OFFER AND

ACCEPTANCE
OFFER

• 1. An offer is an expression of willingness to contract on certain terms

made with the intention that it shall become binding as soon as is
accepted by the person to whom it is addressed to.
• 2. In some instances, offers are made to the public at large. In Carlill v
Carbolic Smoke Ball (1893), the court ruled that an advertisement
posted by the defendants - which offered £100 for anyone who uses
their smoke balls for a certain period of time still catches flu –
constitutes an offer.
INVITATION TO TREAT

1. Offers should not be confused with invitations to treat, which is a preliminary stage in which
one party invites another to make an offer.
2. In the case of Gibson v Manchester City Council, the court ruled that the defendant’s
letter,which states that they ‘may be prepared’ to sell the house to the plaintiff at given price,
wasmerely an invitation to treat, which invites the making of a ‘formal application’ amounting to
an offer. One reason that decision was reached was because the court deemed that the words
‘may be prepared’ shows uncertainty and indicates that there might be further negotiations.
3. In Storer v Manchester City Council, the court ruled that a similar letter send to the
plaintiffamounted to an offer, because the defendant said in the letter that the ‘are willing to’
sell the house in question to the plaintiff for a given price which the court thought was less
uncertain.
• Advertisement

Advertisements are generally invitations to treat:

Eckhardt Marine GMBH v Sheriff, High Court of Malaya, Seremban & Ors
[1974] 2 MLJ 114, advertisement generally is only an attempt to induce
offers and is not an offer in itself.
*Partridge v Crittenden
However, in some instances an advert can amount to an offer:
Carlill v Carbolic Smoke Ball
• GOODS ON DISPLAY IN SHOPS
• Goods on display in shops are generally not offers but an invitation to
treat. The customer makes an offer to purchase the goods. The trader
will decide whether to accept the offer:
1. Pharmaceutical Society of Great Britain v Boots (1953)
2. Fisher v Bell (1961)
TERMINATION OF AN OFFER
TERMINATION OF AN OFFER

• How long does an offer last?:

1. Specific time if an offeror stipulates that the offer remains open for a specific
period of time, the offer would lapse when the time is up.
2. Reasonable length of time
If the offeror does not specify how long the offer remains open, the length of time
the offer remains open would depend on whether the means of communication is
fast or slow, and on the subject matter. In the case of Ramsgate Victoria Hotel v
Montefiore, the court ruled that 5 months was not a reasonable time for acceptance
of an offer to buy shares as it is a commodity with rapidly fluctuating prices.
3. Failure of a pre-condition
Some offers are made to subject to certain conditions, and if the conditions
are not met, the offer may lapse. In Financings v Stimson, the court ruled that
the defendant’s offer to contract with the plaintiff was subjected to the
implied condition that the car in question remain in much the same state as it
was when the offer was made.
4. Rejection
An offer lapses once it is rejected by the offeree, and an offeree cannot insist
on accepting the same offer later.
5. Counter offer
An offer is terminated when the offeree changes the original term and
that change would constitute to a new offer, or a counter offer. In Hyde v
Wrench, the court ruled that the claimant’s offer to buy the defendant’s
farm for a price lower than what the defendant proposed would amount
to a counter offer, and thus the original offer would be terminated.
However, a request for information about an offer does not amount to
making a counter offer and does not terminate the original offer, as held
in the case of Stevenson Jacques v McLean.
6. Death of an offeror
In Bradbury v Morgan, the court held that if the offeree knows about the death
of the offeror, the offer will lapse. However, if the offeree was unaware if the
offeror’s death and accepted the offeror’s offer, the offer would not have
lapsed. However, any offer requiring personal performance by the offeror
would lapse after the offeror’s death.
7. Death of an offeree
There is an English case on this subject, but it is most likely that the offer
would lapse at the death of an offeree.
8. Withdrawal of an offer (Revocation)
For bilateral offers generally, offers can be withdrawn. In Payne v Cave, the
court held that an offer may be withdrawn any time before it is accepted.
(Routledge v Grant). revocation will only take place upon communication as
seen in Byrne v Leon Van Tienhoven OR it may take place through a third party
provided that that party is a reliable source as seen in Dickinson v Dodds.
• *Unilateral offers generally cannot be withdrawn once the offeree
commenced performance. (See Errington v Errington, Soulsbury bv
Soulsbury, Daulia v Four Millbank Nominees)
ACCEPTANCE

