Offer and Acceptance PDF

Section 1: Offer and Acceptance A contract is a legally binding agreement between two parties. For it to be valid, it must fulfil all the following requirements: Meeting of the minds (Consensus ad idem) Consideration and intention to create legal relations Parties are awa...

Section 1: Offer and Acceptance A contract is a legally binding agreement between two parties. For it to be valid, it must fulfil all the following requirements: Meeting of the minds (Consensus ad idem) Consideration and intention to create legal relations Parties are aware and able to contract Parties freely consent to the agreement A contract can be expressed orally or in writing. There are two types of contracts: (1) unilateral contract, where the offeror makes an offer to the world at large in return for an act to be performed as seen in Carlill v Carbolic Smoke Ball Co (1893) and (2) bilateral contract, where an offer is made by the offeror in return for a promise to perform by a specific and identifiable offeree. The legal issue that we are dealing here is whether ______ has made an offer to ______ and whether ____ has accepted the offer, if any. Step 1: Determine if there is an offer An offer is defined as an expression of willingness by the offeror to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the offeree and the offer must have been communicated to the offeree, as seen in Gay Choon Ing v Loh Sze Ti Terence Peter and Another Appeal (2009). It is key that we first distinguish between an offer and invitation to treat for our issue at hand. 3 questions to ask to distinguish between both: (1) intention to be bound? (2) room for negotiation? (3) ability to be accepted immediately (i.e. seller’s stocks)? An invitation to treat (ITT) is an attempt to induce or invite offers by the offeror, and is an expression of willingness to enter into negotiations with the other party. There is no intention to be bound and no contract is formed at the moment. Any response to an invitation to treat is treated as an offer, not an acceptance. A mere response to provide more information to an enquiry does not constitute an acceptance too, as seen in Harvey v Facey (1893). There are four stereotyped situations in which the law amounts it to an invitation to treat, rather than an offer: (1) advertisements (2) display of goods (3) auctions (4) tenders. Online offers are invitation to treat, unless clearly intention to be bound clearly stated à S14 electronic transaction act. Referring to the facts of our case, it seems to be fitting of the scenario of _______ as…….. : (1) Advertisements are generally considered to be an invitation to treat. This was laid down in the case Patridge v Crittenden (1968). The rationale behind that is based on the reasoning that viewers might want to negotiate further and given that each seller has a limited amount of goods to sell, he or she might not be in the position to sell to all that respond. Also, a party cannot snap up an offer which he knows to be mistaken. The exception is the case of Carlill v Carbolic Smoke Ball Co (1893), where the court had rejected that the advertisement was a mere puff as an intention to be bound is clearly shown with the defendants’ deposit of E1000 into the bank. Other exceptions include advertisements where the buyer is guided on screen step by step by the seller until he clicks “I accept” and pays the purchase price online. A case of mistake can be seen in Chwee Kin Keong and others v Digilandmall.com Pte Ltd (2004): Defendant advertised on their website laser printers for sale, but an employee mistakenly quotes $66  instead of $3854 each. Plaintiffs spotted the error and purposed bought the printers at $66. When defendant realised the mistake and declined all orders, plaintiffs sued as they received automated confirmation emails from the defendant which they claim are binding. (2) Display of goods are generally regarded as invitations to treat, as illustrated by Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953). acceptance only occurs when the cashier accepts the buyer’s payment for the goods Rationale: o seller can refuse to sell the goods if he realises the price of the good is misquoted, o or if he had run out of stock, and that a buyer can change their mind even after placing the item in their shopping cart. (3) Calls for bids in an auction sale are invitations to treat, as explained in the case of Payne v Cave (1789). Each bid constitutes an offer which could be withdrawn at any time until it is accepted with the fall of the auctioneer’s hammer. This is confirmed in the section 57(2) Sale of Goods Act. An exception is illustrated in the case of Warlow v Harrison (1859), where it is held by the court that an auction advertised as “without reserve” amounts to an offer by the auctioneer that once the auction commenced, the lot will be sold to the highest bidder however low the bids may be. (4) Lastly, an invitation to tender is an invitation to treat and a tender is an offer made, as in Spencer v Harding (1870). exception : invitation to tender amounts to an offer to accept the higher bids, o and thus, once such tenders are submitted, there is a collateral contract to such effect, as shown in Harvela Investments Ltd v Royal Trust Co of Canada Ltd. o First defendants decided to sell shares of a company by sealed competitive tender. o invited two parties to submit