OFFER AND ACCEPTANCE

Definition of offer
Section 2(a) Contracts Act 1950 • • An offer is a promise or proposal by a person (offeror) to another person (offeree) with intention to create legally binding relationship. Offer can be by words, conduct, an act or abstinence.

Condition of offer
• Must be clear, complete, final to avoid any doubt or discrepancies if terms unclear.

GUNTHING v LYNN Lynn offered to buy a horse from Guthing on condition that if the horse brings luck to him he will pay another 5pound extra. A dispute arose and the issue is whether there is valid offer or not.

Held: The offer is not valid because it’s not final and complete.

Offer can be made either expressly or impliedly (Section 9 Contracts Act 1950). Expressly – in writing or verbally Impliedly – conduct of the parties.

Type of offer
o Individual (specific person) (Section 2(b)) BOULTON v JONES o General public 1. Address public at large and would satisfy all terms and conditions stipulated by offeror. 2. Anyone who fulfill the condition may accept the offer.

CARLILL v CARBOLIC SMOKE BALL CO.

Mr. They also mentioned that they would pay 100pound to anyone who still suffering influenza after taking medicine according to its prescription. Held: Plaintiff did not communicate his offer to give his service to sail the ship back. Mr. no acceptance could be made to form binding contract.complete when it comes to the knowledge of person to whom it made. TAYLOR v LAIRD Plaintiff (Taylor) resigned from being the captain of a ship owned by the Defendant during a voyage. Plaintiff accepted the offer and entitled the money. The Plaintiff claim for the amount promised but the Defendant refused.The Defendants had made an advertisement about a medicine Smoke Ball that was used to cure influenza. Plaintiff then assisted to sail the ship back and claimed remuneration from Defendant (Laird) from work done. the defendant had deposited some amount of money into the bank. To show their sincerity. Clarke then gave information which lead to the arrest of another person. it does not form any binding contract. If not. Therefore Defendant did not liable to pay remuneration to Plaintiff. . X and Clarke were arrested for the crime. o A party accept the offer must aware the existence. R v CLARKE The Australian Government offered a reward for any information leading to the arrest and conviction of persons responsible for the murder of 2 police officers. Communication of offer o Section 2 (a) – ‘signifies to other’ o Section 4 (1) . o If the offer has not been communicated to the offeree. Held: The advertisement was made to the whole world at large and anyone who consumed the medicine as prescribed was said to accept the offer. Y. The Plaintiff duly used the product advertised but nevertheless became ill.

X and Y were convicted but Clark was release. Later. HARRIS v NICKERSON Defendant advertised a sale of certain goods including certain office accessories on a certain date at particular place. Invitation from one party to make an offer. o Examples : advertisement. Plaintiff attended the sale with attention to buy some office accessories. OFFER VS INVITATION TO TREAT o An offer must be differentiate from invitation to treat (ITT). the Defendant had actually withdrawn the sale of office accessories. tender. COELHO v PUBLIC SERVICE COMMISSION . Held: The advertisement was only invitation to treat and no contract. auctioneer. he knew about the reward and claimed for it. Plaintiff sought for damages and claimed that the defendant had breached the contract since the advertisement was an offer and his presence was an acceptance to the offer. The person who read the advertisement and make offer to buy. However. o Advertisement :1. Only an invitation to attract people’s interest to make an offer. Held: His claim failed on the grounds that the information was given only to release himself and not in reliance on the offer of reward. display of goods with price tags. ITT is not an offer but sort of preliminary communication on stage of negotiation which might lead to an offer. 2. price list.

They had stationed a registered one at the cashier’s desk. Subsequently. However it was alleged that there was a contract when the customers selected those poisons and put it into the shopping baskets. which made it unlawful to sell certain poisons unless a registered pharmacist supervised the sale. the Defendant tried to terminate Plaintiff’s employment on the basis that he was appointed on probation. there was a valid contract between Plaintiff and Defendant.The Plaintiff applied for the post of Assistant Passport Officer as advertised in Malay Mail newspaper. In this case. The termination was invalid. the appointment letter was an unconditional acceptance. The application from the applicant was offers and such offers could either be accepted with or without conditions. Held: The job advertisement was an invitation to any qualified persons to apply. FISHER v BELL . The agreement or contract was formed once cashier accepted the payment from the buyer. PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v BOOTS CASH CHEMIST LTD The defendants were charged under the Pharmacy and Poisons Act 1933. The offer is made when customers select the desired goods and bring them to the counter for payment. o Display of goods with price tags 1. Cashier will make acceptance. Held: The display of goods on shelf was only invitation to treat. He was later informed that his application has been accepted. Therefore.

