Offer

Topics you will cover:

- 5 Essentials to a valid contract

- Define Offer
- How an offer is made
- Certainity of an offer
- How an offer comes to an end
- Revokation of an offer
- Rejection of offer
- Death

Cases included in this chapter:

Case #1: CARLIL v CARBOLIC SMOKEBALL CO.

Case #2: FOLEY v CLASSIQUE COACHES LTD.
Case #3: DICKINSON v DODDS
Case #4: BYRNE v VANTIENHOVEN
Case #5: RAMSGATE VICTORIA HOTEL v MONTEFIERE
Case #6: HYDE v WRENCH

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- Essentials to the valid contract are:

• One party must make an offer which the other party has a
choice to accept. Offer and Acceptance are proof that the
parties are in agreement.

• Both parties must contribute something of value to the

bargain. This contribution is called consideration and without it
the contract will not be valid. Unless it is put in a special form of
legal document called a "deed".

• The parties must intend to create a legal relation.

• The parties must be legally capable of contracting.

• The parties must genuinely consent to the agreement. The

purpose of the contract must not be illegal.

- Offer
When one party indicates that he/she is willing to be bound as
soon as the other party agrees to his/her terms, he/she has
made an offer. The party making the offer is called offeror and
the person to whom the offer is being made to is called offeree.

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- How can an offer be made?
• An offer can be made orally, in writing or even by conduct. As
long as it indicates that the offeror is willing to be bound, if his
terms are accepted. An offer may be made to one person or to
a group or "the world at large".

• In the case of CARLILL v CARBOLIC SMOKEBALL COMPANY

[1892], the defendants were the makers of a patent medicine
called a smoke ball which they claimed could cure and prevent
a number of illnesses including influenza.
They promised a reward of £100 to anyone who used the
smokeball as prescribed and caught influenza. The company
showing their good faith, claimed they had put £1000 in the
bank to pay any claimants.
Mrs. Carlill used the smokeball as directed and still got
influenza. The defendants refused to pay the reward, claiming
among other arguments that there was no contract as it was
impossible to have a contract with the whole world.
The court held that it was impossible to have a contract with
the whole world but when you claim to deposit cash in your
account for the purpose of authenticity of your offer then you
are bound to pay Mrs. Carlill the agreed amount.

- Certainity of an Offer:
•The terms of an offer must be certain.

•If one of the terms of the agreement is uncertain or

meaningless, the court may simply ignore it.

•In the case of FOLEY v CLASSIQUE COACHES LTD. [1934], an

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agreement that petrol would be sold at a price to be agreed
between the parties did not "invalidate the contract" despite
it's vagueness, because the contract contained an arbitration
clause. The uncertainity regarding petrol could be resolved by
the arbitrator.

- How an offer comes to an end:

•An offer ends when it is accepted.
•When the offeror withdraws or revokes the offer.
•When the offer has remained open for too long.
•When it is rejected by the offeree.
•When the condition on which the offer was based is not
fulfilled.
•On the death of either parties.

- Revocation of an Offer:
• Revocation is the legal term for withdrawal of an offer by the
offeror.

• An offer can be revoked at any time before acceptance but

the offeree must be informed of the revokation. Until and
unless he/she knows the offer has been revoked he/she is free
to accept it.

• Usually the offeror tells the offeree that the offer has been
withdrawn but sometimes the offeree hears from a third-party.
Such a revocation can be effective provided that this is a
reliable third-party or source.

• In the case of DICKINSON v DODDS [1876], the defendant

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offered to sell a house to the plaintiff and said that he would
keep the offer open on Friday morning till 9.
On Thursday afternoon the defendant was on the point of
selling the house to the third-party. The plaintiff left a copy of
his acceptance at the defendants house before 9 a.m. But after
the defendant had already sold the house to the third party.
The court held that there was no contract. The offer was
revoked when the plaintiff was informed of the imminent sale
to another party.

• Revocation is not valid until it is actually recieved not when it

is put to/in the post.
This was illustrated in the case of BYRNE v VANTIENHOVEN
[1880].
The defendants posted a letter on the 1st of October making an
offer to the plaintiffs. On the 8th of Oct. they posted another
letter revoking the previous offer but this time the letter did
not arrive until the 25th of Oct., after the acceptance was
already sent. It was held that a contract was formed when the
offer was accepted by sending the telegram, and so the
revocation arrived too late to have any effect.

• If an offer is said to be open for a specified time period

(deadline) then it ends when the time ends and so an offer to
let someone have first refusal on a car until 9.a.m. on Friday
morning will come to an end at that specific time.

• If no time is specified, then the offer will end after a

"reasonable time".

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• In RAMSGATE VICTORIA HOTEL v MONTEFIORE [1866], an
offer to buy shares was made on the 8th of June. The
acceptance did not arrive until the 23rd of November and so
the court held that this was too late; the offer had lapsed in the
meantime.

• What exactly constitutes a "reasonable time" for an offer to

remain open is decided by the court based upon the facts of
the case, which includes the nature of the subject matter.

• In the case of shares, prices can vary/change quickly and so

the offer would be open for a fairly short time period. But if the
contract was regarding the sale of land/property it might be
reasonable to give the offeree longer time to accept the offer.

- Rejection of an Offer:
• To reject an offer is to end it. The offeree cannot "go back" on
his/her rejection once he/she has given it; he/she cannot
"revive" the offer unless the other party agrees.

• A counter-offer by which the offeree answers the offer with

another offer containing new terms, has the same effect as a
rejection; it ends the offer.

• HYDE v WRENCH [1840], the defendant offered to sell a farm

at £1000. The plaintiff refused this offer and made a counter-
offer of £950, which was also refused. The plaintiff then offered
£1000 and when the refused to let him have the farm he sued
him.
The court held that there was not contract. The original offer,
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to sell at £1000 had ended when the counter-offer of £950 was
made and the later offer, to buy at £1000 had not been
accepted.

- Death:
• The death of the offeree before acceptance will end an offer,
since the offer was made to that person and no-one else can
accept it.

• The death of the offeror ends the offer once the offeree
knows of the death, and if he/she accepts before hearing of the
demise the contract will bind the offerors personal
representatives.

• This will not apply to any contract that involves the personal
attributes of the offeror, such as a contract of employment or
service.