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Lecture 3

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  • 1. OFFER
    AND ACCEPTANCE
  • 2. Learning
    What is an offer and Acceptance?
    Legal rules as to offer and acceptance
    Communication of offer and acceptance
    Revocation of offer and acceptance
  • 3. Composition of an agreement
    An agreement is:
    • generally characterised by an ‘OFFER’ by one party and an ‘ACCEPTANCE’ by another
  • Definition of Offer
    A person is said to have made a proposal when he signifies to another his willingness to do something with a view to obtain assent of that other. It indicates that upon acceptance by the offeree, the offeror will be bound thereby.
    HOW AN OFFER IS MADE
    Express Offer
    Implied Offer
  • 4. Elements of a Contract: 1) Offer
    What is an offer?
    Does not have to be in writing
    Promissory: Promise to do something or to refrain from doing a certain act
    Intention: To be legally binding
    Communication: To Promisee
    Certainty: Terms must be clear & certain
    Finality: Must be a degree of finality with the terms
  • 5. Elements of a Contract: 1) Offer cont…
    An offer must be made to another person
    Offeror: party that makes the offer
    Offeree: party that receives the offer
    Offer made to the whole world
    Carlill v Carbolic Smoke Ball Company
  • 6.
  • 7.
  • 8. The case concerned a flu remedy called the "carbolic smoke ball". The manufacturer advertised that buyers who found it did not work would be rewarded £100, a considerable amount of money at the time. The company was found to have been bound by its advertisement, which it construed as creating a contract. The Court of Appeal held the essential elements of a contract were all present, including an offer, acceptance, consideration and an intention to create legal relations.
  • 9. Elements of a Contract: 1) Offer cont…
    Offer must be communicated
    Offeror to Offeree
    Mode of Communication
    Verbal/ Writing/Post
  • 10. Elements of a Contract: 1) Offer cont…
    Termination of an offer
    An offer can be terminated through the following ways:
    (1) Revocation
    (2) Lapse
    (3) Rejection By Offeree
    (4) Implied rejection : counter offer
    Eg - A offers to sell his car to B for $1000. B says to A, “I will give you $750". B statement amounts to a counter offer which terminates the original offer by A
  • 11. Do you have a valid offer?
  • 12. Offer to Whom
    1. To a specific person - Specific Offer
    2. To the world at large – General offer
    [Case: Carlill v/s Carbolic Smoke Ball Co.]
  • 13. Rules relating to offer
    Offer must be such as in law is capable of being accepted and giving rise to legal invitation.
    Terms of offer must be definite and certain
    Examples: (i) A owns three cars and offers to sell one of his car
    (ii) A offers to take a house on lease for 3 years if the house was put to thorough repair and rooms are decorated according to present style
    [ Case: Taylor v/s Portington]
  • 14. Case law: A offered to take a house on lease for three years at $ 285 per annum if the house was “put into through repair and drawing room handsomely decorated according to the present style.” Held, the offer was too vague to result in a contract relationship. (Taylor v/s Portington)
  • 15. 3. An offer may be distinguished from
    (a) A declaration of an intention and an announcement
    [Case: Harris v/s Nickerson – Auction Sale]
    (b) An invitation to make an offer
  • 16. CL: An auctioneer advertised in a newspaper that a sale of office furniture would be held. A broker comes from a distinct place to attend that auction, but all the furniture was withdrawn from the auction. The broker thereupon sued the auctioneer for his loss of time and expenses. Held, a declaration of intention to do a thing did not create a binding contract with those who acted upon it, so that the broker could not recover. (Harris vs. Nickerson)
  • 17. 4. It must be communicated to the offeree.
    Case law: S sent his servant, L to trace his missing nephew. He than announced that anybody who traced his nephew would be entitled to a certain reward. L traced the boy in ignorance of this announcement. Subsequently when he come to know of the reward, he claimed it. Held, he was not entitled to reward. (Lalman v/s GauriDutt)
  • 18. 5. It must be made with a view to obtain the assent.
    6. It should not contain a term the non – compliance of which may be assumed to amount to acceptance
    7. A statement of price is not an offer
    [Case: Harvey v/s Facey]
  • 19. Case law: three telegrams were exchanged between Harvey and facey.
    “Will you sell your bumper hall pen? Telegraph lowest cash price – answer paid”
    “Lowest price for bumper hall pen $900” (Facey to Harvey)
    “We agree to buy bumper hall pen for the sum of $900 asked by you” (Harvey to Facey)
    Held, there was no concluded contract between Harvey and facey. (Harvey v/s Facey)
  • 20. Acceptance
    A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer
    Who can accept?
