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Offer and Acceptance

there are two essentials parts of a contract; offer and
acceptance. in order for a contract to come into existence there
must be an offer made and that offer must have been accepted
by the second party.

whether the parties intended to have a legal effect is not judged by their
subjective intention but by the interpretation of their words or conduct and
whether this shows that they agreed upon all the terms. (RTS flexible systems
Ltd v Molkerei Alois Muller Gmbh & Co KG)

this type of objective approach was applied in the case of Centrovincial Estates
v Merchant Investors Assurance Co.

there is an exception to this general rule; situation where the courts may opt for
the subjective approach; this is where the offeree accepts an offer for which he is
aware that there was a mistake which the offeror made as to the terms. (Hartog
v Collins and Shields)

Offer
Offer is an expression made by the offeror that he is ready to be bound on specific
terms without any discussions or negotiations when the offeree accepts the offer.

there are two contradicting cases which make a distinction between what is deemed
an offer and what is not. in the first case of Storer v Manchester City Council the
only requirement for the offeree was to sign the document so the intention of the
offeror to be bound was clear. on the other hand in the case of Gibson v
Manchester City Council it was held that the council did not make an offer as the
document sent could not have been accepted.

the mention of price is a key factor in determining whether the statement made is
an offer or not and this can be seen in the above case.

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 in determining whether the statement is an offer or not, it is important to distinguish it
from other steps which are present in the negotiation process as not every statement
made is an offer.

1. a statement of intention is where one party shows intention to do something and

this is different from an offer as when an offer is made the offeror is stating there
is not only intention but he will do something (Harris v Nickerson)

2. a supply of information is where one party is communicating for the purpose of

providing information and this statement doesn’t require the other party to accept
or act upon it (Harvey v Facey).

An invitation to treat:
this is different from an offer in a sense that here one party is showing willingness
that the other party makes an offer or this is an invitation to the other party to start
negotiations. in order to determine what is an offer and what is an invitation to treat
the courts have set circumstances under which the the communication was merely
an invitation to treat:

1. goods displayed in a window will be treated as an invitation to treat. this can be

seen in the cases of Pharmaceutical Society v Boots and Fisher v Bell where
it was held that display of goods is an invitation to treat and customers make an
offer when they bring the items to the cash desk. on the other hand in the case
of Thornton v Shoe Lane Parking the automatic ticket machine which
contained the information was making an offer and the defendant accepted the
offer by driving in. hence, where the information is given by a machine it will
constitute as an offer.

2. Advertisements; generally are regarded as invitation to treat. here is important to

distinguish between unilateral and bilateral contracts as under bilateral contracts
advertisement is merely an invitation to treat

Bilateral contracts are where all the parties are assuming obligations and
unilateral contracts are where one party makes a promise in return for the other
party’s act these are mostly where one party is offering a reward in return of an
act.

bilateral contracts are mostly an invitation to treat; as seen in the case of Partridge v
Crittenden where it was held that advertising goods at a given price is not an offer
as there is room for further negotiations but is an invitation to treat as it shows the
willingness to receive offers.

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 an example of unilateral contracts is Carlill v Carbolic Smoke Ball Co where it was
held that where one party is offering an award for an act in return it will be treated as
an offer as there is no room for further negotiations and the person making the offer
intends to bound himself as soon as the act is complete.

3. requesting tenders is merely an invitation to treat but a tender is an offer

(Harvela Investments Ltd v Royal Trust Co of Canada Ltd).

4. Auction; under this when there is a bid it is regarded as an offer and the offer is
accepted when the auctioneer brings down his hammer. in auctions where there
is not s fixed price a separate contract is formed and the auctioneer is bound to
accept the bid that was the highest (Warlow v Harrison)

Communication of an offer
there is a requirement that an offer is only effective when it is communicated as there
can be no acceptance if there was no knowledge of the offer.

however, in the case of Gibbons v Proctor the policeman claimed the reward even
though he was unaware of the offer.

Acceptance of the offer

another essential part of a contract is acceptance. acceptance is that the offeree
agrees upon each and every term of the offer. anything that is not the exact image of
the offer is not acceptance(Arcadis Consulting v AMEC)

there is a case under which even though it was stated that acceptance will be
binding when signed, subsequent conduct constituted as acceptance(Reveille LLC
v Anotech International Ltd)
like offer acceptance is also judged objectively; it is the words or act by the offeree
which show that he agreed upon the terms of the offer.
A case where the acceptance was made by conduct (Brogden v Metropolitan
Railway Company)
situations where it is not an acceptance:

situations where the offeree tries to add new terms in the offer is a counter offer
and not an acceptance. the offeree here is rejecting the original offer and in
return making a new offer to the offeror.(Hyde v Wrench)

where the offeree asks for more information regarding the offer, this is an enquiry
and the original offer is still there (Stevenson, Jacques & Co v McLean)

