Offer and Acceptance

Offer and Acceptance

1. offeror = person who makes a legally identifiable offer

2. offeree = person to which the offer is made

3. agreement = legally binding?

4. ingredients to an offer

   • a clear display of contractual intent
   • on terms that are fixed
   • on terms that are certain
   • on terms that once accepted automatically bind both parties to their agreement

5. contractual intent

   • clear display of contractual intent
   • the offeror must display a clear intention to be bound in a legal relationship
     • if not it will be interpreted as an invitation to treat
       • a declaration that the party is open to the negotiation process
       • lacks contractual intent
         • vague statements where no reasonable person would think they displayed an intention to be bound
   • assessing
     • objective approach - look at the words used
       • storer v manchester city council (1974)
         • how the words were percieved by an objective party
         • if the offeror acts in such a way that the reasonable man would conclude that the offeror has an intention to be bound then the courts will find such contractual intent even if the offeror had no such intent at all
         • supported by first energy (uk) ltd v hungarian international bank ltd 1993
           • honest man must be protected
   • distinguishing an offer from an invitation to treat
     • offer displays a clear intention to be bound
     • invitation to treat is an indication that the party is open to negotiations
     • gibson v manchester city council 1979 & storer v manchester city council
       • gibson - the claimant enquired as to whether he could purchase the council house that he lived in - the council sent a letter stating 'may be prepared to sell the house to you' at a fixed price - shorty after the council switched and the house was withdrawn from market.
         • house of lords held this was only an invitation to treat - the words displayed no contractual intent and were only an invite for mr gibson to make an offer
       • storer - same agreement as gibson however letter was received labelled 'agreement for sale' - the claimant signed and returned the doc before the political control of the council had changed
         • the court of appeal held that the letter was an offer which the claimant had accepted before the property was withdrawn from the sale
     • use of presumptions
       • display of goods
         • pharmaceutical society of great britain v boots cash chemists 1953
           • boots charged with infringing s.18(1)(a)(3) of the pharmacy and poisons act 1933 which req the sale of proscibed poisons to be 'effected by or under the supervision of a registered pharmacist'
           • court of appeal held that the display of goods was an invitation to treat. It was the customer who made the offer which was accepted at the cashier when the items were presented at the cash desk
             • it was at this point that the transaction was supervised by the pharmacist and therefore there was no infringement of the act
         • problems with the decision in boots
           • american case - lasky v economy grocery stores
           • clashes with consumer protection legislation eg trade descriptions act 1968
         • display of goods in a shop window
           • fisher v bell 1961
             • charged with offering for sale a flick knife in his shop window under the restriction of offensive weapons act 1959 however it was held that the display was an invitation to treat not an offer so sale
           • if the display of an item were seen as an offer the shop keper would lose his right to refuse sale to anybody who accepted
           • argument of quantity - shopkeeper may have only a limited stock of that item and if a customer saw and demanded a sale even if stock was exhausted he would be in breach on contract if he refused.
       • advertisements
         • general rule is that they are invitations to treat
         • partridge v crittenden 1968 - the defendant placed an advertisement in the periodical cage and aviary birds, under the heading classified advertisements - stating - bramble finch cocks, bramblefinch hens 25s each - mr thompson saw the advertisement and requested a bird and subsequently mr partridge was charged with offering for sale a wild bird contrary to protection of birds act 1954
           • high court held that the ad was an invitation to treat
         • multi acceptance issue
           • grainger and son v gough (surveyor of taxes) 1896 - transmission of a price list does not amount to an offer to supply - if this were so the merchant might find himself involved in any number of contractual obligations which he may not be able to carry out (parker)
         • advertisements from manufacturers
           • position may be different - as they can respond to no of orders by making more, therefore eliminating the limited stock problem
             • not general rule - all factors are taken into consideration
         • advertisements construed as offers
           • carlill v carbolic smoke ball co ltd 1893 - def placed an advertisement in newspaper advertising their carbolic smoke ball a device that was claimed to cure many common ailments.
