OFFER AND ACCEPTANCEOFFER AND ACCEPTANCE rules regarding offerrules regarding offer1. An 1. An offer may be offer may be express or may express or may be implied from the be implied from the circumstances :circumstances :

An offer may be made in two ways : An offer may be made in two ways : 1.1. by words, spoken or written and by words, spoken or written and 2.2. by conduct.by conduct.2. An offer 2. An offer may may be made be made to a definite person to a definite person 3.legal relationship is required :3.legal relationship is required : 4.The terms of the offer 4.The terms of the offer must be must be certain, definite, unam biguous and certain, definite, unam biguous and not vague :not vague : 5. A mere statement 5. A mere statement of of intention is not an offer intention is not an offer I.I. intention to sell:intention to sell:II.II. Quotation of prices :Quotation of prices :III.III. Advertisements :Advertisements :IV.IV. Catalogue : Catalogue : V.V. time-table time-table VI.VI. Question and Reply :Question and Reply :VII.VII. Auction Auction 6.offer must be communicated to the offeree :6.offer must be communicated to the offeree :7.an offer may be conditional7.an offer may be conditional I.I. Strict enforcement :Strict enforcement :II.II. No reasonable notice No reasonable notice III.III. Against public interest : Against public interest : IV.IV. unreasonable :unreasonable :Conditional offers are invalid under the following circumstancesConditional offers are invalid under the following circumstances1.1. Lack of reasonable notice. Lack of reasonable notice. 2.2. Unreasonable terms. Unreasonable terms. 3.3. breach of fundamental rights.breach of fundamental rights.4.4. Tortious action by offeror:Tortious action by offeror:8.Printed 8.Printed Contracts :Contracts :

OFFER AND ACCEPTANCEOFFER AND ACCEPTANCERules regarding –acceptanceRules regarding –acceptance

1.1. must be 'an absolute and unqualified acceptance of all the terms of the offer-Sec 7(1).must be 'an absolute and unqualified acceptance of all the terms of the offer-Sec 7(1). 2.2. conditional Acceptance conditional Acceptance 3.3. Contracts subject to condition Contracts subject to condition 4.4. Clarification :Clarification :5.5. the acceptance must be expressed in same usual or reasonable manner :-Sec 7(2).the acceptance must be expressed in same usual or reasonable manner :-Sec 7(2).6.6. Mental acceptance or uncommunicated assent does -not result in a contract Mental acceptance or uncommunicated assent does -not result in a contract 7.7. The mode of acceptance :The mode of acceptance : 8.8. time of Acceptance :time of Acceptance : 9.9. when acceptance is complete when acceptance is complete 10.10. Before Before Offer:Offer: 11.11. he acceptance must be made while the he acceptance must be made while the offer offer is in force, is in force,

REVOCATIONREVOCATION

1.1. By noticeBy notice2.2. By lapse of timeBy lapse of time3.3. After expiry of reasonable timeAfter expiry of reasonable time4.4. By failure of a condition precedentBy failure of a condition precedent5.5. .By death or insanity.By death or insanity6.6. Counter OfferCounter Offer7.7. .By refusal.By refusal

Revocation of AcceptanceRevocation of Acceptance

Section 5 of the Contract Act provides that an acceptance can be revoked any time before the acceptance comes to Section 5 of the Contract Act provides that an acceptance can be revoked any time before the acceptance comes to the knowledge of the proposer but not afterwards.the knowledge of the proposer but not afterwards.

A)A) Offer and Acceptance: Offer and Acceptance:

X says to Y, "Will you buy my house for Rs 50,000?”This is an offer. If Y says, "Yes", the offer is X says to Y, "Will you buy my house for Rs 50,000?”This is an offer. If Y says, "Yes", the offer is accepted and a contract is formed.accepted and a contract is formed.

  a) a) Requirements of a valid offer:Requirements of a valid offer: i) An offer is a definite promise to be bound on specific terms. i) An offer is a definite promise to be bound on specific terms.

