Contractual agreement - offer and acceptance
Introduction:
Contractual agreement has traditionally been analysed in terms of offer and acceptance. One party, the offeror, makes an offer which once accepted by another party, the offeree, creates a binding contract. Key concepts that you need to familiarise yourself with in relation to offer and acceptance include the distinction between an offer and an invitation to treat - you need to be able to identify specific examples of where an offer or an invitation to treat exists. Also it is important to know the difference between bilateral and unilateral contracts. The case of Carlill v Carbolic Smoke ball co. is the leading case in both these areas so it worth concentrating your efforts in obtaining a good understanding of this case.
Offer
In order to amount to an offer it must be shown that the offeror had the intention to be bound:
Harvey v Facey [1893] UKPC 1
Carlill v Carbolic Smoke Ball co [1893] 1 QB 256
Invitation to treat
An offer needs to be distinguished from an invitation to treat. Whereas an offer will lead to a binding contract on acceptance, an invitation to treat can not be accepted it is merely an invitation for offers.
Goods on display in shops
Goods on display in shops are generally not offers but an invitation to treat. The customer makes an offer to purchase the goods. The trader will decide whether to accept the offer:
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Fisher v Bell [1961] 1 QB 394
Advertisements
Advertisements are also generally invitations to treat:
Partridge v Critenden (1968) 2 All ER 425
However, in some instances an advert can amount to an offer:
Carlill v Carbolic Smoke Ball co [1893] 1 QB 256
Contract by Tender
The request for tenders represents an invitation to treat and each tender submitted amounts to an offer unless the request specifies that it will accept the lowest or highest tender or other condition. If the request contains such a condition this will amount to an offer of a unilateral contract where acceptance takes place on performing the condition:
Spencer v. Harding Law Rep. 5 C. P. 561
Auctions
Where an auction takes place with reserve, each bid is an offer which is then accepted by the auctioneer. Where the auction takes place without reserve, the auctioneer makes a unilateral offer which is accepted by the placing of the highest bid:
Heathcote Ball v Barry [2000] EWCA Civ 235
Machines
The machine represents the offer, the acceptance is inserting the money:
Thornton v Shoe Lane Parking [1971] 2 WLR 585
Termination of offers
An offer may be terminated by:
1. Death of offeror or offeree
2. Lapse of time
An offer will terminate after a reasonable lapse of time. What amounts to a reasonable period will depend on the circumstances.
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
3. Revocation
An offeror may revoke an offer at any time before acceptance takes place:
Dickinson v Dodds (1876) 2 Ch. D. 463
This may not apply in unilateral offers where acceptance requires full performance:
Errington v Errington Wood [1952] 1 KB 290
Dahlia v Four Millbank [1978] Ch 231
4. Counter offer
A counter offer is where an offeree responds to an offer by making an offer on different terms. This has the affect of destroying the original offer so that it is no longer open for the offeree to accept.
Hyde v Wrench (1840) 49 ER 132
Acceptance
Once valid acceptance takes place a binding contract is formed. It is therefore important to know what constitutes a valid acceptance in order to establish if the parties are bound by the agreement. There are three main rules relating to acceptance:
1. The acceptance must be communicated to the offeree.
2. The terms of the acceptance must exactly match the terms of the offer.
3. The agreement must be certain.
1. Communication
The general rule is that the offeror must receive the acceptance before it is effective:
Entorres v Miles Far East [1955] 2 QB 327
Silence will not amount to acceptance:
Felthouse v Bindley [1862] EWHC CP J35
Acceptance can be through conduct:
Brogden v. Metropolitan Railway Co. (1877) 2 App. Cas. 666
Butler Machine Tool v Ex-cell-o Corporation [1979] 1 WLR 401
The postal rule
Where it is agreed that the parties will use the post as a means of communication the postal rule will apply. The postal rule states that where a letter is properly addressed and stamped the acceptance takes place when the letter is placed in the post box:
Adams v Lindsell (1818) 106 ER 250
It is relatively easy for the parties to exclude the postal rule:
Holwell Securities v Hughes [1974] 1 WLR 155
2. The terms of the acceptance must exactly match the terms of the offer.
If the terms differ this will amount to a counter offer and no contract will exist:
Hyde v Wrench (1840) 49 ER 132
3. The agreement must be certain
When viewed objectively it must be possible to determine exactly what the parties have agreed to. Compare the following two cases:
Scammell & Nephew v. Ouston [1941] AC 251
Sudbrook Trading Estate v. Eggleton [1983] AC AC 444
Thursday, 6 May 2010
Sudbrook Trading Estate v. Eggleton [1983] AC AC 444
Sudbrook Trading Estate v Eggleton [1983] AC AC 444 House of Lords
A lease gave the tenant an option to purchase the freehold of the property at a price to be agreed by two surveyors one appointed by the tenant and one appointed by the landlord. The tenant sought to exercise the option but the landlord refused to appoint a surveyor. The landlord claimed that the clause was too vague to be enforceable as it did not specify a price.
