De Montfort Law School
Schools and Colleges
Mooting Competition 2016
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CONTENTS
Introduction 2
Programme 3
Mooting Instructions 4
Contract books and looking up cases 7
Round One Moot 9
Round Two Moot 10
Moot Final 11
Background Notes on Formation of Contract 12
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INTRODUCTION
Welcome! The De Montfort Schools and Colleges Mooting Competition is now in its thirteenth year. We hope you find participating in moots an enjoyable and rewarding experience. If you do go on to study law at university, we trust that you will have found it useful to have had a first shot at it before starting on your degree course. Most university law schools run student mooting competitions and also enter teams for national competitions.
All the moots in our competition are designed for students who have not studied A-level law. We have included a set of background notes on the law of contract formation (offer and acceptance). Traditionally a contract is formed when an offer has been accepted. All the moots depend on arguing whether a valid offer has (or has not) been made and whether acceptance has (or has not) taken place.
If you need to contact the Law School the telephone number is 257 7177 and you can e-mail on [email protected]
Andy Robinson Law Club Organiser
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PROGRAMME
Tuesday 19 January 2016
Andy Robinson will explain how the mooting competition is organised, followed by a demonstration moot by two De Montfort University students. After refreshments you will have the opportunity to sign up for the Leicestershire Schools and Colleges Mooting Competition, and get advice on how to present your moot.
Tuesday 2 February 2016
First round of the mooting competition. The best eight teams (on their point scores) from the first round will be invited to take part in the second round.
Tuesday 23 February 2016
Second round of the mooting competition. These will be arranged individually with the contestants. The best two teams from the second round will be invited to take part in the final.
Tuesday 15 March 2016
The Final of the Mooting Competition which is open to all the members of Law Club, parents and teachers to watch. This session of Law Club will start at 6.30pm and will probably end slightly earlier than usual. The moot will be judged by Emeritus Professor Richard Card who was formerly Head of the Law School.
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MOOT INSTRUCTIONS
1. Moots are legal debates in a hypothetical courtroom setting, in which students play the role of counsel and present legal arguments based on a fictitious legal action. Use the offer and acceptance chapter(s) in contract textbooks and the material on formation of contract at the back of this booklet to establish the legal points at issue and then go to the original cases - both for your case and for your opponents - so that you can attempt to distinguish their cases and contradict their arguments.
2. You will sign up to play the role of:
• leading (senior) counsel for the appellant or • leading counsel for the respondent or • junior counsel for the appellant or • junior counsel for the respondent.
3. Your part in the moot should last ten minutes including time for the judge to stop your speech and ask questions. The whole moot is scheduled to last an hour. The judge will time your speech and will ask you to bring your remarks to a close if you are over-running your time.
4. Most judgements in a moot problem question are divided into two, the leading counsel takes point (i) and the junior counsel point (ii).
5. Leading counsel for the appellants, who is the first speaker, must begin by introducing all the counsel. The speech should start with
"My Lord/My Lady I am Mr/Mrs/Miss/Ms ...... and I am representing the appellant with learned junior Mr/Mrs/Miss/Ms...... The respondents are represented by my learned colleague Mr/Mrs/Miss/Ms.... and his/her learned junior Mr/Mrs/Miss/Ms..."
6. Refer to the judge(s) as My Lord, Your Lordships, My Lady, Your Ladyships as the case may be.
7. At the start of your speech tell the judge what you intend to show in your argument.
8. If you disagree with a point made by a judge when you are speaking then reply 'With all due respect your Lordship' and then tell him/her why you think they are wrong. If you feel compelled to agree with the judge on a point that goes against your case, you reply ' As your Ladyship pleases' (not advisable unless forced!). Details on how to address judges are given on the judiciary web-site, http://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/what-do-i-call-judge
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9. Some students say that dressing up smartly helps them to take on the role of a barrister. There is no need to buy a suit especially for your moot. Dark trousers/skirt and a smart blouse/shirt is fine. You should stand to deliver your speech.
10. Finish your submission with ' Thus I ask you to find for my client' or some similar phrase.
11. The order of counsel will be:
• Leading counsel for the appellants • Leading counsel for the respondents • Junior counsel for the appellants • Junior counsel for the respondents
There is no right of reply.
