Elements of a Contract: The Offer

Including Invitation to Treat and Revocation

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What is an offer?
Offeror Deal!

Offeree

0
£10, 00

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 What is an offer?
• “an expression of willingness to contract
made with the intention that it shall
become binding on the offeror as soon as
it is accepted by the offeree”
• As such, a contract is formed only when
the offer has been properly accepted.
• The courts take an objective approach to
this problem –
– i.e. they use the legal fiction of the
‘reasonable man’

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 Objective Approach
• Smith v Hughes [1871] –
• Blackburn J:
• "If, whatever a man's real intention may be, he so conducts himself that a
reasonable man would believe that he was assenting to the terms
proposed by the other party, and that other party upon that belief enters
into the contract with him, the man thus conducting himself would be equally
bound as if he had intended to agree to the other party's terms."

The
‘Reasonable
Man’ test

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Types of Offer
Unilateral offer
Only 1 party
assumes obligation

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Types of Offer
Sharon, do Bilateral offer
you want to All parties assume
buy my car an obligation
for £10,000?

Yes I do
Jim

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 Offer… or is it?
A genuine offer is different from what is known as an
"invitation to treat", i.e. where a party is merely
inviting offers, which he is then free to accept or
reject. The following are examples of invitations to
treat:

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 Invitation to Treat
1. The display of goods with a price ticket
attached in a shop window or on a
supermarket shelf is not an offer to sell
but an invitation for customers to make
an offer to buy.
– Pharmaceutical Society of Great Britain v
Boots Chemists [1953]

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 Invitation To Treat
• Fisher v Bell [1960]

“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."

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Adverts for bilateral contracts
2. Advertisements of goods for sale are
normally interpreted as invitations to
treat.
• Partridge v Crittenden [1968]

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 Except…
 advertisements may be construed as offers if
they are unilateral
 or an offer that the entire world can accept:
 Carlill v Carbolic Smoke Ball Co [1893]
 (next slide)
 Bowerman v ABTA Ltd [1996]

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12
 Mere Enquiries
3. However - a ‘mere enquiry’ or request
for information is simply an enquiry –
– NOT an offer and
– NOT an Invitation to Treat
– Harvey v Facey [1893]

M M M M
Harvey Facey Facey Harvey

Will you sell to us

Lowest price for Bumper
Bumper Hall Pen?
Hall Pen, £900.
Telegraph lowest cash
price.
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Other examples of Invitations
to Treat
4. Tenders:
– Harvela Investments v Royal Trust Co. of
Canada [1985]
– Blackpool Aero Club v Blackpool Borough
Council [1990]
5. Auctions:
– Sale of Goods Act 1979 s57

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 So…
• Therefore - the words of the potential
offer need to be read carefully – as
they may be simply an invitation to buy
– Gibson v Manchester City Council [1979] –
• Of course, the offer is only valid if
communicated to the offeree
– Taylor v Laird [1856]

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 Termination of the Offer
1. Acceptance
• Once an offer has been accepted, a
binding contract is made and the offer
ends.

2. Rejection
• If the offeree rejects the offer that is
the end of it.
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 Termination
• 3. Revocation [taking BACK the
offer/withdrawal of the offer]
– The offer may be revoked by the offeror
at any time until it is accepted.
– However, the revocation of the offer must
be communicated to the offeree(s). Unless
and until the revocation is so
communicated, it is ineffective.
• Byrne v Van Tienhoven (1880)

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 Revocation – bilateral offer
• The revocation need not be
communicated by the offeror
personally, it is sufficient if it is done
through a reliable third party.
– Dickinson v Dodds (1876)

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 Revocation – unilateral offer
• Where an offer is made to the whole world
[unilateral offer] , it may be revoked by taking
reasonable steps.
• Shuey v United States [1875]

• BUT - Once the offeree has commenced

performance of a unilateral offer, the offeror
may not revoke the offer.
• Errington v Errington [1952]

• Daulia v Four Mill Bank (1978) 19

Other methods of Termination
4. Counter Offer
– Hyde v Wrench (1840) - this will ‘kill’ the original offer – see
lecture on acceptance

5. Lapse of time
– Where an offer is stated to be open for a specific length of
time, then the offer automatically terminates when that
time limit expires. Where there is no express time limit, an
offer is normally open only for a reasonable time.
• Ramsgate Victoria Hotel v Montefiore (1866)

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 Termination
• 6. Death
– The offeree cannot accept an offer after
notice of the offeror's death.
– However, if the offeree does not know of
the offeror's death, and there is no
personal element involved, then he may
accept the offer. Bradbury v Morgan
(1862)

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