Held:
The clause was not too vague to be enforceable as it put in place a mechanism to ascertain the price.
A lease gave the tenant an option to purchase the freehold of the property at a price to be agreed by two surveyors one appointed by the tenant and one appointed by the landlord. The tenant sought to exercise the option but the landlord refused to appoint a surveyor. The landlord claimed that the clause was too vague to be enforceable as it did not specify a price.
Held:
The clause was not too vague to be enforceable as it put in place a mechanism to ascertain the price.
Scammell & Nephew v. Ouston [1941] AC 251
Scammell and Nephew v Ouston [1941] AC 251
The parties entered an agreement whereby Scammell were to supply a van for £286 on HP terms over 2 years and Ouston was to trade in his old van for £100. There was then some disagreement and Scammel refused to supply the van.
Held:
There was no certainty as to the terms of the agreement. Whilst there was agreement on the price there was nothing in relation to the HP terms stating whether it would be weekly or monthly instalments or how much the instalments would be.
The parties entered an agreement whereby Scammell were to supply a van for £286 on HP terms over 2 years and Ouston was to trade in his old van for £100. There was then some disagreement and Scammel refused to supply the van.
Held:
There was no certainty as to the terms of the agreement. Whilst there was agreement on the price there was nothing in relation to the HP terms stating whether it would be weekly or monthly instalments or how much the instalments would be.
Hyde v Wrench (1840) 49 ER 132
Facts
Wrench offered to sell his farm in Luddenham to Hyde for £1200, an offer which Hyde declined. On 6 June 1840 Wrench wrote to Hyde's agent offering to sell the farm for £1000, stating that it was the final offer and that he would not alter from it.Hyde offered £950, and after examining the offer Wrench refused to accept, and informed Hyde of this on 27 June.On the 29th Hyde agreed to buy the farm for £1000 without any additional agreement from Wrench, and after Wrench refused to sell the farm to him he sued for breach of contract.
Judgment
Lord Langdale's judgement read:
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 accepted 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.
Held
There was no contract. Where a counter offer is made this destroys the original offer so that it is no longer open to the offeree to accept.
Wrench offered to sell his farm in Luddenham to Hyde for £1200, an offer which Hyde declined. On 6 June 1840 Wrench wrote to Hyde's agent offering to sell the farm for £1000, stating that it was the final offer and that he would not alter from it.Hyde offered £950, and after examining the offer Wrench refused to accept, and informed Hyde of this on 27 June.On the 29th Hyde agreed to buy the farm for £1000 without any additional agreement from Wrench, and after Wrench refused to sell the farm to him he sued for breach of contract.
Judgment
Lord Langdale's judgement read:
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 accepted 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.
Held
There was no contract. Where a counter offer is made this destroys the original offer so that it is no longer open to the offeree to accept.
Holwell Securities v Hughes [1974] 1 WLR 155
Hughes, in an agreement dated 19 Oct 1971 granted Holwell an option to purchase premises. The agreement said that the option could be exercised by notice in writing addressed to the vendor at any time within 6 months from that date. It was accepted that Holwell posted a letter to Hughes on 14 April 1972 but this was not received. Holwell sought specific performance. The action was dismissed at trial.
HELD Lawton LJ.
It is a truism of the law relating to options that the grantee must comply strictly with the conditions stated for its exercise. The document was carefully drafted and should be strictly construed. The wording is familiar to conveyancers and should be construed in the way they would use such words. "Notice in writing" should be contrasted with "agreed in writing" and "required in writing". The word "notice" comes from the Latin word "to know" and the Oxford Dictionary suggests it means intimation or warning.
Now notice in writing to the vendor meant that he was to be fixed with this information - but he never was because it never got to him. The Plaintiffs were unable to do what the agreement said they were to do, and fix the vendor with the knowledge of the exercise of the option. If this construction of the option is correct, there is no room to apply the postal rule.