             • the advert specifically promised that ' £100 reward will be paid to any person who contracts the increasing epidemic influenza...after having used the ball 3 times daily for two weeks according to the directions given on the ball. £1000 is deposited into a bank showing our sincerity in the matter'
             • used the ball as prescribed but caught influenza however the company refused to honour their promise saying it was a mere puff - that no reasonable person would take as displaying any contractual intent
               • court of appeal held that it was an offer as they had deposited money into bank (evidence) and it was reasonable to believe this was therefore an offer
           • lefkowitz v great minneapolis surplus stores inc (1957) - defendant placed advertisement in a news paper - sat 9am sharp 3 brand new fur coats worth $100.00 first come first served. $1 each. - the claimant saw the advertisement and was the first person to enter the store on the sat morning however the store refused to sell him a fur coat relying on the argument that it only intended to sell the coats to woman (no restriction in advertisement) - the supreme court held that the advertisement had been an offer as it had been clear and definite. (the problem of multi acceptance is avoided as the store specified they only had 3)
       • auctions
         • without reserve
           • the auctioneer undertakes to sell the item to the highest bidder - acts as an agent to the owner and the bidder
           • offer is made by a person making a bid (payne v cave 1789)
             • offer is accepted wjem tje auctioneer's hammer falls - a person may with draw his bid before this. generally there is no obligation to accept the offer however in this situation there will be a separate contract between the auctioneer and the highest bidder ( warlow v harrison 1859. - if the auctioneer refuses to accept the highest bidder he will be in breach of this implied obligation and will be in breach of the contract to the bidder
           • barry v davies 2000- in this case owners of 2 machines instructed the defendants to auction these machines without reserve - the machines had a market value of 14,000 each. at auction they went for 200 however the auctioneer withdrew the machines from sale and sold them for more - the court held the auctioneer had breached a collateral contract between him and bidder as he had an obligation to accept the highest bid. so the bidder was awarded damages - if the owner withdraws the item he is not in breach of contract
         • with reserve
           • minimum price to the auctioner - if this price is not met at auction the auctioneer has no obligation to sell the item to the highest bidder
             • if they do they will be in breach of contract with the owner of the goods
         • advertisement of an auction
           • if an ad states that an auction will be held on a particular day then potential bidders claim for breach of contract if the auction does not take place the potentiial bidders claim for breach of contract if the auction does not take place or items are withdrawn??*
           • harirs v nickerson 1872-73 - claimant travelled to an auction on the strength of an advertisement intending to bid for certain items - which had in fact been withdrawn and the claimant tried to claim for loss of time and travel expenses. the court held that it was an invitation to treat
       • tenders
         • similar to auctions - a person may seek specific goods or services and will put the job or service out to tender
           • by doing so the individual is making a request will be seeking that people submit offers in response
             • the request for tender is an invitation to treat - the response to this will be an offer - the person making the request will then be able to accept the offer that meets his requirements
         • harvela investments v royal trust co of canada 1986 - the first defendants sought to sell their shares in a company by tender with the intention that they would accept the highest offer - the plaintiff made an offer of 2175000 the second defendants made an offer of 2100000 or in 101000 in ecess of any other offer which ever is the highest - this type of offer is known as a referential bid, the first defendants offered the referential bid. the hol held that the highest offer was the plantiff as it was a fixed bidding offer and these made the highest offer
         • blackpool and fylde aero club v blackpool bc 1990 - the council made it clear that it would consider all tenders submitted before the specified deadline - the aero club posted the tender in the town hall post box before the deadline however it was not emptied that day therefore it was late - it was held that the request for tender was an invitation to treat so there was no obligation to accept any of the tenders submitted however the req also contained a collateral offer to consider all bids received by the deadline which the club had accepted before the deadline the collateral contract was therefore breached when the council failed to consider the clubs bid.
         • automated machines
           • thornton v shoe lane parking - acceptance takes place when money entered and product selection made
           • internet transactions
             • customer makes the offer - normally terms and conditions