12. Please submit to the judge at the beginning of the moot a photocopy of the pages of the cases that your will cite with the relevant passages highlighted or underlined. There is no need to photocopy the whole case - just the relevant page. Your collection of photocopied pages is often referred to as your “bundle”.
13. Marks are awarded for presentation, so remember to look at the judge and not to speak too quickly. The best mooters do not read their scripts but have memorised their speech and use the script merely as a memory aid. Remember that textbooks are rarely cited in court so you must quote from the judgements in the cases - DO NOT CITE
• from case headnotes (i.e. the synopsis at the beginning of the case report) • from speeches made by counsel (only speeches from judges) • from textbooks (including case books) • from a quotation from one case that is mentioned in a second case
Cite cases correctly:
Fisher AND Bell is correct even though it is written Fisher v Bell In civil cases describing the case as Fisher versus Bell or Fisher 'vee' Bell is wrong.
Try to find some good citations from the cases. You should give the page reference and paragraph of the report “May I refer your Lordship/Ladyship to Volume 1 of the All England Reports for 1946 at page 63 paragraph X…where Lord…says…[read out the precise words from the Report]”
14. Do not invent more facts in the scenario, just discuss the facts that you are given and the relevant law.
15. You might find some useful tips on the national web-site www.mootingnet.org.uk which is designed for university student mooters.
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MARKING GUIDELINES
CONTRACT MOOTS
A PRESENTATION (50%)
General Presentation (25%)
• Voice, clarity, diction and speed • Eye contact • Keeping to time • Responding to questions
Structure and coherence of the argument (25%)
B LEGAL CONTENT (50%)
Accuracy, relevance and selection of the law in the general argument (25%)
Law used in responding to questions (10%)
Use of authorities and references (15%)
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BOOKS TO CONSULT
All the following contract textbooks have a chapter(s) on formation of contract (offer and acceptance). You may be able to borrow them from your local library. These are the up to date editions. Any editions published since 2002 would not be seriously out of date on this topic.
Ewan McKendrick Contract Law Macmillan
Lawrence Koffman & Elizabeth Macdonald The Law of Contract Tolley
Jill Poole Textbook on Contract OUP
Jill Poole Casebook on Contract OUP
M.P.Furmston Cheshire, Fifoot and Furmston's Law of Contract OUP
G.H.Treitel The Law of Contract Sweet & Maxwell
J.Adams & R.Brownsword Understanding Contract Law Sweet & Maxwell
H.G.Beale,W.D.Bishop & M.P.Furmston Contract Cases and Materials Butterworths
Catherine Elliott and Contract Law Pearson Longman Frances Quinn
And there are the following books about mooting
Paul Dobson and The Observer Book of Moots Barry Fitzpatrick
Christopher Kee The Art of Argument: A Guide to Mooting (CUP)
Tim Kaye and Blackstone’s Book of Moots (Blackstone) Lynne Townley
John Snape and The Cavendish Guide to Mooting (Cavendish) Gary Watt
John Snape How to Moot (OUP) and Gary Watt
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Looking up cases in hard copy reports
For example Pharmaceutical Society of GB v Boots [1953] 1 QB 401; [1953] 1 All ER 482; [1953] 2 WLR 427 was reported in 1953. The first number after the date is the volume number. QB stands Queen’s Bench, All ER stands for All England Reports and WLR stands for Weekly Law Reports. The last number is the page number. All three sets of reports are in the DMU Law Library. ER stands for English Reports and are a set of old (pre 1865) cases reprinted from the original reports. The complete set is in the DMU Law Library.
Looking up cases on web-sites
DMU subscribes to “Lexis Library” and though the general public cannot access Lexis, you will be given a code that you can use to look up the cases on this web- site. The code will be operative throughout the Mooting Competition. If you have any difficulties accessing Lexis please contact us. www.lexisnexis.com/uk/legal
Bailii is a free web-site that does not need a password. “bailii stands for The British and Irish Legal Information Institute. This web-site is not as comprehensive as Lexis but does have some case details and legislation www.bailii.org
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ROUND ONE MOOT
Nottcester City Council advertised for transport operatives to tender for the provision of taxi services to convey children with disabilities to school. The advertisements made it clear that the lowest tender would be accepted. ‘Smart Cabs’ tendered for the contract and in its tender it stated that the tender was based on the assumption that all journeys would be between 8am – 9am in the morning and between 3pm – 4pm in the afternoon. ‘Smart Cabs’ was not awarded the contract. Exercising their rights under the Freedom of Information Act they found out that they had submitted the lowest tender. They sued Nottcester City Council in the High Court.
