Contract: Offer

Offer

Establishing an Offer

What is an Offer?

The first requirement of contract formation is that one party made an offer. An offer is a promise to enter into a contract, which is objectively seriously intended. The following factors are relevant to whether there has been an offer: 

Tone and Humour
Tone and humour, laughing couple

If the tone or setting of the conversation is informal or appears to be in jest, there is likely no offer: Blue v Ashley [2017] EWHC 1928.

Vagueness
vague contract terms, fluffy cloud

A vague or equivocal statement is less likely to be an offer than a clear and unequivocal one: Blue v Ashley [2017] EWHC 1928.

Objectivity
objectivity, architects map

 The party’s subjective state of mind is not relevant: Storer v Manchester City Council [1974] 3 All ER 824. 

Invitations to Treat

Be careful to distinguish an offer from an invitation to treat. An invitation to treat is a statement which invites other people to make offers or negotiate. A person making an invitation to treat does not objectively appear to intend to be bound by the statement. For this reason, no contract arises if another person purports to accept an invitation to treat. Common situations which involve an invitation to treat and not an offer include: 

Information Requests
Invitation to treat, receipt

If a person asks for information about a product and the defendant provides the information, the defendant’s response is normally an invitation to treat: Harvey v  Facey [1893] AC 552.

Goods in Shop Displays
Shop displays and invitations to treat

Putting goods on display on a shelf or shop window is normally an invitation to treat: Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401. The customer makes the offer when they bring the goods to the counter.

Adverts
Adverts, neon street

Adverts are normally an invitation to treat: Partridge v Critenden (1968) 2 All ER 425. However, they might not be if the wording demonstrates intention to be bound (such as by offering a reward): Carlill v Carbolic Smoke Ball [1893] 1 QB 256.

Catalogues
Catalogues and magazines

Catalogues, even when they include the price of the goods, are typically taken to be invitations to treat: Grainger & Son v Gough [1896] AC 325.

Auctions
Auction, hammer

An auctioneer asking for a bid is an invitation to treat: Payne v Cave (1789) 3 TR 148. However, in an auction ‘without reserve’, by inviting bids the auctioneer is making an offer to accept the highest bid price: Barry v Davies (2001) 1 WLR 1962.

Websites
Websites, laptop

While there is no case on whether goods displayed on a website are an offer or invitation to treat, it is likely that they are an invitation to treat. This is because the situation is analogous to shop displays.


Extinguishing Offers

Withdrawing an Offer

An offer can be revoked by the offeror any time before it is accepted: Payne v Cave (1789) 3 TR 148. This is so even if the offeror previously stated the offer would remain open for a particular period of time: Routledge v Grant (1828) 130 ER 920.

It is possible for a promise to keep the offer open to amount to a separate, collateral contract. However, consideration must be provided for that promise before it can be binding. Even if there is a collateral contract, the offeror can still withdraw the offer. He merely opens himself up to an action for breach of the collateral contract by doing so.

To withdraw an offer, the offeror must communicate the withdrawal to the offeree. He can do this in person or through a third-party: Dickinson v Dodds (1876) 2 Ch D 463. The postal rule (applicable to acceptances) is not applicable to offers: Byrne & Co v Leon Van Tien Hoven & Co [1880] 5 CPD 344.

Termination of Offers

An offer is terminated in the following circumstances:

Rejection
Rejecting a contractual offer

Where the offer is rejected or a counter-offer is made: Hyde v Wrench (1840) 49 ER 132. Requests for information are not counter-offers: Stevenson, Jacques v McLean (1880) 5 QBD 346.  

Lapse (Specific Period)
Lapse for a period, clock time

If a time for the offer lapsing is stated, when that time passes.

Lapse (Reasonable Period)
Lapse for a period, clock time, alarm

If no time is stated, when a ‘reasonable’ amount of time passes: Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109.

Conditional Offers
Conditional, competition

If the offer is conditional, when that condition is fulfilled: Financings Ltd v Stimson [1962] 3 All ER 386.

Death of the Offeror
Death, gravestone

If the offeror dies, but only in the case of contracts which need the offeror to personally perform: Bradbury v Morgan [1862] 158 ER 877.