Gunthing v Lynn: Gunthing v Lynn: The offeror offered to pay a further sum for a horse if it was `lucky'. The offeror offered to pay a further sum for a horse if it was `lucky'. Held:Held: the offer the offer was too vague.was too vague.

   ii). An offer must be distinguished from the mere supply of information; ii). An offer must be distinguished from the mere supply of information;

Harvey v Facey:Harvey v Facey: A telegraphed to B ‘will you sell us bumper hall pen? Telegraph lowest cash price’. ‘B A telegraphed to B ‘will you sell us bumper hall pen? Telegraph lowest cash price’. ‘B replied lowest price for bumper hall pen $ 900’. A telegraphed to accept what he regarded as an offer; B replied lowest price for bumper hall pen $ 900’. A telegraphed to accept what he regarded as an offer; B made no further reply. made no further reply.

Held: Held: B's telegram was merely a statement of his price if a sale were to be agreed. It was not an offer B's telegram was merely a statement of his price if a sale were to be agreed. It was not an offer which A could accept. No contract had been made.which A could accept. No contract had been made.

   An invitation to the other party to enter into negotiations; or An invitation to the other party to enter into negotiations; or An invitation to make an offer.An invitation to make an offer.

   iii). But if, in the course of negotiations for a sale, the vendor states the price at which he will sell, that iii). But if, in the course of negotiations for a sale, the vendor states the price at which he will sell, that

statement may be an offer which can be accepted.statement may be an offer which can be accepted.

Bigg v Boyd Gibbons:Bigg v Boyd Gibbons: X in the course of correspondence rejected an offer of $20,000 by Y and added X in the course of correspondence rejected an offer of $20,000 by Y and added `for a quick sale I would accept $26,000 ..., if you are not interested in this price would you please let me `for a quick sale I would accept $26,000 ..., if you are not interested in this price would you please let me know immediately'. know immediately'. Held:Held: in this context X must be treated as making an offer (at $ 26,000) which Y-had in this context X must be treated as making an offer (at $ 26,000) which Y-had accepted. accepted.   

iv). iv). An 'invitation to treat', is not an offer to sellAn 'invitation to treat', is not an offer to sell

Fisher v Bell:Fisher v Bell: a shop keeper was prosecuted for offering for sale an offensive weapon by exhibiting a flick a shop keeper was prosecuted for offering for sale an offensive weapon by exhibiting a flick knife in his shop window. knife in his shop window.

Held:Held: 'the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no 'the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale.'sense an offer for sale.'

   v). The use or absence of the word `offer' is not conclusive. v). The use or absence of the word `offer' is not conclusive.

For example, aFor example, a. . company is said to make an `offer' of its shares when it publishes a prospectus, but is an company is said to make an `offer' of its shares when it publishes a prospectus, but is an invitation to the public to make offers. invitation to the public to make offers.

vi). An offer may only be accepted by a person to whom the offer has been made. vi). An offer may only be accepted by a person to whom the offer has been made.

Carlill v Carbolic Smokeball Co:Carlill v Carbolic Smokeball Co: The manufacturers of a patent medicine published The manufacturers of a patent medicine published an advertisement by which they undertook to pay `£ l00 reward ... to any person who an advertisement by which they undertook to pay `£ l00 reward ... to any person who contracts …. influenza, colds, .... after having used the Smokeball three times daily for contracts …. influenza, colds, .... after having used the Smokeball three times daily for two weeks.' two weeks.' Held:Held: it was an offer to the whole world which C could accept and had it was an offer to the whole world which C could accept and had accepted. Point (1) did not succeed since the court found that the terms of the offer accepted. Point (1) did not succeed since the court found that the terms of the offer were sufficiently clear. They were not vague. were sufficiently clear. They were not vague.

b)b) Termination of offer: Termination of offer: i). an offer may only be accepted while the offer is still open. An offer is terminated in i). an offer may only be accepted while the offer is still open. An offer is terminated in

any of the following circumstances:any of the following circumstances: if it has expired by lapse of time, if it has expired by lapse of time, if the offeror has revoked it;if the offeror has revoked it; if the offeree has rejected it:if the offeree has rejected it: if the offeree dies or if the offeror dies.if the offeree dies or if the offeror dies.

