Is there a Contract?
Agreement and Contractual Intention
Agreement (Offer and Acceptance)
In order for parties to make an agreement, one party must make an offer, which is accepted by
another
Offer
➢ ‘an expression of willingness to contract on certain terms, made with the intention that it
shall become binding as soon as it is accepted by the person to whom it is addressed’
(Treitel, The Law of Contract, 13th edn, p 8).
L
Person who makes the offer is called offeror and the person whom the offer is made is called
the offeree
Expression
GD
➢ May take many different forms (eg a latter, newspaper advertisement, fax and even
conduct, as long as it communicates the basis on which the offeror is prepared to
contract
Intention
➢ Does not necessarily mean the offeror’s actual intention
➢ The courts look at what was said and done between the parties, from the point of view of
a ‘reasonable person’ and try to decide what a reasonable person would have thought
was going on
ce
Allied Marine Transport v Vale do Rio Doce Navegacao SA (The Leonidas) [1985] 1 WLR 925
➢ If the offeror so acts that his conduct, objectively considered, constitutes an offer, and
the offeree, believing that the conduct of the offeror represents his actual intention,
accepts the offer, then a contract will come into existence.
Three Essential Elements to form a legally binding contract
A
1) Consideration
2) Intention to Create Legal Relations (CLR) and Capacity
3) Agreement (Offer + Acceptance
Objective Test of Agreement
Treitel’s definition of an offer refers to ‘the person to whom it is addressed’
➢ This may be one person, a class of persons or even the whole world
Invitation to Treat
➢ Is the preliminary stages of negotiation
,Distinction Between an Offer and an Invitation to Treat
The distinction between an offer and an invitation to treat is important, but not always easy to
draw
Self-service and Shop Window Displays: Offers or Invitations to Treat
Pharmaceutical Society of Great Britain v Boots Cash Chemists
➢ The customer offers to buy the goods when he presents them at the payment point, and
acceptance takes place when the shop takes payment for the goods
Fisher v Bell [1961] 1 QB 394
➢ The court held that the display of the knife was simply an invitation to treat and acquitted
the defendant of the charge
Goods on display are normally just an invitation to treat. The offer to buy is made by the
L
customer and acceptance takes place at the payment point
A display of goods may amount to an offer in very limited circumstances where there is a clear
intention to be bound
GD
Likely that the display of goods on a website will be treated in the same way as goods on
display in a supermarket or shop and so amount to an invitation to treat
Advertisements
Advertisements are generally regarded as invitations to treat
Partridge v Crittenden [1968] 1 WLR 1204
➢ Advertisement was simply an invitation to treat
Williams v Carwardine (1833) 5 C & P 566
- An advertisement of a reward has traditionally been treated as an offer as there is an
ce
intention to be bound as soon as the information is given
Advertisements: Offers or Invitations to Treat?
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
➢ Authority for the proposition that an advertisement can constitute an offer to ‘the world’
and it may waive the need for communication of acceptance prior to a claim under it
A
➢ Clear intention to be found
Unilateral and Bilateral Contracts
A bilateral contract arises where one party makes a promise in return for a promise from the
other party
The offer and acceptance both take the form of promises
➢ Both parties are immediately bound
Unilateral Contracts
➢ A unilateral contract is effectively a promise in return for an act, suggests the
commitment is one-sided (promise inviting an act)
, ➢ The promisor is bound to perform if the person to whom the promise is made performs
the specified act
➢ Williams v Carwardine (1833) 5 C & P 566
○ Offer of reward
- The offeror usually promises to pay a sum of money to anyone providing
information or finding and returning lost property
Auctions
A contract for the sale of goods concluded at an auction is regarded by the law as a particular
situation to which special rules apply
s57(2) of the Sale of Goods Act 1979, a sale by auction is complete on the fall of the
auctioneer’s hammer, that is the acceptance
L
➢ Bids are offers which can be withdrawn at any time before acceptance
➢ When auctioneer calls for bids, they are inviting offers and these are invitation to treat
s57(3) of the 1979 Act
GD
➢ Refers to a ‘reserve price’
➢ A price agreed between the auctioneer and the seller as being the lowest price which the
auctioneer may accept for the lot
➢ If the bidding does not reach the reserve price, the lot will be withdrawn from the sale
Auction Advertised as being ‘Without Reserve’
Barry v Davies (t/a Heathcote Ball & Co) [2000] 1 WLR 1962
➢ There was a contract between the auctioneer and Mr Barry
➢ If an auction is advertised as being ‘without reserve’, the auctioneer is effectively
ce
promising to sell to the highest bidder
➢ Such a promise amounts to an offer of a unilateral contract
Tenders
Requests for tenders will be invitations to treat and the tenders will be the offers, which may, or
may not, be accepted by the business which has invited them
➢ Invitation to tender is an invitation to treat
A
● There may be situations where an invitation to tender does constitute an offer
○ Harvela Investments Ltd v Royal Trust Company of Canada Ltd [1986] AC
207