6. acceptance

   • unequivocal acceptance
   • counter offers
     • the offer and acceptance must match - if the offeree tries to into new terms to the offer or vary the terms it will not constitute as an acceptance - this is considered a counter offer - is not an acceptance and has the effect of destroying the origiional offer
     • hyde v wrench 1840 - the defendat offered his land for sale £1000 the plaintiff responded by offering £950 which was rejected by the defendant - the plaintiff then sought to accept the defendants offer of £1000, it was held that by making an offer of £950 the plaintiff had rejected the origional offer and had replaced this offer with another, as the new offer was rejected by the defendant there was no contract. it was not possible for the dfendant to revive the defendants origional offer of £1000 as that offer has been destroyed and a new offer subbed. the new counter offer was the only offer capable of being accepted.
     • counter offer is only one which can be accepted however both parties can make these and it can turn into quite lengthy process
   • request for information
     • must be distinguished from a counter offer
     • stevenson v mclean 1979-80 - defendants offered to sell a quantity of steel to plaintiffs at 40s per ton. the plaintiffs responded by enquiring as to whether the defendants would accept 40s for delivery over 2 months or if not what would be the longest time they would give. it was held that the response from the plantiffs was a req for info as the intention of the ofere was not to seek new terms into the offer
   • cross offers
     • both parties make the same offer in ignorance of the others offer
       • either party is free to accept the others offer however until this stage there will be no contract
         • obiter authority - tinn v hoffman 1873
   • statement of min price
     • harvey v facey 1893 - the plaintiff sent a telegram to the defendant stating - will you sell bumper hall pen? telegraph lowest price? - the def replied stating that his lowest price was £900, - the court held that there was no contract here as the defendants response was neither an offer or an acceptance
   • battle of the forms
     • last shot principle
       • british road services ltd v arthur crutchley and co 1968
       • the party which sought to intro their standard terms the latest will prevail
     • butler machine tool co v ex-cell-o corp 1979 - the plaintiffs offered to sell some machinery to the defendants for £75,535, the plaintiffs sought to impose their standard terms which includd price variation clause, the defendants sought to accept and impose their own standard terms- which did not include the clause, the plaintiffs completed and signed a tear off slip stating they accepted the def terms, the court of appeal held it was the def terms that prevailed as they had rejected the def offer and offered a counter offer which the plaintiff signed and returned.
   • when is acceptance effective
     • acceptance must be communicated to the offeror
     • the postal rule
       • when an acceptance is sent by post the general rule is that acceptance will become effective when it enters the postal system
         • adams v lindsell 1818 - the def wrote to the plaintiffs offering wool for sale however the letter sent was misaddressed and as a result the delivery of the letter to the plaintiffs was delayed. the plaintiffs posted an acceptance on the same day that they received the offer, the plaintiffs posted an acceptance on the same day that they recieved the offer before the plaintiffs acceptance arrived the defendants sold the wool to another party - the court held that the paintiffs acceptance was effective before the wool was offered to another party, the defendants were in breach of contract when they sold the wool to another.
       • even if offer never reaches person
         • household fire insurance co ltd v grant 1878-79
       • limitations to the postal rule
         • must be reasonable to use the post as a method of acceptance
           • henthorn v fraser 1892
           • exceptions eg - if offeree knows there is going to be a delay because of a postl strike for example.
         • the letter of acceptance must be properly posted
           • getreide importgesellschaft mbh v contimar 1953 - the plaintiffs entered into the contract with the def to purchase a quantity of wheat - the contract was governed by a clause req all disputes arising out of contract were to be referred to arbitration - a right of appeal following the arbitration process was available provided notice of an intention to appeal was given to the other part in 14 days of date of award. july 30 1952 award was made in favour of plaintiffs and on aug 12 the def notified the plaintiffs of their intention to appeal. however whilte the letter was addressed to the town in which the plaintiffs carried on business the address gave the wrong company and steet name as a result the letter was delivered to the wrong company and eventually forwarded to the plaintiffs but arrived after the 14 day notice period - the court held that the notice had not arrived in time so was ineffective.
           • effective at time least favourable to party - korbetis v transgrain shipping bv 2005