a2 law - offer and acceptance

Definition: a statement of intent by offeror to be bound by the terms of the offer either in words, conduct or writing. contract exists once accepted.

Types

• bilateral: made between two distinct groups where both the offeror and the offeree makes a promise. to individual or to group.
• unilateral: these offers are purely one sided where the offeror only promises to do something. to the whole world. for example, reward cases; carlill v carbolic, and, promotions; esso v commissioners of customs.

Definition: not all negotiations amount to an offer, some are invitations to treat ie. inviting the offeree to make an offer to offeror who can then accept or reject.

Types

• advertisements: partridge v crittenden
• window displays: fisher v bell
• shelf displays: boots case
• auctions: harrison v nickerson, payne v cave
• tenders: blackpool v flyde, spencer v harding, great northern rail v witham
• statements of price: gibson v manchester c.c
• goods on internet: kodak case

Ao2

• protects seller from too many contracts that he may not be able to fulfill
• allows seller to reject offer for whatever reason and not risk being sued for breach of contract
• allows seller to control who he/she makes contract with
• some contracts regulated by law eg. sale of alcohol and cigarettes, so seller needs to protect themselves from prosecution by refusing to sell
• if price set incorrectly means seller not bound
• allows exchange of information without having to form a binding contract. gibson v manchester c.c demonstrates this point, parties can still negotiate whilst contracting
• allows goods to be placed on internet without risk of making a contract if goods run out or pricing is wrong
• confusion when something looks like an offer but later proves to be i.t.t
• fisher v bell case encouraged parliament to change the law as invitation to treat ruling in case made a mockery of act

Rules

• offer must be communicated: taylor v laird, t gave up captaincy of ship and worked his passage back to englan but did not tell owners, so his claim for wages failed
• ao2: this can be harsh in certain circumstances but it does prevent a party changing a contract without the other knowing about it being bound. can be seen as a common sense approach
• offer must be certain: guthing v lynn, promise to pay £5 more if horse is lucky was seen as too vague
• ao2: if too vague parties may not know what they are contracting for and this may cause confusion. makes sense to have this rule

How an Offer can come to an End

• acceptance
• counter offer: if offeree makes changes to the offer, hyde v wrench, stevenson v mclean
• revocation: the offer is withdrawn before acceptance, must be communicated before acceptance takes place, byrne v van tienhoven, confetti records v warner music
• 3rd party revocation: the communication doesn't have to come from the offeror himself, dickinson v dodds
• revocation in unilateral contracts: normally a general offer made 'to the world at large' can be withdrawn by giving the withdrawal as much publicity as the original offer, shuey v usa. however problems may occur when the offeree has started to perform the offer, errington v errington + woods
• lapse of time: an offer may lapse due to the passing of time, offer open for specific time or a reasonable amount of time has passed, ramsgate hotel co v montefiore
• failure of precondition: if the main term of an offer, which is vital to the contract is not fulfilled or is altered, then the offer is no longer capable of acceptance, financings v stimson
• death: there is some uncertainty in this area of law and much depends on which one of the parties dies. if the offeree dies then no contract, reynolds v atherton. if the offeror dies then contract may be enforceable as may have been accepted in ignorance of offerors death, bradbury v morgan

Acceptance Definition

• where the offeree accepts the terms of an offer the acceptance must mirror the terms of the offer. an acceptance can take any form; written, orally or conduct

Postal Rule Definition

• acceptance does not have to be communicated ie. offeror may never receive acceptance but it is still valid as soon as it has been posted: Adams v Lindsell

Acceptance

• an acceptance must be a 'mirror iamge' of the offer, with no variation of the terms of the offer.
• the acceptance must be communicated: Felthouse v Bindley
• the acceptance can be in any form, writing, words or conduct

Acceptance of Unilateral Offer

• when a unilateral offer is made there is no need for the acceptance to be communicated
• performance of the terms of the offer are sufficient: Carlill v Smoke Ball

The Postal Rule

• when the form of accpetance is by letter the postal rule applies
• that is when the post is used the acceptance takes place as soon as the letter is posted: Adams v Lindsell

What if the Letter is Lost in the Post?

• Household Fire Insurance v Grant
• according to this case, even is the letter is lost in the post, it is still a valid accpetance as long as it is stamped and addressed correctly

Acceptance must be Unconditional

• it is possible to avoid the effects of the postal rule by stating that there will be no contract until the acceptance is actually received
• Holwell Securities v Hughes

Modern Methods of Communication

• the postal rule doesn't apply to; faxes, telex, e-mail, telephone
• case examples are; Entores v Miles Far East Coorporation, Brinkibon, The Brimnes

Distance Trading

• if the two parties to a contract are not dealing face to face, the buyer could be at a disadvantage
• a consumer in this situation is vulnerable and following a european directive, the consumer protection rugulation 2000 are now in force
• the consumer has a cooling off period of 7 days to change their mind

Electronic Trading

• a further set of regulations now exists when people deal by electronic methods, most commonly by computers over the internet
• the electronic commerce directive regulations 2002
• an important aspect of the regulations that they do not stipulate the way in which contracts are formed, only the principles of fairness on which they will be based. therefore case law in this area is still important, see the cases mentioned previously on instantaneous methods of communication