    Those to whom offer was made (either a specific person or general public)
    Rule
    Acceptance must match offer exactly
    Must be communicated to offeror
  • 21. An acceptance is a final and unqualified assent to all the terms of the offer.
    Rules of acceptance :
    (1) Offer still in force
    (2) Acceptanceto be made by the offeree & to offeror
    (3) Unqualified and absolute
    (4) Acceptance can be in writing, oral or by conduct
    (5) Silence does not constitute an acceptance
    (5) Communication
  • 22. Communication of acceptance
    Completed acceptance
    Reasonable time
  • 23. When is all this Effective?
    Acceptance occurs when SENT
    Through mail—when posted
    Spoken—when said
    Fax/E-mail—when sent
  • 24. Legal rules as to acceptance
    • Acceptance must be legal & unqualified
    Acceptance must be absolute and unqualified. If a purported acceptance introduces any qualifications or new terms, it is a counter offer, which destroys the previous offer.
    • It must be communicated to the offeror
    Acceptance is only effective when it is communicated to the offeror.
    Exception – Acceptance of a unilateral offer(made to public at large) need not be communicated. It happens on the performance of the coditions
    • CASE: Carlill v Carbolic Smoke Ball Co (1893)
    • It can not precede an offer
    • 25. It must be according to the mode prescribed
    • 26. It must be given within a reasonable time
    [Case: Ramsgatevictoria Hotel Co V/s Montefiore]
    • Showing intention to fulfil the terms of promise It cannot be implied by silence (mere mental acceptance is no acceptance)
    • 27. Must be given before the offer lapses
  • Completion of Communication
    Offer or Acceptance
    OFFER : when it comes to the knowledge of the Offeree
    ACCEPTANCE : (i) As against the offeror : when putted into course of transmission (out of acceptors’ power)
    (ii) As against the acceptor : when it comes to the knowledge of the offeror
    Revocation of Offer or Acceptance
    (i) As against the person who makes it -- when putted into course of transmission.
    (ii) As against the person to whom it is made -- when it comes to his knowledge
  • 28. EXAMPLE
    A proposes by a letter to sell a house to B at certain price. The letter is posted on 15 th May.It reaches B on 19th May. A revokes his offer by telegram on 18th May. The telegram reaches B on 20th May. The revocation as against A is complete on ………………
    and as against B is complete on …………………
  • 29. Time for revocation of offer and acceptance
    Revocation of Offer:
    Before the communication of acceptance is complete as against the proposer
    Revocation of Acceptance
    Before the communication of acceptance is complete as against the acceptor.
  • 30. Withdrawal
    arrived
    after offer
    effected
    Effective offer
    Offer on the way to the offeree
    withdrawal
    Withdrawal
    arrived before
    offer effected
    Ineffective offer
    Offer on the way to the offeree
    withdrawal
    Delayed
    withdrawal
    arrived after it
    should have
    arrived
    Ineffective offer
    Offer on the way to the offeree
    withdrawal
    Offer dispatched
    Offer arrived
  • 31. 7-31
    Revocation by Communication
    Automatic Revocation
    Revocation by Passing of Time
    Revocation by Death or Insanity
    Revocation by Destruction
    Revocation by Subsequent Illegality
    Revocation of an Offer
  • 32. Revocation by Communication
    An offer may be revoked by the offeror by communicating that intent to the offeree before the offer has been accepted.
    Revocation is ineffective if acceptance has occurred.
    7-32
  • 33. Automatic Revocation
    If term of offer includes a definite time limit for acceptance, offer is automatically revoked at end of time period stated.
    Revocation by Passing of Time
    When no time limit is set, an offer will revoke automatically after the passing of a reasonable length of time.
    The time element is determined by a review of surrounding facts and circumstances.
    7-33
  • 34.
    • Revocation by Death or Insanity
    • 35. Death or insanity of an offeror automatically revokes an offer that has not yet been accepted.
    • 36. Revocation is immediate and communication to offeree is not required.
    • 37. Revocation by Destruction
    • 38. Destruction of subject matter related to an offer automatically revokes that offer. 
    • 39. Revocation by Subsequent Illegality
    • 40. Legislation that makes performance of an agreement illegal automatically revokes an existing offer.
    7-34
  • 41. THANK YOU
    11