■ HOLs held that the telexes were offer of a unilateral contract to
sell to the highest bidder, which would be followed by a bilateral
contract for the sale of the shares
An invitation for tenders may give rise to a unilateral contract
➢ Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195
● That tenders had been invited from a small number of selected parties connected
with the airport and that the invitation had laid down ‘a clear, orderly and familiar
, procedure’ so that the tenderers obviously would assume that if they submitted a
conforming tender, they had a right to have their tender considered along the rest
● Liable to the Club in damages for loss of opportunity
Termination of Offer
An offer may be terminated in the following ways
1) Revocation (ie withdrawal) of the offer by the offeror
2) Rejection by the offeree
3) Lapse of time
Revocation
1) Offer can generally be revoked at any time before acceptance
➢ Routledge v Grant (1828) 4 Bing 653
L
● Is authority for the principle that such promises are not binding if they are
gratuitous promises (in the sense that the offeree has not given, or
promised anything in return for the promise to keep the offer open)
GD
➢ Generally, a promise to keep an offer open is not binding
➢ Offeror can revoke the offer within the specified time as long as it has not been
accepted
● Exception to this rule: Mountford v Scott [1975] 1 All ER 198
2) Revocation must be communicated to the offeree
➢ Notice of withdrawal of the offer must be given and must be communicated to the
offeree to be effective
● Implicit in the decision in Byrne & Co v Van Tienhoven & Co (1880) 5
CPD 344, in which withdrawal of an offer by telegram was held to take
effect only on receipt
ce
➢ Some exceptions to this general rule that revocation must be communicated
● For example, notice of withdrawal sent to the offeree’s last known
address would be effective if he has moved without notifying the offeror
3) Revocation of Offers made to the Public
➢ Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
● The best the company could do to revoke the offer in these circumstances
would be to publish a sufficiently prominent notice of withdrawal in
A
relevant newspapers
4) Notice of revocation sent to a business during normal office hours
➢ The Brimnes [1975] QB 929
● Notice will be effective on receipt where it is reasonable to expect a
member of staff to be available to read a notice of revocation
Agreement and Contractual Intention
Agreement (Offer and Acceptance)
In order for parties to make an agreement, one party must make an offer, which is accepted by
another
Offer
➢ ‘an expression of willingness to contract on certain terms, made with the intention that it
shall become binding as soon as it is accepted by the person to whom it is addressed’
(Treitel, The Law of Contract, 13th edn, p 8).
L
Person who makes the offer is called offeror and the person whom the offer is made is called
the offeree
Expression
GD
➢ May take many different forms (eg a latter, newspaper advertisement, fax and even
conduct, as long as it communicates the basis on which the offeror is prepared to
contract
Intention
➢ Does not necessarily mean the offeror’s actual intention
➢ The courts look at what was said and done between the parties, from the point of view of
a ‘reasonable person’ and try to decide what a reasonable person would have thought
was going on
ce
Allied Marine Transport v Vale do Rio Doce Navegacao SA (The Leonidas) [1985] 1 WLR 925
➢ If the offeror so acts that his conduct, objectively considered, constitutes an offer, and
the offeree, believing that the conduct of the offeror represents his actual intention,
accepts the offer, then a contract will come into existence.
Three Essential Elements to form a legally binding contract
A
1) Consideration
2) Intention to Create Legal Relations (CLR) and Capacity
3) Agreement (Offer + Acceptance
Objective Test of Agreement
Treitel’s definition of an offer refers to ‘the person to whom it is addressed’
➢ This may be one person, a class of persons or even the whole world
Invitation to Treat
➢ Is the preliminary stages of negotiation
,Distinction Between an Offer and an Invitation to Treat
The distinction between an offer and an invitation to treat is important, but not always easy to
draw
Self-service and Shop Window Displays: Offers or Invitations to Treat
Pharmaceutical Society of Great Britain v Boots Cash Chemists
➢ The customer offers to buy the goods when he presents them at the payment point, and
acceptance takes place when the shop takes payment for the goods
Fisher v Bell [1961] 1 QB 394
➢ The court held that the display of the knife was simply an invitation to treat and acquitted
the defendant of the charge
Goods on display are normally just an invitation to treat. The offer to buy is made by the
L
customer and acceptance takes place at the payment point
A display of goods may amount to an offer in very limited circumstances where there is a clear
intention to be bound
GD
Likely that the display of goods on a website will be treated in the same way as goods on
display in a supermarket or shop and so amount to an invitation to treat
Advertisements
Advertisements are generally regarded as invitations to treat
Partridge v Crittenden [1968] 1 WLR 1204
➢ Advertisement was simply an invitation to treat
Williams v Carwardine (1833) 5 C & P 566
- An advertisement of a reward has traditionally been treated as an offer as there is an
ce
intention to be bound as soon as the information is given
Advertisements: Offers or Invitations to Treat?
