OFFER
Payne v Cave
(1789)
The defendant made the highest bid for the plaintiff's goods
at an auction sale, but he withdrew his bid before the fall of the auctioneer's
hammer. It was held that the defendant was not bound to purchase the goods. His
bid amounted to an offer which he was entitled to withdraw at any time before
the auctioneer signified acceptance by knocking down the hammer. Note: The
common law rule laid down in this case has now been codified in s57(2) Sale of
Goods Act 1979.
Fisher v Bell
(1960)
A shopkeeper displayed a flick knife with a price tag in the
window. The Restriction of Offensive Weapons Act 1959 made it an offence to
'offer for sale' a 'flick knife'. The shopkeeper was prosecuted in the magistrates'
court but the Justices declined to convict on the basis that the knife had not,
in law, been 'offered for sale'.
This decision was upheld by the Queen's Bench Divisional
Court. Lord Parker CJ stated: "It is perfectly clear that according to the
ordinary law of contract the display of an article with a price on it in a shop
window is merely an invitation to treat. It is in no sense an offer for sale
the acceptance of which constitutes a contract."
PSGB v Boots
(1953)
The defendants' shop was adapted to the
"self-service" system. The question for the Court of Appeal was
whether the sales of certain drugs were effected by or under the supervision of
a registered pharmacist. The question was answered in the affirmative.
Somervell LJ stated that "in the case of an ordinary shop, although goods
are displayed and it is intended that customers should go and choose what they
want, the contract is not completed until, the customer having indicated the
articles which he needs, the shopkeeper, or someone on his behalf, accepts that
offer. Then the contract is completed."
Partridge v
Crittenden (1968)
It was an offence to offer for sale certain wild birds. The
defendant had advertised in a periodical 'Quality Bramblefinch cocks,
Bramblefinch hens, 25s each'. His conviction was quashed by the High Court.
Lord Parker CJ stated that when one is dealing with advertisements and
circulars, unless they indeed come from manufacturers, there is business sense
in their being construed as invitations to treat and not offers for sale. In a
very different context Lord Herschell in Grainger v Gough (Surveyor of Taxes)
[1896] AC 325, said this in dealing with a price list:
"The transmission of such a price list does not amount
to an offer to supply an unlimited quantity of the wine described at the price
named, so that as soon as an order is given there is a binding contract to
supply that quantity. If it were so, the merchant might find himself involved
in any number of contractual obligations to supply wine of a particular description
which he would be quite unable to carry out, his stock of wine of that
description being necessarily limited."
Carlill v Carbolic
Smoke Ball Co (1893)
An advert was placed for 'smoke balls' to prevent influenza.
The advert offered to pay £100 if anyone contracted influenza after using the
ball. The company deposited £1,000 with the Alliance Bank to show their
sincerity in the matter. The plaintiff bought one of the balls but contracted
influenza. It was held that she was entitled to recover the £100. The Court of
Appeal held that:
(a) the deposit of money showed an intention to be bound,
therefore the advert was an offer;
(b) it was possible to make an offer to the world at large,
which is accepted by anyone who buys a smokeball;
(c) the offer of protection would cover the period of use;
and
(d) the buying and using of the smokeball amounted to
acceptance.
Harvey v Facey
(1893)
The plaintiffs sent a telegram to the defendant, "Will
you sell Bumper Hall Pen? Telegraph lowest cash price".
The defendants reply was "Lowest price £900".
The plaintiffs telegraphed "We agree to buy … for £900
asked by you".
It was held by the Privy Council that the defendants
telegram was not an offer but simply an indication of the minimum price the
defendants would want, if they decided to sell. The plaintiffs second telegram
could not be an acceptance.
Gibson v MCC
(1979)
The council sent to tenants details of a scheme for the sale
of council houses. The plaintiff immediately replied, paying the £3
administration fee. The council replied: "The corporation may be prepared
to sell the house to you at the purchase price of £2,725 less 20 per cent.
