An offer and acceptance are required to form a contract. An offer communicates the terms of an exchange and indicates the offerer is prepared to be bound. Acceptance creates a contract by agreeing to the offer's terms. Offers can be unilateral, obligating one party, or bilateral, obligating both. Advertisements are generally invitations to treat rather than offers. An offer expires after a reasonable time if not accepted, or if rejected or a precondition fails. Acceptance must be unconditional and can be oral, written or through conduct. Under the postal rule, acceptance is effective upon dispatch rather than receipt to form a binding contract in some non-instantaneous communication circumstances.
2. What is an offer and acceptance?
What makes a contract?
■ Who is an offerer?
■ Who is an offeree?
■ Commuication counts as an offer when the offerer indicates the terms of an
exchange, is prepared to make a contract, and lets the offeree know the terms
are binding.
■ What is acceptance?
■ Acceptance makes contracts.
3. Types of offers
■ Unilateral contracts:
■ Obligation on one party only
■ Eg missing persons reward
■ Bilateral contracts:
■ Obligation on both parties
■ Eg purchase of a car
4. Types of offers
■ Offers to the public at large
– Carlil v Carbolic Smoke Ball
■ Advertisements for unilateral contracts are offers
■ Such offers are accepted when a member of the public acts upon it
■ Contracts to the public at large are unilateral
5. Invitations to treat
■ When one party invited another to discuss the terms of a possible contract
■ Advertisements for unilateral contracts are offers
■ Advertisements for bilateral contracts are invitation to treats
– Patridge v Crittenden
■ Prices on goods are invitations to treat, the buyer asking to buy a good is an
offer
– Fisher v Bell
6. How long does an offer last?
■ If specified
■ A reasonable amount of time
– Ramsgate Victoria Hotel LTD
v Montefiore
■ If rejected
■ If a counter offer is made
– Hyde v Wrench
■ Failure of a precondition
– Financings LTD V Stimson,
offer may lapse
■ Requests for information does not
amount to a counter offer,
– Stevenson Jaques Co v
McLean
■ Death of the offerer unless the
offeree doesn’t know
– Bradsbury v Morgan
■ Death of the offeree
■ Withdrawal of the offer uptill any
point before the offer is accepted,
and must be communicated.
7. Acceptance
■ Can be oral, written or in conduct, and must be intentional
– Felthouse v Bindley
■ Unilateral is usually via conduct and no acceptance until the full act is completed
■ Must be unconditional
■ Specified methods of acceptance
– Tinn v Hoffman
– Unless its for the offeree’s ease
8. Acceptance and communication
■ Not valid until communicated
– Entores LTD v Miles Far East Corporation
■ There are exceptions:
– Terms of the offer
■ Felthouse v Bindley
– Conduct of the offer
– Postal Rule
9. Postal Rule
■ What is it?
■ Adams v Lindsell
■ Applies to all non instantaneous modes of communication, only when
reasonable
■ There are exceptions
– Offers requiring communication to take effect
– Instantaneous communication
– Misdirected acceptance