tenders, promising to accept the highest offer. o Plaintiff’s bid was higher but the second defendants lower bid was accompanied by a clause which stated “or $100,000 in excess of any other offer”. § held that given the expressed intention of the vendor to sell to the highest bidder, the invitation to tender was a contractual offer. It held that the second defendants’ “referential bid” was invalid. In this case,.. Step 2: If there was an offer, was it terminated properly? The offer was terminated through: 1) _____’s (defendant) revocation of the offer. General rule for revocation: 1. Offer can be revoked at any time before its acceptance, as illustrated in Dickinson v Dodds (1876), and even before a promised specified period as shown in Routledge v Grant (1828). o Exception: if the promise to not revoke an offer within a specified time is supported by consideration, also known as a “firm offer” as in the case of Moutford v Scott (1975). In this case, the offeror is bound to keep the offer open till the specified time period is up. a. Exception: However, given that ___ has begun his performance of the unilateral offer (…), we have to apply the two-offer approach. In the first offer, it is stated that the unilateral offer that can be revoked before an offeree had embarked on performance as long as the offeror had used reasonable means to bring revocation of the offer to the attention of ____. In this case, (….). The second offer, however, is an implied offer not to revoke the first offer once the offeree begins performance within a reasonable time, as shown in Dickson Trading (S) Pte Ltd v Transmarco Ltd (1989). Hence, the offer cannot be revoked. i. Alternatively, _____ (def) can argue for the compensation approach, which would allow him to revoke his offer any time before the completion of ____ (plaintiff)’s performance but he is subjected to compensate ____ (plaintiff) a reasonable sum in quantum meruit for ____’s (plaintiff) troubles as seen in the case of William Lacey (Hounslow) Ltd v Davis (1957). 2. Revocation must be communicated to the offeree for it to be valid as laid down in Byrne & Co v Van Tienhoven & Co (1880). a. The Brimnes (1975: held that the notice of withdrawal is deemed effective when it is received on the communication device during business hours, even if it not read by the offeree yet. b. need not be directly communicated to the offeree as long as it is communicated by a reliable third party. c. Dickinson v Dodds (1876), it was also held that the communication of the revocation by a reliable third party, in this case Dickinson’s own agent, is valid. By looking at our case, we can see that ______ has… OR Revoking unilateral offer to the world need to determine whether he/she had revoked the offer effectively. European Contract Law (PECL) article 2:202(2) that “an offer made to the public can be revoked by the same means as were used to make the offer”. In this case, ______ had made a unilateral offer to the world through _______ and had revoked it through the same mode of ______ (some factors to consider: is the size of the notice the same?) and this is acceptable. Therefore, similar to the case of Shuey v United States (1875), ______ (ptf) is not allowed to claim for the reward despite his/her ignorance of the withdrawal since the offer of reward had been effectively revoked. Moreover, as in the case of R v Clarke (1927), an offeree is not allowed to claim for an offer for reward that he is ignorant of at that crucial time. Similarly, in the case of ____, … Exceptions: However, given that _____ has begun his performance of the offer, we have to apply the two-offer approach.  In the first offer, it is stated that the unilateral offer that can be revoked before an offeree had embarked on performance as long as the offeror had used reasonable means to revoke the offer. The second offer however, is an implied offer not to revoke the first offer once the offeree begins performance, as shown in Dickson Trading (S) Pte Ltd v Transmarco Ltd (1989). Therefore, …. compensation approach: Alternatively, _____ (def) can argue for the compensation approach, which would allow him to revoke his offer any time before the completion of ____ (plaintiff)’s performance but he is subjected to compensate ____ (plaintiff) a reasonable sum in quantum meruit for ____’s (plaintiff) troubles as seen in the case of William Lacey (Hounslow) Ltd v Davis (1957). 2) Termination of offer due to rejection/made a counter-offer. An offer can be terminated when an offeree rejects the offer, and rejection may be made in writing, orally or by conduct. In this case, _____ has… A counter-offer is construed as rejecting the initial offer and stands as a new offer being capable of being accepted by the initial offeror. As such, as decided in Hyde v Wrench (1840), once a counter-offer is made, the original offer can no longer be accepted. However, a counter-offer is not the same as a request for more information, as distinguished in the case of Stevenson v Mclean (1880). 3. Hyde v Wrench (1840) [Pg.181] – Defendant offered to sell farm at $1000, plaintiff counter-offers $950 but defendant rejects. Plaintiff then purports to accept original offer of $1000 but it was held that there was no contract because the counter-offer made the original offer lapse. 