£2,180 (freehold)." The letter gave details about a mortgage and went on
"This letter should not be regarded as a firm offer of a mortgage. If you
would like to make a formal application to buy your council house, please
complete the enclosed application form and return it to me as soon as
possible." G filled in and returned the form. Labour took control of the
council from the Conservatives and instructed their officers not to sell
council houses unless they were legally bound to do so. The council declined to
sell to G.
In the House of Lords, Lord Diplock stated that words
italicised seem to make it quite impossible to construe this letter as a
contractual offer capable of being converted into a legally enforceable open
contract for the sale of land by G's written acceptance of it. It was a letter
setting out the financial terms on which it may be the council would be prepared
to consider a sale and purchase in due course.
Harvela v Royal
Trust (1985)
Royal Trust invited offers by sealed tender for shares in a
company and undertook to accept the highest offer. Harvela bid $2,175,000 and
Sir Leonard Outerbridge bid $2,100,000 or $100,000 in excess of any other
offer. Royal Trust accepted Sir Leonard's offer. The trial judge gave judgment
for Harvela.
In the House of Lords, Lord Templeman stated: "To
constitute a fixed bidding sale all that was necessary was that the vendors should
invite confidential offers and should undertake to accept the highest offer.
Such was the form of the invitation. It follows that the invitation upon its
true construction created a fixed bidding sale and that Sir Leonard was not
entitled to submit and the vendors were not entitled to accept a referential
bid."
Blackpool Aero
Club v Blackpool Borough Council (1990)
BBC invited tenders to operate an airport, to be submitted
by noon on a fixed date. The plaintiffs tender was delivered by hand and put in
the Town Hall letter box at 11am. However, the tender was recorded as having
been received late and was not considered. The club sued for breach of an
alleged warranty that a tender received by the deadline would be considered.
The judge awarded damages for breach of contract and negligence. The council's
appeal was dismissed by the Court of Appeal.
ACCEPTANCE
Brogden v MRC
(1877)
B supplied coal to MRC for many years without an agreement.
MRC sent a draft agreement to B who filled in the name of an arbitrator, signed
it and returned it to MRC's agent who put it in his desk. Coal was ordered and
supplied in accordance with the agreement but after a dispute arose B said
there was no binding agreement.
It was held that B's returning of the amended document was
not an acceptance but a counter-offer which could be regarded as accepted
either when MRC ordered coal or when B actually supplied. By their conduct the
parties had indicated their approval of the agreement.
Gibson v MCC
(1979)
Lord Denning said that one must look at the correspondence
as a whole and the conduct of the parties to see if they have come to an
agreement.
Trentham v Luxfer
(1993)
T built industrial units and subcontracted the windows to L.
The work was done and paid for. T then claimed damages from L because of
defects in the windows. L argued that even though there had been letters, phone
calls and meetings between the parties, there was no matching offer and
acceptance and so no contract.
The Court of Appeal held that the fact that there was no
written, formal contract was irrelevant, a contract could be concluded by
conduct. Plainly the parties intended to enter into a contract, the exchanges
between them and the carrying out of instructions in those exchanges, all
supported T's argument that there was a course of dealing between the parties
which amounted to a valid, working contract. Steyn LJ pointed out that:
(a) The courts take an objective approach to deciding if a
contract has been made.
(b) In the vast majority of cases a matching offer and
acceptance will create a contract, but this is not necessary for a contract
based on performance.
Hyde v Wrench
(1840)
6 June W offered to sell his estate to H for £1000; H
offered £950
27 June W rejected H's offer
29 June H offered £1000. W refused to sell and H sued for
breach of contract.
Lord Langdale MR held that if the defendant's offer to sell
for £1,000 had been unconditionally accepted, there would have been a binding
contract; instead the plaintiff made an offer of his own of £950, and thereby
rejected the offer previously made by the defendant. It was not afterwards
competent for the plaintiff to revive the proposal of the defendant, by
tendering an acceptance of it; and that, therefore, there existed no obligation
of any sort between the parties.
