enclosed application form and return it to me as soon as possible." As there was

never an offer available to be accepted, no contract had been formed and by extension the council had

not been in breach.

Conclusion: No contract was held since the traditional approach of offer and acceptance is preferred.

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd. (1953)

Facts: Boots Cash Chemists had just instituted a new method for its customers to buy certain

medicines. The company would let shoppers pick drugs off the shelves in the chemist and then pay for

them at the till. Before then, all medicines were stored behind a counter and an assistant had to get

what was requested. The Pharmaceutical Society of Great Britain objected and argued that under the

Pharmacy and Poisons Act 1933, that was an unlawful practice. Under s 18(1), a pharmacist needed to

supervise at the point where "the sale is effected" when the product was one listed on the 1933 Act's

schedule of poisons. The Society argued that displays of goods were an "offer" and when a shopper

selected and put the drugs into their shopping basket that was an "acceptance". Therefore because no

pharmacist had supervised the transaction at this point, Boots was in breach of the Act. Boots argued

that the sale was affected only at the till.

Held: Both the Queen's Bench Division of the High Court and the Court of Appeal sided with Boots.

They held that the display of goods was not an offer. Rather, by placing the goods into the basket, it

was the customer that made the offer to buy the goods. This offer could be either accepted or rejected

by the pharmacist at the cash desk. The moment of the completion of contract was at the cash desk, in

the presence of the supervising pharmacist. Therefore, there was no violation of the Act.


The holding of public auction is also usually regarded as invitation to treat.

Advertisements and circulars; are generally classified as:

Invitation to treat:

Partridge v Crittenden (1968)

P placed an advertisement which read "Bramble finch Cocks, Bramble finch Hens, 25 shillings each."

The advertisement was placed in a general classified section and did not use the words "offer for sale".

He sold a bird to a third party who opened its box in the presence of C, an RSPCA (Royal Society for the

Prevention of Cruelty to Animals) inspector. From the bird's leg ring, it was apparent that the bird was

a wild bird and had not been bred in captivity. To offer such a bird for sale was an offence under the

Protection of Birds Act 1954. P was charged with that offence, and convicted, but the conviction was

quashed on appeal. The advertisement was deemed to be an invitation to treat and not an offer for

sale. Therefore, the offence could not be demonstrated to have occurred. P could have been charged

with the offence of the completed sale, but the prosecution had instead chosen to rely on the offence

of "offering for sale" and had then failed to establish that offence.

Advertisement for birds in a magazine was not an offer.

Circulation of a wine catalogue is an invitation to treat.

Gibbons v Proctor (1891)

Facts: A police officer supplied information for which a reward had been offered; he was not aware of

the offer at the time that he gave the information but he had become aware of the offer by the time

the information reached the relevant party. It was held that the officer was entitled to claim the

reward.

Held: This case held that the advertisements of rewards for information leading to the arrest or

conviction of the perpetrator of a crime, is treated as an offer, as the intention to be bound is inferred

from the fact that no further bargaining is expected to result from them.

The case is sometimes wrongly cited as authority for the proposition that acceptance in ignorance of

an offer is effective. A closer inspection of the facts of the case reveals that the party claiming the

reward possessed full knowledge of the offer at the time when he gave the information.

Advertisements promising rewards for the recovery of lost property are generally construed as

offers.

Williams’s v Cawardine (1833)

Fact: Walter Carwardine was murdered in Hereford. The plaintiff, Mrs. Williams, gave evidence at the

Hereford assizes against two suspects, but did not say all she knew. The suspects were acquitted. On

April 25, 1831, the victim's brother and defendant, Mr. Carwardine, published a handbill, stating there

would be a £20 for.

Whoever would give such information as would lead to the discovery of the murder of Walter

Carwardine.

In August, 1831, the Mrs. Williams gave more information which led to the conviction of two men

(including a Mr. John Williams, the plaintiff's husband). She claimed the reward. Mr. Carwardine

refused to pay. At the trial her motives were examined. It was found that she knew about the reward,


but that she did not give information specifically to get the reward. It was apparent that after the first

murder trial, Mrs. Williams had been savagely beaten by Mr. Williams.

Held: At the trial Parke J said, "The motive was the state of her own feelings. My opinion is, the motive

is not material."

He held that she was entitled to the reward.

The Court, consisting of Lord Denman CJ, Littledale J and Patteson J held that the plaintiff was entitled

to recover the £20. The advertisement amounted to a general promise or contract to pay the offered

reward to any person who performed the condition mentioned in it, namely, who gave the

information.

Two judges clearly stated that motives were irrelevant. Littledale J said, "If the person knows of the

handbill and does the thing that is quite enough." Patteson J said "We cannot go into the plaintiff's

motives."

Advertisements giving rise to unilateral contracts are generally regarded as offers. It is, however

always a matter of construction.

Carlill v Carbolic Smokeball Co Ltd. (1893)

Tenders and standing offers:

An announcement that contracts for the provision of goods or services is open to tender, is an

invitation to treat and not an offer.

Spencer v Harding (1870)

Facts: The Defendants sent out a circular containing the following wording:

“28, King Street, Cheapside, May 17th, 1869. We are instructed to offer to the wholesale trade for sale

by tender the stock in trade of Messrs. G. Eilbeck & Co., of No. 1, Milk Street, amounting as per stock-

book to 2503l. 13s. 1d. And which will be sold at a discount in one lot. Payment to be made in cash.

The stock may be viewed on the premises, No. 1, Milk Street, up to Thursday, the 20th instant, on

which day, at 12 o'clock at noon precisely, the tenders will be received and opened at our offices.

Should you tender and not attend the sale, please address to us sealed and enclosed, 'Tender for

Eilbeck's stock.' Stock-books may be had at our offices on Tuesday morning. Honey, Humphreys, & Co.”

The Defendants did not promise to sell the stock to the highest bidder for cash. The Claimants sent a

tender to the Defendants which, following the submission of all tenders was the highest tender. The

Defendants refused to sell the stock to the Claimants.

