THE OFFER

● “An offer is an expression of willingness to contract on certain terms. It must be

made with the intention that it will become binding upon acceptance.” In other
words- Upon acceptance, there should be no need for further negotiations or
discussions. The offer must contain allll the details.

● Offer can be made by words, writing or conduct.

● It usually takes into consideration the objective intentions of the parties. (Smith v
Hughes 1871).

● Exception to objective approach - This is known as the “snapping up effect”. If the

offeree is aware that the offerer is mistaken as to the terms of the contract, the
offeree cannot accept the offer. (Hartog v Collins and Sheilds 1939).

● Limitation- It isn’t enough fo the offeree to know the offerer made a mistake, it
must be that the offeree is aware that the offeror is mistaken as to the terms of the
contract ( Statoil ASA v Louis Dreyfus Energy Services LP (‘The Harriette N’)
[2008] ).

● Scriven Bros v Hindley [1913] - The offeree was careless, induced the mistake on
his own and therefore should have known the offeror was mistaken as to the
terms.

Two important offer cases -

1) Storer v Manchester City Council (1974) - The defendant, MCC, was selling
council council houses. The claimant applied to purchase a house with
mortgage by filling out a form. The Council agreed and wrote back to the
claimant informing him to sign the agreement and a signed copy would be
sent back to the claimant. The claimant did this but left the date (of which
the sale would be complete) blank.
 Due to unforeseen circumstances, MCC decided not to go through with the
agreement but the claimant noted that there was already a completed
contract.

The issue - 1) Was there a valid contract? 2) Was the fact that the date clause
was blank mean that there was not a contract?

Decision - The lower court decided that date on the form was a mere
administrative formality and that there was requisite intention that the
contract be binding.

The Court of Appeal upheld this decision. Lord Denning MR said

“In contracts you do not look into the actual intent in a man’s mind. You look at
what he said and did. A contract is formed when there is, to all outward
appearances, a contract. A man cannot get out of a contract by saying ‘I did not
intend to contract’ if by his words he has done so. His intention is to be found
only in the outward expression which his letters convey. It they show a
concluded contract, that is enough.’

2) Gibson v Manchester City Council (1974) - The defendants sent a brochure to

persons that expressed interest in purchasing council houses. Mr Gibson
filled out a form on the brochure and also asked about the price of the
house.
Treasurer wrote back to Mr Gibson and said the “the council may be
prepared to sell the house’ to him at a stated price and also informed him
that if he wanted to make a “formal application” to purchase one of the
houses, he was required to complete another form.

Mr Gibson filled out a form but did not add in a price. He wanted to enquire
whether the council would be willing to fix the path to his house. If they
 were not willing, he would deduct the cost to repair the path from the
house.

The council’s reply was that the condition of the house (including the path)
was taken into consideration when they decided on the price. Mr Gibson
agreed and told the council to continue with the application for the
purchase of the house. Mr Gibson began repairs.

The Labour Party won the elections and took control of the council. They
decided to stop selling council houses unless there was already a binding
contract. They concluded that there was no binding contract (wrt to Mr
Gibson).

Decision-

The trial judge and COA held that there was a binding contract. Lord
Denning held that since all the material points were agreed upon, there was
no need for the specific formalities to be completed for there to be a binding
contract.

HOWEVER, The HOL held that there was no binding contract. The words
“may be prepared to sell” was not an offer. The council was simply
expressing their willingness to enter into negotiations. The HOL also noted
that Mr Gibson was told to “make a formal application” and not to simply
indicate that he agreed to the terms.

Tretel stated (2015, para 2-007) that: “ It may be possible to displace these rules by
evidence of contrary intention, but the absence of such evidence (these rules of
law) will determine the distinction between offer and invitation to treat, and they
will do so without the reference to the intention ( actual or objectively ascertained)
of the maker of the statement
If the communication lacks the requisite intention to be bound upon acceptance,
it may not be an offer. Sometimes what looks like an offer may simply be: a
statement of intention, A supply of information or an invitation to treat.

A statement of intention - If a party says they will do something, this can be an

offer. However, if they simply say that they intend to do it, this won't be enough to
be considered an offer. (Harris v Nickerson 1873)

A supply of Information- One party provides information to english another party.

There is no intention that a party should or would act upon the information
provided. (Harvey v Facey 1893)

AN INVITATION TO TREAT

● A party expresses their willingness to do business with another. They

indicate that negotiations can begin ( to work out all the details ) or an offer
can be made.

The courts have looked at a variety of circumstances to decide whether its an

invitation to treat or an actual offer that can be accepted.

a) A display of goods - Generally, an invitation to treat.