Stevenson v McLean
(1880)
On Saturday, the defendant offered to sell iron to the
plaintiff at 40 shillings a ton, open until Monday. On Monday at 10am, the
plaintiff sent a telegram asking if he could have credit terms. At 1.34pm the
plaintiff sent a telegram accepting the defendant's offer, but at 1.25pm the
defendant had sent a telegram: 'Sold iron to third party' arriving at 1.46pm.
The plaintiff sued the defendant for breach of contract and the defendant
argued that the plaintiff's telegram was a counter-offer so the plaintiff's
second telegram could not be an acceptance.
It was held that the plaintiff's first telegram was not a
counter-offer but only an enquiry, so a binding contract was made by the
plaintiff's second telegram.
Butler Machine
Tool v Ex-Cell-O Corporation (1979)
The plaintiffs offered to sell a machine to the defendants.
The terms of the offer included a condition that all orders were accepted only
on the sellers' terms which were to prevail over any terms and conditions in
the buyers' order. The defendants replied ordering the machine but on different
terms and conditions. At the foot of the order was a tear-off slip reading,
"We accept your order on the Terms and Conditions stated thereon."
The plaintiffs signed and returned it, writing, "your official order … is
being entered in accordance with our revised quotation …".
The Court of Appeal had to decide on which set of terms the
contract was made. Lord Denning M.R. stated:
In many of these cases our traditional analysis of offer,
counter-offer, rejection, acceptance and so forth is out-of-date. This was
observed by Lord Wilberforce in New Zealand Shipping Co Ltd v AM Satterthwaite.
The better way is to look at all the documents passing between the parties and
glean from them, or from the conduct of the parties, whether they have reached
agreement on all material points, even though there may be differences between
the forms and conditions printed on the back of them. As Lord Cairns L.C. said
in Brogden v Metropolitan Railway Co (1877):
… there may be a consensus between the parties far short of
a complete mode of expressing it, and that consensus may be discovered from
letters or from other documents of an imperfect and incomplete description.
Applying this guide, it will be found that in most cases
when there is a "battle of forms" there is a contract as soon as the
last of the forms is sent and received without objection being taken to it.
Therefore, judgment was entered for the buyers.
GNR v Witham
(1873)
GNR advertised for tenders for the supply of stores and W
replied 'I undertake to supply the company for 12 months with such quantities
as the company may order from time to time'. GNR accepted this tender and
placed orders which W supplied. When W later refused to supply it was held that
W's tender was a standing offer which GNR could accept by placing an order. W's
refusal was a breach of contract but it also revoked W's standing offer for the future, so W did not have to meet any
further orders.
Lord Denning in
Entores v Miles Far East Corp (1955)
If a man shouts an offer to a man across a river but the
reply is not heard because of a plane flying overhead, there is no contract.
The offeree must wait and then shout back his acceptance so that the offeror
can hear it.
Powell v Lee
(1908)
The plaintiff applied for a job as headmaster and the school
managers decided to appoint him. One of them, acting without authority, told
the plaintiff he had been accepted. Later the managers decided to appoint
someone else. The plaintiff brought an action alleging that by breach of a
contract to employ him he had suffered damages in loss of salary. The county
court judge held that there was no contract as there had been no authorised
communication of intention to contract on the part of the body, that is, the
managers, alleged to be a party to the contract. This decision was upheld by
the King's Bench Division.
Felthouse v
Bindley (1862)
The plaintiff discussed buying a horse from his nephew and
wrote to him "If I hear no more about him, I consider the horse mine
…" The nephew did not reply but wanted to sell the horse to the plaintiff,
and when he was having a sale told the defendant auctioneer not to sell the
horse. By mistake the defendant sold the horse. The plaintiff sued the
defendant in the tort of conversion but could only succeed if he could show
that the horse was his.