The Defendants submitted that the circular was not intended to be a binding offer capable of

acceptance. Rather, it was merely a circular inviting others to make offers. The Claimants submitted

that the circular did constitute a valid offer and that the Claimant had, by submitting the highest

tender and attending all the necessary meetings, accepted that offer.

Held: Willes J held that the circular was not an offer, but merely an invitation to gather tenders, upon

which the Defendants were entitled to act. Willes, J. held that the absence of any specific wording such

as "and we undertake to sell to the highest bidder" rebutted any presumption that the Defendants had

intended to be bound by a contract and distinguished the present circumstances from instances of

reward contract offers or an offer to the world.


Auction sale

The call for bids is an invitation to treat. The bid is an offer. The auctioneer may accept or reject such

offers.

Payne v Cave (1789)

Facts: Mr. Cave made the highest bid for Mr. Payne's goods at an auction. But then, Mr. Cave changed

his mind and he withdrew his bid before the auctioneer brought down his hammer.

It was held that the defendant was not bound to purchase the goods. His bid amounted to an offer

which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking

down the hammer. Note: The common law rule laid down in this case has now been codified in many

countries in variations of the Sale of Goods Act, e.g. UK 1979 s57(2).

Held: The court held that Mr. Cave was entitled to withdraw his offer at any time before the

auctioneer accepted it. The auctioneer's request for bids was an invitation to treat, and each bid

constituted an offer which could be withdrawn at any time until it's accepted, and finally, the fall of the

auctioneer's hammer constituted acceptance of the highest bid.

Termination of offer

An offer remains live that is capable of being accepted, until terminated. Termination may occur in six

ways:

1. Revocation

2. Rejection

3. Lapse of time

4. Death

5. Insanity, incapacity, impossibility

6. Occurrence of a terminating condition

The offeror may revoke his offer at any time up till acceptance.

Byrne v Van Tienhoven (1880)

Facts: Van Tienhoven & Co posted a letter from their office in Cardiff to Byrne & Co in New York,

offering 1000 boxes of tinplates for sale on 1 October. Byrne and Co got the letter on 11 October. They

telegraphed acceptance on the same day. But on 8 October Van Tienhoven had sent another letter

withdrawing their offer, because tinplate prices had just risen 25%. They refused to go through with

the sale.

Held: Lindley J held that the withdrawal of the offer was not effective until it was communicated. His

judgment stated the following.

“There is no doubt an offer can be withdrawn before it is accepted, and it is immaterial whether the

offer is expressed to be open for acceptance for a given time or not. The offer was posted on the 1st of

October, the withdrawal was posted on the 8th, and did not reach the plaintiff until after he had

posted his letter of the 11th accepting the offer. It may be taken as now settled that where an offer is

made and accepted by letters sent through the post, the contract is completed the moment the letter

accepting the offer is posted: Harris’s; Dunlop v Higgins, even although it never reaches its destination.

When, however, those authorities are looked at, it will be seen that they are based upon the principle

that the writer of the offer has expressly or impliedly assented to treat an answer to him by a letter

duly posted as a sufficient acceptance and notification to himself, or, in other words, he has made the

post office his agent to receive the acceptance and notification of it. But this principle appears to me to


be inapplicable to the case of the withdrawal of an offer. In this particular case I find no authority in

fact given by the plaintiffs to the defendants to notify a withdrawal of their offer by merely posting a

letter, and there is no legal principle or decision which compels me to hold, contrary to the fact, that

the letter of the 8th of October is to be treated as communicated to the plaintiff on that day or on any

day before the 20th, when the letter reached him.....Before leaving this part of the case it may be as

well to point out the extreme injustice and inconvenience which any other conclusion would produce.

If the defendants’ contention were to prevail no person who had received an offer by post and had

accepted it would know his position until he had waited such a time as to be quite sure that a letter

withdrawing the offer had not been posted before his acceptance of it.

Payne v Cave (1789)

The defendant made the highest bid for the plaintiff's goods at an auction sale, but he withdrew his bid

before the fall of the auctioneer's hammer. It was held that the defendant was not bound to purchase

the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the

auctioneer signified acceptance by knocking down the hammer. Note: The common law rule laid down

in this case has now been codified in s57(2) Sale of Goods Act 1979.

Revocation must be communicated.

Dickinson v Dodds (1876)

Facts: On Wednesday, June 10, 1874 Dodds (D) sent Dickinson (P) a memorandum in which he agreed

to sell a specified piece of land for 800 pounds with the offer held open until 9AM the following Friday.

Dickinson alleged that he had decided to accept Dodds’ offer on Thursday morning but did not contact

him immediately because he thought he had until Friday morning to accept. On Thursday afternoon

Dickinson learned that Dodds had offered or agreed to sell the land to a third party. Dickinson wrote a

note accepting the offer and delivered it to his home, leaving it with his mother-in-law who neglected

to give the note to Dodds. On Friday morning before the original deadline to accept the offer, both

Dickinson and his agent gave Dodds a written acceptance of the offer. Dodds stated that he had

already sold the land to another party the previous day.

Dickinson sued for specific performance. The trial court found in Dickinson’s favor and ordered that

Dodds convey the property to him and Dodds appealed.

Issue: Whether a promise to hold an offer open is binding where the other party does not accept until

after he learns that the offeror has already conveyed the property.

Holding and Rule: No. An open offer to sell terminates when the offeree learns that the offeror has

already agreed to sell to someone else.

The court stated that since Dickinson knew that Dodds’ offer had been implicitly withdrawn when he

learned that he had sold the property to someone else, there was no meeting of the minds at the time

acceptance was made and therefore a binding contract was not formed.

Disposition: Judgment reversed.

Difference between an offer an invitation to treat

An invitation to treat is an action inviting other parties to make an offer to form a contract.

These actions may sometimes appear to be offers themselves, and difference is difficult to determine.


An offer creates a binding contract while accepting an invitation to treat is actually making an offer.

Advertisements are usually invitations to treat, which allows sellers to refuse to sell products at prices

mistakenly marked.

Advertisements can also be considered offers in some specific cases.

Auctions are sometimes invitations to treat which allows the seller to accept bids and choose which to

accept.

