Offer and Acceptance
An Offer is an expression of willingness to contract on certain terms. It is made with the intention that it will become binding, once it has been accepted. Offers can be specific or general. Specific offers are made to individuals or groups of people and the offer can only be accepted by that group. Alternatively, general offers, such as a reward for the safe return of a lost dog, or an advertisement for products in a supermarket, are directed at nobody in particular and can be accepted by anybody who meets the conditions of the offer. Some offers are time limited, whereas offers without time limits are open for a ‘reasonable time’.
Rules Of The Offer - Offers are subject to certain rules. Firstly, the offer must be ‘certain’, in that the terms within it must be clear and without ambiguity. In the case of Guthing v Lynn, a promise to pay an extra £5 “if the horse was lucky” was considered to be too vague to constitute an offer. Secondly, the offer can be made by any method. This means in writing, verbally or even by one’s conduct. Thirdly, the offer can be made to anybody who fulfils the conditions of the offer. Fourthly, the offer must be communicated. This means that only those who have been notified of the offer can accept it. For example, imagine if a lost dog was found and returned to the owner. The owner would only be required to pay the reward if the person who returned the dog was aware of the reward before returning it. Finally, the offer must still be in existence when it is accepted. This refers to time-limited offers, which expire after a set period of time has passed.
Just as offers can be made in a variety of ways, they can also be terminated in a number of ways. The most obvious way to terminate an offer is to accept or refuse it. An alternative way to terminate an offer would be to place a counter-offer. In Hyde v Wrench, Wrench offered to sell his farm to Hyde for £1000. Hyde counter-offered with £950. When this was refused, he then tried to reinstate the original asking price. However Wrench refused to sell as the offer had been terminated the moment that the counter offer was made.bAnother way to terminate an offer is through revocation. This is when an offer is withdrawn. The revocation must occur before the offer has been accepted, or else the agreement must be honoured. Finally, a lapse of time may render an offer terminated. Obviously, some offers are time-limited and this time limit forms a condition of accepting the offer. However, where offers are not time limited, they should remain open for a “reasonable time”. What is reasonable depends on the individual circumstances of the offer.
Invitation to Treat - Sometimes an offer is not made, but an invitation is given for another person to make an offer instead. This is called an invitation to treat. An invitation to treat involves person A inviting person B to make an offer. Person B then makes the offer. Person A then decides whether or not to accept the offer. In the case of Fisher v Bell, a shopkeeper displayed a flick-knife in the shop window. It was illegal to offer flick knives for sale. Next to the knife was an invitation to treat, i.e. a price tag. This was not an offer for sale, although it is easy to see how similar it would be! Due to this interpretation, the court decided that since the shopkeeper had not offered a flick-knife for sale, there was no criminal liability. Goods on display on supermarket shelves and in self-service stores are considered as invitations to treat as well.
Small advertisements are also considered as invitations to treat. Simply listing the price next to a product for sale does not constitute an offer. In Partridge v Crittenden, an advert listing “Bramble finch cocks, 25s each” was an invitation to treat, not an offer. They couldn’t then be found guilty of offering for sale a wild bird under the Protection of Birds Act 1954. In the same way, a catalogue of prices wouldn’t be considered an offer, but an invitation to treat. Auction sales are also invitations to treat, as placing an item at auction still requires a bidder to make the offer, as seen in British Car Auctions v Wright, where an unroadworthy car was put into the auction. Had the unroadworthy car been offered for sale in the traditional sense, there would have been an offer and consequently a criminal act.
Acceptance is an unqualified and unconditional agreement to all the terms of the offer, by words or conduct. Any conditions or qualifications added would constitute a counter-offer and would therefore terminate the standing offer. In order for acceptance to be valid, the following conditions must apply. Firstly, acceptance must be communicated. In the case of Felthouse v Bindley, the claimant stated that if he heard nothing then he would infer acceptance of the offer made. There was no acceptance of the offer as the acceptance had not explicitly been communicated; silence was not enough. Secondly, acceptance can be inferred from conduct, i.e. if the party who accepts the offer starts to implement what is in the offer. Thirdly, if an offer is accepted, then it must be complied with, although under some circumstances another method of compliance may be satisfactory. If no method of acceptance is specified, then any method of acceptance will suffice, providing that it is effective. Thirdly, if acceptance is made by post, then it is complete when posted. The party who made the offer need not have received the acceptance. For example, if the acceptance was lost in the post, the acceptance is still valid as it has already taken place. Finally, where each party uses their own bespoke forms, an agreement is only formed, once the last of the forms has been sent and received without objection.
- Must an offer be specific?
- True or false: Counter-offers terminate previous offers?
- True or false: Goods on display on supermarket shelves are invitations to treat?
- Can acceptance of an offer be inferred from silence?
- Once acceptance is “posted”, does it need to be received in order to create legal relations?