Death of the Offeree?
Death, gravestone

Possibly if the offeree dies before accepting, as stated obiter in Reynolds v Atherton (1922) 127 LT 189.


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Contract Formation Quiz

Test yourself on the principles which determine when a contract is formed.

1 / 42

Sean offers to sell his collection of nerdy T-Shirts to Chris, for £40. Chris accepts, saying that his father will provide the money. Have Sean and Chris both provided consideration?

 

2 / 42

In what four circumstances is an offer terminated without the offeror having to withdraw it?

3 / 42

Shira is seriously injured as a result of Quen's negligence. She tells them that if they give her their car, she will not sue. Quen agrees. Have both parties provided consideration?

4 / 42

Kayleigh offers to sell Tom a crate of tomatoes. She asks him to respond by letter with his signature if he accepts. Tom sends Kayleigh a letter accepting the tomatoes, but does not sign it. Is this a valid acceptance?

 

5 / 42

On Saturday, Roger offers to sell Tyrone a car. He asks him to respond by next Thursday if he accepts. Tyrone sends Roger a letter by post on Monday agreeing to the deal, but it is lost in the post and never arrives. Has Tyrone accepted the offer?

 

6 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first of them that swims the English Channel. Ricardo swims the English Channel the next day, and then calls Annabelle asking for the money. Is Annabelle obliged to pay him?

 

7 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first member of the team that swims the English Channel. Ricardo, one of the team members, is not present. The next day he decides to swim the English Channel for fun, not knowing about Annabelle's offer. If he completes the challenge, is Annabelle bound to pay him the money?

 

8 / 42

Dennis owes Maureen £1000, and is obligated to pay by the 1st of June. He asks her if she will discharge the debt for £600, if he pays by the 1st of May. Maureen agrees. Has Dennis provided consideration for Maureen's promise to discharge the debt?

9 / 42

Jubedul lets his office know that he is selling his pet cat Bianca for £50, and that if anyone would like to buy her they should let him know. Liz, his co-worker, sends him a letter containing £50, saying that she will buy Bianca. However, she puts the wrong address on the envelope and the letter never arrives. Has Liz accepted Jubedul's offer?

 

10 / 42

On Saturday, Roger offers to sell Tyrone a car. He asks him to respond by next Thursday if he accepts. Tyrone sends Roger a letter by post on Monday agreeing to the deal, but it does not arrive until Friday. Has Tyrone accepted the offer?

 

11 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he pays her £500. Maureen agrees, because she needs the money to avoid being liable to a third-party and therefore thinks the arrangement is practically beneficial. Has Dennis provided consideration for Maureen's promise to accept the lesser amount?

12 / 42

Which two of the following factors are relevant to whether a statement is an offer?

13 / 42

Kayleigh offers to sell Tom a crate of tomatoes. She asks him to respond by telephone if he accepts. Tom sends Kayleigh a letter accepting the tomatoes. Is this a valid acceptance?

 

14 / 42

Fatima is looking to sell an antique doll, which is worth £3000. Paul offers to buy it for £5. Fatima accepts, as she is in a hurry to get rid of the doll as it spooks her. Have both parties provided consideration?

15 / 42

What two conditions must be met for an agreement to be sufficiently certain to form a contract?

16 / 42

Specific proof is required to demonstrate intention to be legally bound where the parties have a family or social relationship. True or false?

 

17 / 42

John is a Government official who is under a duty to give a license to anyone who fills out the proper application form. Paul fills in the form and offers to give John £300 if he gets a license. John agrees. Have both parties provided consideration?

 

18 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he pays her £500. Taking pity on him, Maureen agrees. Has Dennis provided consideration for Maureen's promise to accept the lesser amount?

19 / 42

Phil makes a contract with Ingrid for his old shed to be torn down in exchange for £200. His next-door neighbour Andrew, who thinks the shed is an eye-sore, says he will pay Ingrid an extra £100 for taking down Phil's shed. Ingrid accepts and takes down the shed. Has Ingrid provided consideration for Andrew's promise?