It was argued that the parties must have contemplated the use of the post, and this is enough to bring in Henthorn. But that rule does not apply where the express terms of the offer specify that acceptance must reach the offeror. The public are now familiar with this exception to the general rule through their involvement with football coupons. Also, the rule does not apply if it would lead to manifest absurdity or inconvenience. This means that having regard to all the circumstances, including the subject matter being considered, the rule does not apply where the parties cannot have intended that there should be a binding agreement until the acceptance has been communicated to the other. In my view this principle applied here.
HELD Lawton LJ.
It is a truism of the law relating to options that the grantee must comply strictly with the conditions stated for its exercise. The document was carefully drafted and should be strictly construed. The wording is familiar to conveyancers and should be construed in the way they would use such words. "Notice in writing" should be contrasted with "agreed in writing" and "required in writing". The word "notice" comes from the Latin word "to know" and the Oxford Dictionary suggests it means intimation or warning.
Now notice in writing to the vendor meant that he was to be fixed with this information - but he never was because it never got to him. The Plaintiffs were unable to do what the agreement said they were to do, and fix the vendor with the knowledge of the exercise of the option. If this construction of the option is correct, there is no room to apply the postal rule.
It was argued that the parties must have contemplated the use of the post, and this is enough to bring in Henthorn. But that rule does not apply where the express terms of the offer specify that acceptance must reach the offeror. The public are now familiar with this exception to the general rule through their involvement with football coupons. Also, the rule does not apply if it would lead to manifest absurdity or inconvenience. This means that having regard to all the circumstances, including the subject matter being considered, the rule does not apply where the parties cannot have intended that there should be a binding agreement until the acceptance has been communicated to the other. In my view this principle applied here.
Adams v Lindsell [1818] EWHC KB J59
Adams v Lindsell [1818] EWHC KB J59, is an English contract case regarded as the first case towards the establishment of the "postal rule" for acceptance of an offer. Ordinarily, any form of acceptance must be communicated expressly to an offeror; however, it was found that where a letter of acceptance is posted, an offer is accepted as soon as the letter leaves the offeree's control.
Facts
The case involved two parties in the sale of wool. On 2 September, the defendants wrote to the plaintiffs offering to sell them certain fleeces of wool and requiring an answer in the course of post. The defendants, misdirected the letter so that the plaintiffs didn't receive it until 5 September.[1] The plaintiffs posted their acceptance on the same day but it was not received until 9 September. Meanwhile, on 8 September, the defendants, not having received an answer by 7 September as they had expected, sold the wool to someone else.
The defendants argued that there could not be a binding contract until the answer was actually received, and until then they were free to sell the wool to another buyer.
Judgment
Law J said that if that was true it would be impossible to complete any contract through the post; if the defendants were not bound by their offer until the answer was received, then the plaintiffs would not be bound until they had received word that the defendants had received their acceptance, and this could go on indefinitely.[1] Instead it must be considered that the offerers were making the offer to the plaintiffs during every moment that the letter was in the post.[2]
Remarks
This case in the first step towards establishing the postal acceptance rule (mailbox rule). It was not until 1892 in Henthorn v. Fraser [1892] 2 Ch 27 that the court determined the precise timing of the acceptance, that is the moment the letter of acceptance is posted. (See also Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, CA).
Facts
The case involved two parties in the sale of wool. On 2 September, the defendants wrote to the plaintiffs offering to sell them certain fleeces of wool and requiring an answer in the course of post. The defendants, misdirected the letter so that the plaintiffs didn't receive it until 5 September.[1] The plaintiffs posted their acceptance on the same day but it was not received until 9 September. Meanwhile, on 8 September, the defendants, not having received an answer by 7 September as they had expected, sold the wool to someone else.
The defendants argued that there could not be a binding contract until the answer was actually received, and until then they were free to sell the wool to another buyer.
Judgment
Law J said that if that was true it would be impossible to complete any contract through the post; if the defendants were not bound by their offer until the answer was received, then the plaintiffs would not be bound until they had received word that the defendants had received their acceptance, and this could go on indefinitely.[1] Instead it must be considered that the offerers were making the offer to the plaintiffs during every moment that the letter was in the post.[2]
Remarks
This case in the first step towards establishing the postal acceptance rule (mailbox rule). It was not until 1892 in Henthorn v. Fraser [1892] 2 Ch 27 that the court determined the precise timing of the acceptance, that is the moment the letter of acceptance is posted. (See also Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, CA).