Held: No contract had been made because B just supplying the information. Notice inviting tender are also invitation to treat. o Tender 1. A agreed to buy it on price. The offer for tender made by the Plaintiff was the highest but the Defendant did not accept it. The acceptance of that offer depends on the discretion of shop owner. Both buyers and sellers have rights to accept or reject such offer or new price given. . The party submitted the tender may or may not accept such tender SPENCER v HARDING The Defendant made an announcement inviting tenders for the sale of certain goods. To give opportunity to buyer to choose the best price. Held: The Defendant has the right to reject such offer as there was no valid contract. B replied by telegraph “the lowest price for BHP is 900pound. HARVEY v FACEY A had telegraphed to B “will you sell us Bumper Hall Pen?’ (a plot of land).Display of several kinds of pen-knives in a glass window is only invitation to treat. o Price List or Quotation 1.

The publisher (Preston) asked for quotation from Respondent (printer) Held: The quotation was only supply of information and only invitation to treat.PRESTON CORPORATION SDN BHD v EDWARD LEONG & ORS. The issue was. It is only invitation to treat. . can Defendant revoke his offer before 6 weeks lapsed? Held: Defendant may revoke his offer at any time within 6 weeks on condition that no acceptance had been made by Plaintiff. PAYNE v CAVE An offer can be effectively revoked before fall of hammer in an auction sale. o Section 5 (1) – an offeror may revoke it at any time before acceptance. ROUTLEDGE v GRANT Defendant offered to sell house to Plaintiff and acceptance need to be made within 6 weeks. 2. REVOCATION OF OFFER • When it can revoke? o An offer remains open until it lapses or withdrawn. offeror is no longer entitled to revoke his offer. o Once accepted. o Auctioneer inviting bids 1. “A sale by public auction shall be complete when the auctioneer announces its completion by the fall of hammer” (Section 10 Auction Sales Act).

The following communications took place between them: 1st October: D posted letter of offer in Cardiff to P in New York 8th October: D posted a letter revoking the offer 11th October: P received the letter of offer and sent acceptance by telegram on the same day 15th October: P sent a letter of acceptance. verifying the acceptance by telegram on the 11th October 20th October: P received the D’s letter of revocation which was posted on the 8th October Held: There was a contract between the parties. (Section 4 (3) (a) & (b) ) (Illustration Section 4) 2. BRYNE v VAN TIENHOVEN D offered to sell 1000 boxes of tinplates to the P. Third party is not sufficient. HENTHORN v FRASER . Revocation through post – (Illustration Section 5) 3.• Modes of revocation (Section 6) o Section 6 (a) .Communication of revocation notice by offeror to another party 1. Revocation only effective when it put into the transmission on the person and after the notice had come to actual knowledge of another party/oferee. It can be made offeror or their representative. The revocation of the offer posted on 8 Oct was not effective until 20th Oct when it was received by the P. Meantime. the P had already accepted the offer on 11 October when the telegram was sent.

50pm when P posted his letter of acceptance to the D. When the acceptance has not been made within the time prescribed by the offeror. Held: contract occurred at 3. The P were expected to mail the scrips of shares about the end of March. Held: The acceptance of the P was not made within a reasonable time. the scripts would have arrived on or before 23rd April. RAMSGATE v MONTEFIORE MACON WORKS v PHANG HON CHIN . • Revocation by lapse of time (Section 6 (b)) o Two situation occurred:1. 3. The following events took place on the following day: 12pm : D posted a letter of revocation to the P. 5pm: P received the letter of revocation of offer from the D. taking into consideration that the shares in question were mining shares of a very fluctuating character. o What is defined as ‘reasonable time’? FRASER v EVERETT The contract was for shares. If no time is prescribed the acceptance has not been made within a reasonable time.D represented an association of developers offered in writing to sell several houses to the P. The scripts should have been delivered much earlier. However the scripts were mailed early in April and received by the D on 15th May. and which if done so. 2.50pm: P posted a letter of acceptance to the D.

