1. Introduction Agreement = offer and acceptance. Parties must show mutual assent to terms of contract. Once an agreement is reached, if the other elements of a contract are present, a valid contract is formed.

2. Requirements of Offer 1.) Offeror’s serious intention. - Contract is judged by what a reasonable person in the Offeree’s position would conclude about the offer. - Offers made in anger, jest, or undue excitement are usually not offers. - Expressions of opinion are not offers. - Statements of Intention or preliminary negotiations are are not offers. - Advertisements, Catalogues, Price Lists, and Circular are treated as Invitations to negotiate and not as offers. 2.) Definiteness of terms. Terms (Expressed or Implied). – Identification of the parties. – Object or subject matter of the contract. – Consideration to be paid. – Time of payment, Delivery, or Performance. 3.) Communication to Offeree. Offeree’s knowledge of the offer: – Directly by the Offeror. – Use of Agents.

3. Requirements for a contract Offer + Acceptance = Agreement Consideration Intention to Create Legal Relations

4. Offer or Invitation to Treat? An offer once accepted creates an agreement An offer can be contrasted with an invitation to treat An invitation to treat is an invitation to enter negotiations The “acceptance” of an invitation to treat does NOT create an agreement It is not always easy to distinguish between an offer and an invitation to treat

5. Offer or Invitation to Treat? In certain types of standard transactions (e.g. display of goods, advertisements) there are some general rules that apply as to whether or not an offer has been made (can be rebutted)

6. Advertisements Generally these are Invitations to Treat NOT offers If an advert in the paper was an offer the person who placed the advertisement would be required to contract with anyone/everyone who wanted to purchase the goods at the price stated

7. Advertisements in a catalogue or in a curricular. Circulars, which provide information about items for sale and their prices, are regarded as invitations to treat. If it were regarded as an offer and the manufacturer ran out of stock, they would be in breach of contract for anyone who accepted such an offer as they could not provide stock Advertisements in Newspapers and Magazines. These are also considered invitations to treat unless the advertisement is couched in terms which indicate the retailers willingness to be bound if the specified terms are accepted (eg. there is a promise (Carlill) rather than a mere invitation (Partridge v Crittenden). Advertisements appearing on the Internet. The application of the same principle as newspapers and magazines is used. Display of Goods. Items appearing in retail outlets, even if the price is attached, are regarded as an invitation to treat. Pharmaceutical Society of Great Britain v Boots Cash Chemists.

8. Auctions Advertisement of Auctions The advertisement of an auction is considered an invitation to treat on the part of the auctioneer. The auctioneer may withdraw items from the auction or cancel the auction all together without incurring any liability from potential bidders. Harris v Nickerson(auctioneer is under no liability to anyone who comes to bid for the sale if the sale is cancelled) The auctioneer may withdraw various lots from the auction or cancel the auction altogether without incurring any liability from potential bidders. Harris v Nickerson Auctions with Reserve Each bid represents an offer, which the auctioneer may reject or accept. Acceptance of an offer occurs, and an agreement is formed, when the auctioneer knocks down the property to the successful bidder. Because the agreement is not formed until the bid is knocked down, the bidder can withdraw a bid (offer) before this time. Payne v Cave Auction without a Reserve Even in an auction without a reserve, each bid represents an offer that could be accepted or rejected by the auctioneer. AGC Ltd v. McWhirter

9. Examples of Invitations to Treat Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 ( goods on supermarket shelves are not an offer by the shopkeeper but an invitation to treat. The transaction is complete not when the goods are placed in the customer’s basket but when the money is presented at the checkout and is accepted by the cashier. Based on this principle, elementary as it may seem, a storekeeper is under no legal obligation to sell his goods to you (admittedly a poor business practice!). Partridge v Crittenden [1968] 1 WLR 1204 Fisher v Bell [1961] 1 QB 394

10. Some adverts ARE offers Often this is the case in UNILATERAL contracts The leading case is…

11. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal

12. In Carlill Vs. Carbolic Smoke Ball Co. Ltd, the defendant company manufactured and owned a drug named the carbolic smoke ball. The company was confident that it was the best cure for fever, influenza, and colds and other diseases associate with taking cold water. It put an advertisement in a newspaper to the effect that a $ 1,000/- reward was available to any person who contracted influenza, fever, cold or other diseases after taking the carbolic smoke ball as prescribed. The advertisement stated further that the company had deposited $ 1,000/- with Alliance Bank. Mrs. Carlill who had read the advertisement bought and took the smoke balls as prescribed but contracted influenza. The company denied paying her and she sued. The company argued that: - The advertisement was mere sales talk. - There was no intention to create legal relations with any person. - The company couldn‟t make and offer to the whole world. However, it was held that though the advertisement was unclear in certain respects, it amounted to a general offer and any person who fulfilled its conditions contracted with the company hence Mrs. Carlill was entitled to the $ 1,000/-

13. Rewards are often offers Gibbons v Proctor (1891) 64 LT 594 Taylor v Allon [1966] 1 QB 304 R v Clarke (1927) 40 CLR 227 Williams v Cawardine (1833) 5 C & P 566

14. Establishing Offer and Acceptance: “A Meeting of the Minds” A legally recognized offer and an acceptance creates a “meeting of the minds’, or mutual assent, between the parties. Mutual Assent requires the presence of the following factors: 1.Both parties must exhibit a “contractual intent” [words spoken in jest or frustration will lack the requisite intent]; 2.The terms of the offer must be clear and definite; 3.The acceptance must be clearly communicated.