However, if the seller states that there is no reserve price or the reserve price has been met, the

auction will be considered an offer accepted by the highest bidder.

An offer is made when a person shows a willingness to enter into a legally binding contract.

An invitation to treat (ITT) is merely a supply of information to tempt a person into making an offer.

The distinction has been discussed in a number of cases:

HARVEY V FACEY [1893] AC 552

FACTS: dispute over the sale of a property (in Jamaica) and an alleged agreement made via telegram

correspondence

Plaintiff (P): Will you sell us Bumper Hall Pen? Telegraph lowest cash price

Defendant (D): Lowest price for Bumper Hall Pen £900

P: We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you

ISSUE: whether there had been an offer and acceptance of that offer

HELD: Privy Council decided in the initial exchange of telegrams: P was asking questions about the

property and clearly not making an offer and D was simply answering second part of P's question

D discussed but did not commit, so D's first telegram invitation to treat not an offer

P's last telegram is first unequivocal statement but D has not made an offer P can accept

P has now made an offer, which D has chosen not to accept

case criticised as some argue D implied a promise to sell for £900

today contracts for sale of land must be written and signed by both parties (Law of Property

(Miscellaneous Provisions) Act 1989 s2(1))

GIBSON V MANCHESTER CITY COUNCIL [1979] 1 WLR 294

FACTS: P was a council tenant and received a letter from D inviting an application to buy the council

house

D's letter stated: The Corporation may be prepared to sell the house to you at the purchase price of

£2,725... If you would like to make formal application to buy your Council house, please complete the

enclosed application form...

P completed the application

D was a newly elected council and refused to accept P's application

P sued for breach of contract

ISSUE: did D make an offer or invitation to treat?

HELD: held that D's letter was not a contractual offer, which P could accept

formal application by P was an offer, that D did not accept

Lord Diplock: The words 'may be prepared to sell' are fatal... [D's letter is] setting out the financial

terms on which it may be the council will be prepared to consider a sale and purchase in due course...


STORER V MANCHESTER CITY COUNCIL [1974] 3 ALL ER 824

FACTS: earlier case also involving a council tenant's right to buy his property

D sent P a document titled Agreement for Sale and a letter which stated: If you will sign the Agreement

and return it, I will send you the Agreement signed on behalf of the council in exchange

P signed and returned the Agreement for Sale

Labour party took control of the council and did not return a signed copy, refusing to sell the property

P sued for breach of contract

ISSUE: was there an agreement?

HELD: there was a binding obligation on D to sell

Lord Denning: In contracts you do not look into the actual intent in a man's mind. You look to what he

said and did. A contract is formed when there is, to all outward appearances, contract. A man cannot

get out of a contract by saying 'I did not intend to contract' if by his words he has done so...

objectively, to a reasonable man D's letter appeared to commit to selling the property if P returned the

documents

Shops

whether items on display in a shop constitute an offer or an invitation to treat

timing of the acceptance is a central factor

a contract is concluded and becomes binding on the parties once the offeree accepts the offer (in full

and to all the terms)

after a customer selects a product from the shelf he can change his mind until he takes the item to a

checkout

at this point the customer is making an offer to pay for the goods and the store accepts when payment

is taken

PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMISTS [1953] 1 QB 401

FACTS: regulations required a registered pharmacist to supervise sale of certain drugs

customers select items from shelves and take to specific pay point to purchase

D had suitably qualified persons at the pay point in stores

ISSUE: when was the contract of sale was concluded?

HELD: contract not concluded until the sale at pay point, D not committing an offence

self-service in a shop is classified as an invitation to treat

FISHER V BELL [1967] 1 QB 394

FACTS: a criminal case involving the sale of restricted weapons

D had a knife displayed in his shop window with a sale price

sale of that type of flick knife was prohibited under Restriction of Offensive Weapons Act 1959

ISSUE: was the display an offer for sale?

HELD: that the knife in the window was an invitation to treat

D was acquitted

Advertisements

general rule is that advertisements are invitations to treat not offers


PARTRIDGE V CRITTENDEN [1968] 2 ALL ER 421

FACTS: D placed advertisement in periodical, Classified Advertisements section: Bramblefinch cocks,

Bramblefinch hens 25s each

ISSUE: was D offering for sale a wild bird contrary to the Protection of Birds Act 1954?

HELD: advertisement was invitation to treat not an offer

D acquitted

it is reasoned that if an advertisement was considered an offer then anyone responding and asking for

the items would be accepting

this would mean the seller would be bound and could cause difficulties

cases are determined on the objective intention behind the advertisement

courts will consider whether: the wording is sufficiently clear to be an offer, the advertiser intended to

be bound and there are issues of limited supply

Rewards

For information

advertisements of rewards for information have generally been treated as offers not invitations to

treat

WILLIAMS V CARWARDINE [1833] EWHC KB J44

FACTS: D advertised: Whosoever would give such information as might lead to a discovery of the

murder of the said Walter Carwardine, should, on conviction, receive a reward of £20...

P gave information but was refused the reward

ISSUE: was D obliged to pay the reward advertised?

HELD: the advertisement was sufficiently precise, with no negotiation required so constituted an offer

supply of information was an acceptance and the money should be paid

For consumers

rewards advertised to encourage consumers can also be offers

LEFKOWITZ V GREAT MINNEAPOLIS SURPLUS STORES (1957)

FACTS: American case which is not binding on English courts

D placed the following advertisement in a newspaper: Saturday 9 A.M. Sharp 3 Brand New Fur Coats

Worth to $100.00. First Come First Served $1 Each

P was the first person to come into the store but D refused to sell to him

ISSUE: was D's advertisement an offer?

HELD: the wording was sufficiently precise and there would be no issues of limited supply, as only

three coats were advertised as available

advertisement was found to be an offer and P had accepted it by being the first person to come into

the store, as specified

CARLILL V CARBOLIC SMOKE BALL CO. [1893] 1 QB 256

FACTS: D's advertisement stated: £100 reward will be paid by the Carbolic Smoke Ball Company to any

person who contracts the influenza after having used the ball three times daily for two weeks


according to the printed directions supplied with each ball... £1000 is deposited with the Alliance Bank,

showing our sincerity in the matter...