Fox J held that no contract had been formed because:
(i) The advertisements were invitations to treat and therefore were not offers (Partridge v Crittenden applied)
(ii) Even if the advertisements were offers no acceptance had been made by ‘Smart Cabs’. Additional terms had been introduced and the tender, therefore, amounted to a counter offer (Hyde v Wrench applied).
‘Smart Cabs’ has decided to appeal to the Moot Court of Appeal.
Senior counsel should take point (i) and junior counsel should take point (ii)
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ROUND TWO MOOT
Albert puts the following advertisement in the Times on August 20th
“For sale – due to unforeseen business commitments – round the world cruise ticket on the Empress Eugenie (single luxury cabin). One only. Must be sold. Highest bid secures. Bids must be received by August 26th”
The advertisement included a residential telephone/fax number and an address for the replies. He received only one reply which was in a letter from Belinda, who agreed to pay £4,500 for the ticket, but also enquired whether the ticket covered all on-shore excursions. The letter arrived on August 24th.
However, on August 23rd, Albert went away on business and while he was away he found that he could rearrange his business commitments so decided to go on the cruise himself. He therefore arranged by telephone to the Times to place another advertisement stating that the cruise ticket was no longer available. The advertisement appeared on August 25th. He arrived home on August 27th, he read Belinda’s reply and telephoned her to say that although she had made the only bid he had decided to go on the cruise himself. Belinda was so annoyed she sued Albert for breach of contract.
Judge Parrott in the County Court held that a contract was formed:
(i) The advertisement in the Times was an offer (Carlill v The Carbolic Smoke Ball Company (1893) applied) which would be accepted by the person making the highest bid.
(ii) Belinda made an acceptance and not a counter offer. She was merely enquiring about the on-shore excursions, Stevenson v McLean (1880) applied.
Albert has decided to appeal to the Moot Court of Appeal
Senior counsel should take point (i) and junior counsel should take point (ii)
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MOOT FINAL
Rich Gibson, a superstar and tennis fan places advertisements in the national daily press concerning Wimbledon tennis tickets for the middle Sunday of the tournament. He is advertising his box for the day as he is unable to attend. He had not expected the tournament to play on Sunday, and he is also organising and performing at a huge open air concert in Hyde Park, campaigning for measures to combat climate change. Although the concert is in the evening, and Wimbledon during the day, he will be too busy preparing for his performance to attend Wimbledon as well.
The advertisements read:
“Rich Gibson is proud to be headlining the “Cool It” Festival in Hyde Park. All tickets bought from the record company’s offices will be at 25% discount. The first customer through the doors tomorrow morning will also receive , absolutely free, the use of Rich Gibson’s private box at Wimbledon on Sunday.”
Ferdinand rushes to the record company with his sleeping bag, and stays outside until Friday morning. Shortly before the company offices are due to open the manager tells Ferdinand that the first customer will, in fact, receive £40 worth of CDs. However, Ferdinand, ignores this and, on entering the offices as the first customer, demands the use of the box at Wimbledon on Sunday.
Judge Parrott in the County Court held that no contract was formed:
(i) In respect of the advertisement relating to the use of the box, this was an invitation to treat (Partridge v Crittenden applied)
(ii) If in fact the advertisement was an offer then Ferdinand’s acceptance was not complete and therefore no contract was formed (Errington v Errington applied)
Ferdinand has decided to appeal to the Moot Court of Appeal
Senior counsel should take point (i) and junior counsel should take point (ii)
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FORMATION OF A CONTRACT
A standard definition of a contract is:
“A contract is an agreement giving rise to obligations which are enforced or recognised by law. The factor which distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties”.
Treitel: The Law of Contract 13th edition 2011 page 1.