15. offer When a person signifies his willingness to do or to abstain from doing anything with the view of obtaining the assent of the other to such act or abstinence, he is said to make a proposal. The person proposing is also called an offeror or a promissor. The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. The wording and context of the offer must make it clear to the offeree that her acceptance will bind the parties immediately.

16. Communication of an Offer For an offer to be valid it must be communicated to the offeree by the offeror, or someone authorised by the offeror. Cole v Cottingham An offer becomes effective once it is communicated to the offeree Taylor vLaird Acceptance must take place in reliance upon an offer. If the offeree performs a particular act that corresponds to the terms of the offer without knowledge of the offer, there is no agreement, and no contract comes into existence. Tinn v Hoffman & Co If it is an offer to the world at large, the offer could be accepted by any fulfilling the requirements of the offer. Carlill v Carbolic Smoke Company

17. Types of Offer CROSS OFFER. Occasionally two parties make similar offer to each other without knowing that same offer has been made by the other party. In such a case no binding contract will have been created since none has specified has acceptance to another. COUNTER OFFER. This is a change, variation or modification of the terms of the offer by the offeree. It is a conditional acceptance and therefore not an acceptance in law. It is an offer in its own right and if accepted, an agreement arises between the parties. The legal effect of making a counter-offer is that it terminates the original offer which thereby becomes incapable of acceptance unless revived. In Hyde Vs. Wrench (1840) on June 8th 1840 the defendant made a written offer to sell to the plaintiff a firm for $1,000/-. On June 15th the plaintiff wrote back accepting to pay $ 950 for the firm. On June 27th the defendant wrote to the plaintiff rejecting the $ 950. On June 29th the plaintiff wrote to the defendant accepting to pay $ 1,000/- for the firm. The defendant refused and the plaintiff sued for specific performance. It was held that there was no acceptance as a counter offer does not amount to acceptance neither was the offer revived in this case. A counter offer differs from a request for information or an inquiry.

18. Termination of an Offer An offer may be terminated at any time before it is accepted by either the action of the parties or by operation of law. However, once an offer is accepted it becomes irrevocable. Some offers are left ‘open’ for a specific period of time, in which case it will terminate on a certain date. If there is no time limit stated, then the offer remains open for a ‘reasonable period’, ‘reasonable’ being based on the circumstances and subject matter of the contract. Some offers are ‘irrevocable’ for a certain time period, during which the offeror cannot withdraw the offer until that date. However, in these circumstances, for the offeror’s offer to be irrevocable, some consideration will be paid by the offeree for the privilege of ‘tying the offeror’s hands so that the offer cannot be withdrawn or offered to someone else. This type of offer is usually referred to as an option.

19. Termination by Action of the parties

20. a. Revocation of the offer by the offeror Revocation is the formal withdrawal of the offer by the offeror. Before acceptance, an offer can be freely revoked or withdrawn. Goldsbrough Mort & Co v Quinn Veivers v Cordingly Unless there is a promise, supported by consideration or under seal, by the offeror to keep it open for a fixed period. Routledge v Grant A revocation will only be effective once it has been communicated to and received by the offeree or his agent. Bryrne v Leon Van Tien Hoven In unilateral contracts, the offer cannot be withdrawn after the offeree has begun to perform the necessary conditions of acceptance of the offer and completion of the contract. Abbot v Lance

21. b. Rejection of the offer by the offeree Rejection by the Offeree (expressed or implied) terminates the offer. The rejection must be communicated to the offeror before it is effective. Once rejected, an offer cannot be later accepted. If an offeree attempts to accept the offer but introduces new terms, the offeree has rejected the offer and is deemed to be making a counter offer (A counteroffer by the Offeree is a rejection of the original offer and making of a new offer). Stevenson Jaques & Co v McLean

22. Termination by operation of law

23. a. Lapse of time An offeror may stipulate that his or her offer must be accepted within a certain period of time, and if the offeree fails to accept, the offer will lapse. If no time is prescribed, the offer must be accepted within a reasonable time. Ramsgate Victoria Hotel Co v Montefiore

24. b. Destruction of the Subject Matter.

25. c. Failure of a condition subject to which the offer was made If a condition upon which the offer is made is not fulfilled the offer will lapse McCaul Pty Ltd v Pitt Club Ltd

26. d. Death If the offeror dies and the offeree has not been notified of that death, it is still possible for the offeree to accept the offer, thus binding the offeror’s estate. If the offeree has been notified of the death he/she cannot accept the offer. Coulthart v Clementson Nor can a representative of the offerors estate accept the offer on their behalf therefore the offer lapses Reynolds v Atherton

27. §3: Acceptance Acceptance is the – Voluntary act (expressed or implied), – by the Offeree that, – shows assent (agreement), – to the terms of an offer.

28. Silence as Acceptance Acceptance of Services by Silence. – Sometimes Offeree has a duty to speak. Prior Dealings and Acceptance. – Silence can be acceptance if there are prior dealings. Solicited Offers. – Offeree has a duty to reject.

29. Mode and Timeliness of Acceptance Mail Box Rule - Acceptance becomes effective on dispatch, providing that authorized means of communication is used. Offeree accepts by using the stipulated means of acceptance. – Offeror specifies (expressly or impliedly) how acceptance should be made. – Effective when dispatched (mailed, shipped).

30. Means of Acceptance Exceptions: – If acceptance is not properly dispatched by the Offeree. – If Offeror specifies that acceptance will not be effective until it is received. – If acceptance is sent after rejection, whichever is received first is given effect. Unauthorized Means of Acceptance. – Not effective until it is received by the Offeror. If timely sent and dispatched it is considered to have been effective on its dispatch.