English Law of Contract Offer, Acceptance etc. (Part I) September 12 th and 14 th 2007 Research Fellow Herman Bruserud

I. Introduction Today and September 14 th : Offer, Acceptance etc. (formation issues) The plan of the lectures –Focusing on the main features –Some comparative remarks to illustrate similarities to, and differences from, Norwegian law of contract

II. Offer and Acceptance – introductory remarks What needs to be apparent to constitute an enforceable agreement (i.e. a contract)? –Agreement (Today and Friday) –Sufficient certainty (Friday) –Intention to create legal relations (Friday) –Consideration (Bygrave) –Other formation issues will not be dealt with in the lectures The objective approach –The existence of agreement and intention are determined on the basis on external evidence – would a reasonable man say that the parties were in agreement?

II. Offer and Acceptance – introductory remarks (cont.) The objective approach (cont.) ”In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a 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.” (Lord Denning in Storer v Manchester City Council) ”the governing criterion is the reasonable expectation of honest men” (Steyn LJ in Trentham Ltd v Archital Luxfer Ltd)

II. Offer and Acceptance – introductory remarks (cont.) The relevance of (purely) subjective elements to the question of formation –Where the promisee knows or (ought reasonably to know) that the promisor did not intend to make an offer (on those terms) Comparative remarks: What is broadly speaking the general criterion for deter- mining the existence of a contract under Norwegian law?

II. Offer and Acceptance – introductory remarks (cont.) Bilateral and unilateral contracts OfferorOfferee OfferorOfferee Bilateral contracts: Unilateral contracts: Obligations subject to acceptance of offer from offeree Obligations subject to acceptance of offer from offeree Obligations subject to performance of condition stated in offer by offeree Performance of condition stated in offer Distinction: Is it only possible to respond to the offer – thus imposing obligations on the offeror – by performing the condition? Comparative remarks: Distinction in Norwegian law?

II. Offer and Acceptance – introductory remarks (cont.) What needs to be apparent to constitute an agreement – the traditional approach OfferorOfferee Communication of Offer Communication of Acceptance Q1 Q2 Q3 Offer Corresponding Acceptance

III. Offer What constitutes an offer? –Expression of willingness to contract on specified terms without further negotiations: The offer must be sufficiently specific Intention to be bound Offer Q1 Corresponding acceptance Agreement Not invitations to treat (i.e. to make an offer) (or negotiate) or mere supply of or request for information Offers, invitations to treat (or negotiate) and supply of or request for information must be distinguished We will come back to the general issues on certainty and intention to be bound later

III. Offer (cont.) What constitutes an offer? (cont.) –General example of distinction: Offer Q1 “may be prepared to sell the house to you” (Gibson v Manchester City Council) “if you will sign the Agreement and return it to me, I will send you the Agreement signed on behalf of the (…) in exchange” (Storer v Manchester City Council)

III. Offer (cont.) Offerinvitation to treat - examples –Advertisements, brochures and price lists Partridge v Crittenden and Granger & Sons v Gough – limited stock argument Unilateral advertisement –Advertisement of reward for performance of specific act or condition constitutes an offer if it is sufficiently definite –Carlill v Carbolic Smoke Ball Co. and Bowerman v ABTA Ltd Offer Q1

III. Offer (cont.) Offerinvitation to treat – examples (cont.) –Shop displays (shop windows, self-service shelves) Fisher v Bell (Shop window) Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (self-service shelves) Policy arguments –Shopkeepers freedom of contract –Practical consequences Offer Q1

III. Offer (cont.) Offerinvitation to treat – examples (cont.) –Tickets and timetables Unclear case law Denton v GN Railway, Wilkie v London Passenger Transport Board, Thornton v Shoe Lane Parking Ltd –Web sites Generally (probably) invitations to treat – see Poole pp –Tenders Request for tenders are normally invitations to treat (Spencer v Harding) Offer Q1

III. Offer (cont.) Offerinvitation to treat – examples (cont.) –Tenders (cont.) Exceptions –Contractual obligation to accept most competitive bid – express or implied (Harvela Investments Ltd v Royal Trust Co. of Canada (CI) Ltd) Offer Q1 Offeror Offer = Invitation to submit tenders (Content of promise = Accept the highest bid and to abide by the other tendering conditions) Offeree Condition to be performed = Submitting of the highest bid Unilateral contract comes into existence

III. Offer (cont.) Offerinvitation to treat – examples (cont.) Exceptions (cont.) –Contractual obligation to consider conforming tenders – express or implied (Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council) Offer Q1 Offeror Offer = Invitation to submit tenders (Content of promise = Consider all conforming bids) Offeree Condition to be performed = Submitting of conforming bid Unilateral contract comes into existence

III. Offer (cont.) Offerinvitation to treat – examples (cont.) –Auctions Generally (Harris v Nickerson) –Advertisement that an auction is to be held does not constitute an offer –Request for bids at an auction is no more than an invitation to treat »The bid is the offer and the fall of the hammer is the acceptance (Payne v Cave) Offer Q1 Sale of Goods Act 1979 s. 57 (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.”

