2. AGREEMENT: OFFER AND ACCEPTANCE
LEARNING OBJECTIVES
• The definition of a contractual offer
• The distinction between a unilateral and a bilateral offer
• The difference between an offer and other communications
• The moment of effective communication of an offer
• What is (and is not) a valid acceptance
• The requirement of communication of acceptance and its exceptions.
THE DEFINITION OF A CONTRACTUAL OFFER
An offer is a statement by one party of a willingness to enter into a contract on
stated terms, provided that these terms are accepted by the party the offer is
addressed to. It can be made orally, writing or by conduct.
Not all promises are enforceable by courts.
Only certain agreements which tend to have the following elements:
o Agreement (includes corresponding offer and acceptance)
o Consideration (mutual exchange of something the law recognizes as
having value)
o Intention to create legal relations
An agreement may be addressed toa single person or many people. The offer
must be unconditionally accepted.
Once there as been a valid communication of acceptance, the law needs
consideration and intention be established.
If not found, then there is considered to be no contract between the parties.
OFFER
This is an expression of willingness to contract on specified terms, made with
the intention that it is to become binding as soon as it is accepted.
There is an objective approach being used, meaning the subjective intentions of
the parties are not considered.
The objective theory is associated with Smith v Hughes (old oats).
, Whether or not theres a contract depends upon a consideration of whether what
was communicated by words or conduct objectively leads to the conclusion that
they agreed upon all the terms regarded sa essential.
CENTROVINCIAL ESTATES V MERCHANT INVESTORS ASSURANCE CO
Claimants bought commercial premises to let to defendants for 6k. They
mistakenly proposed 5k instead of 126k they intended and they accepted the
mistaken offer as the thought it was because of heir previous complaints about
the poor condition of the place.
The court accepted this argument.
The exception to the objective approach is: They take into account the
subjective knowledge of the offeree. This is called the snapping up doctrine.
This means an offeree is not allowed to accept an offer which he knows is
mistaken to its terms.
HARTOG V COLLIN AND SHIELDS
Any contract would be void by the mistake of the hare skin price; the
complainant would have known that it was normally sold per piece and not by
pound. The court said that there is a duty to correct a mistake that is known to
not be the real intention of the person making it. You cannot simply take
advantage and ‘snap up’ the offer.
LONGLEY V PPB ENTERTAINMENT
The offeree did not know the offeror was mistaken.
SCRIVEN BROS V HINDLEY
Mistake was induced by the offerors own carelessness.
BILATERAL AND UNILATERAL CONTRACTS
o A unilateral contract would be the offer of a reward for the return of lost
property as an example. It involves a promise by one party only it follows
that generates an obligation for one party only.
o The only obligation it creates is contingent noe upon the offeror to pay the
stipulated reward to any person who chooses to perform the act.
o In unilateral, a promise is being exchanged for an act.
o Bilateral, exchanging a promise for a promise.
o Where an advertisement is unilateral, it is likely to be an offer.
o A unilateral offer may be revoked if the revocation is given equivalent
publicity to the offer (Shuey v Us)
LEARNING OBJECTIVES
• The definition of a contractual offer
• The distinction between a unilateral and a bilateral offer
• The difference between an offer and other communications
• The moment of effective communication of an offer
• What is (and is not) a valid acceptance
• The requirement of communication of acceptance and its exceptions.
THE DEFINITION OF A CONTRACTUAL OFFER
An offer is a statement by one party of a willingness to enter into a contract on
stated terms, provided that these terms are accepted by the party the offer is
addressed to. It can be made orally, writing or by conduct.
Not all promises are enforceable by courts.
Only certain agreements which tend to have the following elements:
o Agreement (includes corresponding offer and acceptance)
o Consideration (mutual exchange of something the law recognizes as
having value)
o Intention to create legal relations
An agreement may be addressed toa single person or many people. The offer
must be unconditionally accepted.
Once there as been a valid communication of acceptance, the law needs
consideration and intention be established.
If not found, then there is considered to be no contract between the parties.
OFFER
This is an expression of willingness to contract on specified terms, made with
the intention that it is to become binding as soon as it is accepted.
There is an objective approach being used, meaning the subjective intentions of
the parties are not considered.
The objective theory is associated with Smith v Hughes (old oats).
, Whether or not theres a contract depends upon a consideration of whether what
was communicated by words or conduct objectively leads to the conclusion that
they agreed upon all the terms regarded sa essential.
CENTROVINCIAL ESTATES V MERCHANT INVESTORS ASSURANCE CO
Claimants bought commercial premises to let to defendants for 6k. They
mistakenly proposed 5k instead of 126k they intended and they accepted the
mistaken offer as the thought it was because of heir previous complaints about
the poor condition of the place.
The court accepted this argument.
The exception to the objective approach is: They take into account the
subjective knowledge of the offeree. This is called the snapping up doctrine.
This means an offeree is not allowed to accept an offer which he knows is
mistaken to its terms.
HARTOG V COLLIN AND SHIELDS
Any contract would be void by the mistake of the hare skin price; the
complainant would have known that it was normally sold per piece and not by
pound. The court said that there is a duty to correct a mistake that is known to
not be the real intention of the person making it. You cannot simply take
advantage and ‘snap up’ the offer.
LONGLEY V PPB ENTERTAINMENT
The offeree did not know the offeror was mistaken.
SCRIVEN BROS V HINDLEY
Mistake was induced by the offerors own carelessness.
BILATERAL AND UNILATERAL CONTRACTS
o A unilateral contract would be the offer of a reward for the return of lost
property as an example. It involves a promise by one party only it follows
that generates an obligation for one party only.
o The only obligation it creates is contingent noe upon the offeror to pay the
stipulated reward to any person who chooses to perform the act.
o In unilateral, a promise is being exchanged for an act.
o Bilateral, exchanging a promise for a promise.
o Where an advertisement is unilateral, it is likely to be an offer.
o A unilateral offer may be revoked if the revocation is given equivalent
publicity to the offer (Shuey v Us)
