OFFER
Offer is a proposal made by one party to another to enter into a
legal contract . The offer must be clear and definite . showing
the intention of the offeror ( the person making the offer ) to be
bound by the terms.
● To be effective an offer must be communicated: there can
be no acceptance of the offer without the knowledge of the
offer.
● There can be no ‘ meeting of minds’ if one mind is unaware
of the other.
Carlill v Carbolic Smoke Ball Co (1893):The company
advertised a product claiming it could prevent influenza and
promised to pay £100 to anyone who caught the flu after using it
as directed. The court held that the advertisement constituted a
valid offer, as it was clear, specific, and demonstrated an
intention to create a binding contract.
Hyde v Wrench (1840):
Summary: In this case, Wrench offered to sell his farm to Hyde.
Hyde's response included a counter-offer, which Wrench
rejected. The court ruled that a counter-offer nullifies the
original offer, meaning Wrench was not bound to sell to Hyde.
Harvela Investments Ltd v Royal Trust Co of Canada Ltd
(1986):
Summary: This case involved a property bid where one party
submitted a conditional bid based on another bid. The court
ruled that offers must be clear and unconditional, affirming that
Harvela’s fixed bid was valid.
ACCEPTANCE
It is the agreement by the other party ( the offeree ) to the terms
of the offer. Acceptance must be communicated by the offeror
and must mirror the terms of the offer exactly ( known as the
mirror image rule )
● The general rule is that acceptance is not effective until it is
communicated to the offeror.
● Acceptance can not be made through silence Felthouse v
Bindley (1862)
Entores Ltd v Miles Far East Corporation (1955):
Summary: This case involved a contract negotiated via telex.
The court held that acceptance must be communicated to the
offeror, and in this case, the acceptance was effective when
received by the offeror.
Hyde v Wrench (1840):
Summary: As mentioned above, this case also illustrates
acceptance. Hyde's counter-offer constituted a rejection of
Wrench's original offer, demonstrating that acceptance must be
clear and unambiguous.
Felthouse v Bindley (1862):
Summary: In this case, Felthouse attempted to accept an offer
by saying "if I hear no more, I shall consider it mine." The court
ruled that silence cannot constitute acceptance unless explicitly
stated, highlighting the need for clear communication.
INVITATION TO TREAT:
An invitation to treat is a legal concept in contract law that
refers to an invitation for others to make an offer. It is not an
offer itself, but rather a preliminary stage in the negotiation
process.
● DISPLAY OF GOODS: Items displayed in a shop window
or on shelves with price tags are typically seen as
invitations to treat. Customers are invited to make an offer
to purchase the items.
● ADVERTISEMENT : General advertisements are usually
invitations to treat, encouraging customers to make offers.
However, if an advertisement is specific and clear (like a
reward offer), it may be considered an offer.
LEGAL PRECEDENT:
Pharmaceutical Society of Great Britain v Boots Cash
Chemists (1953): This case established that the display of goods
in a shop is an invitation to treat, and the contract is formed
when the cashier accepts the customer's offer to buy.
Fisher v Bell (1961): The court ruled that displaying a flick
knife in a shop window was an invitation to treat, not an offer
for sale.
Chapelton v Barry UDC (1940):In this case, a council
displayed deckchairs for hire with a sign. The court held that the
display was an invitation to treat, and the contract was formed
when the customer paid, not merely by the display of the chairs.
UNILATERAL OFFER:
A unilateral offer is a type of offer where one party makes a
promise in exchange for the performance of an act by another
party.
● One-Sided Promise: Only the offeror (the person making
the offer) is bound to fulfill their promise once the offeree
(the person receiving the offer) performs the specified act.
● Acceptance by Performance: The offeree accepts the offer
by completing the act required by the offeror. No formal
acceptance is needed; the act itself signifies acceptance.
● Clear Terms: The terms of the unilateral offer must be
clear and specific so that the offeree knows what is
expected to accept the offer.
Carlill v Carbolic Smoke Ball Co (1893):The company
advertised that it would pay £100 to anyone who used their
product and still caught influenza. Mrs. Carlill used the product
and caught the flu, and the court held that the advertisement
constituted a unilateral offer. Her act of using the product was
considered acceptance.