• Revocation by the death or mental disorder of offeror. (Section 6 (d)) ACCEPTANCE Section 2 (b) • • Acceptance is where the person to whom offer was made agrees to the offer or the proposal made or adopts the conditions of offer. (Section 6 (c) ) o If offeror put a condition to be fulfilled by offeree before making acceptance the offeree must fulfil it and if not the offer is revoked. CONDITION OF ACCEPTANCE • Acceptance must be absolute and unqualified o Acceptance must be made exactly on the same terms as the offer without any modifications. on June 27 the . A contract is binding when the offer is accepted. Once there is an acceptance an agreement between the parties is created. HYDE v WRENCH On June 6 the Defendant offered to sell his estate to the Plaintiff for 1000pound. On June 8. The Defendants refused to accept the counter offer. in reply the Plaintiff made a counter offer to purchase the land at 950pound.• Revocation by failure of the offeree to fulfil condition precedent to the acceptance. Subsequently. (Section 7 (a)) o Any modification constitute counter-offer not acceptance o Counter-offer – rejection of original offer and did not amount to create binding contract.

The Plaintiff sent a telegraph to the Defendant saying “Please answer whether you would accept payment for delivery over 2 months or if not longest limit that you would give. Held: The Plaintiff did not make a counter offer. ELIASON v HENSHAW The appellant offered to buy flour from the Respondent requesting that the acceptance to the offer should be sent to the Appellant at Harper’s ferry by the wagon which brought the offer letter.Plaintiff accepted the original offer. must be followed by the offeror. The issue was whether there was a valid acceptance and the Defendant was bound to sell the land to Plaintiff. Held: There was no acceptance because the counter offer contained in the Plaintiff’s letter of June 8 had rejected the original offer which could not be revived. The respondent sent the letter by mail thinking that it can arrive more quickly. • Communication of acceptance must be in some usual and reasonable manner o Two method of communication with regard to the mode of acceptance and time of acceptance. The telegram was only an inquiry which should have been answered by the Defendant and could not be treated as a rejection to the offer. Unfortunately. o The general rule is an acceptance must be communicated to the offeror.” There was no response from the Defendant and the Defendant then sold the iron to another purchaser thinking that the Plaintiff had rejected the offer. The mode of acceptance for example that the acceptance must be made by writing. o If the offer does not follow the prescribed mode. the prescribed letter . the acceptance must be in usual and reasonable manner depending on the circumstances and practice norms available. STEVENSON JAQUES & CO v Mc LEAN The defendant offered to sell iron at 40s per ton.

FRASER v EVERETT It was held that there is no rule of law saying that “silence give consent” which is applicable to mercantile contracts.   .  If the offeror waives the requirement of communication of acceptance or release the offeree from obligation to communicate the acceptance. in certain circumstances.arrived after prescribed date. a valid acceptance had been made even though there was no communication of acceptance. Keeping silence without actually making the effort of conveying the acceptance to the offeree does not amount to an acceptance. Exceptions to general rule of communication of acceptance: o Although acceptance must generally be communicated to the offeror. the offeree needs not to communicate his/her acceptance to the offeree. once the plaintiff fulfils the certain conditions. Hence. a contract can still be created. the mode of acceptance must be made clearly by offeror. However there must be some express or implied requirement from the offeror that a particular mode of acceptance will be sufficient or there must be some conduct on part of offeree which shoes that offeree intends to accept and which confirms to the mode of acceptance indicated by the offeror In Carlill v Carbolic Smoke Ball. Held: The Appellant was entitled to reject the acceptance as the Respondent did not adhere to the prescribed mode of acceptance. The issue was whether there was a valid acceptance to constitute valid contract. o The following are the exceptional circumstances where communication of acceptance is not necessary: • When the offeror dispensed with the need of communication of acceptance. actual communication is not required. o Therefore. even though the acceptance was not physically made.