  

ii). an offer would last for a specified time. ii). an offer would last for a specified time. Ramsgate Victoria Hotel Co v Montefiore:Ramsgate Victoria Hotel Co v Montefiore: M applied to the company for shares M applied to the company for shares

and paid a deposit to the company's bank. and paid a deposit to the company's bank. Held:Held: M's offer was for a reasonable time only and five months was much more M's offer was for a reasonable time only and five months was much more

than that. The offer had lapsed.than that. The offer had lapsed.

iii). the offeror may revoke his offer at any time before acceptance. iii). the offeror may revoke his offer at any time before acceptance. Routledge v Grant:Routledge v Grant: G offered to buy R's house, requiring acceptance within six G offered to buy R's house, requiring acceptance within six

weeks. Within the six weeks G withdrew his offer. weeks. Within the six weeks G withdrew his offer. Held:Held: as there was no option as there was no option agreement, G could revoke his offer at any time.agreement, G could revoke his offer at any time.

   vi) Revocation may be an express statement or an act of the offeror to that effect.vi) Revocation may be an express statement or an act of the offeror to that effect. Byrne v Van Tienhoven:Byrne v Van Tienhoven: The offeror was in Cardiff: the offeree in New York. The offeror was in Cardiff: the offeree in New York. Held:Held:

the letter of revocation could not take effect until received (20 October); it could not the letter of revocation could not take effect until received (20 October); it could not revoke the contract made by acceptance of the offer on 11 October. Simply posting revoke the contract made by acceptance of the offer on 11 October. Simply posting a letter does not revoke the offer until it is received. a letter does not revoke the offer until it is received.

   v. An offer may be rejected outright or by a counter-offer made by the offeree. v. An offer may be rejected outright or by a counter-offer made by the offeree.

Either form of rejection terminates the original offer. Either form of rejection terminates the original offer.

Hyde v Wrench:Hyde v Wrench: W offered to sell property to H for £ 1,000. H made a counter W offered to sell property to H for £ 1,000. H made a counter offer of £ 950 which W rejected three weeks later. offer of £ 950 which W rejected three weeks later.

Held:Held: the original offer of £ 1,000 had been terminated by the counter offer of £ the original offer of £ 1,000 had been terminated by the counter offer of £ 950; it could not therefore be accepted.950; it could not therefore be accepted.

  

vi. Death of the offeree terminates the offer. Death of the offeror terminates the vi. Death of the offeree terminates the offer. Death of the offeror terminates the offer unless the offeree accepts it in ignorance of the offeror's death, and the offer is offer unless the offeree accepts it in ignorance of the offeror's death, and the offer is not of a personal nature.not of a personal nature.

   Bradbury v Morgan:Bradbury v Morgan: A offered to guarantee payment (up to $ 100) for X in A offered to guarantee payment (up to $ 100) for X in

respect of goods to be supplied by B on credit to X. A died and B, in ignorance of his respect of goods to be supplied by B on credit to X. A died and B, in ignorance of his death, continued to supply goods to X. death, continued to supply goods to X. Held:Held: A's offer was a continuing commercial A's offer was a continuing commercial offer which B had accepted by supply of goods after A's death.offer which B had accepted by supply of goods after A's death.

Requirements of a valid acceptance:Requirements of a valid acceptance:

   1. Acceptance may be by express words or by action or by implied from conduct.1. Acceptance may be by express words or by action or by implied from conduct. Brogden v Metropolitan Railway Co: For many years B supplied coal to M. He Brogden v Metropolitan Railway Co: For many years B supplied coal to M. He

suggested that they should enter into a written agreement and M's agent sent a suggested that they should enter into a written agreement and M's agent sent a draft to him for consideration. draft to him for consideration.

Held: the draft agreement became the contract between the parties as soon as M Held: the draft agreement became the contract between the parties as soon as M ordered and B supplied coal after the return by B of the draft to M's agent.ordered and B supplied coal after the return by B of the draft to M's agent.

   2. There must be some act by the offeree to indicate his acceptance.2. There must be some act by the offeree to indicate his acceptance.

Felthouse v Bindley: After previous negotiations had produced an agreed price P Felthouse v Bindley: After previous negotiations had produced an agreed price P wrote to J offering to buy a horse for £ 30.75, adding `If I hear no more about him, I wrote to J offering to buy a horse for £ 30.75, adding `If I hear no more about him, I consider the horse mine at that price'. consider the horse mine at that price'.

Held: there could be no acceptance by silence in these circumstances - the offeror Held: there could be no acceptance by silence in these circumstances - the offeror cannot impose acceptance merely because the offeree does not reject the offer.cannot impose acceptance merely because the offeree does not reject the offer.

3. Goods which are sent or services which are rendered to a person who did not 3. Goods which are sent or services which are rendered to a person who did not request them are not ‘accepted’ merely because he does not return them to the request them are not ‘accepted’ merely because he does not return them to the sender. sender.

