Offer

Identification of a simple contract Offer and Acceptance An intention by the parties To form a legally binding agreement Consideration

Definition of Offer: An offer is an expression of willingness to contract on the specified terms without further negotiation, so that it requires only acceptance.

Invitation to Treat An offer must be distinguished from all other statements made in the course of negotiations towards a contract, which would be merely invitations to treat. An offer is a response to an invitation to treat. Only an offer which is capable of immediate acceptance can be a contract.

Definition of Invitation to Treat Statements indicating the maker’s willingness to receive offers. Any negotiating statement falling short of an offer which furthers the bargaining process.

Carlill v Carbolic Smoke Ball Co.[1892] This case involved an advertisement in a newspaper in which the defendants offered a reward. A reward of £100 would be paid to anyone who caught one of a number of specified diseases (including influenza) despite taking one of their smoke balls for a certain period, according to the instructions. Mrs Carlill, the claimant, bought one of the smoke balls, used it for more than the period specified in the advertisement, and according to the instructions, but still contracted influenza. She claimed the reward, but the defendants refused to pay. It was held that the advertisement constituted an offer, not an invitation to treat, and that as the offer had been accepted by the claimant, a contract had, therefore, been formed and she was entitled to the reward fund. This case requires to be examined in an activity.

Carlill v Carbolic Smoke Ball Co. A unilateral contract is a contract where one party (the promisor) binds itself to perform a stated promise upon performance of the requested act or condition by the promisee.

Carlill v Carbolic Smoke Ball Co. If a reward is advertised for the performance of a specified act, such as supplying information, that advertisement will constitute a unilateral offer, assuming the language is sufficiently clear. The acceptance is the performance of that act, not another promise.

Offer or Treat? For Sale: My Car - £500 Would you like to buy my car?

Communication Sufficiently specific in terms of the main obligation and price capable of immediate acceptance; and Made with an intention to be bound by the mere fact of acceptance.

Consensus ad idem Meeting of the Minds

Harvey v Facey [1893] In this case, the claimants sent a telegram to the defendants, which stated: ‘Will you sell us Bumper Hall Pen? Telegraph lowest cash price.’ Bumper Hall Pen was the name of the defendant’s farm. The reply from the defendants stated: ‘Lowest cash price for Bumper Hall Pen £900’ The reply to this from the claimants was: ‘We agree to buy Bumper Hall Pen for £900 asked for by you’

Harvey v Facey [1893] This last communication was not replied to and the property was not bought by the defendants. The claimants sued the defendants, arguing that a contract had been agreed, and that the defendants were legally bound to pay the agreed £900.

Harvey v Facey [1893] However, the court held in favour of the defendants, on the basis that the initial telegram was simply an inquiry to see if the owners of the property were willing to sell and to discover what their bargaining position would be. The reply was simply an indication of what the lowest price was, not an offer of a definite price. This reply, then, was not an offer, which was open for acceptance to form a legally binding contract, but was an invitation to treat, an invitation to further negotiations.

Harvey v Facey [1893] It might be argued that the decision in the case ignores the commercial realities of the situation in that where a party indicates the lowest price acceptable to him, the other party would hardly offer more. On the other hand, the defendants in this situation are entitled to say ‘I would not pay anything like £900 for the property, so I will take these negotiations no further; there is no point since the lowest offer that would be acceptable is too high for me.’

Typical instances of Invitation to Treat Advertisements, brochures, and price lists Shop displays Web sites Tenders Auctions

General Rule Advertisements, brochures, and price lists are only invitations to treat. Partridge v Crittenden Business Sense: an advertiser may not be able to supply everyone who responds.

Exceptions: If a catalogue is addressed to a small group of people or it was clear that unlimited supplies, all other things being equal, it could be an offer. Rewards: Carlill v Carbolic Smoke Ball Co.

If such an advertisement is to constitute an offer it must be clear and definite in its terms and leave nothing open for negotiation. It may also need to relate to a limited quantity of the specified goods. O’Brien v MGN Ltd [2002]

Shop Displays Fisher v Bell [1961]: Flick knives in a window with a price tag does not amount to offering. Pharmaceutical Society of GB v Boots [1952]: The customer offers to buy the goods at the check out, the shopkeeper accepts the price that has been displayed.

Practical application Shopkeeper’s have freedom to contract, i.e., the right to refuse to sell. If the offer was the display, then if the customer chose the item, it would be construed as an acceptance.

Tenders Request for tenders is normally an invitation to treat Except where to request can also constitute an offer: Contractual obligation to accept the most competitive bid Contractual obligation to consider tenders which conform to the bid conditions Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council.

Tenders Acceptance of a tender to supply a definite quantity during a specified time creates a binding contract. Only a firm order from the offeree constitutes a binding acceptance of a tender to supply goods which may be required. Great Northern Railway Co v Witham

Referential bids Example: £10,000 in excess of any other offer. Harvela Investments Ltd v Royal Trust Co of Canada [1986] These are not valid unless the invitation to tender expressly allows bids in that format.

Auctions An advertisement that an auction is to be held is not an offer to hold it and a request for bids at an auction is generally no more than an invitation to treat. Payne v Cave [1789]

Advertisements to hold auctions On a particular day are not offers. Harris v Nickerson [1873]. However,

Auction without a reserve This promise (no reserve) constitutes a unilateral offer. The unilateral offer is accepted by the highest bona fide bidder at the auction. Barry v Davies (Trading as Heathcote Ball & Co)[2000]

Communication Identify the applicable principle for communication Did this happen? If so, when?

Communication Sufficiently specific in terms of the main obligation and price capable of immediate acceptance; and Made with an intention to be bound by the mere fact of acceptance.

If you don’t know about an offer, you cannot accept it. Taylor v Laird [1856] – ship’s captain Williams v Carwardine [1833] - reward

Duration Offers do not continue indefinitely Lapse of time Ramsgate Victoria Hotel Co Ltd v Montefiore [1866]

Duration Death Failure of a condition precedent Coulthart v Clementson [1879] Failure of a condition precedent Financings Ltd v Stimson [1962]

Retraction (Revocation) of Offer The rule is that where an offer is withdrawn before it is accepted, it ceases to be open for acceptance. It does not matter how far advanced the negotiations are, as long as a final deal has not been reached, the offeror may withdraw his offer, and no contract will exist.

Revocation of Offer Revocation must be communicated to the offeree in order to be effective. This is generally taken to mean actual communication, and in the case of Henthorn v Fraser [1892], Lord Herschell referred to the need to have the withdrawal ‘brought to the mind of the person to whom the offer is made’.

Revocation An offer may be revoked anytime prior to acceptance. Payne v Cave [1789] Even if they promise to leave the offer open for a specific period of time. Routledge v Grant [1828] Pickfords Ltd v Celestica Ltd [2003]: a 2d offer sometimes revokes the 1st

Communicating the Revocation Can’t just change your mind. Must clearly state revocation: Byrne v Van Teinhoven [1880] Letters of revocation received but not read during office hours are considered received. The Brimnes [1975] Offeree just needs to receive notice: Dickinson v Dodds [1876]

Counter Offers Any response which seeks to vary any of the terms of the original offer. Hyde v Wrench [1840]

Requests for more information These are not counter offers. Stevenson v McLean [1880]

Society of Lloyds v Twinn [2000] It may be possible for the offeree’s response to constitute both an unconditional acceptance of the original offer and a counter offer of a collateral contract, the non-acceptance of which would not affect the validity of the main contract.

Battle of the Forms