From this one can derive the essence of a contract. It is an AGREEMENT which is LEGALLY ENFORCEABLE. An agreement which is only ‘morally binding’ is not a contract. Initially the issue of ‘agreement’ itself is considered, and then the question of what makes an agreement legally enforceable.
AGREEMENT
An agreement is often said to require a meeting of the minds of the parties to it, but this is rather misleading. The reason is that the law tends to take an objective rather than a subjective approach to an agreement. It is concerned not so much with what is actually in the minds of the parties, but with what a reasonable person would infer, from their conduct and the circumstances, as being in their minds (ie did they agree and, if so, on what terms?). This approach is not surprising: when the question, of whether or not there is agreement, is raised it is not possible to look back into the actual minds of the parties.
The following quotation indicates the approach of the courts:
‘In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract. A man cannot get out of a contract by saying: ‘I did not intend to contract’ if by his words he has done so.’
Storer v Manchester City Council [1974] 3 All ER 824 at 828b, per Lord Denning MR.
Agreement is analysed into two aspects: (i) Offer (ii) Acceptance.
OFFER:-
An offer can be defined as:-
AN EXPRESSION OF WILLINGNESS TO CONTRACT ON CERTAIN TERMS, MADE WITH THE INTENTION (ACTUAL OR APPARENT) THAT IT SHALL BECOME BINDING AS SOON AS IT IS ACCEPTED BY THE PERSON TO WHOM IT IS ADDRESSED.
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Offers may be made:
(i) To one person (then only he/she may accept).
(ii) To a group or class of people (eg all students at De Montfort University) - then only those within that class/group can accept.
(iii) To the ‘whole world’, i.e. people generally. Particularly (as will be seen) in cases of rewards and some other public advertisements, an offer may be addressed to the world ‘at large’. The well known case of
CARLILL v CARBOLIC SMOKE BALL [1893] 1 QB 256 decided (among several other points) that an offer to the ‘whole world’ was possible; it would become a contract with any person(s) who accepted the offer before its effective termination.
In the case
The Carbolic Smoke Ball Company advertised the ‘Smoke Ball’ in a number of journals, and, aside from bold claims as to its efficacy, stated that anyone who contracted influenza, colds, or other diseases caused by taking cold, after using the smoke ball three times a day for two weeks, would be paid a reward of £100. The company added that as an earnest of their good faith, £1,000 had been deposited in the Alliance Bank. Mrs Carlill used the smoke ball as specified, contracted influenza, and claimed her reward!
The company in defending the claim put forward various defences - and in rejecting them one by one the High Court and the Court of Appeal laid down various important legal propositions. (The net result of the case was success for Mrs C. and recovery of the £100.)
(a) What did the Carbolic Smoke Ball Company mean by arguing that their promise was a mere ‘advertising puff’? What did the courts decide on this point?
The Carbolic Smoke Ball Company argued that the advertisement was vague. They did not seriously promise to pay £100 to anyone who had used the Smoke Ball at any time. The Court held that the advertisement was an offer, the seriousness was shown by lodging £1,000 in the Alliance Bank.
(b) Why was this not a ‘contract with the whole world’? What was it instead?
The Carbolic Smoke Ball Company argued that there was not a contract with the whole world so there was not a contract at all. Bowen LJ held that it was an offer to the whole world which became a contract when the
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condition was performed, i.e. using the Smoke Ball three times a day for a fortnight and catching ‘flu (c) Why did it not matter that Mrs Carlill had not notified the company of her intention to accept their offer? How did she accept their offer?
The general rule is that acceptance must be notified to the person who makes the offer (the offeror). However if acceptance is by the performance of an act notification is not required. Mrs C accepted the offer by using the Smoke Ball as directed – three times a day for a fortnight.
The case has other interesting implications, for in addition to the various points of law dealt with it probably heavily influenced commercial thinking in advertising practice - heralding the death knell of Victorian advertising and hinting at what was to come regarding consumer protection, including trade descriptions legislation. (Indeed an early Parliamentary involvement in consumer protection was a Commons Select Committee on Patent Medicines set up in 1910). As for the Carbolic Smoke Ball Co. - perhaps inundated with claims - they went into liquidation in June 1895.
An initial task is to distinguish ‘offers’ from other communications in contractual negotiations – such as the ‘invitation to treat’.
