An attempt to answer some rudimentary questions on contract law.

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1. How does an invitation differ from an offer?

An invitation to treat is suggesting that someone enter into discussions with a view to forming a contract. Negotiations are just beginning at the stage of an invitation to treat. It is using the verb ‘treat’ in the sense of treaty – it is working towards and an agreement. The terms are only gradually being defined. A display of goods in a shop window (or any analogous situation) is taken as an invitation to treat.

On the other hand an offer in the legal sense is proposing a certain agreement to the offeree. An offer implies no further negotiations – it is a take it or leave it proposition. The offeree may accept or reject the offer. If the offer is accepted then a contract has been formed. If the offeree rejects it then the offer is terminated. Of course the offeree is free to make a new offer (even on exactly the same terms as were offered by the original offeree) but that makes the person who was the original offeree the offeror the second time around.

An invitation to treat and an offer are determined by what a reasonable person would infer from what was said and done. The law does not try and figure out what either party intended but only to construe what a reasonable person would from the circumstances.

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2. Does a railway or airline timetable constitute an offer?

A railway timetable is comparable to a display of goods since goods and services are analogous to each other. One has to work through what happens with railway timetables and airline timetables. These timetables may include prices in them.

Airlines and railways and entitled to change their timetables and prices as they see fit. They have have to delay services or cancel them. When timetables are altered or planes and trains are delayed, re-routed or canceled this is not seen as a breach of contract.

An offer means that once the offeree accepts he is entitled to have the goods and services for the advertised price and if the offeror fails to provide them then the offeror is in breach of contract.

When one sees the timetable although the terms of carriage are pre-defined there is still some negotiation to be done. The prices vary enormously because of which seat one picks on a plane even in economy class (the emergency exit seat costing more) and the amount of luggage one takes. Therefore for this and many other reasons this is an invitation to treat and not an offer.

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3. How do courts treat the display of goods in a shop window differently from a display in an automated machine?

A display of goods in a shop window is different from in an automated machine for several reasons. A display of goods in a shop window is a classic example of an invitation to treat. This was established in Pharmaceutical Society v Boots in 1953. These goods may then be haggled over and the shopkeeper may entice the customer by throwing in additional items for free. There may be certain items that a shopkeeper will not sell to certain customers because they are under age or the shopkeeper suspects that the potential customer (even and adult) will put certain items to a dangerous use. Therefore the shopkeeper is not obliged to sell the items if they are asked for.

A display of goods in an automated machine is an offer – this was decided in the case of Thornton v Shoe Lane Parking in 1971. This is partly because and automated machine cannot negotiate. This offer can be accepted by the offeree simply by inserting the requisite amount of money into the machine and purchasing the goods. There can be no further discussion of terms and conditions with a machine – that is why it is an offer.

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Was the decision in R v Clarke influenced by the consensus theory of contract? Should it have been?

The judgment in R v Clarke was that ”there cannot be assent without knowledge of an offer; and ignorance of an offer is the same thing as not hearing an offer or hearing about it and forgetting it later.”

This decision seems to have indeed been influenced by the consensus theory of contract. The consensus theory of contract requires that there be ”consensus ad idem” – that is to say both agreeing to the same. One cannot agree to a thing that one does not know about. People hear so many things, so many offers that it is very easy to forget over time. It is a core principle of English law that uninformed consent is no consent at all. This applies in this case. A reasonable person in the R v Clarke case would conclude that either Clarke did not know about the offer or Clarke knew at one time but subsequently forgot about it.

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How might the decision have been different if Clarke had been a poor but honest widow?

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A wrote to B offering 300 bags of cement at 10 pounds a bag. B wrote in reply that she was very interested to know but needed to know whether they were premium quality cement. The following morning, soon after A read B’s letter, B heard a rumour that the price of cement was about to rise. She immediately sent a fax to A stating, ‘Accept your price of 10 pounds a bag for Premium Quality cement.’ Assuming that the cement is premium quality is there a contract? (If so does the price include delivery)? Explain your reasoning.

Yes, there is a contract here. Crucially B made an ”offer” as the text says and this is an offer in the legal sense and not just in the sense that it is used in non-legal contexts. The key elements of an offer were there – A wrote to B specifically talking about a definite number of goods and a definite price. This is more than a display of goods situation. B did not accept or first or make a counter-offer. What B was doing was to seek more information and this is permitted while still keeping the offer open.

As A wrote to B presumably then A expected a reply by the same means. B’s question was by letter. B sent a fax accepting the offer as B was eager to accept the offer forthwith so as to take advantage of the good price.

No, delivery is not included. There was no mention of delivery by either party. In such situations the onus is on the buyer to take possession of the goods by collecting them himself or herself. It is also possible for the buyer to hire someone else to do it but this is a separate matter from the purchase. So long as the goods are there ready for collection A has done all he needs to do to honour the contract.

