Dr Akayeer’ Lecture Slide on

Law Of Contract 2020/2021

Offer, Acceptance, Invitation to Treat and E-Contract
General Introduction
This topic provides background on:

● The nature of contract;

What a contract is; what about electronic?

● Why do we need contract law?

a Secure fulfilment of exception created by promise

b Facilitate forward planning of transactions

c Establish respective responsibilities

d Enable taking economic risks

e Provision of remedies for contract breaches etc

● Theories of Contract Law: Subjective vs Objective

● Sources of Contract Law - not different from others
General Introduction: Classification
➢ Formal ( signed, sealed & delivered) & informal (simple) contract
NB: Escrow contract: B Manfang (Nig) V. M/SOL Ltd (2007) - document
delivered with intention that it will not be effective until certain conditions are
fulfilled.
➢ Express and Implied contract - AG Kaduna V. Bassey Atta & Ors (1986) -
parties acting on unsigned terms over a period of time, contract implied
➢ Bilateral and Unilateral contract - Carlill V. Carbolic smoke Ball Co (1893) 1
QB 256
➢ Executed and Executory Contract
➢ Void and Voidable Contract
➢ Electronic Contract - Evidence Act 2011
Topic 2 Formation Of Contract
Objective
The objective of this topic is to examine the elements of a valid contract: offer,
acceptance,consideration and intention to contract.
Offer
● Definition of offer:
Carlill V. Carbolic Smoke Ball (1893) 1Q.B. 256
Omega Bank (Nig) Plc V. O.B.C. Ltd. (2005) 8 NWLR (Pt.928) Pg. 547.
● Definition of Invitation to Treat
BFI Group Corporation V. B.P.E (2012) 18 NWLR (Pt. 1332) 209 @ 246 G-H
FORMATION OF CONTRACT
- Essential elements for the present purpose are:
- NB: Have you ever brought a fake item or drug?

Enemchukwu V. Okoye (2017)6 NWLR (Pt.1560)37 - held on ingredients of

contract:
“There are five ingredient that must be present in a valid contract. They
are offer, acceptance, consideration, intention to create a legal
relationship and capacity to contract. All these five ingredients are
essential , and valid. Contract cannot be formed if any of them is
absent.”
Offer: Meaning
● Ojo V. ABT Associate Incorp. (2017)9 NWLR (Pt1570)

“An offer is an expression of willingness or readiness to contract made

with intention that it shall become binding on the person making it as
soon as it is accepted by the person to whom it is addressed”.
Meaning of Offer
● Valid components are:
➢ An offer must involve two parties - the offeror & offeree

➢ An offer must be definite and precise - as not to create any doubts or speculations in the mind of the offeree see Orient
Bank Plc V. Bilante Int’l (supra).

➢ No limit to the number of people - Carlill V, Carbolic Smoke Ball Co (supra) - Contract with the whole world?

➢ Test - objective and not subjective (Olowu V. Building Stock)

➢ It can be express or implied -

OFFER: Meaning and Nature
❖ Read:
1) Carlill V. Carbolic Smoke Ball Co (supra)
2) BPS Construction & Eng. Co. Ltd V. FCD Authority (2017) 10 NWLR (Pt.
1572)1
3) Stanbic IBTC Bank Plc V. Longterm Global Capital Ltd (2018)10 NWLR
(Pt. 1626) 96
4) Best (Nig) Ltd V. Blackwood Hodge (Nig) Ltd (2011)1 CLRN 33 SC
5) Sparkling Breweries Ltd V. UBA Ltd (2001) 15 NWLR (Pt. 737) 539.
6) Orient Bank Plc V. Bilante Int’l (1997) NWLR (Pt. 515) 76. etc
Offer and Invitation to Treat
● Invitation to treat: Sun Stars United V. Moon Stars United
● Df of Inv. to treat: It is a mere preliminary move to negotiations which may
lead to contract, but which is not itself an offer e.g PURCHASE OF
PROPERTY.
● See Carlill V. Carbolic Smoke Ball co (supra) invitation to treat are offers to
negotiate - offers to receive offers -
● In Berliet Nig. Ltd V. Francis (1987) 2 NWLR (Pt. 58) 673. Benin branch
manager of Berliet Ltd - received a letter from MD in Lagos abt 10% of all
shares be owned by workers, Francia applied for N2,500 and paid, but was
not allotted shares. Any CONTRACT?
Forms of offer & Invitation to Treat
a. Advertisement
➢ Depends on whether its unilateral or bilateral contract
➢ Unilateral - like reward cases are usually considered offers - Carlill’s
➢ Bilateral - adverts usually invitation to treat as they may lead to further bargains -
Partridge V. Crittenden (1968) - sale of widebird
➢ - in bilateral contract, the response is what amounts to offer.

