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Offers

Previous: Contractual form

We analyse contracts under the heading ‘offer and acceptance’. This is the usual way in which courts judge whether a contract has been formed. Has there been an offer which has been accepted? Butler Machine Tool Co v Ex-cello-corp [1979] was an exception to this analysis. We class the person who makes the offer as the ‘offeror’ and the person to whom the offer is addressed the ‘offeree’.

An offer is the first step in the formation of a contract. Treitel said that:

An offer is an expression of willingness to contract on certain terms made with the intention that it shall become binding on the person making it as soon as it is accepted by the person to whom it is addressed. An offer may be made to an individual, to a group of persons, or to the world at large. It may be made expressly or by conduct.

Requirements of offers

An offer must contain an expression of willingness with a objectively clear intention and does not usually have any requirement of form.

An expression of willingness

If an offer does not have a clear expression of willingness, it is not an offer and so it cannot be accepted to form a contract. In Gibson v Manchester City Council [1978], having the words, ‘may be able to,’ in a letter of proposal to sell a house did not constitute a legal offer. An offer can be inferred from conduct, such as in Steven v Bromley & Son [1919], where different cargo was loaded onto a ship and a contract for a new price inferred from this loading. However, in Baird Textile Holdings Ltd v Marks and Spencer Plc [2001], no such contract could be inferred from 30 years of past orders.

An objectively clear intention

Going back to our form requirements, if an offer is objectively intent on creating legal relations, it can be so binding on the offeror. A prime example of the conflict which this requirement can create can be found in in the well known case of Carlill v Carbolic Smoke Ball Co [1893]. In this case, to the ‘reasonable man,’ the offer was too clearly intent on creating legal relations to be classed as a mere puff (something not intended to be taken literally), and therefore it was deemed that a contract had been formed.

When is an offer made?

As contracts do not usually have requirements of form, it is often difficult to know when an offer is made and that offer accepted. Luckily, precedent is here to help.

Shops

When you purchase something in a shop, who makes an offer and who accepts it? When do these two events occur in the shopping process? Fisher v Bell [1961] ruled that anything on display in a shop is not necessarily for sale and that a display in a shop is simply an invitation to treat. From the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953], it can be seen that shoppers are invited to take items to the till then offer to buy them. A contract is made when the cashier (and the supervising chemist in this case) accepts the shopper’s offer. This also means that a cashier is entitled to refuse to serve a shopper, though they should take care not to make themselves liable in tort law by humiliating the shopper.

Auctions

This is one of the few areas where statute intervenes in contract law, namely with the Sale of Goods Act 1979, section 57. The offer is made by the bidder, and can be withdrawn at any time before it is accepted. Acceptance is to the highest bidder at the fall of the hammer. In Barry v Davies [2001], it was ruled that an action with no reserve is an offer to sell to the highest bidder and items cannot be withdrawn. An auctioneer may cancel their auction with no penalty however, and is not then liable to potential bidders due to a lack of certainty that they would win items.

Advertisements

As we have already seen from the case of Leonard v Pepsico [2000, America], advertisements may be objectively classed as mere puffs, so may not be binding. Similarly, in Grainger v Gough [1896], it was ruled that a catalogue does not constitute an offer to sell if it contains insufficient detail. In Carlill v Carbolic Smoke Ball Co [1893], there was enough detail to constitute a unilateral offer in the form of an advertisement. Consideration was provided by carrying out actions rather than by a money payment.

Tenders

In Spencer v Harding [1869], it was ruled that a call for tenders, without wording to the contrary, is an invitation to treat. Therefore, the defendant was perfectly within the law to accept a tender on the first day of the 1 week submission window he had set. There was no obligation to accept the highest or lowest bid, since a number of other factors may have been relevant. However, in Blackpool Aero Club v Blackpool Borough Council [1990], it was ruled that there was a collateral contract to consider all conforming tenders, so perhaps Spencer v Harding [1869] has been overruled in part. Finally, in Great Northern Railway v Witham [1873], it was ruled that the acceptance of a tender can occur upon the first order under than tender: there was no obligation to order under a tender, but there was an obligation for the tender provider to supply if and when orders were placed. In Harvela Investments v Royal Trust of Canada [1985], referential bids were denied when it was said that the highest bidding tender would be accepted.

Ticket machines

It was ruled in Thornton v Shoe Lane Parking [1971] that the presence of a ticket machine constitutes an offer; acceptance occurs when money is put into the machine. The ticket is a result of the acceptance. Therefore terms on the ticket are irrelevant.

Next: Acceptance

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