Offers and invitations to treat
Many statements and pieces of information may pass between parties in contractual negotiations. One of the most important tasks a court has in facing the question of contractual existence (or otherwise) is to construe whether a FIRM offer has been made, capable of ACCEPTANCE. Such a question can provoke profound differences of opinion between members of a court, since in part it turns on how particular words are interpreted in their context.
The normal comparison is between the OFFER (capable of acceptance) and the INVITATION TO TREAT - merely invitations to others to negotiate/make offers and so clearly incapable of acceptance in themselves.
(a) Displays of goods in shop windows and in supermarkets
The position in English law since Timothy v Simpson (1834) has been that normally window displays do not constitute offers to sell but merely invitations to others to come into the shop to make offers to buy the goods.
In PHARMACEUTICAL SOCIETY OF G.B. v BOOTS [1953] 1 QB 401; [1953] 1 All ER 482; [1953] 2 WLR 427 it was established that Timothy v Simpson applied in a modern context and to the new situation of supermarket sales.
In the case Boots had developed an early version of ‘self service’ for their Edgware store. In essence, customers selected items they wished to purchase from the open plan shelves and then took them in the wire baskets
vm/lawclub/mootinghandbook12 16 provided to one of two check outs near the exit. Items which could be purchased in this way included drugs and medicines which, under s18(1) of the Pharmacy and Poisons Act 1933, could only lawfully be sold by or under the supervision of a registered pharmacist. In the Edgware store pharmacists supervised the transactions at the check out. The Pharmaceutical Society claimed that this procedure was unlawful – in effect because sales took place at the shelves, outside the control of the pharmacist. In both the High Court and the Court of Appeal this argument was rejected, and Boots’ procedures were seen to be lawful. If the display was an offer and the customer accepted by putting the goods in the basket the contract would not have been made under the supervision of a pharmacist. The Court rejected this argument and held that the customer made the offer at the check out which was in turn accepted by Boots. The contract was, therefore, formed at the check out and was supervised by a pharmacist.
(b) Advertisements
Normally advertisements to sell goods/supply services are not offers - but merely invitations to treat (contrast with adverts regarding rewards - Carlill etc).
In PARTRIDGE v CRITTENDEN [1968] 2 All ER 421; [1968] 1 WLR 1204
Partridge had advertised for sale protected birds - bramblefinches - in a magazine. He was charged with unlawfully ‘offering’ the birds for sale - contrary to the Protection of Birds Act 1954.
Held: No offence had been committed as charged, since in the normal case - as here - an advertisement of goods for sale is not an offer to sell those goods but a mere invitation to treat.
The reasoning why such adverts are not normally construed as offers is the same as that regarding displays of goods although one might have thought that public policy would sometimes dictate that displaying/advertising goods at named prices would involve the loss of the right to turn away customers.
Lord Parker CJ at page 424 gave a possible exception, he said “when one is dealing with advertisements and circulars unless they indeed come from manufacturers there is a business sense in their being construed as invitations to treat and not offers for sale”.
Catalogues and the like in which goods or services are advertised for sale etc are usually invitations to treat, even where (as in Grainger v Gough [1896] AC 325) a catalogue and price list is circulated only to a defined and select group of customers (in the particular case the regular clients of a wine merchant).
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(c) Auction Sales
(i) The advertisement of an auction is not an offer to hold it
So, in HARRIS v NICKERSON (1873) LR 8 QB 286, the defendant auctioneer advertised in the London press that various items - including office furniture – would be sold by auction, at Bury St Edmunds, on a specified day. The claimant attended on that day, in part he said, with the intention of acquiring some of the office furniture. However, the furniture was withdrawn from the sale. He brought an action claiming damages for his lost time, arguing there had been a binding contract to put the items up for sale. The judge at first instance found for the claimant, but on appeal it was decided that the advert was merely an invitation to prospective buyers to come and make bids at an auction IF it was held. Therefore, the claimant had not accepted any offer by travelling to Bury St. Edmunds.
(ii) The auctioneers’ request for bids at the commencement of the auction: is not an offer but merely an invitation for bids from prospective buyers. The bids themselves are the offers (to buy).