b. Goods displayed in shops, super markets, self service shops

➢ Not offer; what customers pick is an offer
➢ Pharmaceutical Society of Great Britain V. Boots Cash Chemists (Southern)
Ltd (1953) 1 QB 401 - price are to be bargained.
➢ Fisher V. Bell (1961) 1 QB 394 - display of prohibited knife
c. sales of shares
➢ General rule and exceptions - Berliet Nig Ltd V. Francis (supra)
d. Auction sales - Read auctioneer laws of various states
➢ s.58(2) sales of Goods Act 1893 or equivalent
➢ BFI Group Corp. V. Bureau of Public Entrp (2012) CLRN Sc
➢ Payne V. Cave (1789) 100 ER 502
➢ If without reserve - highest bidder takes all;
➢ If with reserve, must be at the reserved price. But if the purchaser is not aware, it's
still binding - Adebaje V. Conde (1938) 19 NLR 57
➢ Referential bids not valid - i.e. specific sum, but add if any psn bid above - Harvela
Invest Ltd V. Royal Trust Coy (1986) AC 207
➢ That an auction sale will be held at a certain venue does not amount to offer to hold
it. See Harris V. Nickerson (1873)
e. Invitation to Treat
● Mere advertisements for tenders are not offers, but invitation to treat.
● The bid or tender submitted in response is an offer. See Spencer V.
Hardings (1870) CP 561
f. Buses, Taxis, Trains: The transport company or the passenger? What breach
or injury occurs?
➢ Denton V. GN Railway (1850) 5 E&B 860- showing destination, like BRT -
offers
➢ Wilkie V. London Passenger Transport Board (1947) 1 All ER 258 -
passengers enters amounts to offer.
➢ Thorton V. Shoe Lane Parking Ltd (1971) 2 QB 163
Termination of an offer
a) Rejection
b) Revocation
c) Lapse of time
d) Death
e) Conditional offer
f) Operation of law
a) Rejection
➢ An offer lapse when the offeree rejects it - St. Machiavelli College V.
Ogunsan (2010)2 CLRN 228
➢ Rejection can be in several ways, e.g counter offer - Amana Suits Hotels
Ltd V. PDP (2007)6 NWLR (Pt.1031) 1453 CA
➢ Rejection MUST be communicated to the offeror

➢ Poser: what if the offeree send a rejection, but before it will reach the
offeror, the offeree uses a fastest means to accept?
b) Revocation
➢ Means withdrawal, even if open offer
➢ Read: Routledge V. Grant (1828)4 Bing 653 Dff offer (6wks), withdrawn
on 3wks; pff accept at the end of 6wks. What’s your response? (contract
binds both or neither?)
➢ What happens if consideration is received in return for promise to keep
an offer open? - Mountford V. Scott (1975)1 All ER 198

➢ The trite rule: revocation must be communicated b4 acceptance - Byrne

V. Van Tien Hoven (1880)5 CPD 344 - Answer: Telegram Vs Letter
Revocation
➢ Another rule: Is communication of revocation by a third party valid?

E.g. (A offer to sell houses to B; acceptance within 2 days. thereafter , B

heard that A is selling the houses to C, A wants to accept, but the houses
were already sold to C.

Any breach? (DIckson V. Dodds (1876)2 Ch.D 463)

➢ What is 3rd party is mere amebo?

