- Created by: Naomi Dartnell
- Created on: 14-12-10 18:24
There are three things needed to form a contract, and agreement, consideration and intention to create legal relations. There must also be and offeree and and offeror. the offeror makes the offer. For example, party A makes an offer to party B, who accepts and they have formed a contract.
An invitation to treat is often confused with an offer, and this is where one party is invited to make an offer to the other party. This is seen in the case of Pharmaceutical Society of GB v Boots Cash Chemists Limited. where the medicines were on a self service shelf, so it was actually the customer making the offer when they took the medicine to the till.
Another example is Fisher v Bell, where the defendant displayed a flick knife in the window. the courts decided it was not an offer, but an invitation to treat. the other cases relating to offer are, Partridge v Crittenden, where the defendant was illegally selling birds. Another is Harvey v Facey which is regarding a mere statement of price and British Car Auctions v Wright which is regarding lots at an auction.
There are such things as unilateral offers, and this is seen in the case of Carlill v The Carbolic Smoke Ball Company Limited, the courts held that the advert was an offer...it is possible to make an offer to the world at large...the offer of protection would cover the period of use...and the buying and using of the smokeball amounted to acceptance.
Statement of Price With Intention
There are other principles which are important too, such as when a statement of price also intends an offer. this is seen in the case of Biggs v Boyd Gibbins, where the claimant wrote, "for quick sale, i will accept £26000" and the defendant replied, "I accept your offer"... the claimant's first letter was an offer that the defendant had accepted.
Another issue is competetive tendering, which is shown in the case of Harvela Investments Limited v Royal Trust Company of Canada Limited. the defendant invited offer by sealed tender for shares in a company and had to accept the highest bidder. Harvela bid $2175000 and sir Leonard bid "2100000 or $100000 in excess of any other offer. Sir Leonard won the bid, eventhough the courts held that Harvela should have won.
When in an auction, there are often items that are advertised as 'without reserve'. this is shown in the case of Barry v Heathcote Ball and Company Limited. in this case, the auctioneer offered two tractors with no reserve price. Barry bid £2000 each. the auctioneer withdrew the tractors and sold them later privately. there was no contract between Barry and the owner, but there was a collateral contract between Barry and the auctioneer. Claimant awarded damages to the value of the tractors minus the bid, which equated to £267000
Rules of Offer
Obviously, there must be rules of offer in order to make sure that contracts are legally binding, The first rule is that the offer must be communicated to the offeree. this was shown in the case of Taylor v Laird, where the captain of a ship gave up his captaincy and worked for the duration of the journey home. the ship's owner did not know this and owed Taylor no money.
Rules of Offer
the second rule is the offeree must have knowledge of the offer for it to be valid and enforceable. which is seen in the case of Inland Revenue Commissioners v Fry. in this case, the defendants owed the inland revenue £113000 and Mr Fry sent a cheque for £10000 to the I R C with a letter stating that the cheque was 'in full settlement' and that if it presented for payment this would be acceptance of the offer. the letter got separated from the cheque and the courts simply held that as the I R C had no knowledge of the offeer, it was not valid.
Rules of Offer
In the case of Guthing v Lynn, a horse was purchased and a promise to pay £5 more if the horse was lucky. this could not be an offer as it was too vague. this sets down the principle that the terms of the offer must be certain.
Case law also states that it is possible to withdraw an offer at any time before the offer is accepted. this is seen in the case of Routledge v Grant, where Grant had offered his house for sale with the offer open for 6 weeks. he took it off the market before 6 weeks. this was allowed as no one had accepted his offer.
In the case of Byrne v Van Tienhoven, the principle that arises is that the offeror must communicate the withdrawal of the offer to the offeree. in this case, Van Tienhoven wrote to Byrne offering to sell goods, a week later he changed his mind and send a ltter withdrawing the offer. in the meantime, Byrne had accepted the offer by telegram and confirmed it in writing. A few days later, Byrne received Van Tienhoven's letter withdrawing the offer,
Another rule is that a unilateral offer cannot be withdrawn while the offeree is performing. this is seen in the case of Errington v Errington and Woods. a father has bought a house and mortgaged it in his own name for his osn and daughter-in-law. they were allowed to live in the house as long as they paid the mortgage. they did this, but unfortunately the fathe died and his wife wanted the house. the courts held that the father's promise could not be withdrawn so long as the couple kept up their payments
Finally, termination of an offer. this can be done in 5 ways, 1. with a counter offer...2. it can be properly withdrawn...3.the time of acceptance could lapse...4.a reasonable time can have lapsed...and 5.when one of the parties dies. in the case of Ramsgate Victoria Hotel Company v Montefiore, the defemdant had offered to buy shares in the hotel in June, the company only issued the shares in November, and it was held that his offer to buy had lapsed.