Payne v Cave (1789): In this case, a bidder at an auction
retracted his bid before the auctioneer accepted it. The court
ruled that the bid was an invitation to treat, but acceptance
occurred when the auctioneer accepted the highest bid. This
establishes the nature of unilateral offers in auction scenarios.
Errington v Errington Woods (1952): A father promised to
give a house to his son if he paid off the mortgage. The court
ruled that once the son began making payments, he accepted the
unilateral offer, and the father was bound by his promise.
BILATERAL CONTRACT: A bilateral contract is a type of
agreement where both parties make mutual promises to each
other. In this contract, each party is both an offeror (the one
making the promise) and an offeree (the one receiving the
promise). Essentially, both parties agree to do something or
refrain from doing something.
● Mutual Promises: In a bilateral contract, both parties
promise to perform a specific action. For example, one
party promises to deliver goods, while the other promises to
pay for them.
● Two-Way Agreement: Since both parties are involved in
making promises, both must fulfill their obligations for the
contract to be executed successfully.
● Formation: The contract is formed when the parties agree
on the terms, and both accept those terms, often through
verbal or written communication.
Routledge v Grant (1828): In this case, Grant offered to sell his
house to Routledge and allowed him six weeks to accept the
offer. Before Routledge accepted, Grant changed his mind and
sold the house to someone else. The court held that the offer was
not binding because it was not accepted within the specified
time frame, illustrating the importance of mutual agreement in
bilateral contracts.
Byrne & Co v Leon Van Tienhoven & Co (1880): In this case,
a seller offered to sell goods to a buyer, then changed his mind
before the buyer accepted. The court ruled that the offer could
not be revoked once the buyer had posted his acceptance,
demonstrating that both parties must adhere to their promises
once acceptance is communicated.
Dickinson v Dodds (1876): Here, Dodds offered to sell his
property to Dickinson, but before Dickinson could accept,
Dodds sold it to someone else. The court held that there was no
binding contract because the offer was revoked before
acceptance, emphasizing the necessity of mutual consent in
forming a bilateral contract.
THE POSTAL ACCEPTANCE RULE:
The postal acceptance rule is a legal principle in contract law
that states that an acceptance of an offer becomes effective when
it is posted, rather than when it is received by the offeror. This
rule applies specifically to communication made via post (mail)
and is important for understanding when a contract is formed.
● Timing of Acceptance: According to this rule, once the
offeree (the person accepting the offer) has posted their
acceptance, it is considered valid, even if the offeror (the
person making the offer) has not yet received it.
● Reasonable Method of Communication: The postal rule
applies only if the postal service is a reasonable method of
communication. If the offer specifies a different method
(like email), that method must be used.
● Protection for the Offeree: This rule protects the offeree
by allowing them to know that their acceptance is effective
as soon as it is sent, eliminating uncertainty about whether
the acceptance has been communicated.
Adams v Lindsell (1818): In this case, the defendants (Lindsell)
sent an offer to sell wool to the plaintiffs (Adams), but the letter
was delayed in the post. Adams posted their acceptance, but
Lindsell had already sold the wool to someone else by the time
they received the acceptance. The court held that a contract was
formed when Adams posted the acceptance, not when Lindsell
received it.
Household Fire Insurance Co v Grant (1879): In this case, a
company sent a letter of acceptance for a share application. The
letter got lost in the post, and the applicant believed he had not
entered into a contract. The court ruled that the contract was
valid because acceptance was complete when the letter was
posted.
Byrne & Co v Leon Van Tienhoven & Co (1880):This case
involved an offer that was revoked before the acceptance was
received. The court ruled that acceptance was effective when
posted, and since the acceptance was sent before the revocation
was communicated, a contract was formed.
METHODS OF ACCEPTANCE
The method of acceptance refers to the way in which an offeree
(the person accepting an offer) communicates their acceptance
of an offer to the offeror (the person making the offer). The
method can vary depending on what the offeror specifies or the
nature of the agreement.
● Express Acceptance: This occurs when the offeree
explicitly communicates their acceptance, either verbally or
in writing. For example, saying "I accept your offer" or
signing a contract.
● Implied Acceptance: Acceptance can also be implied
through actions. If someone performs the act requested in
the offer, it can indicate acceptance. For example, if a
person starts working after being hired, their actions imply
acceptance of the job offer.