➢ Can offeror revoke in unilateral contract?
Revocation of Unilateral Contract
● What happens if performance is half way and offeror revokes;
● e.g , Reward for lost item: seeing the person coming to your house with
the lost item and then you revoke.
Schools of thought
a. No acceptance until performance is complete;
b. The commencement of performance amounts to consideration, hence
the offeror cannot revoke;
c. The offeree will entitle to quantum meruit; and
d. Commencement of performance amounts to acceptance but the offeree
will not be entitled to the reward until performance is completed Read
Errington V. Errington (1952)1 KB 290

Where do you belong and why?

c) Lapse of Time
● Offer ends by expiration of time.
● Where specific time - time specified.
● Where no specific time - reasonable time; i.e case by case basis e.g in
Ramsgate Victoria Hotel V. Montifiore (1866)1 EX 109 - sale of share and
company delayed for 5 mths. Held offer lapse.
● In Loring V. City of Boston (1844)7 Metcoff 409 offer of reward lapse after 3
years.
d) Death: Offeror/Offeree
● Death of offeror: Uncertainties: but if the offeree knows of the death, the
offer will lapse, if unaware, whether it will lapse depends on the nature of the
contract. If the can be perform by his representatives: see Bradbury V.
Morgan (1862)153 ER 877.
● Death of offeree: the offer lapses if the offeree dies before he accepts, see
Reynolds V. Atherton (1921)125 LT 690, held an offer can only be made to
living persons and not dead persons.
e) Conditional Offer
● Not valid until condition is met - Financing Ltd V. Stimson (1962)3 All ER
386 -
● Nigerian Supreme Court in Atiba Iyalamu Savings & Loans Ltd V. Suberu
(2018)12 NWLR (Pt.1637)387 stated;
“Where a contract is made subject to the fulfilment of specific terms and
conditions, the contract is not formed and not binding unless and until
those terms and conditions are fulfilled.” - by extension to offers.
● Operation of law - e.g change in law
NB: Electronic Offers
ACCEPTANCE
Meaning: Read some of the cases below:

➢ Carlill V. Carbolic Smoke Ball Co (supra)

➢ Ojo V. ABT Associates Incorp (2017)9 NWLR (Pt.1570)167
➢ Udeogu V. B.C.C. Plc (2006)2 NWLR (Pt.965)600
➢ Amana Suits Hotels Ltd V. P.D.P. (supra)
➢ Obaike V. B.C.C. Plc (1997)10 NWLR (Pt.525)435
➢ Orient Bank (Nig) Plc V. Bilante Int’l Ltd (supra) etc.
Meaning
● “Final and unqualified accents to the terms of an offer” - Lagos State
Govt V. Toluwase (2013)1 NWLR (Pt.1336)
● “A qualified acceptance cannot give rise to a binding agreement” -
Supreme Court in: Dalek (Nig). Ltd V. OMPADEC (2007) NWLR
(Pt.1033)402
● Offer and acceptance signifies “Mutual Consent” or “consensus ad
idem” - Okugbule V. Oyagbola (1990)4 NWLR (Pt.147)723
Rule of acceptance
➢ Cardinal Rule: acceptance must be externally manifested
(communication).
➢ Lord Denning’s explanation in Entores Ltd V. Miles Far East Corp (1955)2
QB 327 A shout and offer across a river……..; phobe; email
➢ Read also; Mrs Ajayi-Obe V. Executive sec FPCN (1975)3 S.C.1 -

Question:

Should there be exceptions to communication?