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What is the position under the last shot rule if, after an exchange of forms, the seller fails to deliver the goods?

A number of forms have been exchanged in an attempt to come to an agreement. The last form is the one that is actually agreed to and that is the one that creates the contract. That is the essence of the last shot rule.

Assuming that the seller is contractually required to deliver the goods and not simply have them available for collection then the seller is in breach of contract. The buyer is entitled to take legal action against the seller to compel the seller to deliver them or else to pay compensation to pay for the cost of delivery.

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You offer to buy a kilo of oranges for 9p from your local shop. Nothing further is said, nor do you receive any written correspondence. The next day, however, a kilo or oranges is delivered to your door. Is there a valid acceptance of the contract? Has there been communication of acceptance?

Yes, a contract has been formed. I offered to buy the oranges for that price. Going into the shop where goods were in view was responding to an invitation to treat. When I suggested paying that amount for a kilo of oranges that was an offer on my part. The shop has accepted the offer by delivering the oranges. Any lawyer will say that contracts can be accepted through behaviour and not just through words whether written or spoken. See Carlill v Carbolic Smoke Ball Company 1893. This contract has been validly accepted by the shop – the offeree in this case. The shop has communicated this fact through its conduct. I may not have intended to make an offer in a legal sense but a reasonable person would infer that this was a statement of definite action on my part and thus it is a legally binding offer.

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What rules do you think the courts should adopt for communication by fax or email?

Let us start by examininng the postal acceptance rule how see how suitable or unsuitable that principle would be to apply to fax and email. A letter of acceptance seals the contract as soon as it is posted. This rule was developed because the post took days or weeks and occasionally the letter never gets through. Moreover, post is a permissible means of an offeree accepting a contract so long as the offeror did not specify that another means is to be used for acceptance and only specified means of communication is permissible. The idea was to put the risk on the offeror and that is one principle which can be taken from the postal acceptance rule and transferred to the case of email and fax acceptance. The time lag between sending a letter and it being received were not to be used by the offeror to offer the contract to others unless the contract allowed him to do so.

Fax and email provide near instantaneous communication. The question arises as to whether the moment of acceptance is to be taken as the time of sending or the time of receiving. Using the moment of sending as the time of acceptance is unreasonable in this case because the time lag between email and fax on the one hand and letters on the other hand are two quite different things. Therefore the time of acceptance ought to be taken as the time of receipt. It is up to the offeror to check emails and faxes regularly if he or she knows that an acceptance might come. This is consistent with the principle laid down in the postal acceptance in putting the inconvenience and risk involved in a time lag onto the offeror. There is a counter-argument to be made that the postal acceptance rule should be extended to email and fax. One could look to Bruner v Moore in 1903 and this involved a telegram. However, this was a very long time ago and has been superseded by faster forms of communication. It is true that the postal acceptance principles were established even further back than Bruner v Moore but the difference is that instant communication has proliferated whereas the speed of the postal service has not improved unduly.

Courts are loathe to extend the postal acceptance rule to forms of near immediate communication. Furthermore, the postal acceptance rule is an exception to the general principle that the moment of acceptance is the time of receipt of the communication and as it is possible and fair to return to this general principle in the case of fax and email it is thus right to do so.
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What reasons have been given by the courts for the postal acceptance rule?

The postal acceptance rule was devised in the matter of Adams v Linsell 1818 and refined in Household Fire Insurance v Grant 1879.

The reasons given for the postal acceptance rule are several. One of them is that an offeror would offer a contract to an offeree. The offeree would ponder the matter and then communicate acceptance by post. There would be some delay between the letter of acceptance being sent and it being received. In the meantime the offeror might well make the offer anew to other offerees on the same terms. The offeror might be given an acceptance by a second offeree in the interim – this second offeree might do so by more immmediate means such as in person. The original offeree would then have missed ought and would be unfairly disadvantaged if this were permitted to happen and thus the offeror would be in breach of contract.

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In what circumstances would the postal acceptance rules not operate?

They would not operate if postal acceptance was not contemplated as a means of communication by the offeror. If the offeror used another means, especially a faster one such as a phone call, then this would suggest that the offeror expected the offeree to communicate and acceptance by a similarly speedy means. This principle was established in 1974 in Holwell Securities v Hughes.

In another instance the postal acceptance rule would have to be disapplied if the offeror stipulated that another form of communication must be used and only the said form of communication was to be permitted in this case.

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When is ever can an offeror waive the need for communication?

As established in Felthouse v Brindley 1862 an offeror may wave the need for communication only if doing so does not put the offeree at an unfair disadvantage. In Carlill v Smoke Ball Company it was held that performance is acceptance in some cases and in certain cases there is no need for an acceptance to be communicated.

