Lecture 4 AGREEMENT

Offer Termination of Offer

Formation of a Contract

Offer
An offer is a definite promise to be bound on specific terms.

Formation of a Contract
(OFFER)

Certainty of Offer
An apparent vague offer:

Gunthing v Lynn 1831 The facts: the offeror offered to pay a further sum for a horse if it was lucky. Decision: the offer was too vague and no contract could be formed by a puported (claimed) acceptance.
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Formation of a Contract
(OFFER)

Certainty of Offer
A definite offer may be made to a class of persons or to the world at large

Carlill v Carbolic Smoke ball Co 1893

The facts: the manufacturers of a patent medicine published an advertisement by which they undertook to pay 100 rewardto any person who contractsinfluenzaafter having used the smoke ball three times daily for two weeks. The advertisement added that 1,000 had been deposited at a bank showing our sincerity in this matter. The claimant (plaintiff / applicant) read the advertisement, purchased the smoke ball and used it as directed. She contract influenza and claimed her 100 reward.
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Formation of a Contract
(OFFER)

Certainty of Offer
Carlill v Carbolic Smoke ball Co 1893 (Contd)
The manufacturers argued a number of defences, including the following:
(a) (b) The offer was so vague it could not form the basis of a contract as no time limit was specified It was not an offer which could be accepted since it was offered to the whole world.

Decision: the court considered these two defences as follows: (a) The smoke ball must protect must protect the user during the period of use. The offer was not vague (b) An offer to the public can accepted so as to form a contract.

Formation of a Contract
Supply of Information

Supply of information will not be considered to be an offer.

Case Example: Harvey v Facey 1893
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Formation of a Contract
Supply of Information
If, in the course of negotiations (discussions by two parties) for a sale, the vendor states (declares) the price at which he will sell, that statement may be an offer which can become accepted eventually.
Case Example: Bigg v Boyd Gibbons 1971
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Formation of a Contract

Invitation to Treat
An invitation to treat is an indication that someone is prepared to receive offers (i.e. one party invites the other to make an offer) with the view to forming a binding contract. It is not an offer in itself.
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Invitation to Treat
There are four types of invitations to treat: 1. Auctions 2. Advertisements 3. Exhibition of goods for sale 4. TENDERS
Case Example for advertisements: Patridge v Crittenden 1968 Case Example for Exhibition of goods for sale: Fisher v Bell 1961

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Formation of a Contract
TERMINATION OF OFFER
An offer is terminated so that it may no longer be accepted in any of the following circumstances.
a. Rejection b. Lapse of time c. Revocation by the offeror d. Failure of a condition e. Death of one of the parties
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Formation of a Contract (Termination of Offer)

a. Rejection
An outright rejection can cancel an offer also a counter-offer (a proposal to substitute the earlier offer) terminates the original offer made.
Case Example: Hyde v Wrench 1840

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Formation of a Contract (Termination of Offer)

b. Lapse of Time
An offer may be expressed to last for a certain period of time but if there is no express time limit set, it expires after a reasonable time. What is a reasonable time depends on the circumstances of the case.
Case Example: Ramsgate Victoria Hotel Company v Montefiore 1866
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Formation of a Contract (Termination of Offer)

c. Revocation by the offeror An offeror can withdraw his offer at any time before it is accepted. The revocation must be communicated to the offeree.
Case Example: Routledge v Grant 1828
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Formation of a Contract (Termination of Offer)

c. Revocation by the offeror (contd)

The offeror cannot just change his mind and not tell anyone about it. Revocation by post is not complete until the letter is received by the offeree.
Case Example: Bryne v Leon Van Tienhoven 1880
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Formation of a Contract (Termination of Offer)

c. Revocation by the offeror (contd)

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Formation of a Contract (Termination of Offer)

c. Revocation by the offeror (contd)

While acceptance must be communicated by the offeree, revocation of offer may be communicated by any third party who is a sufficiently reliable informant. Case Example: Dickinson v Dodds 1876
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Formation of a Contract (Termination of Offer)

c. Revocation by the offeror (contd)

Where an offer is meant to be accepted by conduct (a unilateral contract), it has been held that it cannot be revoked once the offeree has begun to try and perform whatever act is necessary.
Case Example: Errington v Errington 1953
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Formation of a Contract (Termination of Offer)

d. Failure of a Condition An offer which is expressly or impliedly made subject to some condition cannot be accepted if the condition fails. For example, an offer to buy goods is subject to an implied condition that they will not deteriorate before the offer is accepted.
Case Example: Financings Ltd v Stimson 1962
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Formation of a Contract (Termination of Offer) e. Termination by death

The death of the offeree terminates the offer.

The offerors death terminates the offer unless the offeree accepts it in ignorance of the offerors death, and the offer is not of a personal nature.

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Formation of a Contract (Termination of Offer)

e. Termination by death
For example, A promises to sell her video recorder to B, then dies soon after, and B writes to accept the offer not knowing that A is dead, it seems that the people responsible for As affairs after death would be obliged to sell the video recorder to B and B would obliged to pay the price to the executors (i.e. the people responsible for As affairs).
However, where an offer requires personal performance by the offeror (such as painting a picture, or appearing in a film) it will usually lapse on the offerors death. 21