● Specified Method: Sometimes, the offeror will specify
how they want the acceptance to be communicated (e.g.,
via email, phone, or in writing). In such cases, the offeree
must use the specified method to create a valid contract.
● Silence as Acceptance: Generally, silence does not
constitute acceptance. However, in certain situations (like
previous dealings), silence may be interpreted as
acceptance.
Foley v Classique Coaches Ltd (1934): In this case, the court
held that an agreement was formed when both parties acted in
accordance with the terms of the agreement, even if not all
details were explicitly agreed upon. The actions of the parties
indicated acceptance of the terms.
Routledge v Grant (1828): In this case, the defendant made an
offer to sell a house and allowed the plaintiff time to accept. The
plaintiff's acceptance, sent by post, was invalid because the offer
was revoked before it was received. This case highlights that
acceptance must align with the offeror's specifications.
THE END OF AN UNACCEPTED OFFER
An unaccepted offer is an offer that has not been accepted by
the offeree (the person to whom the offer is made). An
unaccepted offer can end or become invalid in several ways.
Understanding how and when an offer ends is important in
contract law.
● Revocation: The offeror (the person making the offer) can
withdraw the offer at any time before it is accepted. The
revocation must be communicated to the offeree.
● Expiration: An offer can have a specific time limit. If the
offeree does not accept the offer within that time frame, the
offer automatically expires.
● Rejection: If the offeree explicitly rejects the offer, it ends
immediately. A counter-offer made by the offeree also acts
as a rejection of the original offer.
● Death or Insanity: If the offeror dies or becomes mentally
incapacitated before the offer is accepted, the offer ends
unless it is a part of an ongoing contractual obligation.
● Illegality: If the subject matter of the offer becomes illegal
after the offer is made, the offer is automatically
terminated.
Hyde v Wrench (1840):
In this case, Wrench made an offer to sell his farm, which Hyde
attempted to accept with a counter-offer. The court ruled that the
original offer was terminated by the counter-offer, illustrating
how an unaccepted offer can end through rejection.
Dickinson v Dodds (1876):
Here, Dodds offered to sell his property to Dickinson but sold it
to someone else before Dickinson accepted. The court held that
the offer was effectively revoked when Dickinson learned of the
sale, demonstrating revocation of an unaccepted offer.
Byrne & Co v Leon Van Tienhoven & Co (1880):
In this case, an offer was revoked after the offeree had already
posted their acceptance. The court ruled that the revocation was
not effective until received, highlighting the importance of
communication in ending an offer.
CHANGE OF MIND
Change of mind refers to a situation where a person who has
made an offer or entered into an agreement decides to alter their
position or withdraw from the initial decision. This can occur in
various contexts, including contract law, personal relationships,
and business dealings.
● Offers: When someone makes an offer (e.g., to sell a
product), they might change their mind about the terms or
withdraw the offer before it is accepted. This is often
referred to as revocation.
● Acceptance: Once an offer is accepted and a contract is
formed, a change of mind by either party does not
automatically invalidate the agreement. Instead, the parties
are bound by the terms of the contract unless they mutually
agree to modify or terminate it.
● Communication: For a change of mind to be effective, it
often must be communicated clearly to the other party. For
instance, if an offeror decides to revoke their offer, they
must inform the offeree before acceptance.
● Legal Implications: In contract law, a change of mind can
lead to legal consequences, especially if one party relies on
the initial offer or agreement. Courts may enforce the
original terms if the change is deemed unfair or if it causes
harm to the other party.
Routledge v Grant (1828): In this case, Grant offered to sell a
house to Routledge and allowed him time to accept. Before
Routledge accepted, Grant changed his mind and sold the house
to someone else. The court held that the offer was effectively
revoked when Routledge was informed that the house had been
sold, illustrating how an offer can be revoked before acceptance.
Payne v Cave (1789): This case involved an auction where
Payne made a bid on an item. Before the auctioneer accepted the
bid, Cave (the bidder) changed his mind and withdrew his bid.
The court ruled that a bid can be revoked before acceptance,
showing that a change of mind can terminate an offer.
Boulton v Jones (1857): In this case, Jones attempted to accept
an offer from Boulton without knowing that Boulton had sold
the business to someone else. The court held that the offer was
no longer valid due to Boulton's change of mind regarding the
sale, demonstrating that the offeror's status can affect
acceptance.