Exception to communication of acceptance
1. Waiver of communication
➢ In Stanbic IBTC Bank Plc V. L.G.C Ltd (2018)10 NWLR (Pt.1626) 96 -
waiver was defined as abandonment of legal right. A party may not say so
in specific word or not at all, but conduct.
2. Unilateral contract - Acceptance by performance
3. Fault of the offeror - A party who fails to receive acceptance through his own
fault cannot come back to claim it was not communicated - Entros - phone,
unread emails, etc.
4. Postal Rule of Acceptance
➢ General rule -
➢ Locus classicus - Adams V. Lindsell (1818)106 ER 681
● 2/9/1817 - Linsell offer to sell wool to Adams
● 5/9/1817 - Misdirected letter reached Adams
● 5/9/1817 - Adams post acceptance
● 7/9/1817 - Expected acceptance if letter properly addressed
● 8/9/1817 - Wool sold to another party
● 9/9/1817 - Lindsell received acceptance
➢ Adams sued for breach of contract -
➢ Which day did contract come into existence?
Justification for postal rule
● If an offeror was to continue to wait, contract may go on ad infinitum. Do
you agree?
● Extended reasons advanced in Household Fire Insu Co V. Grant (1879)
78-79 LR 4 - acceptance by allotment of shares was lost in the post
a. Post is a common agent
b. With posting, contract is complete, as there is no other act necessary to bring
it into existence.
c. An offeror is free to make it a term on receive of acceptance
d. Any rule will lead to fraud and delay in commercial tra
e. The rule is most convenient of all possible alternative
NB: Any criticism?
Exception to the postal rule
a. Offer indicates acceptance must reach offeror - Read; Holwell Securities Ltd
V. Hughes (1974)1 WLR 155 - “by notice in writing”
b. If the rule will lead to inconvenience and injustice
c. Letter wrongly addressed or inadequately stamped
d. Letter not properly posted - Re - London and Northern Bank, ex. P.
Jones (1900)1 Ch.
The moment of acceptance
➢ At what time? - it varies with contracts
a. Telex - until received - Entores (supra)
b. Face to face
c. Telephone
d. Telegrams
e. Emails
f. Post
Methods of acceptance
● Read: Conoil V. Solomon (2017)3 NWLR (Pt.1551) 50
a. Where prescribed
➢ At common law - if mandatory, it must be followed, if not mandatory, the most
convenient method e.g by phone instead of email. The offeree bears the risk for
alternative method.
➢ In Nigeria, same rule apply unless statute provide contrary e.g s.109 contract law,
Anambra State
b. Where not prescribed
➢ Method depends on the nature of the offer and other surrounding circumstances.
NB: Acceptance can be revoked any time before it reaches the offeror, except in cases of
postal rule
Invalid types of acceptance
1. Counter Offer - alteration, addition, changes
➢ Benue Cement Co V. Sky inspection (Nig) Ltd (2002)17 NWLR (Pt.795)86
2. Conditional Acceptance
E.g “Subject to Contract” or “Provisional” Read UBA Plc V. Tejumola &
Sons (Nig) Ltd (1988); Acmel (Nig) Ltd V. First Bank PLc (2014)6 NWLR
(Pt.1402)158
3. Cross offers - identical offers exchange route
➢ Tinn V. Hoffman & Co (1873)
4. Acceptance in Ignorance of offer - Fitch V. Snedker (1869); By Clarke
(1927); William V. Carwardine (1833); GIbbons V. Proctor (1891).
5. Unauthorized acceptance: Hardman V. Booth (1863)
Acceptance scenario
● ATM machine:
- Display of machine
- Blinking of light
- Inserting a card
- Entering the pin
- Display tasks
- Pressing “cash transaction”
- Pressing “recharge phone”
- Display of amount
- Entering amount
- Request of send and send
- Credit
Acceptance scenario
● ATM contract Read: Thornton V. Shoe Lane Parking(SP)
- Automatic ticket Machine at park & notice
- Lord Denning: “placing machine ready for money was offer; inserting money
was acceptance; ticket was the terms. The terms (in ticket) came after
contract was made. Terms not effective because it was communicated after
contract.”
● Email contract Read: Chwee’s case (supra)
Debate:
a. Postal rule
b. Recipient rule
E - acceptance
❏ Chwee’s case
❏ Per justice: unlike fax and telephone calls, emails are processed through
servers, routers, and internet service providers, it may not be
instantaneous bk of many protocols”, which the sender has no control.
Held recipient rule applied”
❏ NIGERIA:
- ET Bill 2017 - s. 16 - automated contract can be formed
- S. 15 - unless parties agree otherwise, offer and acceptance can be in
electronic form.
Offer scenario
➢ The UNCITRAL Model Law - silent
➢ Nigeria Electronic Transaction Bill 2017 - silent
➢ Evidence Act 2011 - silent
The court: in Chwee’s case, it was held:
“Website advertisement is in principle no different from bill board outside a shop or
an advertisement in a newspaper or periodicals…. In effect, the internet
conveniently integrate into a single screen traditional advertising catalogue, shop
display/window and physical shopping.”
Apply to the scenario - Any contract?
Offer scenario
● Sir T posted online advertisement for the sale of Hand-Fan at the rate of
#55.00 per piece instead of the actual price of #5,500. Mr Smart, ordered for
100 pieces and also informed four of his friends, who also ordered 50 pieces
each. All the orders were confirmed by automated system.
● Mr Smart and his friends went to Sir T’s office to take delivery only to learn the
online price was an error.
● Is valid contract created?
Offer and Acceptance
➢ It is settled in law that all elements of contract apply with equal force to
e-contract.
➢ But the form remains unsettled - Read:
a. s. 258 EA 2011
b. Chwee kin keong V. Digilandmail.com Pte Ltd (2004)2 SLR 594
c. Cowan V. O’connor (1888)20 QBD 640
d. Thornton V. Shoe Lane Parking (1971)2 QB 163
e. Entores Ltd V. Mile Far East Corp (supra)
➢ NB: the legislature has failed to allocate these element, hence ongoing
judicial struggle.
Time and Moment of Acceptance
Debate:

