OFFER AND ACCEPTANCE

OFFER= a willingness to contract on specified terms made with the intention that it will be
binding as soon as it is accepted.

1. Bilateral Offer= a promise for a promise- parties are immediately bound

2. Unilateral Offers= a promise for an act- offeror is bound as soon as the specific act is
performed

• Carlill v Carbolic Smoke Ball= no need to communicate acceptance to

the offeror – acceptance through performance

INVITATION TO TREAT (ITT)= preliminary statement, expresses a willingness to receive offers

1. ADVERTISEMENTS

• Partridge & Crittenden= an advert is an invitation to treat

• Carlill v Carbolic Smoke Ball **= offer. Unilateral offer waived the need for
communication of the acceptance – acceptance through performance.

2. SELF-SERVICE/WINDOW DISPLAYS

• Pharmaceutical Society of GB v Boots Cash Chemists= displays of goods on the shelf=

ITT. Offer to purchase is made at the cash desk by the customer and the shopkeeper
is free to reject or accept this.
• Fisher v Bell=shop display was ITT

3. AUCTIONS

• the lot itself and the auctioneer’s call for bids is an ITT
• British Car Auctions v Wright= the car hadn’t been offered for sale, there had only
been an ITT (bid)
• Sale of Goods Act 1979 s57(2)= A sale by auction is complete when the auctioneer
announces its completion by the fall of the hammer, or in other customary manner;
and until the announcement is made any bidder may retract his bid.
• in an auction without reserve however= an offer to sell to the highest bidder which is
accepted by the submission of the highest bid

4. INVITATIONS TO TENDER
 • person making the invitation isn’t bound to accept any responses (offers) to the
tender= Spencer v Harding
• An invitation to tender is usually an ITT, the submission of tender is usually an offer.

• However, if offeror states they will accept the highest or lowest offer, then tender will
be considered as either an offer or invitation to submit offers with the undertaking to
accept the most favourable, concluding the contract at the time the best offer is
communicated= Harvela Investments v Royal Trust of Canada
• Parties issuing these invitations to tender are bound to consider (though not
necessarily to accept) a tender properly submitted before the deadline= Blackpool
and Fylde Aero Club v Blackpool Borough Council

5. MERE STATEMENTS OF PRICE

• Where a party merely states the minimum price at which they would be willing to sell=
ITT= Harvey v Facey- there had been no offer, Facey’s statement merely a statement
of price.
• Gibson v Manchester City Council= council wrote saying that it ‘may be prepared to
sell’. Tenant completed application form but court this was an offer to buy in response
to the council’s initial letter which was an ITT
• Storer v Manchester City Council= court held that the form had specific character that
made it an offer rather than ITT, which tenant had accepted by signing and returning
it. The form of words used can render it sufficiently precise to be an offer capable of
acceptance.

COMMUNICATION OF OFFERS GENERAL RULES:

o in order to be valid, offer must be communicated to the offeree, no party can be bound by
an offer of which they were unaware= Taylor v Laird

o true for both unilateral and bilateral offers, offeree must have clear knowledge of the
existence of the offer for it to be valid= Inland Revenue Commissioners v Fry

o Carlill v Carbolic Smoke Ball= unilateral offers can be made to the world at large and may
be accepted by performing the conditions by anyone who had notice of the offer.

TERMINATION OF OFFERS= means the recession, annulling or withdrawal of an offer.

1. REVOCATION
 • Generally, the revocation may be made any time prior to acceptance of an offer and
it must be communicated to the offeree.
• Bryne v Van Tienhoven- the offer of 1 October had not been withdrawn at the time it
was accepted and therefore the contract was formed on acceptance on 11 Oct-
despite the lack of agreement between the parties. Offeror sent revocation on 8 Oct
but Offeree only received it on 20 Oct.
• Hyde v Wrench- possible for an Offeree to reject the offer and terminate it. Counter
offer= has the effect of rejecting the offer. The rejection must be communicated.
• Payne v Cave- in an auction acceptance happens when the auctioneer slams the
hammer and a offer can be revoked/withdrawn any time prior to this point.

2. LAPSE OF TIME

• Offeror may state a specific time or date, if nothing is specified then a reasonable time
must pass.
• Ramsgate Victoria Hotel v Montefiore= held that an offer would lapse after a
‘reasonable time’. What is reasonable depends on the offer and the subject matter of
the contract. in cases where the value of the subject matter could fluctuate rapidly e.g
shares, or its perishable then the offer would terminate after a short time.
• Quenerduaine v Cole= this applies to telegrams and similar expedient means of
communication such as telex
• Korbetis v Transgrain Shipping– communication of the acceptance must be done
within a reasonable time otherwise the offer will lapse.

4. DEATH OF ONE OF THE PARTIES

• Death of offeror: their personal representatives may still be bound if=

1. The contract does not involve personal services of the deceased.

2. The offeree is ignorant of the offeror’s death= Bradbury and Morgan

• Death of Offeree: the offer lapses and the offeree’s personal representatives will
be unable to accept on behalf of the deceased= Reynolds v Atherton
ACCEPTANCE= a final and unqualified expression of assent to the terms of an offer.