• An acceptance is an unconditional agreement to all the terms of the

offer - Tinn v Hoffman (1873)
• 3. An acceptance by conduct can be demonstrated through the case of Brogden v.
Metropolitan Railway Co. (1877).
• B supplied the railway company with coal for several years without any formal agreement.
• To make it official- rail co. sent B a draft agreement which left a blank space for B to insert
the name of an arbitrator.
• After doing so, B signed and returned it and marked it “approved”.
• The draft was in the drawer for the next two years without any further steps taken regarding
it.
• B continued to supply coal under the terms of the contract and the railway co. paid for it.
• A dispute arose and B denied that any binding contract existed.
• The House of Lords held that by inserting the arbitrator’s name, B
added a new term to the potential contract. Therefore, in returning to
the railway company, he was counter - offering to supply coal under
the contract.
• But when was that offer accepted?
• i. An acceptance by conduct can be inferred through the parties’
behavior.
• ii. A valid contract was completed either when the company first
ordered coal after receiving the draft agreement from B... or... at the
latest when he supplied the first lot of coal.
2. An acceptance must also correspond to the offer.
This means that an acceptance must be in response to an offer as
opposed to being a mere statement or conduct which is isolated from the
initial offer. It should be also relevant to note that unless a mode of
acceptance has been stipulated by the promisor, there is no specific way
of constituting a valid acceptance.
• In the case of Manchester Diocesan Council for Education v Commercial & General
Investments Ltd [1970] 2 ALL ER 531, there were several guidelines on this specific
situation.
“If a promisor stipulates by the terms of his offer that it may, or that it shall, be accepted in a
particular manner, the contract materialises as soon as the promise does that stipulated act.
The promisor is also entitled to insist that he is not bound unless the acceptance is
communicated through a manner that was already prescribed.
If the promisor has prescribed a particular method of acceptance, but does not in terms
insisting that only such mode of acceptance results in a binding contract, any acceptance
communicated to the promisor by any other mode which is no less advantageous to him will
result in a conclusion of the contract.
THE COMMUNICATION RULE

• 1. The acceptance must be communicated to the offeree.

• Entorres v Miles Far East (1955)The claimant sent a telex message from England offering to
purchase 100 tons of Cathodes from the defendants in Holland. The defendant sent back a
telex from Holland to the London office accepting that offer. The question for the court was
at what point the contract came into existence. If the acceptance was effective from the
time the telex was sent the contract was made in Holland and Dutch law would apply.
If the acceptance took place when the telex was received in London then the contract would
be governed by English law.
• Held: To amount to an effective acceptance the acceptance needed to be communicatedto
the offeree. Therefore the contract was made in England.
2. Silence will not amount to acceptance:
• Felthouse v Bindley (1862)
• A nephew discussed buying a horse from his uncle. He offered to purchase the
horse and said if I don’t hear from you by the weekend I will consider him
mine. The horse was then sold by mistake at auction. The auctioneer had been
asked not to sell the horse but had forgotten. The uncle commenced
proceedings against the auctioneer for conversion. The action depended upon
whether a valid contract existed between the nephew and the uncle.
• Held: There was no contract. You cannot have silence as acceptance.
3. Acceptance can be through conduct:
• Brogden v Metropolitan Railway (1877)
• Butler Machine Tool v Ex-Cell-O Corporation (1979)
THE POSTAL RULE-AN EXCEPTION

• Adams V Lindsell (1818)

• Communication of acceptance took place the moment the letter was
posted.
• This applies usually to non-instantaneous modes of communication.
Letter however must be correctly addressed, stamped and sent by
registered post.
• Exceptions,
• Offeror mentions that acceptance must be through other forms of
communication.
• If instantaneous method of communication is used then acceptor must
use the same.