Topic 2(A): Agreement Offer

OFFER

Offer: expression of will to enter into a contract on certain terms.

·  Issue: Proposal only amounts to offer if offeror shows that acceptance is invited

·  Objective test: Whether is would appear to reasonable person (offeree) that an offer was intended and that a binding agreement would be made upon acceptance.

·  Does not matter whether offeror intended to make offer.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

·  Advertised ‘Carbolic Smoke Ball’. ₤100 reward paid to any person who contracted a cold/influenza after using device three times daily for two weeks. ₤1000 deposited with the Alliance Bank, Regent Street.

·  Defendants argued:

o  No promise was intended – mere joke

o  No offer was made to any particular person

o  There was no notice of acceptance of offer

o  Agreement was uncertain (does not stipulate period within which disease must be contracted).

o  Did not supply consideration for the defendant’s promise.

·  English Court of Appeal rejected:

o  Statement relating to bank deposit shows promise was intended. Construed the ad as an ordinary person reading the doc would think was intended.

o  Offer can be made to the whole world.

o  An offer that calls for performance of certain conditions may be accepted by performance of those conditions. UNILATERAL CONRACT.

o  Reasonable construction made on ad.

o  Use of smoke ball constituted benefit to defendant and detriment to plaintiff – hence consideration.

Unilateral Contracts:

·  Offer accepted by performing an act and performance of act is all that the contract requires of referee.

·  Obligation of offeree is performed at time of contract formation.

Bilateral Contracts:

·  Exchange of promises.

·  Obligations of both parties not performed yet at time of contract formation.

Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

·  C subsidised purchases of wool by manufacturers of woollen products to enable those manufacturers to supply products at low price. Subsidy ended but each manufacturer would have certain amount of subsidised wool in stock on 30 June 1948.AWM’s stockpile exceeded this amount and AWM repay subsidy paid on that excess. No contract.

·  Unilateral contract different from conditional gift:

o  Offeror must impliedly/expressly REQUEST the doing of the act by the offeree

o  Offeror states price which offeree must pay for promise

o  Offer was made in order to induce doing of act.

Offer distinguished from mere supply of information:

·  Eg. a price list is not an offer

·  Harvey v Facey 1893

Offer distinguished from mere puff (joke):

·  Is it simply a joke?

·  Leonard v Pepsico Suppl 2d 1999 – pepsi points, jet

Invitation to treat:

·  Invitation to others to make offers or enter into negotiations eg. price listing

It is offer, not invitation to treat if:

·  Limit of acceptors: merchant limits no. of acceptors

·  Limit on offer: one per customer

Shop sales (distinguish offer to the world at large from invitations to treat):

·  Display of goods for sale is not an offer

o  Pharmaceutical Society Of Great Britain v Boots Cash Chemists (Southern) Ltd 1953

o  Walkthrough chemist, prosecuted for selling over the counter drugs not over the counter

·  Acceptance is communicated only at checkout.

·  Customers can put items back on shelf.

Auction:

·  Each bid is an offer.

·  Auctioneer communicates acceptance of final bid by fall of hammer – Payne v Cave 1789

·  Auctioneer is not obligated to sell to highest bidder. Bidders can retract bids.

·  No claim if auction is cancelled – Harris v Nickerson (1873).

Tenders:

·  Each tender is an offer. Call for tenders is a invitation to treat.

Tickets:

·  Issue: WHEN a contract was formed.

·  Purchased ticket with written conditions not previously seen.

·  Acceptance is made by conduct (presenting herself/himself for travel).

Termination of Offer

Withdrawal

·  An offer may be revoked by offeror any time before it is accepted, unless the offeree has given consideration for that promise.

·  Only effective when communicated to offeree

Option (consideration given):

·  Agreement between option holder (offeree) and grantor (offeror) where option holder is entitled to enter into contract on specified terms either at specified time/period.

·  Goldsborough, Mort & Co Ltd v Quinn:

o  Grantor gave option holder option to purchase certain land at specified price at any time within one week of agreement in return for sum of 5 shillings paid to grantor (consideration).

Lapse

·  Offer lapses at end of particular period of time for acceptance.

·  If no specified time, then after a reasonable time it lapses.

·  Both the death of the offeror and offeree will terminate offer.

o  But Fong v Cilli

o  Offeree cannot accept an offer after offeror’s death where offeree knew of death before the purported acceptance.

Failure of condition:

Rejection and counter offer:

·  Bargaining (counter offer) implicitly rejects original offer, thereafter no longer available.

·  But such counter offer may be an inquiry or request for information, not a rejection.