1. ACCEPTANCE MUST CORRESPOND WITH THE TERMS OF THE OFFER

This is the mirror image rule: an acceptance must mirror the terms of the offer. The problem
comes from the fact that the offeree sometimes isn’t accepting but making a counter-offer.

❖ COUNTER OFFERS

o are offers that introduce new terms or attempts to vary the terms proposed in the original
offer. A counter-offer destroys the original offer and the roles of offeror and offeree become
reversed and the original party can either, accept, or reject the new terms or make a counter
offer.

o Hyde v Wrench= counter offer impliedly rejected the original offer, which had now been
destroyed, it was no longer open for Hyde to want to go back and accept it.

❖ MERE REQUESTS FOR INFORMATION

o if a response is made to the offer which doesn’t attempt to vary the terms of the offer. it
is not a counter offer since it doesn’t reject the terms of the offer. Therefore, it’s still open to
acceptance by offeree.

o Stevenson, Jaques & Co v Mclean= a mere request for information is treated differently to
a counter offer. in this case it was only a mere inquiry which should have been answered and
not treated as a rejection of the offer.

❖ STANDARD FORM CONTRACTS

o Problems arise when one or both parties try and rely on pre-prepared contract forms in
relation to the general rule that the acceptance must correspond exactly with the offer. The
situation which arises where both parties attempt to rely on their standard terms is often
referred to as The Battle of the Forms

o acceptance is usually inferred by conduct and contract is usually concluded on the terms
of the last counter offer, this applies to the contract as a whole= Zambia Steel v James Clark

o Butler Machine Tool Co v Ex-Cell-O= radical and unlikely to be followed departure from
the strict offer/counter offer analysis was offered by Denning. He suggested:

1. T&Cs of both parties should be construed together if they can be reconciled together
to give harmonious result.
2. if differences are irreconcilable then conflicting terms may have to be scrapped and
replaced by reasonable implication
 • He argued look at the document which comes in last (last shot rule) and look at the
content of the documents and whether the main issues have been agreed to.

2. ACCEPTANCE MUST BE GIVEN IN RESPONSE TO THE OFFER

• Upton RDC v Powell– established that acceptance must be in response to an offer.

3. THE ACCEPTANCE MUST BE MADE IN THE APPROPRIATE METHOD

1. stipulated forms of acceptance

• acceptance can take any form as long as it’s communicated to the offeree except in
the case of a unilateral offer.
• BUT where the offer stipulates a particular method of acceptance, if the offeree uses
a different method then there may be no contract, especially if offeror stipulates
clearly that it’s the only method of acceptance that will be sufficient= Eliason v
Henshaw.
• Tinn v Hoffman: if the offeree uses an equally expeditious method of acceptance then
that should be sufficient.

4.THE ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR.

1. COMMUNICATION OF ACCEPTANCE

General rule: an acceptance has no effect until it is communicated to the offeror. Entores v
Miles Far East Corporation– Denning gave an analogy of a plane flying overhead.

a) ACCEPTANCE BY CONDUCT

• acceptance may be inferred from conduct without it being expressly communicated.

However, the conduct must refer to the offer and be identifiable as acceptance of the
offer terms. Brogden v Metropolitan Railway
• Day Morris v Voyce- conduct will only amount to acceptance only if it is clear that the
offeree intended to accept the offer.

b) SILENCE DOESN’T AMOUNT TO ACCEPTANCE

• Silence can never constitute acceptance.

• Felthouse v Brindley= held there was no contract since nephew never communicated
intention to accept or done anything to bind himself.
c) POSTAL RULE

• This is an exception to the general rule. It only applies to Acceptance. The general
postal rule is that acceptance takes effect upon posting rather than delivery.
• Adams v Lindsell= court held the contract was made at the time the letter was posted.

For the rule to apply:

1. Acceptance by post must have been requested by offeror, or it must be a normal,

reasonable, or anticipated means of acceptance- Henthorn v Fraser.
2. letter must be properly stamped and addressed= Re London & Northern Bank ex
parte Jones
3. Letter must be posted– so i.e in the control of the Post Office= Brinkibon v Stahag
Stahl.
4. the rule must not have been expressly excluded in the offer= Holwell Securities v
Hughes- required notice in writing to reach the offeror so the parties could not rely
on postal rule
5. use of the rule must not create manifest inconvenience or absurdity– Holwell
Securities.

❖ INSTANTANEOUS COMMUNICATION OF ACCEPTANCE

• Since its development, the postal rule has become irrelevant in some situations due
to advances in communications technology. The general rule here is that acceptance
takes place when and where the acceptance is received. = Entores v Miles Far east
Corp.
• Brinkibon v Stahag Stahl– an acceptance was sent by telex out of office hours.
Therefore, acceptance would only be effective when the office reopened.
• Lord Wilberforce= no universal rule can cover all cases. they must be resolved by
reference to the intention of the parties, sound business practice and in some cases
by a judgement where the risk should lie.