P's claim was refused and D argued that the advertisement: was mere puff, had not been addressed to

specific persons and that the P had not communicated notice of her acceptance

ISSUE: was D's advertisement an offer?

HELD: advertisement was not mere puff as D had explicitly stated money had been set aside to make

such payments

a reasonable person reading the advertisement would take it to be a serious offer which amounted to

a binding obligation

although an offer must usually be addressed to specific person or class of persons, the advertisement

was being made to anyone who met the criteria set out and this was sufficient

the wording of the advertisement meant P did not have to communicate acceptance, as clearly D did

not expect every customer to contact them on purchasing the item, rather only those who used the

product as directed and then caught influenza

case established that advertisements can constitute an offer to the public at large and can be worded

to waive the need to communicate acceptance prior to a claim

rewards are unilateral contracts where the promisor is bound to perform his promise if the other party

performs the required act

in contrast to a bilateral contract where one party offers a promise in return for the promise of the

other

Essentials of a valid offer

It may be expressed or implied

Contractual intention

Balfour v Balfour

Facts: A husband worked overseas and agreed to send maintenance payments to his wife. At the time

of the agreement the couple was happily married. The relationship later soured and the husband

stopped making the payments. The wife sought to enforce the agreement.

Held: The agreement was a purely social and domestic agreement and therefore it was presumed that

the parties did not intend to be legally bound.

It must create legal relationship

Definite

It may be specific or general

Communication of offer to the offeree

It should not contain negative condition

It may subject to any or some terms and conditions

It must not contain cross offer

It is different from an invitation to offer or treat or negotiate.

Revocation/Termination of an Offer

Meaning: Recalling or cancelling


No particular form or words are required to constitute a revocation. Any word, words indicating the

intention

Modes of revocation of offer

Lapse of time

Rams gate Victoria hotel co. v Montefiore (1866)

Facts: The defendant offered to purchase shares in the claimant company at a certain price. Six months

later the claimant accepted this offer by which time the value of the shares had fallen. The defendant

had not withdrawn the offer but refused to go through with the sale. The claimant brought an action

for specific performance of the contract.

Held: The offer was no longer open as due to the nature of the subject matter of the contract the offer

lapsed after a reasonable period of time. Therefore there was no contract and the claimant's action for

specific performance was unsuccessful.

Notice of revocation

Failure to honor prescribed conditions

Revocation by the offeree/Rejection

Counter offer by the offeree

Hyde v Wrench (1840)

Facts: Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench

then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property

for 950 pounds and Wrench replied that he would consider the offer and give an answer within

approximately two weeks.

Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s

earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of

contract and sought specific performance, contending that Wench’s offer had not been withdrawn

prior to acceptance.

Issue: If one party makes an offer and the offeree makes a counteroffer, does the original offer remain

open?

Holding and Rule: No. A counteroffer negates the original offer.

Kindersely and Keene: To constitute a valid contract there must be a simple acceptance of the terms

proposed. Hyde rejected the defendant’s offer to sell and made a counter proposal which terminated

the offer. The offer was never accepted and cannot be revived later.

Pemberton and Freeling: Wrench’s offer had not been withdrawn before Hyde accepted it and his

acceptance created a binding contract.

The Master of the Rolls (Lord Langdale): By making a counteroffer, the plaintiff rejected the original

offer and he was not entitled to revive it. Under these facts the parties did not form a binding contract.

Disposition: Judgment for Wrench.

Death of one from offeror or offeree

Disability of either party

Subsequent illegality (becomes illegal after offer)


Destruction of subject matter

The general rule is that the revocation is effective, only when it is properly communicated

Mailbox rule

If the offeror does not otherwise specify, a mailed acceptance takes effect when the acceptance is

properly mailed.

Routledge v Grant (1828)

Facts: In the case, Grant wrote to Routledge offering to purchase the lease of his house. The offer was

to remain open for six weeks. Grant then changed his mind about purchasing the lease and, within the

six weeks, withdraws his offer. After Routledge had received Grant’s letter withdrawing the offer, he

wrote back to Grant, within the six weeks, accepting Grant’s offer.

Issue: The issue before the court was whether Grant could withdraw his offer within the six week

period or whether he was bound contractually given that Routledge had accepted the offer within the

timescale.

Held: The court held the offer could be withdrawn within the six week period without incurring any

liability – if one party has six weeks to accept an offer, the other has six weeks to put an end to it. One

party cannot be bound without the other. The offeror (Grant) did not have to keep his offer for any

specific time and, chief Justice Best put it, “till both parties are agreed, either has a right to be off”.

However, the situation is likely to be different had there been some consideration for the promise to

keep the offer open. So, for example, if Routledge had made a payment to Grant to ensure the offer

was kept open for six weeks, the revocation of the offer within that period is likely to be a breach of

the agreement.

The case is a useful reminder that until such time as an offer is accepted, the offeror is free to revoke

it, even if they have given the recipient a period of time to consider it. Similarly, if you do want to

ensure there is some time to consider an offer, ensure that you have agreement, supported by

consideration, for how long that period will be.

Byrne v Van Tienhoven (1880)

Held: The offeror need not himself inform the offeree of the revocation, this can be done by some

reliable third party.

Unilateral contracts and revocation

Problem in revocation

Suppose that Subhan offer £100 to the Sajawal to swim across the river Trent on New year’s day.

Sajawal having seen the offer dives in and starts to swim across. When Sajawal is just a few meters

from the other bank of the river, Subhan shouts to Sajawal, sorry the offer is withdrawn!

- If the general rule as to acceptance applied, acceptance would not be complete until the act was

fully performed, leaving the offeror free to revoke at any time.

- Possible solution:

The “two contract theory”, offer accompanied by another implied offer not to revoke providing the

offeree begins the task within a reasonable time.

- English cases turn on the intentions of the parties and the circumstances of the case.


Errington v Errington (1952)

Facts: A father invited his daughter and son in law to live in a house, which he had bought for £750, of

which £500 had been borrowed from a building society. The house was in his name. He said that if the

couple paid off all the remaining mortgage repayments, the house would be theirs (a unilateral offer).

