Contract Law: Offer and Acceptance

Offer and Acceptance

• Offer: An expression of willingness to contract on specified terms, made with the intention that it becomes binding upon acceptance by the offeree. Objectively interpreted from the perspective of a reasonable person, not subjective states of mind.
• Offers are often distinguished from invitations to treat (invitations to negotiate). Courts consider 'presumptions' for typical contracting situations to determine if words or conduct constitute an offer or an invitation to treat.
• Case in Focus: Carlill v Carbolic Smoke Ball [1893] 1 QB 256. Examines the nature of an offer and whether an advertisement can constitute an offer.
• Case in Focus: Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401. Examines the distinction between offer and invitation to treat in a retail context. Displays of goods are usually invitations to treat.
• Presumptions: Typical contracting situations (e.g., displays of goods, advertisements, quotations, auctions, tenders) are presumed to be invitations to treat, unless the circumstances indicate otherwise.

Termination of an Offer

• Rejection: If an offer is rejected, it terminates. A counter-offer is considered a rejection of the original proposal.
• Case in Focus: Hyde v Wrench (1840) 3 Beav 334. A counter-offer terminates the original offer.
• Case in Focus: Stevenson, Jaques & Co. v McLean (1880) 5 Q.B. 346. Distinguishes between counter-offers and requests for information.
• Revocation: An offer can be withdrawn before acceptance. Revocation must be communicated to the offeree.
• Case in Focus: Dickinson v Dodds (1876) 2 Ch D 463. Revocation doesn't need a direct communication, just the offeree knowledge of the revocation.
• Lapse of Time: An offer expires after a reasonable time or if a specified time limit is met.
• Case in Focus: Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Exch 109.
• Death: Death of either the offeror or offeree may terminate an offer. If the offeree does not know of the offerors death, their estate remains bound. The offer is terminated if the offeree dies before accepting the offer.

Acceptance

• Definition: An unqualified expression of assent to the terms proposed by the offeror.
• Unilateral & Bilateral Offers
• Bilateral: A promise in exchange for a promise. Both parties make promises to each other, creating a binding contract (e.g., a purchase of widgets).
• Unilateral: A promise in exchange for an act. A party accepts by performing the requested act (a reward for finding a lost dog).
• Case in Focus: Carlill v Carbolic Smoke Ball. The act of using the smoke ball fulfills the offer.
• Case in Focus: Errington v Errington [1952] 1 KB 290. A unilateral offer cannot be revoked if an offeree has begun to perform the requested act.

Communication of Acceptance

• Postal Rule: Acceptance is effective when posted, not when received. Doesn't apply to instantaneous communication, or when the terms of acceptance specify otherwise.
• Case in Focus: Adams v Lindsell (1818) 1 B & Ald 681.
• Case in Focus: Byrne & Co v Van Tienhoven & Co (1880) 5 CPD 344. Exceptions to the postal rule may exist if a formal notification is requested, or that method of communication presents inconvenience or absurdity (e.g., communication during a postal strike, "lost letter" argument.)
• Ability to Access Them: For instantaneous forms of communication acceptance is effective when it is received. The offeror and offeree must both know of the other’s actions, as in a bilateral offer.
• Case in Focus: Entores v Miles Far East Corporation [1955] 2 QB 327.

Battle of the Forms

• Negotiation often involves multiple documents (forms) with terms. Determining the terms which form a contract requires analysis of the parties' conduct and the offer/acceptance process.
• Case in Focus: Butler Machine Tool Co v Ex-Cell-O Corp [1979] 1 WLR 401.