chapter 10 OFFER AND ACCEPTANCE - Gill - Home

1 chapter 10 OFFER AND ACCEPTANCET opics covered Requirements of a valid OFFER Communication of ACCEPTANCE Recognising an OFFER general rules Termination of an OFFER Communication of ACCEPTANCE Requirements of a valid ACCEPTANCE exceptionsSummaryA contract is based on the agreement or mutual consent of the parties chapter examines both the OFFER and the ACCEPTANCE which lead to The first essential of a valid contract is the agreement or mutual assent of theparties involved. In the event of a dispute about such agreement, the courts seekto discover whether there was consensus ad idem(agreement as to the essentialpoint), whether the words and conduct of the parties are sufficient to lead areasonable person to assume that they had reached agreement with respect to thesame subject matter.

2 The court may examine the negotiations surrounding thetransactions to see if there was a definite OFFER made by one party which wasclearly accepted without qualification by the other party. Requirements of a valid offer2. An OFFER exists where the offeror undertakes to be contractually bound if theofferee makes a proper ACCEPTANCE . It is a definite promise to be bound on certainspecific terms. The essentials of a valid OFFER are as follows:(a)The terms of an OFFER must be clear, certain and complete. It cannot be , the court may hold that there was a failure to make a : Gunthing v.

3 Lynn (1831)The offeror promised to pay a further sum for a horse if it was lucky .Held: The OFFER was too vague. The court was unable to give effect to thealleged agreement, because no clear meaning could be determined.(b)The OFFER must be communicated to the other party. An OFFER can becommunicated to a particular person, a group of persons or to the public atlarge. It can be accepted by anybody who comes within the terms of the Business Law 6th Edition:Irish Business Law REPRINT 06/07/2012 09:35 Page 90 Case: Carlill v. Carbolic Smoke Ball Co. (1893)The defendants undertook, in various advertisements, to pay 100 reward toanyone who caught influenza after having sniffed a smoke ball three times dailyfor two weeks.

4 The plaintiff used the smoke ball as prescribed, and caughtinfluenza after more than two weeks treatment, and while still using the smokeball. She then claimed her 100 reward. Held: It was an OFFER to the public at large which the plaintiff could accept,and had accepted, by performance of the conditions in the OFFER . While anadvertisement in a newspaper is not normally an OFFER but an invitation to treat(see para. 6), in this case, a sum of money was lodged in the bank by thecompany as a sign of their good faith, thereby providing consideration to supportthe OFFER . (c)The OFFER must be made by written or spoken words, or be inferred by the conductof the parties.

5 It may be communicated by letter, telephone, telex or any meansof communication which is appropriate and reasonable in the circumstances. (d)The OFFER must be intended as such before a contract can arise. If it is not madewith a view to a legal relationship, if the OFFER excludes recourse to thecourts for its enforcement, then it will not constitute an OFFER . Recognising an offer3. Only an OFFER in the proper sense, made with the intention that it shallbecome binding when accepted, may be recognised so as to form a bindingcontract. An OFFER must be distinguished from the following, which are not offers:(a) the answer to a question or the supplying of information;(b) an invitation to treat;(c) a statement of intention;(d) an answer to a question or the supplying of information4.

6 An OFFER must not be confused with the answer to a question or the supplyingof : Harvey v. Facey (1893)The plaintiff telegraphed to the defendant Will you sell us Bumper Hall Pen?Telegraph lowest cash price . The defendant telegraphed in reply Lowest price forBumper Hall Pen 900 . The plaintiff regarded this as an OFFER and telegraphed We agree to buy Bumper Hall Pen for 900 asked by you . The defendant madeno further : No contract had been made. The second telegram was merely astatement of the price which the defendant would sell for, if and when he choseOffer and ACCEPTANCE 91 Irish Business Law 6th Edition:Irish Business Law REPRINT 06/07/2012 09:35 Page 91to sell his property.

7 It was not an OFFER which the plaintiff could accept, but thesupply of information in response to a If, however, in the course of negotiations for a sale, the seller states the price atwhich the item will be sold, that statement may be an OFFER which can be invitation to treat6. An invitation to treat is an invitation to another person to make an OFFER . An OFFER can be converted into a contract by ACCEPTANCE , provided the otherrequirements of a valid contract are present, but an invitation to treat cannot be accepted .7. To advertise goods or to exhibit goods for sale in a shop window or on theopen shelves of a self-service shop is to invite customers to make offers topurchase, or an invitation to treat.

8 Case: Fisher v. Bell (1961)A shopkeeper was prosecuted for offering for sale offensive weapons bydisplaying flick-knives in his shop : Although he had exhibited the flick-knives, accepted buyers offers andsold the goods, he had not offered them for sale, because goods on display are noton OFFER for sale, but an invitation to : Minister for Industry and Commerce v. Pim Bros Ltd (1966)A coat was displayed for sale in the defendants shop window. It had a notice ofthe cash price and a weekly sum attached to it. The minister brought an actionagainst Pim Bros Ltd on the grounds that they were in breach of the thenlegislation which made it an offence to OFFER for sale goods on credit terms withoutspecifically stating these : This did not constitute an OFFER to sell which could be made a contractof sale by ACCEPTANCE .

9 It was simply an invitation to treat for the sale of the articlewith an indication that credit facilities were : Pharmaceutical Society of Great Britain v. Boots Chemists (1952)By statute, certain drugs containing poisons could only be sold under thesupervision of a qualified pharmacist . Boots operated a self-service shop, with thedrugs displayed on open shelves and with a qualified pharmacist located at thecheck-out. The Pharmaceutical Society brought an action against Boots Chemistsfor being in breach of their supervisory : The display of goods was only an invitation to treat the selection andpresentation of the goods by the customer was the OFFER and the taking of moneyby the pharmacist at the cash desk was the ACCEPTANCE .

10 Therefore, Boots Chemistsdid not commit an offence, because the sale took place at the of Irish Business LawIrish Business Law 6th Edition:Irish Business Law REPRINT 06/07/2012 09:35 Page 928. The publication of a prospectus by a company in respect of the issue of shares isan invitation to the public to make offers. The company has only a limited numberof shares and cannot intend to allot whatever number the public may apply The advertisement of an auction, or the putting up of items for bids, is aninvitation to treat and not an OFFER to sell to the highest bidder. The offers comefrom successive bidders, and the fall of the auctioneer s hammer is the bidder may retract the bid until this happens.