Although they did not bind themselves to do so, they in fact did pay installments as they became due.

The father died before the whole debt had been paid off, and his personal representatives then tried

to withdraw his offer.

Held: Yes, there was a unilateral contract between the father and the couple. The father promised to

convey the house if they paid the mortgage; the children made no reciprocal promise to make

payments, but the contract was held to be binding unless they stopped making payments.

Communication problem in unilateral offers

There are many rules that apply in relation to the revocation of an offer to enter into a unilateral

contract. An offer to enter into a unilateral contract cannot be revoked once the offeree has

commenced the performance.

Daulia v Four Millbank Nominees (1978)

The defendant offered to sell property to the plaintiff. The parties agreed terms and agreed to

exchange contracts. The defendant asked the plaintiff to attend at the defendant's office to exchange.

The plaintiff attended but the defendant sold to a third party for a higher price. It was held that the

contract fell foul of s40(1) Law of property Act 1925 and the plaintiff's claim was struck out. However,

Goff L.J. stated obiter:

In unilateral contracts the offeror is entitled to require full performance of the condition imposed

otherwise he is not bound. That must be subject to one important qualification - there must be an

implied obligation on the part of the offeror not to prevent the condition being satisfied, an obligation

which arises as soon as the offeree starts to perform. Until then the offeror can revoke the whole

thing, but once the offeree has embarked on performance, it is too late for the offeror to revoke his

offer.

Luxor (Eastbourne) -v- Cooper; HL 1941

Facts: The vendor company had instructed agents to sell properties on its behalf and had agreed to pay

commission on completion of the sale. The sale was agreed with a prospective purchaser introduced by

the agents. Before the sale was completed, the vendor company withdrew from the sale because of an

objection by one of its directors. The vendor company later sold to someone who had not been

introduced by the agents. The agents claimed their commission.

Held: A property owner was under no implied obligation not to deal with his property in such a way

that the estate agent was deprived of the opportunity of earning the agreed commission. The House

considered the use of implied terms.

Lord Wright said: “The expression ‘implied term’ is used in different senses. Sometimes it denotes

some term which does not depend on the actual intention of the parties but on a rule of law, such as

the terms, warranties or conditions which, if not expressly excluded, the law imports, as for instance

under the Sale of Goods Act and the Marine Insurance Act. . But a case like the present is different


because what it is sought to imply is based on an intention imputed to the parties from their actual

circumstances.”

Viscount Simon LC said: “in contracts made with commission agents there is no justification for

introducing an implied term unless it is necessary to do so for the purpose of giving to the contract the

business effect which both parties to it intended it should have”.

Lord Russell said: “As to the claim for damages, this rests upon the implication of some provision in the

commission contract, the exact terms of which were variously stated in the course of argument, the

object always being to bind the principal not to refuse to complete the sale to the client whom the

agent has introduced.

I can find no safe ground on which to base the introduction of any such implied term. Implied terms, as

we all know, can only be justified under the compulsion of some necessity. No such compulsion or

necessity exists in the case under consideration. The agent is promised a commission if he introduces a

purchaser at a specified or minimum price. The owner is desirous of selling. The chances are largely in

favour of the deal going through, if a purchaser introduced. The agent takes the risk in the hope of a

substantial remuneration for comparatively small exertion . . There is no lack of business efficacy in

such a contract, even though the principal is free to refuse to sell to the agent’s client.” and

“in my opinion there is no necessity in these contracts for any implication; and the legal position can be

stated thus:- If according to the true construction of the contract the event has happened upon the

happening of which the agent has acquired a vested right to the commission . . then no act or omission

by the principal or anyone else can deprive the agent of that right; but until that event has happened,

the agent cannot complain if the principal refuses to proceed with, or carry to completion, the

transaction with the agent’s client”.

- Where offer made by advertisement

- May revoke by such advertisement

- May not read by all offerees

- Reasonable steps should be taken to communicate revocation.

Shuey v USA (1875)

Facts: By a proclamation published in the public newspapers on the 20 April 1865 the Secretary of War

offered a $25,000 reward 'for the apprehension of John Surratt, one of Booth's accomplices,' and that

'liberal rewards will be paid for any information that shall conduce to the arrest of either of the above-

named criminals or their accomplices.' On the 24 November 1865 the President published an order

revoking the reward offered for the arrest of Surratt. In April 1866 Marie informed the American

authorities that he had discovered and identified Surratt. At the time of giving the information Marie

was ignorant of the fact that the reward offered by the Secretary of War for Surratt's arrest had been

revoked by the President. Shuey, Marie's executor, sued to recover the sum of $15,000, being the

balance alleged to be due to Marie of the reward of $25,000.

Held: The offer of a reward for the apprehension of Surratt was revoked on the twenty-fourth day of

November 1865; and notice of the revocation was published. It is not to be doubted that the offer was

revocable at any time before it was accepted, and before anything had been done in reliance upon it.

There was no contract until its terms were complied with. Like any other offer of a contract, it might,


therefore, be withdrawn before rights had accrued under it; and it was withdrawn through the same

channel in which it was made. The same notoriety was given to the revocation that was given to the

offer; and the findings of fact do not show that any information was given by the claimant, or that he

did anything to entitle him to the reward offered, until five months after the offer had been

withdrawn. True, it is found that then, and at all times until the arrest was actually made, he was

ignorant of the withdrawal; but that is an immaterial fact. The offer of the reward not having been

made to him directly, but by means of a published proclamation, he should have known that it could

be revoked in the manner in which it was made.

NB Booth was the assassin of President Lincoln.

Counter offer/Conditional acceptance:

- An offer made in response to a previous offer by the other party during negotiations for a final

contract

- Making a counter offer automatically rejects the prior offer, and requires an acceptance under the

terms of the counter offer or there is no contract. [Movie My cousin Vinny]

Example: Sijjal seller offers to sell her house for £150, 000, to be paid in 60 days, Aleena buyer receives

the offer and gives seller a counter offer of £140, 000, payable in 45 days.

The original offer is dead, despite the shorter time for payment since the price is lower.