See Payne v Cave (1789) 100 ER 502 and s.57(2) of the Sale of Goods Act 1979.
Each bidder makes an offer to buy which is accepted by the auctioneer bringing down his hammer (acceptance in the “customary manner”).
(d) Tenders
A request for tenders is a common negotiating device. A company seeking to purchase a major item or service, such as a piece of machinery or some construction work, will invite tenders in, for example, a magazine, trade journal, or circular to interested parties.
Normally, such a request is treated as an invitation to treat rather than an offer – the tenders themselves being offers – see Spencer v Harding (1870) LR 5 CP 561. However, difficulties arise in cases where the request for tenders is coupled with an indication (eg ‘highest bidder secures’) that the person issuing the request is willing to be bound by the most competitive tender. In Spencer v Harding it was stated (obiter) that in such situations the ‘reward’ cases (see above at (b)) applied and the request amounted to an offer to trade with the most competitive tenderer.
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Termination of offer
An offer can of course be validly accepted and thereby conclude a binding contract. However, before this time it might come to an end (ie be terminated) by:
• Lapse, • Revocation, or • Rejection.
(i) Lapse
An offer may lapse because the time limit has expired or a reasonable time has passed.
So in RAMSGATE HOTEL v MONTEFIORE (1866) LR Exch 109, Montefiore offered to buy shares from Ramsgate on 8 June 1864. However, by November, no reply had been received by M. Eventually, on 23 November, R attempted to accept the offer by allotting shares to M. It was held that the offer by M had already lapsed – so that acceptance of it was no longer possible – six months was an excessive period of time in the circumstances.
(ii) Revocation (withdrawal of the offer by the offeror)
(a) An offer can be revoked at any time before it is accepted.
However
(b) Revocation is only effective when communicated to the offeree. It is not enough merely to act inconsistently with the offer, eg by disposing of the subject matter elsewhere.
(c) For effective communication the revocation must actually be brought to the notice of the offeree.
So in BYRNE v VAN TIENHOVEN (1879-80) 5 CPD 344
An offer was posted by Van Tienhoven to Byrne on 1 October. On 8 October V posted a revocation to B. On 11 October B telegraphed an acceptance. On 20 October the letter of revocation was received by B. It was held that a binding contract had come into being.
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However:
(i) It is likely that a revocation would be effective even if the offeree failed to read it, provided it had reached his address. A revocation sent to the offeree’s last known address would also be effective if he had moved without notifying the offeror. There is also the unresolved issue of the effective time of revocation of a letter sent to a company whose mail is received, opened, and sorted in different offices. Interesting comment on this point is to be found in The Brimnes [1974] 3 All ER 88, particularly in the judgment of Edmund Davies LJ, at page 95 when he states:
“[Counsel for the ship owner]…submits that, by leaving the telex machine working, the charterers in effect represented that any message so transmitted to them DURING ORDINARY BUSINESS HOURS [capitals inserted] would…be dealt with promptly…I respectfully agree”.
The case involved the issue of the time of receipt of a telex cancelling a contract but there is no reason to think it does not apply more widely.
(ii) An offer made ‘to the world at large’ can be withdrawn if….????? What is the rule on this question? There are helpful dicta in the American case of Shuey v US (1875) 92 US 73 which state that equivalent publicity must be given to the revocation as was given to the original offer. There is no authoritative English case on this point.
(iii) perhaps the most controversial question arising in connection with revocation is whether an offeror should be entitled to revoke a unilateral offer (see above) when the offeree has commenced performance of the act stipulated for in the offer.
The difficulty is in seeing how an offer can be ‘accepted’ before all the relevant conditions have been fully performed.
(a) On the starkest view, simple logic dictates that a unilateral offer is revocable at any moment until all the conditions have been fulfilled (neither side being committed until this point).
(b) Lord Denning in ERRINGTON v ERRINGTON [1952] 1 KB 290; [1952] 1 All ER 149; [1952] 1 TLR 231 took the view that a unilateral offer could not be revoked once performance of the requisite condition(s) had commenced. In the case a father promised a house to his son and daughter-in-law provided the couple kept up the mortgage instalments. The father would retain the deeds which were in his name until all the instalments were paid. The father died and the house was left to his widow. The son left his wife and went back to live with his mother. The mother sued the daughter-in-law. It was held that the house belonged to the son and daughter-in-law as the offer could not be withdrawn as performance had started.
