Contract Acceptance and Offer
Q1.Understanding the concept of contract is the important thing in answering this question.” A contract may be defined as an agreement between two or more parties that is intended to be legally binding”.
This answer will highlight the main points to see the differences between an offer and an invitation to treat. ” An offer may be defined as a statement of willingness to contract on specified terms made with the intention that, if accepted there will arise a binding contract”. On the other side, invitation to treat invites the other people to make an offer which can be accepted or rejected by the other party.
To illustrate them we have to look in certain areas. First area is the display of goods where these are seen as an invitation to treat because shops are inviting people to make them an offer which can be accepted or rejected by the shopkeeper. Cases to supports this are Fisher v Bell and Pharmaceutical Society v Boots Chemists. Another area in which the sales of goods are treated as an invitation to treat is advertisement as seen in Partridge v Crittenden. However we have an exception. Case to support this is Carlill v Carbolic where a reward was attached to the advert.
This case is treated as an offer because it can be accepted without any future negotiations. Another example where the term of offer is not good valuated we can find in sales of land area. Case to support this is Harvey v Facey where the court decided that between them was not a contract just a confusion regarding to the answer to enquiries, so was not an offer and not an invitation to treat. The last two areas where the court may presume that certain acts are invitation to treat is invitation to tender and auction sales.
Cases which support the fact that invitation to tender is an invitation to treat are Spencer v Harding and Harvela Investments v Royal Trust. First case is illustrating that even you use the word offering in the context it doesn’t mean that is an offer. Second case highlights that the highest tender is going to be accepted . In the auction cases supported by Payne v Cave we can see that we can withdrew the highest bid before the acceptance of the auctioneer because at that point is no contract. Q2. According to contract law an “acceptance is a final and unqualified acceptance of the terms of an offer”.
The concept of acceptance can be interpreted in more ways so we’ve got some rules. One of the rules highlights the fact that the acceptance has to match the offer. The person for who was addressed the offer has to accept all the terms of the offer. They can’t introduce new terms because this will be seen as a counter offer. Case to support this is Percy v Archital. A request for information about an offer it can’t be taken in consideration as a counter offer. Case to support this is Stevenson v McLean where the defendant by answering to some enquires was not doing a counter offer.
Another important rule is when we have two parties with different standard terms. Case to support this is Butler Machine v Excell-o-Corp where is illustrated the fact that when an offer is made on a document with standard terms and the acceptance is coming on a document with another terms and we still delivery the item, means that we accept the second party terms. An acceptance is taking to consideration only if is communicated. Case to support this is Felthouse v Bindley where the claimant considered the silence of his nephew as an acceptance.
To accept an offer we can follow the methods of acceptance when instantaneous methods of communication are used. In this case the contract takes place when and where the acceptance is received as seen in Entores v Miles Far case. If this is received out of normal office hours then acceptance will be valid from the start of the next working day. Case to support this is Brinkibon v Stahag. The only exception of the rule that acceptance must be communicated is the postal rule. This takes place only when is requested or when is an appropriate and reasonable way of communication between the parties.
In this case the acceptance takes place when the letter of acceptance was posted not when was received as seen in Adam v Lindsell case. In case that the letter was sent but it has never arrived is still a valid acceptance. Case to support this is Household Insurance v Grant. Although is an exception of the rule, postal rule will not apply when the letter of acceptance was handed to intermediaries (London and Northern Bank), when the letter is not properly addressed, when the offeror specified that the acceptance must reach to him (Holwell Securities v Hughes) and when is unreasonable to use the post.
Q3. Consideration is important element in the formation of a contract. It is usually described as being “something which represents a benefit for the person who is making a promise or a detriment for the person to whom the promise is made or both” . Case to support this is Currie v Misa. Related to the consideration are certain rules which we have to follow. First rule is that consideration must not be past as seen in Re McArdle case where the court supports the representative of the owner because the occupiers didn’t provide a good consideration.
However we have some exception, case of Lampleigh v Braithwaite where the court decided that it can be a past consideration because the promise of payment came after the performance, so consideration was precede by a request which result a valid consideration. Another rule of the consideration is that it must move from the promise. This is seen in Tweddle v Atkinson case where the court decide that third parties can’t provide the consideration, hence is not having any rights from the agreement.
An exception to this rule is Contract(Rights of Third Parties) Act 1990 which allows the third party to sue in case that the name it can be identified in the original contract. Case called Thomas v Thomas is one of the cases who is coming to support the rule where the consideration needs to be sufficient but not necessarily economically adequate . Court decided that in this case the rent of one pound which the widow was paying it was a sufficient consideration which is enough to form a contract.
The following rule, performance of an existing public duty is not consideration, is seen in Collins v Godefroy case and wants to highlight the fact that if the people have a duty imposed by law to turn up, they have to do it without any promise of remuneration from the client because this is not consideration. However, we’ve got an exception Glasbrook v Glamorgan case where the statutory duty of the police was not sufficient consideration; they had gone beyond their existing duty. “Performance of an existing contractual duty is not consideration” it can be seen from different points of view.
In the first case, Stilk v Myrick the fact that 2 mean deserted is not a good consideration in order to change the contract. However the case called Hartley v Ponsonby is different because 19 people deserted, which is more than half of the total sailors, hence a valid consideration, so the offer of Ponsonby and the acceptance of the crew can be considered a new contract. The next case, Williams v Roffey Brothers is coming with a different point of view because the benefit of not paying the penalty is seen as a consideration.
The following case which I will present is about part payment of a debt. Case to support this is Pinnel v Cole where court decided that the payment of a small amount of money from the whole is not a satisfaction for the money lender, therefore the agreement to receive some money at the due date was not a contract because was no consideration. However we’ve got the case of Hirachand v Temple as an exception because the existing duty to make a payment was owned by a third party, hence was a good consideration.
The last part is about the equitable rule of promissory estoppel which “allows a contract to be enforced even through there is no consideration” as seen in Hughes v Metropolitan Railway case where the tenant was following what he promise but the landlord was enforcing his rights. This case was revised later in London Property v High Trees. Based on the facts that there is a promise that existing legal rights will not be enforced, there is an existing contract and the injured party relied on that promise, Lord Denning stated that the “Landlord was “estopped” from going back on his promise”.