Offer Acceptance Certainty Intention. Notes

Offer & Acceptance, Certainty & Intention

The following are features of the rules laid down by the courts in this respect:

1. The rules claim to be of general application;

2. The rules purport to give effect to the intention of the parties, albeit objectively ascertained;

3. The rules are in practice, often interlinked;

4. The rules appear to attach significance to the precise time ate which the contract was concluded;

5. The reception of offer and acceptance rules is linked with the will theory of contract, which has been the subject of criticism.

1. Offer & Acceptance

(i) Offer & Invitation to Treat

• Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256: On an advert for medicinal balls, D claimed that in the event that anyone using the balls contracted flu, they would be paid compensation. The advert further claimed that money had been set aside for this specific purpose.

  • The fact that money had been put aside indicated that statement more than a mere puff.

  • Does not matter that not addressed to a particular person as anyone who performs accepts.

  • Acceptance need not be communicated; person gets notice with the performance of the condition.

  • Question is how the ordinary person would understand the advert.

• PSGB v Boots [1952] 2 QB 795: Issue as to whether display of products on a shelf was an offer to sell.

  • The exposure of goods for sale by a shopkeeper indicates to the public that he is willing to treat but does not amount to an offer to sell.

  • Ordinary principles of common sense and commerce must be applied to the matter.

• Partridge v Crittenden [1968] 1 WLR 1204 : Advert in paper for birds, with stated price. Prosecuted for offering birds for sale.

  • Insertion of an advert as well as a display in a window are simply invitations to treat.

• Gibson v Manchester CC [1979] 1 WLR 294: A received letter from council stating a price at which they ‘may’ be willing to sell his house. Details of a mortgage firm provided, but was no offer of a mortgage. Council took house off of their own repair list and A began to do repairs thereafter. Following a change of political control said would only allow sales to go through where contracts had already been concluded. A claimed that his was concluded.

  • Court of Appeal: Lord Denning thinks that it is a mistake to think that all contracts can be analysed in terms of offer and acceptance. Thinks there is no need to strictly look for it but should look at everything to see whether there was agreement as to all that was material. So, would allow A to succeed in his claim in this instance.

  • House of Lords (Lead by Lord Diplock):

    • There are certain types of contract which do not fit easily into the normal offer and acceptance analysis. But, a contract alleged to have been made in an exchange of correspondence is not one of them. Should adopt the conventional approach in cases such as this (exchange of correspondence cases).

    • ‘May’ is fatal to the finding of an offer. To hold that there was an offer would be to disregard the evidence.

• Harvela Investments v Royal Trust Co of Canada [1986] AC 207 : Owner of shares invited bids from two people for shares. B submitted an offer of ‘X amount, or Y more than A offers’. Issue as to whether could accept.

  • A promise to accept the highest bid may be binding as analogous to Carlill v Carbolic.

  • An invitation to tender can be seen as an offer. The contract was made with the highest fixed bid- could not accept the referential one.

• Blackpool & Fylde Aero Club Ltd v Blackpool BC [1990] 3 All ER 25: Council sent invitations to tender with a date for receipt. Staff member failed to pick up A’s tender.

  • Where tenders are solicited to known parties, and where there is a clear and orderly prescribed procedure, the invitee has a contractual tight when he conforms to those conditions to have his tender considered.

  • The fact that only open to a small class of persons was of significance in finding a contract in this case.

(ii) Acceptance

(a) Communication of Acceptance

• Felthouse v Bindley (1862) 11 CBNS 869: There had been a misunderstanding between parties as to the sale price of a horse. A wrote to B to say that X would be the price, saying that if he heard nothing in Y time then he would assume that it was sold to him. B brought action when horse accidently sold.

  • Silence cannot amount to acceptance of an offer as the intention to accept must be communicated to the offeror.

• Household Fire Insurance v Grant (1879) 4 Ex D 216: D applied for shares in company. They were allotted to him and he was sent a letter to that effect. The letter was never received.

  • Bramwell LJ (Dissent):

    • The rule is that acceptance must be communicated, therefore the letter must be received to constitute acceptance.

    • There can only be departure from the general rule where there is a special agreement by the parties to do so.

    • There is no good reason for an arbitrary rule relating to postal acceptance. It only works to create hardship for the offeror.

    • Disagrees with the notion that the post office is an agent for both parties as it is not clear on what basis this can or should be so.

  • Thesiger LJ:

    • A contract formed by correspondence through the post is accepted as soon as the letter is posted and the acceptance is not put to an end in the event of a letter never being delivered.

    • Two competing principles: (1) minds of two parties must meet to make a contract and unless it is concluded at the moment when the continuing offer is, in fact accepted, it is difficult to know when they are ever otherwise brought together; (2) minds must be brought together by mutual communication.

    • The way to reconcile the principles is to treat the post office as an agent of both parties. This may lead to hardship for the offeror but there can be no way to make the consequences of the mistake of a mutual agent fall upon both parties evenly.

    • An offeror may still make acceptance conditional upon actual communication.

• Byrne v Van Tienhoven (1880) 5 CPD...

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