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(c) Interesting comment was found in the obiter dicta comments of Goff LJ in DAULIA V FOUR MILLBANK NOMINEES LTD [1978] Ch 231;[1978] 2 All ER 557
The defendants promised that if the plaintiff attended their offices with the draft contract and a banker’s draft for the deposit contracts would be exchanged. The defendants refused to exchange. In the event the defendants won the case for other reasons but on the revocation of a unilateral offer Goff LJ stated:
“Whilst I think the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition being satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform.”
(iii) Rejection
(a) Refusal of an offer terminates it – so if B refuses A’s offer on the 1st he cannot turn round and attempt to accept it on the 2nd.
(b) A counter-offer is treated in law as being a rejection of the original offer – see HYDE v WRENCH (1840) 49 ER 132
Wrench offered to sell Hyde his farm for £1,000. Hyde offered £950 which Wrench rejected. Hyde then attempted to agree to the original price of £1,000. It was held there was no binding contract as the offer of £950 was a ‘counter offer’ which destroyed Wrench’s original offer.
However, not every statement made by an offeree in response to an offer will be construed as a counter-offer. For example, a mere request for further information would not be classed as a counter-offer.
In STEVENSON v McLEAN (1880) 5 QBD 346
The defendant wrote to the plaintiff offering warrants for iron at 40s per ton, the offer open until Monday. The plaintiff telegraphed Monday morning, “Please wire whether you would accept 40 for delivery over two months or if not longest limit you could give.” The defendant did not reply. The plaintiff then accepted. It was held that the telegram was an enquiry which did not destroy the original offer.
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ACCEPTANCE
DEFINITION: THE UNQUALIFIED EXPRESSION OF ASSENT TO THE TERMS OF THE OFFER BY WORDS OR CONDUCT.
Acceptance is only possible if the offer is still in force and has not been terminated for any reason.
Acceptance must be absolute and unqualified (and not introduce fresh terms) – otherwise it will be treated as a counter-offer and a rejection of the original offer.
Thus in NORTHLAND AIRLINERS v DENNIS FERRANTI [1970] 114 SJ 845.
The defendants sent a telegram offering to sell an aircraft to the claimants. The claimants replied by telegram, purporting to accept. However, it was held that their reply was on different terms to the offer, and so operated as a counter offer/rejection of it. The attempted ‘acceptance’ by the claimants seemed to require delivery within 30 days whereas the offer had been silent on this point (in fact the claimants had probably intended to merely enquire about delivery dates, but the word ‘if’ had been omitted from their telegram).
Acceptance by conduct
An acceptance may be express, as where the offeree accepts the offer by a written or oral statement intended to constitute an acceptance, or it may be manifested by the offeree’s conduct
Communication of acceptance
The general rule is that the acceptance must be communicated to the offeror to be effective.
Stipulated modes of acceptance
Where an offer states that it can only be accepted in a certain way the offeror is NOT bound unless acceptance is made in that way (however bizarre it might be).
Thus:- If the offeror requires the acceptance to be sent to
(i) A particular place only – an acceptance sent elsewhere will not bind him; or
(ii) asks for an acceptance in writing only – an oral acceptance will not bind.
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However:- What if the offer prescribes a specified mode of acceptance but not enough to indicate it is a compulsory mode?
On this issue there is the Court of Appeal case of
YATES BUILDING v PULLEYN (1975) 119 SJ 370
P owned 153 plots of building land. Y acquired an option to purchase the plots in instalments. One such option was to be taken up between 6 April and 6 May 1973 it was stated to be ‘exercisable in writing to be sent by registered or recorded delivery post’ to the office of P or their solicitors. In the event Y’s solicitors wrote to exercise the option on 30 April by normal post. The letter was received on the following day, but P did not reply until 4 May (their letter was received on 7 May). P stated that as Y had not replied by registered or recorded delivery the option had not been validly exercised.