The acceptance became valid once the son started to pay the instalment even though the son did not verbally communicate his acceptance. Acceptance through post (postal rule)  The general rule is that the acceptance is complete only when it is communicate to the offeror. However. it binds the offeror from the time that it is posted and not when it received. • Reciprocal promises  Section 2(f): promises which form the consideration or part of consideration for each other are called reciprocal promises  Section 8: performance of the conditions of a proposal.  The proposer allows the acceptance of any consideration for a reciprocal promise which may be offered with a proposal. The son then paid the instalment but subsequently. is an acceptance of proposal. The issue was whether there was a valid contract between them Held: There was a valid contract between father and son. acceptance through post is complete even though it has not come to the actual knowledge of the offeror. the father refused to transfer the house. This is an exception to the general rule that the acceptance must be communicate and called as ‘postal rule’   .ERRINGTON v ERRINGTON A father promised his son & daughter in-law that the house in which they were living would belong to them as soon as they had paid off the instalments of a mortgage on the house. or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal. Actual communication is not necessary and only the act of performing the conditions considered sufficient. The father’s promise was a unilateral contract.  When the offer contains certain stipulations or conditions in order to form a valid acceptance. It is communicated when it comes to the actual knowledge of the offeror. When a letter of acceptance is posted. • Where the offeror allows the offeree to fulfil the condition of offer.

HOUSEHOLD FIRE & CARRIAGE ACCIDENT INSURANCE v GRANT . This situation is also applied where the letter of acceptance gets lost upon posting or its delay. as against the acceptor. The dispute is whether there is a contract created as there was a delay. IGNITIUS v BELL The Defendant offered to sell his land to the Plaintiff on condition that if the plaintiff would like to accept the offer. Hence. that is where the contract is made. the acceptance is complete as soon as the letter is put into post box. ENTORES v MILES FAR EAST CORPORATION It was held that when a contract is made by post.  Illustration (b) to Section 4: B accepts A’s proposal by letter sent by post. when the letter received by A  Therefore. Under this exception. The communication of the acceptance is complete – As against A. a valid contract is created when the acceptance is posted. although the letter of acceptance has not reached the offeror. the offeror is bound by the offeree’s acceptance even though he has no knowledge the acceptance being made. the defendant was bound by the contract. when it comes to the knowledge of the proposer. when the letter is posted As against B. The Plaintiff sent an acceptance by registered post on the 16th August but the letter only reached on the Defendant on 25th August. and b. Held: The acceptance was exercised by the plaintiff when the letter was posted on 16th August. Section 4 (2) provides communication of acceptance is complete  a. when it is put in a course of transmission to him. as against the proposer. the offeror is still bound by the acceptance. the acceptance must be made on or before 20th August 1912. so as to be out of power of the acceptor. A contract is created once the letter of acceptance is posted and hence.

 Revocation of acceptance  Section 5 (2): An acceptance may be revoked at any time before the communication of the acceptance is complete against the acceptor. When the plaintiff’s company asked for payment of he shares. DUNMORE v ALEXANDER The letter of acceptance and the letter of revoking the acceptance were received by the offeror simultaneously. the offeree remains free from contract until the actual receipt of the acceptance by the offeror. However. the defendant refused to pay as there was no valid acceptance from plaintiff’s company. but not afterwards. He could post the letter of acceptance and thus stop the offeror from withdrawing or revoking the offer. Therefore there was no contract. the offeror should provide adequate protection including terms in the offer when the actual contract begins and both parties are bound by the terms. As precaution.  When the communication of revocation of acceptance affective? a. It was held that the acceptance had been effectively revoked by the offeree.e. Illustration (d) Section 4 : B revokes his acceptance by telegraph. The offeree could revoke his acceptance at any time before or at the moment the letter of acceptance reaches the offeror.  Based on Section 4 (2). The plaintiff’s company accepted the offer and the letter of allotment (i. B’s revocation is complete as against B when the telegram is dispatched. letter of acceptance) was posted to the defendant. Section 4 (3) (a) & (b) b. and as against A when it reaches him  In conclusion.The Defendant offered to buy shares in the plaintiff’s company. Therefore valid contract existed.  . the acceptance never reached the destination. it appears that the offeree has the advantages in 2 situations: a. Held: There was valid acceptance once the plaintiff’s company posted the acceptance.

In the meantime. he could revoke the acceptance by using a speedier means of communication before the letter of acceptance reaches the offeror .b.

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