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 Communication of the acceptance:
Acceptance cannot be deemed effective if it hasn’t been communicated hence the
general rule here is that silence cannot amount to acceptance. (Felthouse v
Bindley). this rule exists so that a contract cannot be enforced upon an unwilling
party but where this not an unwilling party silence can amount to acceptance(Rust v
Abbey Life)
there are certain exceptions in the law to this general rule:

there may be cases where it may be a contractual term that communication is

not necessary. this is mostly in the case of unilateral offers where acceptance is
performing the given task. this can be seen in the famous case of Carlill v
Carbolic Smoke Ball Co

another exception which applies to cases where the communication has been
made through post is known as the postal rule. this rule exists because when a
letter is posted it takes times to arrive so when it is that the acceptance is
effective. (Adams v Lindsell)

the decision in this case makes it clear that under this rule acceptance is effective as
soon as the letter is posted.

in order for the postal rule to be effective where it was contemplated or decided by
the parties that the acceptance will be made through post. (Household fire
insurance v Grant)
postal rule will not apply where there exists carelessness on the side of the offeree.
e.g mentioning the wrong address. (LJ Korbetis v Transgrain Shipping BV)

due to uncertainties in this area of law the parties tend to avoid communication
through post. one problem which may arise is that the contract is formed which the
knowledge of the offeror. it may be that the offeree accepts the offer but then the
offeror revokes the offer before the acceptance is received and enters into a contract
with another party. after entering into the contract receives the original offeree
acceptance.
the courts now are reluctant towards this rule (Holwell Securities v Hughes). as
there are now more means of communication which are more quick and effective
than the post courts refuse to extend the use of the postal rule. under the case of
Entores v Miles far East Corp telexes was used as a form of communication hence
the courts refused to apply the postal rule. moreover, under Thomas v BPE solicitors
the courts held that this rule is not applicable where the communication has been
made through emails.

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 there isn’t a defining case for acceptance through instantaneous modes of
communication. however, there is no doubt that using these mediums a contract can
be formed (Anthena Brands Ltd v Superdrug Stores plc)

Method of Acceptance:
where an offeror makes it a term that offer can only be accepted through a
specific method(Manchester Diocesan Council for Education v Commercial
and General Investments)

most suitable way of communicating acceptance is through which method the

offer was made (Quenerduaine v Cole) even if the acceptance is
communicated through any other medium it is effective and the contract comes
into existence.

Offer comes to an end:

as there is no legal obligations until acceptance is present here are certain
circumstances where the offer can come to an end and hence no contract

any of the parties before the acceptance has been made can change their mind and
backoff from the negotiations made. (Payne v Cave)
where the offeror is bound by any collateral contract he cannot withdraw from the
offer unless the specified time comes to an end. however, where the offeror states
the time period for which the offer is valid he can withdraw from that offer within the
given time.
even if the offeror decides to revoke an offer he must communicate it to the other
party. hence simply changing his mind is not enough. (Bryne v Van Tienhoven)
in most cases involving unilateral contracts revocation of an offer is not allowed as
the offeree requires time to complete such an offer and so it is unjust to simply
revoke the offer when he is underway doing the task. (Errington v Errington)
on the other hand if we look at cases like Luxor(Eastbourne) Ltd v Cooper then we
can see that revocation was deemed effective even when the offeree started doing
the required task. in the case of Schweppe v Harper it was said that cases where
revocation will be allowed after performance has begun will be rare.

by what process the offer can be revoked which has been made to the world is not
given under English Law but the principle established in the case of Shuey v Uk is
applied and under this case revocation is effective if it given the same prominence as
was given to the offer.

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 offer also comes to an end if the offeree rejects it and when the offeree makes a
counter offer it kills the original offer and here the offeree is making a new offer.
where the offer made is subject to certain conditions and these conditions are not
fulfilled then the offer comes to an end.

where the death of the offeror results in the offer ending is divided. under one case
of Bradbury v Morgan the offer was still valid even after the death of the offeror. on
the other hand, in the case of Dickinson v Dodds it was held that death of either
party results in the offer coming to an end. here the sensible view can be that offeree
cannot accept an offer for which he is aware of the offerors death. where there is
unawareness of the death the offer may be accepted and when the offeree dies the
offer is terminated.

in cases where the offeror sets a time limit for the offer to be acceptance then we
that time has passed the offer comes to an end. where is not a time given then after
a reasonable time according to the circumstances of the case the offer will come to
an end(Ramsgate Victoria Hotel v Montefiore)

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