It was held that the uncle had no right to impose upon the
nephew a sale of his horse unless he chose to comply with the condition of
writing to repudiate the offer. It was clear that the nephew intended his uncle
to have the horse but he had not communicated his intention to his uncle, or
done anything to bind himself. Nothing, therefore, had been done to vest the
property in the horse in the plaintiff. There had been no bargain to pass the
property in the horse to the plaintiff, and therefore he had no right to
complain of the sale.
Entores v Miles
Far East Corp (1955)
The plaintiffs in London made an offer by Telex to the
defendants in Holland. The defendant's acceptance was received on the
plaintiffs' Telex machine in London. The plaintiffs sought leave to serve
notice of a writ on the defendants claiming damages for breach of contract.
Service out of the jurisdiction is allowed to enforce a contract made within
the the jurisdiction. The Court of Appeal had to decide where the contract was
made.
Denning L.J. stated that the rule about instantaneous
communications between the parties is different from the rule about the post.
The contract is only complete when the acceptance is received by the offeror:
and the contract is made at the place
where the acceptance is received. The contract was made in London where the
acceptance was received. Therefore service could be made outside the
jurisdiction.
The Brimnes (1975)
The defendants hired a ship from the plaintiff shipowners.
The shipowners complained of a breach of the contract. The shipowners sent a
message by Telex, withdrawing the ship from service, between 17.30 and 18.00 on
2 April. It was not until the following morning that the defendants saw the
message of withdrawal on the machine.
Edmund-Davies L.J. agreed with the conclusion of the trial
judge. The trial judge held that the notice of withdrawal was sent during
ordinary business hours, and that he was driven to the conclusion either that
the charterers' staff had left the office on April 2 'well before the end of
ordinary business hours' or that if they were indeed there, they 'neglected to
pay attention to the Telex machine in the way they claimed it was their
ordinary practice to do.' He therefore concluded that the withdrawal Telex must
be regarded as having been 'received' at 17.45 hours and that the withdrawal
was effected at that time.
Note: Although this is a case concerning the termination of
a contract, the same rule could apply to the withdrawal and acceptance of an
offer.
Brinkibon v Stahag
Stahl (1983)
The buyers, an English company, by a telex, sent from London
to Vienna, accepted the terms of sale offered by the sellers, an Austrian
company. The buyers issued a writ claiming damages for breach of the contract.
The House of Lords held that the service of the writ should
be set aside because the contract had not been made within the court's
jurisdiction. Lord Wilberforce stated that the present case is, as Entores
itself, the simple case of instantaneous communication between principals, and,
in accordance with the general rule, involves that the contract (if any) was
made when and where the acceptance was received. This was in Vienna.
Adams v Lindsell
(1818)
2 Sept. The defendant wrote to the plaintiff offering to
sell goods asking for a reply "in the course of post"
5 Sept. The plaintiff received the letter and sent a letter
of acceptance.
9 Sept. The defendant received the plaintiff's acceptance
but on 8 Sept had sold the goods to a third party.
It was held that a binding contract was made when the
plaintiff posted the letter of acceptance on 5 Sept, so the defendant was in
breach of contract.
Household v Grant
(1879)
G applied for shares in the plaintiff company. A letter of
allotment of shares was posted but G never received it. When the company went
into liquidation G was asked, as a shareholder, to contribute the amount still
outstanding on the shares he held. The trial judge found for the plaintiff.
The Court of Appeal affirmed the judgment. Thesiger LJ
stated that "Upon balance of conveniences and inconveniences it seems to
me … it was more consistent with the acts and declarations of the parties in
this case to consider the contract complete and absolutely binding on the
transmission of the notice of allotment through the post, as the medium of
communication that the parties themselves contemplated, instead of postponing
its completion until the notice had been received by the defendant."