Seller then can choose to accept at £140, 000, counter again at some compromise price, reject the

counter offer, or let it expire.

Butler machine Tool Ltd. Vs. Ex-Cell-O Corp.

Facts: Ex-Cell-O wished to purchase a machine from Butler. Butler sent out a quotation of £75,535

along with a copy of their standard terms of sale. The terms included a price variation clause and a

term that the seller's terms would prevail over any terms submitted by a purchaser. The machine

would be delivered in 10 months. Ex-Cell-O put in an order for the machine at the stated price and sent

a set of their terms which did not include the price variation clause. The order contained an

acknowledgement slip which required a signature by Butler and was to be returned to Ex-Cell-O. This

slip stated that the contract would be subject to the terms stated overleaf. Butler duly signed the slip

and returned it. The machines were then delivered and Butler sought to enforce the price variation

clause and demanded an extra £2,893. Ex-Cell-O refused to pay.

Held: The offer to sell the machine on terms provided by Butler was destroyed by the counter offer

made by Ex-Cell-O. Therefore the price variation clause was not part of the contract. The contract was

concluded on Ex-Cell-O's terms since Butler signed the acknowledgement slip accepting those terms.

Where there is a battle of the forms whereby each party submits their own terms the last shot rule

applies whereby a contract is concluded on the terms submitted by the party who is the last to

communicate those terms before performance of the contract commences.

Hyde v Wrench (1840) 49 ER 132 Chancery Division (Decided by Lord Langdale MR)

Facts: The defendant offered to sell a farm to the claimant for £1,000. The claimant in reply offered

£950 which the defendant refused. The claimant then sought to accept the original offer of £1,000. The

defendant refused to sell to the claimant and the claimant brought an action for specific performance.


Held: There was no contract. Where a counter offer is made this destroys the original offer so that it is

no longer open to the offeree to accept.

Mere inquiry (about terms of an offer) is not a counter offer and leaves the

offer intact.

Stevenson v McLean (1880)

On Saturday, the defendant offered to sell iron to the plaintiff at 40 shillings a ton, open until Monday.

On Monday at 10am, the plaintiff sent a telegram asking if he could have credit terms. At 1.34pm the

plaintiff sent a telegram accepting the defendant's offer, but at 1.25pm the defendant had sent a

telegram: 'Sold iron to third party' arriving at 1.46pm. The plaintiff sued the defendant for breach of

contract and the defendant argued that the plaintiff's telegram was a counter-offer so the plaintiff's

second telegram could not be an acceptance.

It was held that the plaintiff's first telegram was not a counter-offer but only an enquiry, so a binding

contract was made by the plaintiff's second telegram.

- A request for information is not a counter offer.

- Under uniform commercial code: Under these rules, new conditions can be added as; “I accept

your offer to sell your car, but you will have to arrange to deliver it to Lahore instead of Karachi”.

To counter a counter offer:

- Should be expected

- Nobody wants to lose their best people

- Easier to make a counter offer than to try to find a new person

- Counter offer is a good thing

Signals that candidate’s current company values them and they don’t want them to go.

How to handle the counter offer:

- Should they offer more money

- Match the counter offer

- Negotiations

Requests for information:

- About an offer (as whether delivery could be earlier than suggested)

- Does not amount to be a counter-offer

- So the original offer remains open

Stevenson Jaques & Co. v McLean (1880)

Facts: Defendants made an offer on Saturday to sell iron to the claimants at a cash-on-delivery price of

40 shillings, and stated that the offer would remain available until the following Monday. The claimants

replied by asking if they could buy the goods on credit. They received no answer. On Monday

afternoon they contacted the defendant to accept the offer, but the iron had already been sold to

someone else.

Held: When the claimants sued for breach of contract, it was held that their reply to the offer had been

merely a request for information, not a counter offer, so the original offer still stood and there was a


binding contract. (Claimant accepted the offer before the revocation of defendant). [It was not a

counter offer but merely inquiry or request for information].

Class activity

What is an offer?

Research activity – think about different ways in which an offer can be made and the factors which are

important – make a list of as many factors as possible and then discuss them in a group.

How is an invitation to treat different?

Look at the website opposite. Make a presentation on the different situations where an invitation to

treat is used and the reasons for the concept.

What is a counter-offer?

Research activity – using cases such as Hyde v Wrench (1840) explain the meaning of a counter offer

and critically analyse its use in the law.

How can an offer be terminated?

Research activity – write a summary of the ways in which an offer can be terminated, supporting what

you say with at least one relevant case.

Questions from past papers

Q1. ‘Offers last forever unless expressly revoked.’ Critically evaluate this statement as it relates to the formation of contracts. [May/June 2009]

Q2. Acceptance of an offer must be communicated before a contract comes into existence. Critically assess any exceptions to this principle that might exist. [May/June 2014]

An offer is the starting point for a contract and can be made either orally or in writing.

Introduction to the formation of a contract and breaches of contract

Key definitions

Offeror: The person making the offer of a contract.

Offeree: The person who can accept or refuse the offer of a contract.

A valid contract starts with the acceptance of an offer made to the person accepting the offer. There are four

elements that need to be considered in the formation of a valid contract:

1. That there has been a valid OFFER made by one party to the contract.


2. That there has been a valid ACCEPTANCE of the offer: together offer and acceptance constitute an agreement.

3. That there is an INTENTION TO CREATE LEGAL RELATIONS: in other words, an intention to have a legally enforceable contract.

4. That there has been CONSIDERATION: the idea that each party has given up something or contributed something to the agreement. If one party contributes and the other does not then there is a gift rather than a contract.

If a person is to succeed in a contract claim, there must be proof that there is a valid contract and that the

contract has been broken.

Once a contract has been correctly formed you will need to be able discuss when a party to the contract has

broken the contract, a breach of contract.

Once a breach of contract has been proved you will need to be able to explain how a C goes about starting a

claim for Damages. You will also need to be able to explain the court procedures before the case goes to

trial.

You will also need to be able to explain what alternatives a C can try to resolve the breach of the contract

besides going to court. This is called alternative dispute resolution.