The Court of Appeal held that, as the form of acceptance (taking up of option to be exercisable in writing to be sent by registered or recorded delivery post to the office of P or their solicitors) was directory (ie permissive) as opposed to obligatory, there had been a valid acceptance by Y’s solicitors’ letter of 30 April because the method of reply was no less advantageous than that prescribed. It would have been different, it was held, if the offeror had stated that the reply (acceptance) must ONLY be by the prescribed method. In such a case that method would have been obligatory.
The postal rule
(i) Effective on posting When it applies the postal rule states that an acceptance via the post is effectively communicated as soon as it is posted, even though previously the offeror may have posted a letter of revocation (if that letter is not received by the offeree before he posts his acceptance) – see Adams v Lindsell (1818) and Byrne v Van Tienhoven (1880).
Also:- As the later case of Household Fire Insurance v Grant (1879) shows – even if the letter of acceptance never arrives, there can be a binding contract from the moment of the posting of the letter of acceptance.
(ii) Reasonable to use the post
This special rule only applies if it is reasonable to use the post to send an acceptance: ‘Reasonableness’ is a question of fact in every case, but relevant factors are:
(a) Whether the offeror states that acceptance may be via the post.
(b) Whether a previous ‘course of dealings’ between the parties has established such a precedent.
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(c) Whether the offer is contained in a letter…if so it is usually reasonable to reply in the same way (unless the offer itself clearly states otherwise).
The general principle is well illustrated by the case of:
HENTHORN v FRASER [1892] 2 Ch 27
The secretary of a land society in Liverpool handed to Henthorn (in Liverpool) a written option to purchase some houses belonging to the society at £750. Around midday the next day, the secretary of the society posted a withdrawal of the offer, but this did not reach Henthorn (in Birkenhead) until after 5pm. Meanwhile at 3.50pm Henthorn had posted an acceptance of the offer; this was delivered to the society’s office after it had closed and was opened by the secretary the next day. Henthorn sued for specific performance of the contract, claiming a binding contract to sell the houses had arisen at 3.50pm. At first instance he was unsuccessful, but on appeal the Court of Appeal found in his favour. Acceptance, in these circumstances, was reasonably communicated by posting and was valid from the moment the letter was posted.
On the other hand:- If the offer is by telephone, word of mouth, or in other forms impliedly indicating a speedy acceptance it is not usually reasonable to post acceptance UNLESS the offer states that this is possible. The increasing complexity of modern methods of communication pose interesting questions.
Also:- If the offeree knows that the post is subject to delays, through strikes, floods, etc. – it would not normally be reasonable to post an acceptance.
(iii) Express or implied exclusion of the postal rule
The more recent decisions in this area illustrate the increasing recognition by the courts that, even if it may be reasonable to use the post, the post rule is not a fixed or inflexible rule of law. It can be expressly or impliedly excluded by the contract. It can also be excluded if it would give rise to ‘manifest inconvenience or absurdity’.
In HOLWELL v HUGHES [1974] 1 All ER 161; [1974] 1 WLR 155
Hughes granted an option to Holwell over a house in North London. The option should be exercisable “by notice in writing” to Hughes “at any time within 6 months”. Just before the end of the option period Holwell’s solicitor sent a letter to Hughes’ solicitor with a copy to Hughes. The copy never arrived. It was held that there was no contract as “excerciable by notice in writing” re- iterated the general rule that acceptance must be communicated.
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(iv) Further points
(a) What if a letter of acceptance is posted, where it is deemed not ‘reasonable’ to use the post?
If the letter is received before the offer lapses/is revoked etc. - then it may still operate as a valid acceptance. However:
(i) This is not the case if some other mandatory mode of acceptance is not complied with (see Yates v Pulleyn, above).
(ii) The problem remains of the legal sense of ‘received’. A similar problem was canvassed earlier about the receipt (communication) of revocations. Is it through the letterbox/ into the firm, or only when read by the offeror? The issues are unresolved as mentioned earlier.
(c) An acceptance by telex or telephone or (possibly) fax is not effectively communicated until received at the other end.
In BRINKIBON v STAHAG STAHL [1983] 2 AC 34; [1982] 1 All ER 293; [1982] 2 WLR 264
The House of Lords confirmed, in the main, earlier authorities, such as Entores Ltd v Miles Far East Corporation [1955] 2 QB 327 and laid down the rule that the acceptance by telex takes place when the communication is received.
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