Holwell Securities
v Hughes (1974)
The defendant gave the plaintiff an option to buy property
which could be exercised "by notice in writing". The plaintiffs
posted a letter exercising this option but the letter was lost in the post and
the plaintiffs claimed specific performance. The Court of Appeal held that the
option had not been validly exercised. Lawton LJ stated that the plaintiffs
were unable to do what the agreement said they were to do, namely, fix the
defendant with knowledge that they had decided to buy his property. There was
no room for the application of the postal rule since the option agreement
stipulated what had to be done to exercise the option.
Tinn v Hoffman
(1873)
Acceptance was requested by return of post. Honeyman J said:
"That does not mean exclusively a reply by letter or return of post, but
you may reply by telegram or by verbal message or by any other means not later
than a letter written by return of post."
Yates v Pulleyn
(1975)
The defendant granted the plaintiff an option to buy land,
exercisable by notice in writing to be sent by "registered or recorded
delivery post". The plaintiff sent a letter accepting this offer by
ordinary post, which was received by the defendant who refused to accept it as
valid.
It was held that this method of acceptance was valid and was
no disadvantage to the offeror, as the method stipulated was only to ensure
delivery and that had happened.
R v Clarke (1927)
(Australia)
The Government offered a reward for information leading to
the arrest of certain murderers and a pardon to an accomplice who gave the
information. Clarke saw the proclamation. He gave information which led to the
conviction of the murderers. He admitted that his only object in doing so was
to clear himself of a charge of murder and that he had no intention of claiming
the reward at that time. He sued the Crown for the reward. The High Court of
Australia dismissed his claim. Higgins J stated that: "Clarke had seen the
offer, indeed; but it was not present to his mind - he had forgotten it, and
gave no consideration to it, in his intense excitement as to his own danger.
There cannot be assent without knowledge of the offer; and ignorance of the
offer is the same thing whether it is due to never hearing of it or forgetting
it after hearing."
Williams v
Carwardine (1833)
The defendant offered a reward for information leading to
the conviction of a murderer. The plaintiff knew of this offer and gave
information that it was her husband after he had beaten her, believing she had
not long to live and to ease her conscience. It was held that the plaintiff was
entitled to the reward as she knew about it and her motive in giving the
information was irrelevant.
TERMINATION OF THE OFFER
Byrne v Van
Tienhoven (1880)
1 Oct. D posted a letter offering goods for sale.
8 Oct. D revoked the offer; which arrived on 20 Oct.
11 Oct. P accepted by telegram
15 Oct. P posted a letter confirming acceptance.
It was held that the defendant's revocation was not
effective until it was received on 20 Oct. This was too late as the contract
was made on the 11th when the plaintiff sent a telegram. Judgment was given for
the plaintiffs.
Dickinson v Dodds
(1876)
Dodds offered to sell his house to Dickinson, the offer
being open until 9am Friday. On Thursday, Dodds sold the house to Allan.
Dickinson was told of the sale by Berry, the estate agent, and he delivered an
acceptance before 9am Friday. The trial judge awarded Dickinson a decree of
specific performance. The Court of Appeal reversed the decision of the judge.
James LJ stated that the plaintiff knew that Dodds was no
longer minded to sell the property to him as plainly and clearly as if Dodds
had told him in so many words, "I withdraw the offer." This was
evident from the plaintiff's own statements. It was clear that before there was
any attempt at acceptance by the plaintiff, he was perfectly well aware that
Dodds had changed his mind, and that he had in fact agreed to sell the property
to Allan. It was impossible, therefore, to say there was ever that existence of
the same mind between the two parties which is essential in point of law to the
making of an agreement.
Shuey v U.S.
(1875)
On 20 April 1865, the Secretary of War published in the
public newspapers and issued a proclamation, announcing that liberal rewards
will be paid for any information that leads to the arrest of certain named
criminals. The proclamation was not limited in terms to any specific period. On
24 November 1865, the President issued an order revoking the offer of the reward.
In 1866 the claimant discovered and identified one of the named persons, and
informed the authorities. He was, at all times, unaware that the offer of the
reward had been revoked.