4. Stevenson v McLean (1880) [Pg.181] – Defendant offered to sell iron to claimant. Claimant asked if they could have credit terms but no reply given so they accepted the offer. Defendant then sold to others. Court held that there was a breach of contract by the defendants as claimants were not issuing a counter- offer but rather an enquiry of terms. Thus, following the case Hyde v Wrench (1840), it can be said that (exam case) was an instance where ____ made a counter offer to ____, as _____. Thus, the original offer does not stand. OR Thus, following the case of Stevenson v McLean (1880), it can be said that (exam case) was an instance where ____ was merely asking for more information from ____. The original offer still stands. 3) Termination due to a lapse of time. A fixed-time offer, an offer which is expressly stated to last for a fixed time, cannot be accepted once the deadline is up. However, if no deadline is expressly stated, then the offer is generally considered to be terminated after lapse of a reasonable time. What is a reasonable time would depend on the circumstances of the case. In the case of Ramsgate Victoria Hotel Co Ltd v Montefiore (1866), the defendant paid a deposit for shares in the plaintiff’s company. He heard nothing for 5 months and then plaintiffs told him shares have been allotted to him and asked for the balance due. Court held that defendant need not pay as 5 months was not a reasonable amount of time due to the rapidly fluctuating nature of share prices. Similarly, in _____, … An exception to a fixed-time offer can be illustrated with the case Panwell Pte Ltd & Anor v Indian Bank (No 2) (2002). If it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern the relationship after the specified period, then the offer is still valid and capable of acceptance after the deadline. 4) Termination by Death The offer will terminate if the offeree knows that the offeror has died. Exception: if the offeree had accepted the offer without knowledge of the offeror’s death, o offer still be valid as in Bradbury v Morgan (1862). BUT CANNOT IF: offer involved personal services, as an offer of services cannot be accepted. if it is the offeree died before acceptance à offer made to him is no longer capable of acceptance by him or his personal representatives, as illustrated in the case of Reynolds v Atherton (1921). 5) Termination due to a failure of a condition subject to which the offer was made 1. An offer subject to conditions stated expressly by the offeror or implied by courts from the circumstances of the case. If conditions not satisfied à offer cannot be accepted. 2. Fundamental change in the basis of the offer. Financings Ltd v Stimson (1962) defendant need not pay as there was implied condition that the car should be in a good condition and that was not fulfilled. Step 3: If the offer was accepted, was the mode of acceptance valid? Acceptance is defined as “a final and unqualified expressed of assent to the terms of an offer”. The offeree must agree to all the terms contained in the offer. general principle: Acceptance must be communicated, through written, spoken word or conduct. Mere mental assent or silence is insufficient, there is a need for objective manifestation. We can see that ____ accepted _____’s offer through: Two Criteria to Satisfy: 1. Acceptance is final and unqualified as_____ (show that the person agrees to all the terms contained in the offer). 2. Acceptance is communicated to the offeror as _____(state from case) OR through: 1) Conduct Brogden v Metropolitian Railway (1877), although there is no formal agreement between ____ and _____, it is clear that there is a binding contract as both offer and acceptance had taken place as evidenced by the conduct of both parties (business dealings continued) Brogden v Metropolitan Railway (1877): o Railway sent a draft agreement to Brogden. Brogden filled in some blanks, marked it approved, and returned it to the company. o Railway company kept the draft but never officially made an offer. o business dealings continued until a dispute arose. Court held that there was a contract. Brogden’s amendments to the draft agreement amounted to an offer which was accepted by the Railway through its subsequent conduct with Brogden. Unilateral contracts made to the world, no need for the communication of acceptance. Acceptance therefore can be made by performing the conditions, as established in the case of Carlill v Carbolic Smoke Ball (1893). 2) Telephone/ telex/ fax/ email/ SMS and received by the offeror. Instantaneous communications general principle: communication must be received by the offeror Entores Ltd v Miles Far East Corporation (1955) Applies to all modes of communication, including face-to-face negotiation communications like telephone/telex/fax/email/SMS 1. Offeror can specify or insist on the mode of acceptance à use ETA or Postal acceptance rule 2. if offeror did not stipulated a particular mode of acceptance, General rule is that another mode of acceptance by _____ which is equally or more speedy may be effective too, as explained by Buckley J in Manchester Diocesan Council for Education v Commercial and General Investment Ltd (1970). In this case, _____ had communicated the offer through _____ and _____ had accepted through ____... (is it reasonable?) Exception: If an acceptance is left as a voicemail during office hours, even if the offeror had not heard it, considered valid as in The Brimnes (1975). Given that _____ had left the telex message