Contract

COMPONENT 2
SECTION A
Requirements of a contract

1. Offer
2. Acceptance
3. Consideration
4. The intention to create legal relations
Two types of contract

Unilateral contracts
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Two types of contract

Unilateral contracts Bilateral contracts

One party promises to do A promise by one party is
something in return for an act of exchanged for a
the other party. promise by another party.

E.G. A promise to reward A promise for the sale of goods.

someone for the return of lost The buyer promises to pay the
property. price and the seller promises
to deliver the goods.
OFFER

What is an offer?

An offer is a statement of willingness by an offeree to enter

into a legally binding agreement based on the term made
by the offeror.

When these terms are ACCEPTED the contract is formed.

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Invitations to treat

An invitation to treat is not an offer.

For, example goods displayed on a supermarket

shelf are generally just an invitation to treat. It is
the customer that makes the offer not the
supermarket.
Fisher v Bell A flick knife displayed
(1961) in a shop window was
not an 'offer for sale'.

It was merely an
invitation to treat.
Partridge v An advertisement in a
Crittenden newspaper that said
(1968) 'Bramblefinches 25
shillings each' was not an
offer.

It was just an invitation to

treat.
Is this an offer?
Carlill v Carbolic Smoke Ball (1893)

The Ds advertised that they would pay This is a unilateral contract.

£100 to any purchaser who used the
smoke ball correctly and still got flu.
The company put £1000 in a bank
account to show their sincerity.
C caught flu after using the smoke ball
correctly and claimed £100.
The Ds refused to pay stating it was
impossible to make a contract with the
whole world.
A promise to pay a reward can
amount to an offer if the
wording shows an intention to
be bound.
Paying £1000 into a bank
account showed this intention.
Mini-scenarios - 1, 2, 3
(THE BLUE SHEET)
Mini-scenario 1

Barry went to his local auction house to treat

himself. Lot 23 was a particularly beautiful
antique toilet seat, and Connie (the
auctioneer) started the bidding at £50. Barry
eventually bought the toilet seat for £6500.

Who made the offer Barry or Connie? Why?

Auctions:

British Car
Auctions v Wright It was held in this case
(1972)
that in an auction, it is
A prosecution for
'offering to sell
the bidder that makes
an unroadworthy the offer and this is
vehicle' at an
auction failed. It
only accepted when
was not an offer. the hammer falls.
Mini-scenario 2

Felicity was selling her house and invited

interested parties to make bids for her house.
There was an understanding that the highest bid
would be accepted. George bid £150,000; and
Harold bid £125,000. Felicity accepted Harold’s
offer and George sued for breach of contract.

Why do you think Felicity has not breached a

contract? Did Felicity make an offer? Why?
Request for tenders:

Harvela Investments
An invitation to tender
v Royal Trust of (an invitation to make a
Canada (1986)
bid) is just an invitation to
RTC invited two parties to
bid for some land on the
treat.
understanding that the
highest bid would be The company in this case
accepted. One party bid
$2.1m, and RTC accepted makes the offer when
the offer. Harvela sued
for breach of contract they make the bid.
(they had
offered $2.175m).
Mini-scenario 3

Paul sent Derek an email and asked Derek if he would

sell him his car; he also asked Derek what the lowest
price Derek would accept for the car was.
Derek replied and said “Lowest price … £2500.”
Paul emailed back and said “I agree to buy the car
for £2500.”

Did Derek make an offer? Why?

A statement of
price:

Harvey v Facey
In this case, the telegram
(1893) stating how much Facey
Harvey telegraphed to
would sell for is an
Facey: “Will you sell us
Bumper Hall invitation to treat.
Pen? Telegraph lowest
cash price.”
A statement of price is
Facey replied: “Lowest
cash … £900.” not an offer.
Harvey then telegraphed:
“We agree to buy Bumper
Hall Pen for the £900
asked by you.”
Mini-scenarios – 4, 5, 6, 7
(THE BLUE SHEET)
Mini-scenario 4

Maria offered her necklace for sale but made it clear that the
offer would only remain open for 2 months. After 2 months she
withdrew the offer.

Is Maria allowed to do this? Why?

Yes. An offer may be revoked at any time until it is accepted –

Routledge v Grant.
Mini-scenario 5

If Maria had not withdrawn the offer, and 2 years later Emily
had seen the offer and tried to accept it, would Maria have
been bound by a contract or could the court decide the
offer no longer exists? Why?

The court could decide that the offer no longer exists

because a reasonable amount of time may have passed.
Where an offer has not been formally withdrawn, it will lapse
after a reasonable amount of time - Ramsgate Victoria v
Montefiori.
Mini-scenario 6

Larry and Joan offered their caravan for sale to Bob. A week
later they had a conversation and decided that they didn’t
want to sell the caravan after all. As Joan was about to send
Bob an email to tell him, she saw that Bob had agreed to
buy the caravan in an email sent the day before. Are Larry
and Joan able to argue there is no contract? Why?

Larry and Joan cannot argue that there is no contract. The

revocation of the offer was not communicated to Bob
before he accepted it – Byrne v Tienhoven.
Mini-scenario 7

Robert offers his speedboat for sale for £4000. Robert is

then killed by a bus whilst taking the life jackets he no
longer needs to the charity shop. Can Eric accept the
offer after Robert’s death?

An offer cannot be accepted once the offeror has died.

BUT, if the offeree doesn’t know about the death when
they accept the offer, a contract might be formed -
Bradbury v Morgan.