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
➢ Authority for the proposition that an advertisement can constitute an offer to ‘the world’
and it may waive the need for communication of acceptance prior to a claim under it
A
➢ Clear intention to be found
Unilateral and Bilateral Contracts
A bilateral contract arises where one party makes a promise in return for a promise from the
other party
The offer and acceptance both take the form of promises
➢ Both parties are immediately bound
Unilateral Contracts
➢ A unilateral contract is effectively a promise in return for an act, suggests the
commitment is one-sided (promise inviting an act)
, ➢ The promisor is bound to perform if the person to whom the promise is made performs
the specified act
➢ Williams v Carwardine (1833) 5 C & P 566
○ Offer of reward
- The offeror usually promises to pay a sum of money to anyone providing
information or finding and returning lost property
Auctions
A contract for the sale of goods concluded at an auction is regarded by the law as a particular
situation to which special rules apply
s57(2) of the Sale of Goods Act 1979, a sale by auction is complete on the fall of the
auctioneer’s hammer, that is the acceptance
L
➢ Bids are offers which can be withdrawn at any time before acceptance
➢ When auctioneer calls for bids, they are inviting offers and these are invitation to treat
s57(3) of the 1979 Act
GD
➢ Refers to a ‘reserve price’
➢ A price agreed between the auctioneer and the seller as being the lowest price which the
auctioneer may accept for the lot
➢ If the bidding does not reach the reserve price, the lot will be withdrawn from the sale
Auction Advertised as being ‘Without Reserve’
Barry v Davies (t/a Heathcote Ball & Co) [2000] 1 WLR 1962
➢ There was a contract between the auctioneer and Mr Barry
➢ If an auction is advertised as being ‘without reserve’, the auctioneer is effectively
ce
promising to sell to the highest bidder
➢ Such a promise amounts to an offer of a unilateral contract
Tenders
Requests for tenders will be invitations to treat and the tenders will be the offers, which may, or
may not, be accepted by the business which has invited them
➢ Invitation to tender is an invitation to treat
A
● There may be situations where an invitation to tender does constitute an offer
○ Harvela Investments Ltd v Royal Trust Company of Canada Ltd [1986] AC
207
■ HOLs held that the telexes were offer of a unilateral contract to
sell to the highest bidder, which would be followed by a bilateral
contract for the sale of the shares
An invitation for tenders may give rise to a unilateral contract
➢ Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195
● That tenders had been invited from a small number of selected parties connected
with the airport and that the invitation had laid down ‘a clear, orderly and familiar
, procedure’ so that the tenderers obviously would assume that if they submitted a
conforming tender, they had a right to have their tender considered along the rest
● Liable to the Club in damages for loss of opportunity
Termination of Offer
An offer may be terminated in the following ways
1) Revocation (ie withdrawal) of the offer by the offeror
2) Rejection by the offeree
3) Lapse of time
Revocation
1) Offer can generally be revoked at any time before acceptance
➢ Routledge v Grant (1828) 4 Bing 653
L
● Is authority for the principle that such promises are not binding if they are
gratuitous promises (in the sense that the offeree has not given, or
promised anything in return for the promise to keep the offer open)
GD
➢ Generally, a promise to keep an offer open is not binding
➢ Offeror can revoke the offer within the specified time as long as it has not been
accepted
● Exception to this rule: Mountford v Scott [1975] 1 All ER 198
2) Revocation must be communicated to the offeree
➢ Notice of withdrawal of the offer must be given and must be communicated to the
offeree to be effective
● Implicit in the decision in Byrne & Co v Van Tienhoven & Co (1880) 5
CPD 344, in which withdrawal of an offer by telegram was held to take
effect only on receipt
ce
➢ Some exceptions to this general rule that revocation must be communicated
● For example, notice of withdrawal sent to the offeree’s last known
address would be effective if he has moved without notifying the offeror
3) Revocation of Offers made to the Public
➢ Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
● The best the company could do to revoke the offer in these circumstances
would be to publish a sufficiently prominent notice of withdrawal in
A
relevant newspapers
4) Notice of revocation sent to a business during normal office hours
➢ The Brimnes [1975] QB 929
● Notice will be effective on receipt where it is reasonable to expect a
member of staff to be available to read a notice of revocation
