1. Law of Contract
obligations 1

2. ELEMENTS OF A CONTRACT OFFER ACCEPTANCE CONSIDERATION GENUINE ASSENT
Intention to be legally bound

3. Overview of Contracts

4. Formation of Contracts
OFFER
Parties
Offeror = person who makes offer
Offeree = person who receives offer
Must have language that indicates intent to contract
Not just inquiry
More than negotiation
Courts use an objective, not a subjective, standard

5. A Offer
An expression of willingness to contract on certain terms, made with intention (actual or apparent) that it shall be binding as soon as it is accepted by the person to whom it is addressed.

6. Formation of Contracts...
Elements of the Offer:
Three requirements must be met:
Objective intent
definite offer
offer must be communicated to offeree intended by offeror.

7. Formation of Contracts...
Objective intent
issue: whether a reasonable person viewing the circumstances would conclude that the persons intended to be legally bound by the offer.

8. Formation of Contracts
“In contracts you do not look into the actual intent in a mans mind. You look at what he said and did. A contract is formed when there is to all outward appearances a agreement”
Lord Denning Storer v Manchester City Council [1974] 3 All ER 824 at page 828
A man can not get out of a contract by saying “I did not intend to make a contract”

9. OFFER AND ACCEPTANCE
A simple contract (that is, a contract made not under seal) requires an offer made by one party and accepted by the other, valuable consideration given by either side, or a common intention that the agreement should be legally binding

10. OFFER AND ACCEPTANCE
An offer is made when one party makes it clear, by words or actions, that he is prepared to be bound as soon as the offer is accepted by the person to whom it is made.
An offer is thus quite different from an invitation to treat, though it is not always easy to distinguish the two.

12. Offer or Invitation to Treat?
An offer once accepted creates an agreement
An offer can be contrasted with an invitation to treat
An invitation to treat is an invitation to enter negotiations
The “acceptance” of an invitation to treat does NOT create an agreement

13. Grainger v Gough [1896] Grainger v Gough [1896] AC 325, HL
AA were London agents for a French wine merchant X;
they distributed catalogues and accepted orders which they passed on to X, X reserving the right to refuse any order.
The case turned on whether X was liable for tax on contracts made by his agents in England. The House of Lords held that the distribution of catalogues was an invitation to treat and that the offer was made by the intending purchaser. This offer was transmitted by AA to X, and the contract was not made until X accepted the offer in France.

14. Gibson v Manchester CC [1979]
Gibson v Manchester CC [1979] 1 All ER 972, HL
A local council write to tenants inviting them to apply to purchase their homes. One such tenant P did apply, and a price was agreed. Following a change of party control, the new council DD refused to go ahead with the sale. The House of Lords said there was no binding contract: P had made an offer which DD had not yet accepted. Phrases in the correspondence such as "may be prepared to sell" and "please complete the enclosed application form" were indicative of an invitation to treat.

15. Display of goods
A display of goods in a shop window, or on the shelves of a self-service shop, is generally regarded as an invitation to treat rather than as an offer to sell.

16. Cases Pharmaceutical Society v Boots [1953] 1 All ER 482, CA
Fisher v Bell [1960] 3 All ER 731, DC

17. Display of goods
This analysis of the transaction leaves both parties free to change their minds. The shopkeeper can refuse to sell to a customer whom he does not like (for example, one who is under age or drunk), and the customer having taken goods from a supermarket shelf can return them if he changes his mind before going to the till.

18. Why should displays be regarded as invitations to treat ?

19. Advertisement
An advertisement is usually an invitation to treat but can be an offer, depending on its wording and on the circumstances.

20. Advertisement Partridge v Crittenden [1968] 2 All ER 421, HC QBD
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, CA
Thornton v Shoe Lane Parking [1971] 1 All ER 686, CA
Wilkie v London Passenger Transport Board [1947] 1 All ER 258, CA

21. Auction Sales
At an auction sale, s.57(2) of the Sale of Goods Act 1979 confirms the common law rule that a prospective buyer makes an offer by bidding, which the auctioneer accepts when he drops his hammer. Thus a buyer may withdraw his bid until the hammer falls, or an item may be withdrawn from the sale even after bidding has begun. The special rules for auctions, however, mean that the lot cannot legally be sold at the auction to anyone other than the highest bidder.

22. Auction Sales Barry v Davies (2000) Times 31/8/00, CA
A sale of machinery by auction was advertised as being "without reserve". Two machines were put up, whose list price would have been £14000 each, but the only bid (of £200 each) was made by C. The auctioneer D refused to accept the bid and withdrew the machines from sale. C sued, and the judge's award of £27600 damages was affirmed on appeal. Although there had been no contract between vendor and purchaser, there was a collateral contract between auctioneer and bidder.

23. Internet Shopping
The growth of internet shopping has led to further developments in this area of law. Where a company advertises goods or services on its web site this is normally (depending on the wording used) an invitation to treat, and the customer makes an offer by sending in an order. So far, so good.
If the company sets up an automatic reply system, this (again depending on its wording) may amount to an acceptance of the offer, and this may have unfortunate consequences for the company if there is any error (e.g. £100 as a misprint for £1000) in the published details.

24. Invitation to Tender
Public authorities are required by law to invite tenders for many services, and some other bodies do so even when not so required. The offer in such cases is clearly made by the tender or and accepted by the authority, but the situation is more complex than it might seem.

25. Invitation to Tender
Harvela Investments v Royal Trust [1985] 2 All ER 966, HL
Blackpool & Fylde Aero Club v Blackpool BC [1990] 3 All ER 25, CA

26. WITHDRAWL
WITHDRAWL
As a general rule, an offer can be withdrawn at any time before it has been accepted; any purported acceptance after withdrawal it is ineffective

27. Routledge v Grant (1828) Routledge v Grant (1828) 130 ER 920, Best CJ
Mountford v Scott [1975] 1 All ER 198, CA

28. Withdrawal
Withdrawal must normally be communicated to the offeree, and does not take effect until such communication is received: the special rule for postal acceptances (below) does not apply to withdrawals.

29. Byrne v Van Tienhoven (1880) LR 5 CPD 344, Lindley J
Dickinson v Dodds (1876) LR 2 ChD 463, CA
Shuey v United States (1875) 92 US 73, Supreme Court (USA)

30. Acceptance by Conduct
Where an offer is to be accepted by conduct, then it is not clear what rules govern its withdrawal. This is particularly important to rewards and "challenges" (e.g. £ to the first person to swim the Atlantic): although such offers can certainly be withdrawn - that is only reasonable - it is unfair if the offeror can withdraw his offer moments before the other party "accepts" by completing the task.

31. termination of offer:
Under common law, methods of termination of offer:
1. Lapse of time
2. Death of either party
3. Destruction of the subject matter
4. Rejection by the offeree
5. Revocation by the offeror