   4. Acceptance must be unqualified agreement to the terms of the offer. 4. Acceptance must be unqualified agreement to the terms of the offer.

Neale v Merrett: A offered to sell land for £280 to B. B replied accepting the offer, Neale v Merrett: A offered to sell land for £280 to B. B replied accepting the offer, enclosing £80 and undertaking to pay the balance of £200 by monthly installments enclosing £80 and undertaking to pay the balance of £200 by monthly installments of £50.of £50.

  

Held: there had been no acceptance. The normal terms are that the entire price is Held: there had been no acceptance. The normal terms are that the entire price is payable as a single sum at completion. payable as a single sum at completion.

   5. It is possible to respond to an offer without accepting or rejecting it by a request 5. It is possible to respond to an offer without accepting or rejecting it by a request

for information or by acceptance 'subject to contract'. for information or by acceptance 'subject to contract'.

   Stevenson v. McLean: M offered to sell iron at £2 per ton. S enquired whether M Stevenson v. McLean: M offered to sell iron at £2 per ton. S enquired whether M

would agree to a contract by which delivery would be spread over two months. would agree to a contract by which delivery would be spread over two months.

  

Held: there was a contract since S had merely enquired as to a variation of terms Held: there was a contract since S had merely enquired as to a variation of terms which was not a rejection. which was not a rejection.

   6. Acceptance 'subject to contract' is neither acceptance nor rejection by counter 6. Acceptance 'subject to contract' is neither acceptance nor rejection by counter

offer. offer.

7. Acceptance 'subject to contract' must be distinguished from outright and 7. Acceptance 'subject to contract' must be distinguished from outright and immediate acceptance immediate acceptance

Branca v Cobarro: A vendor agreed to sell a mushroom farm under a contract which Branca v Cobarro: A vendor agreed to sell a mushroom farm under a contract which ended 'this is a provisional agreement until a fully legalised agreement drawn up by ended 'this is a provisional agreement until a fully legalised agreement drawn up by a solicitor and embodying all the conditions herewith stated is signed.'a solicitor and embodying all the conditions herewith stated is signed.'

  

Held: the parties were bound by their provisional contract until, by mutual Held: the parties were bound by their provisional contract until, by mutual agreement, they made another to replace it.agreement, they made another to replace it.

   Communication of acceptance:Communication of acceptance: 1. The general rule is that acceptance must be communicated to the offeror and is 1. The general rule is that acceptance must be communicated to the offeror and is

not effective until this has been done. not effective until this has been done.

  

Entores v Miles Far Eastern Corporation: The offeror sent off an offer by telex to the Entores v Miles Far Eastern Corporation: The offeror sent off an offer by telex to the offeree's agent in Amsterdam and the latter sent an acceptance by telex. 'offeree's agent in Amsterdam and the latter sent an acceptance by telex. '

  

Held: the acceptance took effect when the telex message was printed out on the Held: the acceptance took effect when the telex message was printed out on the offeror's terminal in London.offeror's terminal in London.

2. But the offeror may by his offer dispense with communication of acceptance. 2. But the offeror may by his offer dispense with communication of acceptance.

   3. The offeror may call for acceptance by specified means. 3. The offeror may call for acceptance by specified means.

Yates Building Co v R J Pulleyn & Sons (York): The offer called for acceptance by Yates Building Co v R J Pulleyn & Sons (York): The offer called for acceptance by registered or recorded delivery letter. The offeree sent an ordinary letter which arrived registered or recorded delivery letter. The offeree sent an ordinary letter which arrived without delay.without delay.

  

Held: the offeror had suffered no disadvantage and had not stipulated that acceptance Held: the offeror had suffered no disadvantage and had not stipulated that acceptance must be made in this way only. The acceptance was valid.must be made in this way only. The acceptance was valid.

   4. The offeror may expressly or by implication indicate that he expects acceptance by 4. The offeror may expressly or by implication indicate that he expects acceptance by

letter sent through the post.letter sent through the post.

Adams v Lindsell: L made an offer by letter to A requiring an answer ‘in course of post'. Adams v Lindsell: L made an offer by letter to A requiring an answer ‘in course of post'.

  

Held: the acceptance was made 'in course of post' and effective when posted.Held: the acceptance was made 'in course of post' and effective when posted.