Pharmaceutical Society v Boots (1953) - It was a self service shop. The COA held
that the display of the goods was not an offer. Instead, the customer made an offer
to the cashier when he arrived, the offer was accepted when payment was taken.
This was supported by the fact that the customer was free to take the items back
to the shelf before carrying it to the cashier.

Thornton v Shoe Lane Parking (`1971) - Where a display is made by a machine, the
display will most probably be an offer.
 b) An advertisement - An invitation to treat, where a bilateral contract is
anticipated.

Partridge v Crittenden (`1968) - The advertisement of a bilateral contract was an

invitation to treat.

The defendant had for sale Bramblefinch cocks and hens, stating that the price was
to be 25 shillings for each. The court held it was not an offer but instead an
invitation to treat.

Carlill v Carbolic Smoke Ball Company (1893) - A unilateral contract where the
advertisement was an offer.
Upon completing the instructions in the advertisement, Mrs Carlill accepted the
offer.

NOTE: The law of consumer protection prohibits misleading advertisements. Eg,

The Unfair Trading Regualations 20018/1277, Part 2. Prohibits misleading adv
aimed at consumers. The European Court of Justice has said that it would be a
breach of European consumer protection law if in a ship a consumer was a refused
a product under advertised terms ( Trento Svilippo srl v Autorita Garante della
Concorrenza e del Mercato (2014)

c) A request for tenders - An invitation to treat and the tender is the

offer. ( Harvela investments Ltd v Royal Trust Co of Canada Ltd (1985).

The COA held that the referential bid was invalid, the first defendant
was therefore bound to accept the claimants bid. “ It reasoned that to
allow a referential bid would create the possibility of conflicting
obligations for the first defendant (had both parties made a bid
offering a certain sum in excess of any other offer), in which case the
offeror would be bound by the terms of its own promise to accept
both offers.”
 Blackpool and Flyde Aero Club Ltd v Blackpool Borough Council (1990)
- Note that the invitation to treat may contain an implied undertaking
to consider all conforming tenders.

d) An auctioneer’s request for bids in an invitation to treat.

The bid is the offer. When the auctioneer brings his hammer down he has accepted
the offer.

Actions without a reserve price - the auctioneer must accept the highest bid. (
Enters into a collateral contract) Warlow v Harrison 1859 and Barry v Davies (2000)
COMMUNICATION OF THE OFFER

● An offer must be communicated to the offeree for it to be effective/valid.

● An offeree cannot accept and offer without knowledge of the offer.
● In other words, there can be no “meeting of the minds”.

Different authorities suggest differently on communicating the offer being

necessary.

Gibbons v Proctor (1891) - The advertisement was seen as an offer (the police
officer learned about the advert before the information reached the
superintendent). There was no need for further negotiations of contractual terms.

Even though advertisements are usually invitations to treat, they can be offers if it
only requires performance of a task to accept the offer and no need for further
negotiations.

R v Clarke (1927) - Australian case

“ 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.”

Cross offers - Tinn v Hoffman 1873

In this case the cross offers were made simultaneously, and there was no
knowledge of each other.
ACCEPTANCE OF THE OFFER

● For the acceptance to be valid, there must be acceptance to ALL the terms of
the offer. Arcadis Consulting v AMEC (BSC) 2016

● The offer could also be accepted by conduct.

Brogden v Metropolitan Railway Company 1877 - the offer was accepted by
way of conduct
Claxton Engineering Services Ltd v TXM Olaj-Es Gazkutato KFT (2010

● Reveille Independent LLC v Anotech International (UK) Ltd 2016 - (Did not
need the signature)

● Counter-offer - In the acceptance stage, if the offeree attempts to add new

terms, this will be a counter offer. This means the original offer could not be
accepted , it was no longer available. The counter -offer was considered a
rejection of the original offer.Hyde v Wrench (1840)

● A query by the offeree is neither an acceptance or rejection. Stevenson,

Jacques & Co v Mclean (1880).

● The majority of the COA inButler v Machine Tool v Ex-Cell-o (1979)held that
the “last shot” wins this “battle of the forms”

The minority (Lord Denning MR) criticised the “all or nothing” approach of
the “mirror image rule” whereby the contract concluded on either the buyer
or seller’s terms. - He prefer to look at the communications as a whole and
hold there to be a contract when there is substantial agreement on all
material points. If the remaining differences are irreconcilable Lord Denning
thought they should be replaced by “reasonable implication.’ Lord Denning’s
radical approach has not been followed elsewhere and in

● Tekdata Interconnections Ltd v Amphenol Ltd (2009) - The COA reasserted

the traditional approach emphasizing the importance of certainty in
commercial transactions.
● Particular relationships are not capable of contractual analysis. m