a. Dispatch rule
b. Recipient rule
❏ Read indian case of: P.R. Transport Agency V. Union of India (AlR 2006 All
23) - Dispatch rule was applied
❏ S. 19 Nigeria’s ET Bill 2017 - on deemed dispatch if it enters information
system without sender’s control and capable of being received and processed
by the addressee!
Mental Assent
● Does mental assent amount to acceptance?
Does mental assent amounts to acceptance?
- General rule: Felthouse V. Bindley (1862)7 LT 835
- Rationale: Orient Bank (Nig) Plc V. Bilante Int’l Ltd (1997) - affirmed by
the SC in: Bilante Int’l Ltd V. NDIC (2011)15 NWLR (Pt.1270) 407
“... if acceptance were to be based on the silence or mental assent, then
its ascertainment is bound to be illusory and at best, a guess work,
unless a judge is super human who would be bound to unfold the
innermost recesses of the heart of the party making a mental assent.
This obviously ia an invidious exercise: consequently, mental assent is
operative”
Any Exceptions?
Exceptions
1) Qui tacit consentire videtur - where a party is bound to speak but remains
silent - (common in legal drafting) - Austin V. Burge (1911) 156 - periodicals
subscriber
2) Previous dealings - goods supplied and retained - Evans Piano co V. Tulley
(1917)166 miss 267
3) Silence plus receipt of benefits - Day V. Caton (1876)119 mass 513
4) Acceptance that is too late to be operative - Morrell V. Studd (1913)2 Ch.
648
Electronic Contract
● The advent of technology, computers and development of electronic
communication
● Challenges on traditional elements of contract
● Legislative responses e.g
- UNCITRAL Model Law on E-Contract 1996
- UK Electronic Communication Act 2000
- Australian Electronic Transaction Act 2000
- USA Uniform Electronic Transactions Act 1999
- South African Electronic Communication Act 2002
- Nigeria?
Formation of e-contract
● E-Contract are simple agreements created through ICT system - ALL
traditional elements must be present.
● Besides, it must be for a lawful purpose and without vitiating factors.
● In 1969, it was recognized by S.C. in Esso W/A Inc V. Oyegbola (1969)1
NMLR 194: “The law cannot be and is not ignorant of the modern business
methods and must not shut its eyes to the mysteries of computer”
Formation of e-contract
The rule is that contract can be created in any form.
However Read: s.258 EA 2011 - computer memory, diskette, CD Roms, videos,
Audio tapes, movies, telefaxes, printout, emails, sms, voice mails, bank transfers
or the other internet transfers are documents.
But challenges in e-contract are:
➢ How can the intention of the parties be ascertained?
➢ Can a human mind be ad idem with machine?
➢ Can two machines express intention to contract?
NB: Human intention can only be ascertained via manifestations; so also through
machine by pressing computer keys and clicking on “I agree”.
Nigeria
● S. 93 (2) EA 2011 - recognises electronic signature, which can be in form of a
symbol or electronic security procedure (password).

● The scope explained by the supreme court in Kubor V. Dickson (2013)4

NWLR (Pt. 1345) 534

● Also, NB. in Faulks V. Cameron (2004) 32 fam LR 417, ‘an email that ended
with “Regards” is deemed duly signed.
Framework in Nigeria
E-contract is still evolving in Nigeria - e.g.

➢ Evidence Act 2011 - ss. 258 & 93 (2), (3)

➢ Electronic Transaction Bill 2017
➢ CBN Guidelines on Electronic Banking in Nigeria 2018 (and subsequent
amendments)
➢ CAMA 2020 - electronic meetings
Is E - Contract in Writing?
● English case law accepts the notion that e contract qualifies as contract in
writing
- Lockhead-Arabia V. Owen (1993) All ER 641
- Bazak Int’l Corp V. Tarrant Apparel Group - 14 674 (US. Dir. S.D 2005)

“Although emails are intangible, they can be rendered tangible. A computer

system remember the message even after turned off”

Nigeria:

S. 258 EA 2011 - all computer output are deemed documents.

Thank you.