   5. The intention to use the post for communication of acceptance may be deduced from 5. The intention to use the post for communication of acceptance may be deduced from

the circumstances - the circumstances -

Household Fire and Carriage Accident Insurance Co v Grant: G handed a letter of Household Fire and Carriage Accident Insurance Co v Grant: G handed a letter of application for shares to the company's agent in Swansea with the intention that it application for shares to the company's agent in Swansea with the intention that it should be posted to the company in London. should be posted to the company in London.

  

Held: the parties intended to use the Post Office as their common agent and delivery of Held: the parties intended to use the Post Office as their common agent and delivery of the letters of allotmentthe letters of allotment toto the Post Office was acceptance of G's offer.the Post Office was acceptance of G's offer.

    

6. The offeror may be unaware that a contract has been made by acceptance of his 6. The offeror may be unaware that a contract has been made by acceptance of his offer. offer.

   7. Acceptance of an offer may only be made by a person authorised to do so.7. Acceptance of an offer may only be made by a person authorised to do so.

  

Powell v Lee: P applied for a job and after a series of interviews the management Powell v Lee: P applied for a job and after a series of interviews the management decided to give it to him no decision was made as to how the appointment was to decided to give it to him no decision was made as to how the appointment was to be communicated. be communicated.

  

Held: since communication of acceptance was unauthorised, there was no valid Held: since communication of acceptance was unauthorised, there was no valid agreement and hence no contract;agreement and hence no contract;

Agreement without offer and acceptance:Agreement without offer and acceptance:

   1. Offer and acceptance are essential to make a contract.1. Offer and acceptance are essential to make a contract.

   2 Problems arise in the following circumstances: 2 Problems arise in the following circumstances:

(a) Reward cases; (a) Reward cases;

(b) Cross-offers;(b) Cross-offers;

(c) Collateral contracts.(c) Collateral contracts.

   3. If A offers a reward to anyone who finds and returns his lost property and B, in ignorance of the offer, 3. If A offers a reward to anyone who finds and returns his lost property and B, in ignorance of the offer,

does in fact return it to him, is B entitled to the promised reward? There is no contract by which A is does in fact return it to him, is B entitled to the promised reward? There is no contract by which A is obliged to pay the reward to B (R v Clarke).obliged to pay the reward to B (R v Clarke).

  

4. Acceptance may still be valid even if the offer was not the sole reason for it being made.4. Acceptance may still be valid even if the offer was not the sole reason for it being made.

  

Williams v Carwardine: A reward was offered to bring criminals to book. W, an accomplice in the crime, Williams v Carwardine: A reward was offered to bring criminals to book. W, an accomplice in the crime, supplied the information, with knowledge of the reward but moved primarily by remorse at her own part supplied the information, with knowledge of the reward but moved primarily by remorse at her own part in the crime.in the crime.

  

Held: as the information was given with knowledge, the acceptance was related to the offer despite the Held: as the information was given with knowledge, the acceptance was related to the offer despite the fact that remorse was the prime motive.fact that remorse was the prime motive.

   5. After an inconclusive discussion, X writes to offer to buy property from Y and Y at the same time 5. After an inconclusive discussion, X writes to offer to buy property from Y and Y at the same time

writes to offer to sell the property to X on the same terms, these 'cross offers' establish agreement, but writes to offer to sell the property to X on the same terms, these 'cross offers' establish agreement, but neither offer has been accepted..neither offer has been accepted..

   6. If there are two separate contracts by offer and acceptance between A and B and A and C on terms 6. If there are two separate contracts by offer and acceptance between A and B and A and C on terms

which involve some concerted action between B and C, there may be a contract between B and C. "this is which involve some concerted action between B and C, there may be a contract between B and C. "this is explained as explained as 'collateral contract' 'collateral contract'

  

Clarke v Dunraven: B and C were competitors in a yacht race and each (by his entry form) agreed with Clarke v Dunraven: B and C were competitors in a yacht race and each (by his entry form) agreed with the race organiser (A) to pay 'all damages' caused by fouling. B fouled C's yacht and caused her to sink. the race organiser (A) to pay 'all damages' caused by fouling. B fouled C's yacht and caused her to sink. Held: there was a contract between B and C under which B must pay for the damages to C's yacht.Held: there was a contract between B and C under which B must pay for the damages to C's yacht.