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Contract Formation: Offer

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on 21 September 2014

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Transcript of Contract Formation: Offer

Contract Formation: Offer
Is there an offer?
But wait...! Dan! Lets go interactive baby!! You got it guys...
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Ready? Drivers...Start your engines!!!

Offer or 'Invitation to treat'?
Two questions -
Has an offer been made?
Has there been effective communication?

Established rules
By the way...
Certainty of Offer
The law will not construct a contract out of terms which are indefinite or unsettled.
 
If agreement has been reached on some terms but not others when negotiations breakdown is there a contract?

Scammel v Ouston,
Courtney & Fairbairn v Tolaini Bros.
Compagnie NOGA v Abacha 2003
Baird Textile Holdings v Marks and Spencer
Hillas v Arcos


The law will not construct a contract out of terms which are indefinite or unsettled

Offer
An offer is an expression of willingness to contract on specified terms without further negotiation;

There needs to be a definite offer made either to a particular person or to the public at large.

Invitations to treat
Offers must be distinguished from all other statements in the course of negotiations

Invitations to treat invite offers:
e.g., would you be interested in buying my mobile phone?;

Only an offer is capable of immediate translation into a contract by
Offer Distinguished from an invitation to Treat
An invitation to treat may be defined as an invitation to make offers. The distinction depends primarily on the intention with which it was made.

If a person intended to enter into a binding agreement with the person with whom he was dealing the statement is an offer, if he merely intended to begin or continue negotiations with the other party it is an invitation to treat.

Gibson v Manchester City Council 1979

A mere supply of information is not an offer
The plaintiffs had asked the defendants whether they would sell a particular property and requested that the defendant’s telegraph their lowest price . They replied stating their lowest price was £900.

Held: This did NOT constitute an offer it was only an indication of the minimum price if the defendant decided to sell.

Harvey v Facey 1893

The courts have established rules of law in order to determine the distinction between offer and invitation to treat in certain areas, eg.
Advertisements
The appellant placed an advertisement indicating he had certain wild birds to sell. It was an offence to offer such birds for sale.

Held that the advertisement did NOT amount to an offer but was merely an invitation to treat.

Partridge v Crittenden 1968

Display of Goods
Held that the display of goods on shelves in a self service store did not amount to an offer of goods for sale, so that no contract was formed merely by the customer removing goods from the shelf.

Pharmaceutical Society of Great Britain v Boots Cash Chemist 1953
Tenders
Harvela Investments v Royal Trust of Canada
A unilateral offer to accept the highest bid and abide by other tendering conditions;
This offer was accepted by submitting the highest tendering bid.
see:Blackpool and Fylde Aero

Club Ltd v Blackpool Borough Council

Auctions
In Harris v Nickerson 1873 it was held that an advertisement that an auction is to be held is not an offer to hold it and a request for bids at an auction is generally no more than an invitation to treat.

In Spencer v Harding the tenders received are the offers and the person requesting the tenders has freedom to determine which they will accept.

If an auctioneer promises the auction will be without reserve this constitutes a unilateral offer which is accepted by the highest genuine (bona fide) bidder at the auction.

See also: Barry v Heathcote Ball

Bowerman v Association of British Travel Agents 1966. The majority of the Court of Appeal held that an ABTA notice which was displayed on the premises of travel agents were ABTA members, constituted an offer (promise) of ABTA protection for customers performing an act, namely booking holidays with those ABTA members.

In Fisher v Bell 1961 it was held that to display a flick-knife with a price marker in a shop window did NOT amount to commission of the offence of offering such a knife for sale.

Websites are treated as similar to advertisements and are therefore invitations to treat;
Pricing mistakes /snapping up see:
Chwee Kim Kong v Digilandmall com 2004

Standing offers:
The display of deckchairs were found to be an offer: Chapelton v Barry UDC 1940;

Vending machines constitute standing offers on the basis that as soon as the machine was activated there was no possibility of negotiation: Thorton v Shoe Lane Parking Ltd 1971

A unilateral contract is a contract where one party (the promisor) binds itself to perform a stated promise upon performance of the requested act or condition by the promisee.

N.B. The promisse is left free to choose whether or not to perform.

Carlill v Carbolic Smoke Ball Co 1893

The Court of Appeal held that the advertisement constituted an offer since it requested performance of an act as acceptance .


Communication of the offer
An offer does not take effect until it is actually communicated to the offeree and it is not possible for an offeree to accept unless the offeree has knowledge of the offer.

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