The claimant's petition was dismissed. It was held that the
offer of a reward was revoked on 24 November and notice of the revocation was
published. It was withdrawn through the same channel in which it was made. It
was immaterial that the claimant was ignorant of the withdrawal. The offer of
the reward not having been made to him directly, but by means of a published
proclamation, he should have known that it could be revoked in the manner in
which it was made.
Errington v
Errington and Woods (1952)
A father bought a house on mortgage for his son and
daughter-in-law and promised them that if they paid off the mortgage, they
could have the house. They began to do this but before they had finished
paying, the father died. His widow claimed the house. The daughter-in-law was
granted possession of the house by the trial judge and the Court of Appeal.
Denning LJ stated: "The father's promise was a
unilateral contract - a promise of the house in return for their act of paying
the instalments. It could not be revoked by him once the couple entered on
performance of the act, but it would cease to bind him if they left it
incomplete and unperformed, which they have not done. If that was the position
during the father's lifetime, so it must be after his death. If the
daughter-in-law continues to pay all the building society instalments, the
couple will be entitled to have the property transferred to them as soon as the
mortgage is paid off; but if she does not do so, then the building society will
claim the instalments from the father's estate and the estate will have to pay
them. I cannot think that in those circumstances the estate would be bound to
transfer the house to them, any more than the father himself would have
been."
Daulia v Four
Millbank Nominees (1978)
The defendant offered to sell property to the plaintiff. The
parties agreed terms and agreed to exchange contracts. The defendant asked the
plaintiff to attend at the defendant's office to exchange. The plaintiff
attended but the defendant sold to a third party for a higher price. It was
held that the contract fell foul of s40(1) Law of property Act 1925 and the
plaintiff's claim was struck out. However, Goff L.J. stated obiter:
In unilateral contracts the offeror is entitled to require
full performance of the condition imposed otherwise he is not bound. That must
be subject to one important qualification - there must be an implied obligation
on the part of the offeror not to prevent the condition being satisfied, an
obligation which arises as soon as the offeree starts to perform. Until then
the offeror can revoke the whole thing, but once the offeree has embarked on
performance, it is too late for the offeror to revoke his offer.
Ramsgate v
Montefiore (1866)
On 8 June, the defendant offered to buy shares in the
plaintiff company. On 23 Nov, the plaintiff accepted but the defendant no
longer wanted them and refused to pay. It was held that the six-month delay
between the offer in June and the acceptance in November was unreasonable and
so the offer had 'lapsed', ie it could no longer be accepted and the defendant
was not liable for the price of the shares.
Financings Ltd v
Stimson (1962)
The defendant at the premises of a dealer signed a form by
which he offered to take a car on HP terms from the plaintiffs. He paid a
deposit and was allowed to take the car away. He was dissatisfied with it and
returned it to the dealer, saying he did not want it. The car was stolen from
the dealer's premises and damaged. The plaintiffs, not having been told that
the defendant had returned the car, signed the HP agreement.
It was held by the Court of Appeal (a) that the defendant
had revoked his offer by returning the car to the dealer. (b) In view of an
express provision in the form of the contract that the defendant had examined
the car and satisfied himself that it was in good order and condition, the
offer was conditional on the car remaining in substantially the same condition
until the moment of acceptance. That condition not being fulfilled, the
acceptance was invalid.
Bradbury v Morgan
(1862)
JM Leigh requested Bradbury & Co to give credit to HJ
Leigh, his brother. JM Leigh guaranteed his brother's account to the extent of
£100. Bradbury thereafter credited HJ Leigh in the usual way of their business.
JM Leigh died but Bradbury, having no notice or knowledge of his death, continued
to supply HJ Leigh with goods on credit. JM Leigh's executors (Morgan) refused
to pay, arguing that they were not liable as the debts were contracted and
incurred after the death of JM Leigh and not in his lifetime. Judgment was
given for the plaintiffs, Bradbury.
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