outside of working hours, it would not be valid, as explained by the House of Lords in Brinkibon Ltd v Stahag Stahl (1983). EMAIL, the Electronic Transactions Act 2010 (“ETA”) may apply. The ETA provides the legal framework for doing business electronically over the Internet. Section 13(1) – despatch principle “The time of despatch of an electronic communication [e.g. communication of acceptance of an offer via e-mail] is – o (a) the time when it leaves an information system under the control of the originator or of the party who sent it on behalf of the originator; (ie: when it is up in the “cloud” and not just on your own device anymore) o (b) OR if the electronic communication has not left an information system under the control of the originator or of the party who sent it on behalf of the originator, the time when the electronic communication is received.” Sections 13(2) and 13(3) – receipt principle o Section 13(2) – “when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee. (ie: when it becomes available and readable to the addressee)” o Section 13(3) – “where its sent to electronic address that has not been designated by the addressee, Time of receipt is when electronic communication becomes capable of being retrieved by the addressee at that address and the addressee becomes aware that the electronic communication has been sent to that address.” Note: Section 13(4) – “For the purposes of subsection (3), an electronic communication is presumed to be capable of being retrieved by the addressee when it reaches the electronic address of the addressee.” s14. A proposal to conclude a contract made through one or more electronic communications which is not addressed to one or more specific parties, but is generally accessible to parties making use of information systems, including a proposal that makes use of interactive applications for the placement of orders through such information systems, is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance The despatch/receipt principle applies as the message was received non-instantaneously/instantaneously. (IF INSTANTANEOUS) Since ______ had/ had not sent his letter of acceptance to the designated electronic address, section ____ applies. 3) Letter (Postal Acceptance Rule) An offeror may specify or insist on the mode of acceptance. However, given that _____ has not stipulated a particular mode of acceptance, General rule: another mode of acceptance by _____ which is equally or more speedy may be effective too, as explained by Buckley J in Manchester Diocesan Council for Education v Commercial and General Investment Ltd (1970). In this case, _____ had communicated the offer through _____ and _____ had accepted through registered post. (is it reasonable?) Registered à consider the postal acceptance rule. Postal acceptance rule: acceptance takes place at the time the letter is posted o regardless as to when the letter reaches the offeror [Adam v Lindsell (1818)] or whether it reaches at all [(Household Fire and Carriage Accident Insurance Co v Grant (1879)]. BUT: letter must be properly stamped and addressed, and that such mode of acceptance is either expressly or impliedly authorized by the offeror. As such, with regards to our case, …. 4) Silence Since the general rule states that acceptance must be communicated to the offeror, it follows that silence cannot be a mode of acceptance, as in Felthouse v Bindley (1862). Exception: if it was the offeree who said to treat his silence after a deadline as an acceptance as in Re Selectmove Ltd (1995). 5) Exceptions (if applicable) Referring to the facts, we can see that ____ did not accept _____’s offer. This is because: For unilateral contracts made to the world, there is no need for the communication of acceptance. Acceptance therefore can be made by performing the conditions, as established in the case of Carlill v Carbolic Smoke Ball (1893). An offeror may, in some occasions, specify or insist on the mode of acceptance. Where an offeror has prescribed that the offer can only be accepted in a specific way, he would not, in general, be bound unless the acceptance is made in that way. An offeror can waive any requirement as to the form of acceptance if the stipulation as to form is solely for his benefit. But if the stipulation is for the benefit of both parties it must be clear that both parties have waived the stipulation (MSM Consulting Ltd v Tanzania (2009)) No acceptance as Offeror has prescribed that offer can only be made by_____, but______ General Rules is that no acceptance of offer by offeree which he has no knowledge of as seen in R v Clarke (1927). Hence in this case, since ___(offeree) had no knowledge of the offer as____, hence the acceptance is not valid. General Rules is that there is no contract in the case of cross-offers as seen in Tinn v Hoffmann & Co (1873). Since, ___(offeror A) made _____(the offer) and ____(offeror B) made____(the offer) at the same time, hence there is no meeting of minds and hence no valid acceptance since he offeree has no knowledge of the offer at the relevant time. Battle of forms: Butler Machine Tool Co v Ex-Cell-O Corporation (England) Ltd (1979) Acceptance must be final and unconditional on the latest form, not merely a counter offer. Hence in this case_______. In conclusion, given that offer and acceptance is both established in our case, there is a binding contract between ____ and _____.