(Activity 1)

(Activity 2)


A valid offer

Key definitions

Offer – An offer is a statement of the terms upon which the person making the offer is

willing to enter a contract: it can be written or verbal.

Invitation to treat – An invitation to treat is merely an indication of a willingness to start

negotiations and is not an offer.

An offer is the starting point for a contract and can be made either orally or in writing.

If a statement made by one party is regarded as negotiations, before a legal offer is made (known as an

invitation to treat), then there will be no legally binding offer of a contract.

The offer must be communicated to the other party. Unless a person knows about an offer, it cannot be acted

upon. Once it is known to exist, the essential point is to establish how long the offer lasts, as it can only be

accepted whilst the offer remains open. Once the offer has ended it cannot be accepted and so it cannot be the

basis of a contract. A new offer would then have to be made to start the process of forming a contract. The

contract is formed when an offer has been accepted.

An offer must be communicated to the other party

Offer is made Offer is open If the offer is accepted

then a contract can be

formed

Offer ends Offer can no longer be

accepted. A new offer

is needed.


An offer cannot be accepted unless the person who is seeking to accept it knows of its existence.


What are the differences between an offer and an invitation to treat?

Key definitions

Offer – An offer is a statement of the terms upon which the person making the offer is

willing to enter a contract: it can be written or verbal.

Invitation to treat – An invitation to treat is merely an indication of a willingness to start

negotiations and is not an offer.

An invitation to treat is merely an indication of a willingness to enter negotiations. But an offer is a statement that a person is willing to enter into a legal contract. Both an offer and invitation to treat can be made either verbally or in writing. However, cases have distinguished between situations that are an offer and those that are an invitation to treat and are mainly common sense. Why do we have situations that are only classed as a willingness to start negotiating a contract rather than going straight into an offer that can be accepted? One reason contract law has situations classed, as an invitation to treat is that there are many different goods and services that are traded which have many different methods of forming a legal contract. For example, to buy a house you cannot make a contract simply through an oral agreement. A written document must be signed by both parties and witnessed by an independent person, such as a solicitor. Task: Can you think of three more reasons why certain situations are only classed as an initiation to treat?

Situation The reason this is classed as an invitation to treat is because…

Mars bars displayed in a shop window


Cases on offers and Invitations to treat – key points

Invitation to treat

Offer Case Legal point

Advertisement in a newspaper

Partridge v Crittenden

An advertisement for the sale of protected birds was not an offer

Goods displayed in a shop window

Fisher v Bell A knife with a price label on it in a shop window was not an offer but an invitation to treat.

Goods on a supermarket shelf

Pharmaceutical Society of GB v Boots

Goods in a self-service store are an invitation to treat, not an offer

Getting goods from a vending or other machine

Thornton v Shoe Lane Parking

A ticket from an automatic machine in a car park involved the car park owner making the offer and the customer accepting the offer by putting money in the machine.

Taking a chair and awaiting the attendant to collect your money

Chapleton v Barry

A pile of deckchairs for hire on a beach

was an offer that the customer could

accept.

Response to a request for information

Harvey v Facey

A response to a request for information is just an invitation to treat, not an offer

Uncertain words Gibson v Manchester City Council

A statement is not an offer if the words you use show uncertainty as to whether there is a willingness to make a contract.

(Activity 3)


Cases where a legal offer was made An offer is a statement of the terms upon which the person making the offer is willing to enter a contract: it can be written or verbal. In both cases below the evidence established that a legal offer had been made and could be accepted by the other party.

Case Name Brief facts Key issue

Thornton v Shoe Lane Parking

C was entering a car park via an automatic barrier. Mr Thornton put money in a machine to open the barrier and was given a ticket. It would be the same if he had just taken a ticket and paid on exit as is more common today.

The offer is made by the owner of the machine and that it is the buyer from the machine who accepts the offer and makes the contract come into existence, when the purchase the item, in this cases a ticket to park. The acceptance takes place when the customer puts the money in the slot.

Chapleton v Barry

The act of taking a deckchair from a pile of deckchairs and sitting on it formed the contract where a local council hired deckchairs to people on its beach.

The offer was the placing of the pile of deckchairs that could be taken.

Cases where an invitation to treat was only established An invitation to treat is merely an indication of a willingness to start negotiations and is not an offer. Therefore a contract cannot be formed if only an invitation to treat exists.


Partridge v Crittenden

An advertiser in a newspaper advertised ‘bramble finch cocks and hens [£1.25]’ It was an offence under the Protection of Birds Act 1954 to offer wild birds for sale. The defendant was found not guilty as he did not offer the birds for sale; there was merely an invitation to treat

An advertisement for the sale of protected birds was not an offer because it was merely an indication of a willingness to enter negotiations.

Harvey v Facey In this case the claimants were interested in buying some land and sent a message, ‘Will you sell us Bumper Hall Pen [the land]? Send lowest cash price.' The defendants replied, ‘Lowest cash price for Bumper Hall Pen is £900.’ The claimants then replied, ‘We agree to buy Bumper Hall Pen for £900.

The court decided that there was not a contract as the original message was merely a request for information.



Gibson v Manchester City Council

The council’s response when asked by Mr Gibson whether he could buy his council house was, 'the corporation may be prepared to sell the house to you at the purchase price of £2,725 less 20 per cent. The word ‘may’ indicated a lack of certainty so there was not an offer.

The uncertainty showed that

negotiations were still continuing,

not that there was a readiness to

make a contract meant that there

could be no offer to sell.

Pharmaceutical Society of Great Britain v Boots Cash Chemists

The well-known high street shop was prosecuted for offering medicines for sale when a pharmacist was not present. This was an offence under the Pharmacy and Poisons Act 1933.

Boots were found not guilty as the

court decided that the offer was

made by the customer at the point

of sale, that is, the counter or

checkout till. This is reflected in

the practice of assistants in

pharmacies of seeking approval

from the pharmacist before selling

some medicines.

Fisher v Bell A shopkeeper in Bristol was prosecuted because he had a flick knife in his shop window with a price label on it.

