BPP University College Of Professional Studies Limited (BPP)
Future Magic Circle Trainee. Total 2023 BPP Adapt Contract Law notes. Includes all adapt materials, relevant cases (with summaries), legislation and precedents. All preparation that is needed for both workshop preparation and exams for Contract Law.
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Contract Law (CONTRACT)
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Offer & Acceptance
Introduction
- For agreement to take place, offeror needs to make offer & offeree needs to
communicate unequivocal acceptance
- Bilateral: both parties assume an obligation to each other
- Unilateral: one party makes offer or proposal in terms which call for an act to be
performed by 1+ parties
- Unilateral doesn’t involve mutual promises - only the person making an offer
assumes an obilgation
- Other party accepts offer by performing required act in accordance w/
requirements of offer - hence creating unilateral contract
Structure for offer & acceptance
1. Identify whether communciation is offer or invitation to treat
2. Is there a counter-offer? Or request for further information? What is the effect of a
counter-offer or request for further info on the original offer?
3. Acceptance: is it in response to the offer?
4. Is the acceptance unqualified - i.e. does it correspond exactly with the terms of the offer?
Where acceptance does not mirror offer, it raises question whether it is a counter-offer or
a request for further information
5. Was acceptance made using a valid mode?
6. Is acceptance communicated? Determined by mode of acceptance used by offeree. If
sent by post, then discussion of postal rule & associated issues = relevant. If
instantaneous, then leads to discussion of rule in Entores v Miles Far East
Corporation & all related issues
7. Wdas the offer open at the point of acceptance? Need to check whether offer had been
terminated either as a result of rejection, lapse or revocation.
Requirements for a valid offer
- Valid offer must be clear & certain & display intention to be bound
- Requirements clearly illustrated in case of Storer v Manchester City Council -
contrasted with Gibson v Manchester City Council
Invitations to treat
- Offer must be distinguished from invitation to treat
- If offer made, offeror is effectively undertaking to be contractually bound by terms of offer
in event of unconditional acceptance being made by offeree
- Invitation to treat: first step in negotiations which may/may not lead to firm offer by one
of the parties
- Cannot be accepted to form a binding contract
, - Invitation to treat: advertisements, display of goods for sale, tenders, auctions, websites
(exceptions)
End of Offer
- Rejection, lapse or revocation
- In each case, offer loses legal effect & becomes incapable of acceptance
Valid Acceptance Rules
1. Only the person/people to whom an offer is made can accept the offer
2. Acceptance must be unqualified - i.e. must be a mirror image of offer corresponding
exactly with terms of offer
3. Manner of communication of acceptance - any manner whatsoever
a. But if offeror prescribes a mode of acceptance either expressly or by
implication & offeree communicates in different mode, then this raises question
whether communication of acceptance in other manner will suffice
4. Acceptance must be communicated to offeror
a. Is it possible for a contract to come into existence where person other than
offeree informs offeror of acceptance
- Is offer still open at time when offeree accepts - if offer terminated, then cannot accept
Mode of Acceptance
- If offeror makes it clear that will not be bound unless acceptance is communicated in a
precise way & by no other, then only acceptance by that mode will suffice
- Unless prescribed mode of acceptance is mandatory, another mode of acceptance
which is no less advantageous to the offeror will bind him
- IF method prescribed for benefit of offeree, then offeree can waive stipulation for his
benefit & use alternative mode - provided alternative method does not disadvantage
offeror
Acceptance must be communicated
- Acceptance is effective from the time it is communicated to the offeror
- Where acceptance is made by post, it takes effect from the moment the letter of
acceptance is properly posted
- Postal rule: authority for exception = Adams v Lindsell
- Applies even where letter is delayed/lost in post (Household Fire & Carriage
Accident Insurance Co v Grant)
- Exceptions to postal rule:
1. If letter not properly posted
2. If not contemplated that post would be used
3. If it would be manifestly inconvenient/absurd
4. If letter incorrectly addressed
5. If offeror has ousted postal rule
- Postal rule does not apply to letters revoking offers
,Acceptance communicated using instantaneous means
- Acceptance takes place at moment received by offeror (Entores v Miles Far East
Corporation)
- Mondial Shipping v Astarte Shipping: acceptance received at start of business on day if
acceptance sent outside ordinary office hours
- Thomas v BPE Solicitors: email to be treated like other forms of instantaneous
communications - therefore email acceptance is effective when received (i.e. when email
arrives on offeror’s email server)
- Case also established meaning of ‘ordinary office hours’ - depends on context of
parties prior communications
Objective Approach to Agreement
- When determining whether agreement exists, court is not concerned with inward mental
intent of parties, but rather with what a reasonable person would say was the intention of
the parties, having regard to all circumstances
- Law applies an objective test when comes to identifying agreement
Requirements for a Valid Offer
Certainty of Offer
- Must be clear & certain
- Illustrated in Gibson v Manchester City Council [1979]
Intention to be bound
- Offeror must show intention to be legally bound
- In Gibson, wording ‘may be prepared to sell’ used by City Treasurer was deemed to lack
the requisite intention to be legally bound
- Storer v Manchester City Council [1974] - ‘if you will sign the agreement & return it to me
I will send you the agreement signed on behalf of the corporation in exchange’ - did
demonstrate intention to be bound
- Court takes objective approach to ascertaining whether there was intention to be bound-
what matters is what a reasonable person would say the parties in Gibson & Storer
intended, on the basis of their letters
- What was actually in the minds of the people who wrote the letters is not relevant
Unilateral & Bilateral Contracts
- Unilateral: only actual performance of the required act will constitute acceptance
, Summary
- Offer must be clear & certain
- Offeror must show intention to be legally bound - words such as ‘may be prepared to
sell’ do not show this
- Two kinds of contract - unilateral & bilateral contracts
- Bilateral more common - each party assumes an obligation to the other party by making
a promise to do something, i.e. sell item to other party in exchange for payment
- Unilateral less common - one party makes offer or proposal in terms which call for act to
be performed by 1+ other parties - only actual performance of required act will constitute
acceptance
Invitations to Treat
- Invitation to treat = first step in negotiations which may/may not lead to a firm offer by
one of the parties
- Usually takes form of invitation to make an offer
- Offer is undertaking to be contractually bound by terms of that offer in event of an
unconditional acceptance being made by offeree
- Invitation to treat cannot be accepted to form a binding contract
Advertisements
- Partridge v Crittenden [1968]: General rule: adverts regarded as statements inviting
further negotiations or invitations to treat
- Reasoning: advertiser may have limited supplies of goods in question - if advert was
offer, could be accepted by larger number of people than advertiser was able to supply -
would result in advertiser breaching 1+ contracts
- Exception: does not apply where advertisement amounts to a unilateral offer
Carlill v Carbolic Smoke Ball Co (1893)
- Essentially - twin requirements of a unilateral offer - both a prescribed act AND a clear
intention to be bound
Displays of goods
- Fisher v Bell [1961]: General rule: price-marked goods are not offer for sale but
invitation to treat
- Regardless of whether shop actually expressly designates that goods are an offer -
‘special offer’ = still no more than an invitation to treat
Invitations to tender
- Where a party (usually company or public body) wishes to purchase a major item or
service
- Requestor invites tenders (offers) from those interested in supplying goods/services
required
- Spencer v Harding [1870] - general rule: is an invitation to treat
- I.e. invitation to interested parties to make offers to be considered
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