Contract Law: Offer and Acceptance

Offer and Acceptance

• Contract law is associated with the laissez faire doctrine/economic principle.
• According to Professor Attiyah, there is no typical contract due to variations.
• Examples of contracts include: club memberships, landlord-tenant agreements, and sale-purchase agreements.
• Laissez faire means freedom to contract.
• The driving principle behind laissez faire is minimal government involvement in the economy to benefit business and ultimately society.
• A contract requires a valid offer, unequivocal acceptance, and intention to create legal relations.
• Consideration (an agreement) is also required for enforcement.
• If there is no mutuality of intent, there is no contract.

Why Contracts Are Enforced

• Contract law regulates relationships.
• Safe arrangements are possible through contract law.
• Contractual agreements create legitimate expectations of both parties regarding performance.
• Reliance on promises often leads to further expenditure.
• It is unconscionable to prevent payment for fulfilling part of a bargain.

Bilateral and Unilateral Contracts

• Bilateral Contracts: Contracts between two or more parties with reciprocal obligations. Essentially, nearly all everyday contracts fall under this category.
• Unilateral Contracts: Contracts made between one party and the world at large, where one party makes a promise in exchange for a specific act by another party. A prominent example of a unilateral contract is a reward for finding a lost item.

Offer

• An offer is a willingness to enter into a contract, with the intention of it becoming binding upon acceptance.
• The objective test is used to determine offer and acceptance. Courts use this test to establish party intentions based on observable actions.
• Offers can be made to a specific person, a group, or the general public.

Invitation to Treat

• An invitation to treat is a preliminary stage before an actual offer is made.
• Negotiations to enter into a contract can amount to an invitation to treat.
• Statements can be misinterpreted as offers or invitations to treat.
• Examples include advertisements, display of goods, requests for tenders, and auctioneer requests for bids.

Advertisements, Display of Goods, Requests for Tenders (Invitations to treat)

• Advertisements are generally invitations to treat.
• Displays of goods within shops are considered invitations to treat unless the specific terms of sale indicate otherwise.
• Requests for tenders are considered invitations to treat unless certain criteria are provided.
• Auction bids are an invitation to treat. The offer is made by the bidder.

Advertisements (Bilateral and Unilateral Contracts)

• Bilateral contracts specify goods at a set price, which are often found in magazines or newspapers.
• Unilateral contracts offer rewards for specific acts (e.g., finding lost property)

Display of Goods (Invitations to Treat)

• The display of goods with a marked price is usually an invitation to treat.
• This is highlighted in cases such as Fisher v Bell and Pharmaceutical Society of Great Britain v Boots Cash Chemists.

Timetable and Tickets for Transport (Invitations to Treat)

• Timetables and transport tickets are often invitation to treat.
• The precise moment when a contract is formed in these scenarios depends on the facts.

How Long Does an Offer Last?

• An offer has a specific timeframe.
• Offers can cease to exist due to: specified time, reasonable time, rejection, failure of a precondition, counter-offer, and withdrawal/revocation.

Specified Time and Reasonable Length of Time, Rejection, Failure of a Precondition, Counter-Offer, and Withdrawal/Revocation

• Specified time: Offer expires after a certain time.
• Reasonable time: Offer expires after a reasonable time based on the circumstances.
• Rejection: Offer terminates if rejected by the offeree.
• Failure of a precondition: Offer terminates if a prerequisite condition fails.
• Counter-offer: Offer terminates with a counter-offer of different terms.
• Withdrawal/revocation: Offeror takes back offer before acceptance.

Withdrawal of an Offer (Revocation)

• An offer can be withdrawn at any time before acceptance.
• Withdrawal must be communicated to the offeree
• Withdrawal may be communicated by a 3rd party if the offeree is aware of the withdrawal.
• The rule regarding communication does not apply to unilateral contracts; the offer can't be withdrawn if the offeree has commenced performance.

Acceptance

• Acceptance is a final and unqualified agreement to the terms of an offer.
• Acceptance must mirror the terms of the offer.
• Acceptance can be expressed in words or by conduct

How and When Acceptance Can Be Made

• Acceptance can be through writing (letters, emails and telegrams), orally (speech) or by conduct.
• Acceptance of an offer to enter a unilateral contract requires the performance of the designated act.
• Silence does not generally constitute acceptance
• Acceptance has to be conditional and precise.

Silence Cannot Amount to Acceptance

• Silence cannot be considered acceptance, unless it clearly communicates acceptance.
• This is elaborated in Felthouse v Bindley.

Negotiations and Battle of the Forms

• A battle of the forms occurs when parties exchange differing standard terms.
• The last document exchanged generally is regarded as the offer.
• The "last shot doctrine" often governs such cases

Specified Methods of Acceptance

• If the offeror specifies a particular method of acceptance, only that method is effective.
• If the offeror states that acceptance may be by post, another manner of acceptance is valid and faster than post.
• Offeree does not need to oblige to specified method if offeror's terms are for the offeree's benefit.

General Rule of Acceptance

• Acceptance must be communicated to the offeror to be effective.
• This principle is elaborated through the judgment delivered in the case of Entores v Miles Far East Corporation.

Exceptions to the Communication Rule and the Postal Rule

• Offer terms may stipulate no communication is necessary.
• Unilateral contracts do not require communication of acceptance..
• Conduct can indicate acceptance if communicated effectively, but there is no acceptance to a unilateral contact until the act has been performed.
• The postal rule is an exception; acceptance is effective when the letter is posted, regardless of whether it reaches the offerer.
• For modern methods of communication (telex, fax and email), the postal rule does not apply.
• Acceptance must be received for communication.

Difficulties of the Postal Rule

• What if the letter gets lost after posting.
• What if offeree posts acceptance and then sends a rejection using a faster method.
• Using instantaneous method of communication.

Auctions

• Auctions (inviting bids) are invitations to treat.
• The offer is made by the bidder.
• The auctioneer accepts or rejects bids.
• A bid is the offer, and the accepted bid is when the auctioneer strikes the hammer.

Exceptions: Auctions Without Reserve

• The auctioneer makes the offer when there is no reserve price
• The bidder accepts this offer when they bid.
• If auctioneer refuses sale after acceptance it's a breach of contract.

Exceptions: Auctions With Reserve

• If there is a reserve price, only a bid that equals or exceeds the reserve can conclude the contract.
• If no bid reaches reserve price, no contract is formed, and the auctioneer has no duty to sell.

Tenders

• Requests for tenders are invitations to treat
• Government bodies and organizations use tenders to select external contractors for projects.
• Tenders are evaluated based on predetermined criteria.
• In tender cases, firms with the best offer based on set criteria have the best opportunity to win the contract, or a unilateral offer.

Ignorance of the Offer

• An offeror must be communicated to the offeree
• Offeree's awareness of the offer is essential for a valid contract, unless there are reward cases.
• In English contract law, a person who is unaware of the offer who is still bound by terms. This relates to unilateral contracts.

This quiz explores the principles of offer and acceptance in contract law, focusing on the laissez faire doctrine and the essential elements required for a valid contract. Understand the purpose of contracts in regulating relationships and the necessity of mutual intent for enforcement.