After completion of this lesson students will be able to: a) define offer b) distinguish between offer and invitation to treat c) explain how a proposal is revoked

1. Offer in
Contract
Law
Preeti Kana Sikder
Assistant Professor
Department of Law & Justice

2. What is an ‘offer’?
An offer is a statement of the terms on
which the offeror is willing to be bound. An
offer involves the making of a ‘proposal’.

3. Offer
• A statement by one party
of a willingness to enter
into a contract on stated
terms, provided that these
terms are, in turn,
accepted by the party or
parties to whom the offer
is addressed.
Invitation to Treat
• An expression of
willingness to enter
into negotiations
which, it is hoped, will
lead to the conclusion
of a contract at a later
date.

4. Most Commonly Encountered Examples of legal
rules relating to offer
•Shop Display
•Advertisements
•Auction Sales
•Tenders

5. Who makes the offer in Shops?

6. Who makes the offer in these Shops?

7. Three Approaches: Who makes the offer
in Shops?
• The shopkeeper makes an offer by displaying the goods
which are accepted when the goods are picked up by
customer
• Display of goods is an offer which is accepted when the
purchaser takes the goods to cash desk.
• Display of goods constitutes an invitation to treat. Offer is
made by the customer when he presents the goods at the
cash desk. The offer may be accepted or not.

8. 1. Fisher v Bell (1961)
Display of goods in a shop window is an invitation to treat
The defendant had a flick knife displayed in his
shop window with a price tag on it. Statute
made it a criminal offence to 'offer' such flick
knives for sale. His conviction was quashed as
goods on display in shops are not 'offers' in the
technical sense but an invitation to treat.

9. 2. Pharmaceutical
Society of GB v
Boots Cash
Chemists (1953)
Section 18(1) of the Pharmacy and Poisons
Act 1933, which required that a sale of
drugs take place under the supervision of a
registered pharmacist.

10. Pharmaceutical
Society of GB v
Boots Cash
Chemists (1953)
Sale took place at the cash desk as
the display of the goods was simply an
invitation to treat

11. Advertisements

12. The general rule is that a
newspaper advertisement is
an invitation to treat rather
than an offer

14. 1. Patridge v Crittenden (1968)
• In Partridge v Crittenden [1968] 1 WLR 1204, the appellant
advertised Bramblefinch cocks and hens for sale at a stated
price. He was charged with the offence of ‘offering for sale’ wild
live birds contrary to the Protection of Birds Act 1954.
• It was held that the advertisement was an invitation to treat
and not an offer, and so the appellant was acquitted.
• Lord Parker CJ stated that there was ‘business sense’ in
treating such advertisements as invitations to treat because if
they were treated as offers the advertiser might find himself
contractually obliged to sell more goods than he in fact owned.

16. 2. Carlill v Carbolic Smoke Ball Co [1893]
• The defendants, who were the manufacturers of the carbolic smoke
ball, issued an advertisement in which they offered to pay £100 to
any person who caught influenza after having used one of their
smoke balls in the specified manner, and they deposited £1,000 in
the bank to show their good faith.
• The claimant caught influenza after using the smoke ball in the
specified manner. She sued for the £100. It was held that the
advertisement was not an invitation to treat but was an offer to the
whole world and that a contract was made with those persons who
performed the condition ‘on the faith of the advertisement’.

17. Auction
Sale

18. What is an Auction Sale?
• A public sale of land or goods, at public outcry, to
the highest bidder.
• At an auction, an auctioneer will invite bids on an
item (a lot), people will bid.
• The offer is made by the bidder which, in turn, is
accepted when the auctioneer strikes the table
with his hammer.
• With Reserve v Without Reserve

19. Auction Sales: When does Offer
Arise?
• An auctioneer, by inviting bids to be made, makes an
invitation to treat.
• The advertisement of an auction sale is generally
only an invitation to treat.
• Offer is made by the bidder and accepted by the
auctioneer when he signifies his acceptance in the
customary manner.
• Before such acceptance the bidder may withdraw his
bid and the auctioneer may withdraw the goods.

20. BARRY V DAVIES [2001]
• The defendant, the auctioneers, were instructed to sell
two machines used in the motor industry. The claimant
was told the sale would be without reserve.
• The claimant was the highest bidder, bidding £200 for
each.
• The defendant refused the claimant's bid and withdrew
the lots from auction as the machines were worth £14000
each.
• The claimant sought damages for breach of contract.

21. BARRY V DAVIES [2001]
• The court followed that there was an offer by the defendant
because the auction was without reserve.
• The claimant had accepted such offer by making the highest
bid. Therefore, the defendant was in breach of contract.
• The claimant was awarded £27600 in damages. The cost of
buying the machines (£28000) minus his bid of £400, in order
to compensate him for his loss due to the breach of contract.