If for instance the police put out an appeal for information and offer a reward one does not need to contact the police – accept the offer and then go and try to ascertain the information. As soon as one has the information one is entitled to go to them and accept the offer by performing the task asked for which is furnishing them with the desired particulars. Offers that are made to all and sundry like this tend to be of this nature – they do not call for communication of acceptance.

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Where a method of acceptance has been proscribed by an offeror
A. may the offeree choose to use another equally effective method of communicating his acceptance?
B What does equally effective mean?

C Whose interest should prevail?

A. An offeree may chose another equally effective means of communicating acceptance provided that the offeror did not add the stipulation that only the requested method of communication is acceptable to the offeror.

B. Equally effective means fast, likely to get through and permanent – as in written and not a spoken form.

C The interest of the offeror should prevail because she or he went to the bother of stating the preferred method of communcation. Should the offeree choose to disregard this than she or he must not inconvenience the offeror by selecting a less favourable means of communication with the regard to the needs of the offeror.

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About Calers

Born Belfast 1971. I read history at Edinburgh. I did a Master's at UCL. I have semi-libertarian right wing opinions. I am married with a daughter and a son. I am allergic to cats. I am the falling hope of the not so stern and somewhat bending Tories. I am a legal beagle rather than and eagle. Big up the Commonwealth of Nations.

27 responses »

    • Thank you so much Mr Flaherty. I think you are too flattering. Surely there must be some. Please play devil’s advocate. There must be more effective ways to argue the cases. I have been reading on wikipedia. I found out that an advertisement constitutes an invitation to treat rather than an offer in almost all cases. So I had something wrong. Moreover, please tell me more about the cases to cite as I do not know my stuff at this stage.

  1. A wrote to B offering 300 bags of cement at 10 pounds a bag. B wrote in reply that she was very interested to know but needed to know whether they were premium quality cement. The following morning, soon after A read B’s letter, B heard a rumour that the price of cement was about to rise. She immediately sent a fax to A stating, ‘Accept your price of 10 pounds a bag for Premium Quality cement.’ Assuming that the cement is premium quality is there a contract? (If so does the price include delivery)? Explain your reasoning.

    The answer given is incorrect. B’s offer is a conditional one because B agreed to buy the cement if it was of premium quality. The conditional offer negates the original offer and thus there is no contract at all.

    Thanks

  2. I do agree with you to an extent. There was no contract yet, as enquiries were still going on if the cements were of premium quality or not. A further response has not been transmitted from A to B regarding the premium quality enquiry. If, the cements were not of premium quality, legally, no contract exists as A response may determine if B will go further or not in purchasing the cements which render the offer still open. Remember, this is about Acceptance, and not directly offer persay.

    Carbolli Smoke Ball Co Ltd made an offer that constitutes a contract between them and Carlill ( the plaintiff). Within that authority, an offer was made which stipulates a contract, between both parties has been established , why? the defendant met the requirements, as offered in the terms and conditions given by the defendants.

    Furthermore, within the authority in Hyde v Wrench 1840, the enquiry by B may be regarded as a counter offer which in effect is capable of killing A’s initial offer. If, on receiving a response from B and, A decided not to go further; I beg to say no contract has been binded between them.

    Once again, this is about acceptance, not mainly offer. B didnt initially accept as enquiry is still on.

    Thanks and I do really wish to be corrected.

    • Thanks so much for your comment. You are more deft at law than I am. I defer to your superior knowledge, experience and virtuosity. My one quibble with your work is that you misspelt Carlill.

  3. There is a contract. since A’s cement is premium quality and what B requested for is also a premium quality cement knowingly fully well dat a contract could come in place through oral,writing and conducts of the parties.Under Terms of contract,sales by description;as an established principle of law that sale of a goods must correspond with the description as well as with the sample.varley v whipp,beale v taylor.as long as it is upon a common purpose which is a premium quality cement there is a contract between the parties.

    • Thank you for your excellent and insighhtful comment Adedeji. I am not suggesting my answers are good. I welcome reproof. Please tell more people about my blog.

  4. Wow You deserve Bravo I’m very very happy and excited to see this may the lord Grant you a good fortune and bless you aboundantly thanks ….

  5. Actually calers A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed.” Contract lawyers distinguish this from a binding offer, which can be accepted to form a contract (subject to other conditions being met). If I was right caler

      • Hello Mr callers pls I tried to open the next content but it brought to my notice that the content is protected by a password. So if you can solve that for me pls I will appreciate it

      • Don’t be Mr callers if you afraid of being uploading it in public here, Mr calers I guess maybe you can forward it to my gmail and I accept all the terms and condition on it because I know how content strong it is but I think the content will help me a lot if you can do this for me I will appreciate it and once again I will want you to Hazard a guess on it…thanks

  6. Your neighbor offers to sell you her car for £10,000. She tells you to ‘think about it and let me know by Monday’. On Saturday, she puts a note under your door to say ‘forget it – I want to keep my car’. Can she do this? Explain.

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