III. Offer (cont.) Offerinvitation to treat – examples (cont.) –Auctions (cont.) Auctions without reserve Offer Q1 Promise to: Sell to the highest bidder Not applying reserve price Not allowing the vendor to bid Offer = Invitation to bid (on an auction without reserve) (Content of promise = Sell to highest bidder, not reserve prices, no vendor bids) Condition to be performed = Submitting of the highest bid Unilateral contract comes into existence

III. Offer (cont.) Offers mere supply of or request for information –Harvey v Facey Unilateral offers –The general criteria must be met –Two types of offers To an (or several) identified individual(s) To the public at large or to a class of persons Offer Q1

III. Offer (cont.) Termination of offer –To be capable of acceptance an offer must be current – must not be terminated before acceptance –Lapse of time Express limitation in the offer Indefinite offers –Terminates after a reasonable time (Ramsgate Victoria Hotel v Montefiore) –Failure of condition precedent An offer may be expressly or impliedly conditional on occurrence or non-occurrence of events Offer Q1

III. Offer (cont.) Termination of offer (cont.) –Death May terminate an offer –Death of offeror »Offer of personal service by the offeror (exclusive skill) »Where substitute performance is available – notice of death –Death of offeree »Unclear case law »Poole suggests: Can probably be accepted by the offeree’s representatives if the offer is of a non-personal nature Offer Q1

III. Offer (cont.) Termination of offer (cont.) –Revocation (withdrawal) An offer may be revoked expressly or impliedly –General rule: Offeror may revoke offer until it is accepted by the offeree Firm offers –A firm offer promise is unenforceable unless supported by consideration (Routledge v Grant) Offer Q1 Comparative remarks: Can offers generally be revoked under Norwegian law?

III. Offer (cont.) Termination of offer (cont.) –Revocation (cont.) Unilateral offers –Special difficulties while the performance of the condition represents the acceptance –The availability of the power to revoke the offer until the offer is accepted can potentially cause hardship »Some authority indicates that the power to revoke might be lost where (the offeror has notice that) an offeree has unequivocally embarked upon performance – but conceptual difficulties: Offer Q1 Acceptance upon commencement? Promissory estoppel? Collateral Contract?

III. Offer (cont.) –Rejection by the offeree A rejection expressly or impliedly causes the original offer to lapse Rejection by counter-offer –A counter-offer will prevent the offeree from later changing his mind – can not accept the original offer (Hyde v Wrench) »Counter-offers must however be distinguished from a request for further information (coming back to this issue in a few minutes) Offer Q1

IV. Acceptance What constitutes a corresponding acceptance? –The offeree’s unequivocal expression of intention to be bound in response to the offer, exactly matching that offer: Key issues –Matching of offer –Method of acceptance –In response to the offer Q2 Corresponding Acceptance Corresponding acceptance Agreement

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) –Matching of offer – The mirror image rule The acceptance must be unconditional and correspond with the exact terms of the offer –Must accept all the terms of the offer – no conditions, qualifications, reservations or additions Q2 Corresponding Acceptance Counter-offer Corresponding acceptance AgreementNo Agreement Rejection of original offer + A new offer Request for further information Original offer still available for acceptance (not rejected)

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) –Matching of offer – The mirror image rule (cont.) If not acceptance: Is it a counter-offer or request for further information? –Hyde v Wrench (counter-offer) –Stevenson v McLean (request for further information) –What is the consequence of the distinction? Q2 Corresponding Acceptance

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) –Matching of offer – The mirror image rule (cont.) Qualifying covering letters (transmittal letters) (The Society of Lloyd’s v Twinn) The battle of forms –The traditional analysis applied: Q2 Corresponding Acceptance No contract Contract on the last terms sent before performance Note: Restitutionary remedy may be available where performance has been rendered

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) –Method of acceptance Starting point: Can be made in writing, orally or by conduct Prescribed method of acceptance –Prescribed mandatory method of acceptance »Explicit words stating that the prescribed method must be followed and that no other method will be sufficient – must be made very clear »An acceptance not conforming to the requirements will not be sufficient Q2 Corresponding Acceptance

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) Prescribed method of acceptance (cont.) –Prescribed method of acceptance (not mandatory) »Manchester Diocesan Council of Education v Commercial & General Investments Ltd): Q2 Corresponding Acceptance (1)Equally efficacious method: Valid if it fulfils the purpose in prescribing the method (2) Method prescribed in order to benefit the offeree: Offeree can waive the stipulation as long as the chosen method of acceptance does not disadvantage the offeror Alt.

IV. Acceptance (cont.) What constitutes a corresponding acceptance? (cont.) –Acceptance must be made in response to the offer Especially important when it comes to unilateral offers –The offeree must have knowledge of the offer –When there is knowledge, the offerees motive is irrelevant (Williams v Carwardine) Q2 Corresponding Acceptance