22. Tenders
The process whereby
governments and
financial institutions
invite bids for large
projects that must be
submitted within a finite
deadline

23. The general rule is that these
requests are an invitation to treat
and any submission of tenders are
offers. It is then up to the person
who requires the service to decide
whether to accept any of the offers.

24. Harvela Investments v Royal Trust Co
(1986)
• A was selling shares and invited B and C to
“tender” (i.e. bid).
• Bids for the shares which wouldn’t be disclosed to
the other party.
• B offered one amount and C offered a lesser
amount OR a sum on top of whatever B was
offering.
• A accepted C’s bid.

25. Harvela Investments v Royal Trust Co
(1986)
• Judges decided that calling bidders for bidding was not
an invitation to treat but an offer and defendant is
bound to accept claimant’s bid.
• Lord Bridge points out that the terms of this unilateral
contract (secret bids) were broken because it was
impossible to determine what C’s bid was, without
referring to the B’s bid, and therefore to accept C’s bid
is to undermine the point of the “secrecy” element: that
the bids should be made independent of each other.
• But we can observe that the decision is deviated from
the general rule of tender.

26. Essential of a Valid Offer
POST CLASS ACTIVITY

27. Essential of a Valid Offer
1. An offer can be made to an individual or to a class of people or to the
world at large
2. The terms of the offer must be certain, definite, unambiguous and not
vague
3. Mere statement of intention is not an offer
4. An offer must be communicated to the offeree
5. An offer may be conditional
6. Printed contracts
7. Offer can be revoked before acceptance
8. An offer does not stand forever

28. What is a Promise? (Section 2)
When the person to whom the proposal
is made signifies his assent thereto, the
proposal is said to be accepted.
A proposal, when accepted becomes a
promise:

29. Hyde v Wrench (1840)
• The defendant offered to sell a farm to the claimant for £1,000.
• The claimant in reply offered £950 which the defendant refused.
• The claimant then sought to accept the original offer of £1,000.
• The defendant refused to sell to the claimant.

30. Hyde v Wrench (1840)
• Lord Langdale stated:
“Under the circumstances stated in this bill, I think there exists no valid
binding contract between the parties for the purchase of this property.
The defendant offered to sell it for £1000, and if that had been at once
unconditionally there would undoubtedly have been a perfect binding
contract; instead of that, the plaintiff made an offer of his own, to
purchase the property for £950, and he thereby rejected the offer
previously made by the defendant. I think that it was not afterwards
competent for him to revive the proposal of the defendant, by
tendering an acceptance of it; and that, therefore, there exists no
obligation of any sort between the parties”.

31. Communication of Proposal
The communication of a proposal is
complete when it comes to the
knowledge of the person to whom it is
made.

32. Communication of Proposal
•A proposes, by letter, to sell a house to
B at a certain price.
The communication of the proposal is
complete when B receives the letter.

33. Revocation in Bangladesh
Communication, acceptance and revocation of proposals:
Section 3
• The communication of proposals, the acceptance of
proposals, and the revocation of proposals and acceptances,
respectively, are deemed to be made by any act or omission
of the party proposing, accepting or revoking by which he
intends to communicate such proposal, acceptance or
revocation, or which has the effect of communicating it.

34. Revocation in Bangladesh
• The communication of a revocation is complete,
as against the person who makes it, when it is
put into a course of transmission to the person to
whom it is made, so as to be out of the power of
the person who makes it; as against the person
to whom it is made, when it comes to his
knowledge.

35. Illustration
• A revokes his proposal by telegram.
The revocation is complete as against A when the
telegram is dispatched. It is complete as against B
when B receives it.
• B revokes his acceptance by telegram. B's
revocation is complete as against B when the
telegram is dispatched, and as against A when it
reaches him.

36. Revocation in Bangladesh
Revocation of proposals and acceptances: Section 5:
• A proposal may be revoked at any time before the
communication of its acceptance is complete as against the
proposer, but not afterwards.
• An acceptance may be revoked at any time before the
communication of the acceptance is complete as against
the acceptor, but not afterwards.

37. Illustration
• A proposes, by a letter sent by post, to sell his house to B.
B accepts the proposal by a letter sent by post.
A may revoke his proposal at any time before or at the moment
when B posts his letter of acceptance, but not afterwards.
B may revoke his acceptance as any time before or at the moment
when the letter communicating it reaches A, but not afterwards.

38. Revocation in Bangladesh
Revocation how made: Section 6:
• A proposal is revoked –
(1) by the communication of notice of revocation by the
proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
(3) by the failure of the acceptor to fulfil a condition precedent
to acceptance; or
(4) by the death or insanity of the proposer, if the fact of his
death or insanity comes to the knowledge of the acceptor before
acceptance.

39. Thank You