The shopkeeper was found not

guilty, as he was not offering the

knife for sale. It was merely an

invitation to treat. Again it is a

logical decision as the

shopkeeper may wish to choose

the person to whom to sell the

goods.

Plan An offer is defined as.. Give brief examples but NOT one you use as a case An invitation to treat is… Give brief examples but NOT one you use as a case Explain 2 cases that are classed as an offer. Say why they are not an invitation to treat but an offer. Explain 2 cases that are classed as an invitation to treat. Say why they are not an offer but an invitation to treat.

Exam Question:

Jan 2010: Explain the distinction between an offer and an invitation to treat (7)


The offer must be communicated to the other party An offer cannot be accepted unless the person who is seeking to accept it knows of its existence. If the other person is not aware of the offer then it cannot be accepted. Potential purchasers who are responding to an invitation to treat and do not realise that they have failed to

communicate with the person making the invitation will have no legal claim as there is no contract.

Case Name

Brief facts Legal issue

Carlill v Carbolic Smoke Ball Co

Mrs Carlill claimed the reward offered by the Carbolic Smoke Ball Co. for anyone who used its smoke ball (a sort of medicinal vaporiser or inhaler) but caught influenza. The company refused to pay stating that the so-called offer of £100 was a mere marketing ‘puff’ and not intended to have any basis for a contract. Mrs Carlill argued that it was an offer, which she had accepted by buying and using the smoke ball in accordance with the instructions.

An advertisement could contain an offer if it was

clearly meant to be taken seriously and was not

just an advertising gimmick. The court also said

that an offer could be made to the whole world,

and that anyone hearing the offer could accept it:

it just had to have been communicated to the

individual claiming to have accepted it.

An offer can come to an end in one of five ways 1. Lapse of time: Some offers are made for a fixed period of time, such as seven days or one month. At the

end of that period, the offer lapses and comes to an end. Most offers do not have any fixed time limit and so will come to an end after a reasonable time. What is reasonable will depend on all the circumstances.

2. Revocation: A person who makes an offer can revoke (withdraw) his offer at any time before it has been accepted. For this to happen, the person to whom the offer was made must receive notification of the withdrawal, at which point he can no longer accept the offer. A withdrawal of an offer can even occur during any period when the offer is said to be open. Revocation can be implied by another’s actions. Once an offer for an object is accepted, it cannot be accepted again. However, where the offer has been made to more than one person, there are potential difficulties, as there could be two contracts with respect to one object. The Situation where one person wants an offer to remain open for a period of time is quite common as the time period is to be used for getting financial and other plans drawn up. So as to make sure that the offer will remain open, a separate contract has to be made. This is usually a contract to keep the offer open for an agreed fixed period in exchange for an agreed sum of money. This is known as ‘buying an option'.

3. Rejection: Once an offer is rejected, it cannot be accepted and the offer comes to an end. The person to whom the offer is made does not have a second chance to accept the offer. If he attempts to accept the offer he is in fact making a fresh offer that the person who originally made the offer can accept or reject. The rejection must be a clear rejection and not just a request for more information.

4. Counter-offer: A counter-offer both rejects the original offer and creates a new offer that can then be accepted or rejected. This commonly takes place during negotiations.


5. Death: In English law contracts can be enforced against a dead person’s estate, if necessary by suing the deceased's executors or administrators. However, an offer made by a person who dies before the offer ends cannot be accepted if the person to whom the offer is made knows of his death. If he does not know of the death, then the offer can still be accepted. This is logical as it could otherwise provide hardship for the family of a business owner who died, as contracts in the course of negotiation would have to be restarted.

Cases on offers and when they may come to an end

Way offer can end

Case Name Facts Legal point

Lapse of time

Ramsgate Hotel v Montefiore

Defendant offered to buy shares in the Ramsgate Victoria Hotel on 8 June. On 23 November, the company tried to accept the offer but the defendant no longer wanted to buy the shares.

An offer to buy shares in a company had lapsed when the company responded five months later. The person making the offer was entitled to assume that the company did not want him to invest as the length of time was unreasonable.

Revocation Routledge v Grant

Grant made an offer to buy Routledge’s house, the offer to remain open for six weeks. Grant decided not to buy the house three weeks later and told Routledge he was withdrawing his offer. Two weeks later Routledge tried to accept the offer.

The court decided that the offer had been withdrawn, so it could not be accepted. An offer can be revoked at any time even if it is said to be open for a fixed period that has not yet ended.

Dickinson v Dodds

Where Dodd’s offered to sell his house to Dickinson. The offer was open until Friday. On Thursday afternoon, Dickinson heard from someone else, whom he knew to be reliable, that Dodds had sold the property to someone else. On the Friday morning Dickinson delivered a formal acceptance to Dodds but the court decided that the offer made to Dickinson had been revoked on the Thursday when he heard of the sale of the house.

Where a reliable person informs the person to whom an offer has been that the offer has ended, it is as if the revocation of the offer had been made by the person who had made the offer. Hearing about the sale from a reliable source is the implied revocation of the offer.

Way offer can end

Case Name Facts Legal point

Rejection Stevenson v McLean

There was an enquiry from a person to whom goods had been offered for sale as to whether he could have two months' credit. There was no

An enquiry about whether credit was available did not reject the offer, which could still be accepted.


reply, so assuming that there would be no credit; he accepted the offer being prepared to pay cash.

The court decided that this enquiry about credit was not a rejection of the offer or a counter-offer and the offer remained open and had been accepted.

Counter offer

Hyde v Wrench

The facts of that case were:

6 June: Wrench offered to sell his farm to Hyde for £1,000. Hyde offered £950 9 June: Wrench rejected Hyde’s offer 21 June: Hyde tried to accept the offer to sell at £1,000. Wrench refused to sell at £1,000, as his original offer had ended with Hyde’s counter-offer of £950.

A counter-offer ends the

original offer. In this case this

occurred in negotiations over

the price to be paid for a farm.

(activity 4)

Plan: An offer is defined as… An offer must be communicated … An offer can come to an end in one of five ways. Explain 3 out of the 5 ways with one case on each.

Exam Question:

June 2010: Explain the ways an offer can come to an end (7)

lecture # 3 offer - vlc

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