20 / 42

Jubedul lets his office know that he is selling his pet cat Bianca for £50, and that if anyone would like to buy her they should let him know. Liz, his co-worker, immediately calls his work phone and leaves a message on his answering machine saying she will buy the cat. Jubedul never listens to the message. An hour later, Micah tells Jubedul in person that she will buy the cat. Who has validly accepted Jubedul's offer to buy Bianca?

21 / 42

Julie offers to pay Ophelia a £1000 allowance in exchange for her continued affection. Ophelia agrees. Have both parties provided consideration?

 

22 / 42

Rod advertises on a website saying he is looking to pay someone to look after his hamster for the weekend. Rosie responds, agreeing. The two draw up a written agreement, which includes a clause saying that it is binding in honour only. Is this agreement a valid contract?

 

23 / 42

Specific proof is required to demonstrate intention to be legally bound where the parties have a business or commercial relationship. True or false?

 

24 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he gives her his car, which is worth £800. Maureen agrees because she loves the car. Has Dennis provided consideration for Maureen's promise to discharge the debt?

25 / 42

For the purposes of demonstrating consideration under the rule in Williams v Roffey Bros, which of the following constitute a practical benefit?

26 / 42

Which four of the following scenarios normally involve an invitation to treat and not an offer?

27 / 42

How can an offeror validly withdraw their offer?

28 / 42

Bob offers to sell a wedding dress to Arthur for $400. Arthur says he is willing to buy the dress for $400, but only if Bob also includes a veil. Has Arthur accepted Bob's offer?

29 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first of them that swims the English Channel. Ricardo begins swimming the English Channel the next day, but before he can finish Annabelle changes her mind and says she will not pay. Has Annabelle revoked her unilateral offer?

 

30 / 42

Erica is a software programmer who was contracted to develop systems for Herbert's business. She begins to have money troubles, and asks Herbert for the extra £100 she needs to complete the project on time. Herbert accepts, because if delivery is late he will be liable to pay damages to a third-party. Has Erica provided consideration for the extra money?

 

31 / 42

What four factors indicate that family members or friends intended to be legally bound by their agreements?

32 / 42

Dennis owes Maureen £1000. Dennis asks Maureen if she will discharge the debt if his sister Dee pays her £600. Maureen agrees. Has Dennis provided consideration for Maureen's promise to discharge the debt?

33 / 42

Bob offers to sell Arthur a wedding dress for $400. Arthur responds by asking if the veil is included for that price. What is the legal nature of Arthur's response?

34 / 42

The parties have reached an agreement, but have not agreed on an important term such as the price. Is the contract void for uncertainty?

35 / 42

Stephen asks Jameel to help him find a venue for his up-coming book signing. Jameel finds the perfect place, and out of gratitude Stephen offers to give him £100 as a reward. He later changes his mind. Is Stephen bound to pay the money?

 

36 / 42

Frederick is Manuel's employee. One day, Frederick is told by Manuel that he needs him to take on some work which goes beyond his employment duties. Frederick is reluctant, but Manuel tells him that if he does it, Manuel will pay Frederick double. Frederick accepts. Has Frederick provided consideration for the extra payment?

 

37 / 42

Clarence offers to sell Pam a table and chairs set for $300. He adds that if Pam does not respond to him within the week, he will assume that she has accepted. Pam does not respond within the week, nor does she positively indicate acceptance in any other way. Has Pam accepted the offer?

 

38 / 42

Rod advertises on a website saying he is looking to pay someone to look after his hamster for the weekend. Rosie responds, asking if they can meet up to negotiate terms. The two meet up and reach a written agreement, but the document states that it is 'subject to contract'. Is this agreement a valid contract?

 

39 / 42

Does the postal rule apply to cases where an offeror is seeking to withdraw his offer?

 

40 / 42

The parties in a case reached an agreement for the claimant to do some work, but that agreement was stated to be subject to contract. Despite a written contract never being signed, the parties have begun performing as if there were a contract. Do the terms of the 'subject to contract' agreement apply?

41 / 42

When can an offer be revoked?

42 / 42

Stephen is struggling to find a venue for his up-coming book signing. Jameel decides to help him on his own initiative. Jameel finds the perfect place, and out of gratitude Stephen offers to give him £100 as a reward. He later changes his mind. Is Stephen bound to pay the money?

 

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