Butler Machine Tool v Ex-cell-o Corporation [1979] 1 WLR 401
Facts
The Butler Machine Tool Company quoted a price for a machine with specific terms and conditions for purchase outlined on the back. These terms included a price variation clause which allowed the seller to increase the price if there was an increase in the manufacturing costs.
The purchaser sent back an order form outlining their own terms and conditions, which did not include a price variation clause. Attached to this order form was a tear off slip to be signed by the seller acknowledging their acceptance of the buyer’s terms.
The seller’s returned the signed slip but when the machine was delivered in November 1970 they claimed an additional £2,982 under the price variation clause. The buyer disputed this arguing there was no price variation clause in the final contract.
Held
Appeal allowed.
Issues
1. The main legal issue was to determine the effect of a counter-offer on an original offer thereby establishing whether the seller (Butler Machine Tool Co) could rely on a price variation clause which was present in the standard form.
Here the last offer rule was said to prevail. This rule was developed in Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 and states that the effect of a counter-offer is to kill the original offer.
This case is said to be an example of the “Battle of Forms”, a situation that
• Arises when both parties, for example a buyer and seller of goods exchange inconsistent standard forms during contract negotiations and reach an agreement without deciding whose standard forms should prevail.
• Standard Form Contract = a contract that is not individually negotiated by the parties but contains the same terms for all transactions of that type.
• In approaching this issue, the court suggested two methods; the conflict and the synthesis approaches.
The conflict approach required the court to determine which set of terms prevail. This was generally held to be the party who had the last say in the negotiation.
The synthesis approach required the court to build a contract from both sets of terms, including the terms common to both and those terms upon which the parties were agreed.
• Two questions
1. Has a contract been concluded at all?
2. If there is a contract, whose terms prevail?
The Butler Machine Tool Company quoted a price for a machine with specific terms and conditions for purchase outlined on the back. These terms included a price variation clause which allowed the seller to increase the price if there was an increase in the manufacturing costs.
The purchaser sent back an order form outlining their own terms and conditions, which did not include a price variation clause. Attached to this order form was a tear off slip to be signed by the seller acknowledging their acceptance of the buyer’s terms.
The seller’s returned the signed slip but when the machine was delivered in November 1970 they claimed an additional £2,982 under the price variation clause. The buyer disputed this arguing there was no price variation clause in the final contract.
Held
Appeal allowed.
Issues
1. The main legal issue was to determine the effect of a counter-offer on an original offer thereby establishing whether the seller (Butler Machine Tool Co) could rely on a price variation clause which was present in the standard form.
Here the last offer rule was said to prevail. This rule was developed in Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 and states that the effect of a counter-offer is to kill the original offer.
This case is said to be an example of the “Battle of Forms”, a situation that
• Arises when both parties, for example a buyer and seller of goods exchange inconsistent standard forms during contract negotiations and reach an agreement without deciding whose standard forms should prevail.
• Standard Form Contract = a contract that is not individually negotiated by the parties but contains the same terms for all transactions of that type.
• In approaching this issue, the court suggested two methods; the conflict and the synthesis approaches.
The conflict approach required the court to determine which set of terms prevail. This was generally held to be the party who had the last say in the negotiation.
The synthesis approach required the court to build a contract from both sets of terms, including the terms common to both and those terms upon which the parties were agreed.
• Two questions
1. Has a contract been concluded at all?
2. If there is a contract, whose terms prevail?
Brogden v. Metropolitan Railway Co. (1877) 2 App. Cas. 666
Brogden v Metropolitan Railway (1877) 2 App. Cas. 666
The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid.
Held:
The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.
The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid.
Held:
The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.
Felthouse v Bindley [1862] EWHC CP J35
Felthouse v Bindley [1862] EWHC CP J35
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don't hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether a valid contract existed between the nephew and the uncle.
Held:
There was no contract. You can not have silence as acceptance.
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don't hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether a valid contract existed between the nephew and the uncle.
Held:
There was no contract. You can not have silence as acceptance.
Tuesday, 4 May 2010
Entorres v Miles Far East [1955] 2 QB 327
Entorres v Miles Far East [1955] 2 QB 327
Entores was a London-based trading company that sent an offer for the purchase of copper cathodes by telex from a company based in Amsterdam.
The Dutch company sent an acceptance by telex.
The contract was not fulfilled by the Dutch Company and so Entores attempted to sue the owner of the Dutch company for damages.
The controlling company, Miles Far East Corp., was based in the U.S. and so Entores could only bring the action in the U.S. if it could be found that the contract was formed in London rather than Amsterdam.
It was held that the contract was formed in London. The instantaneous nature of telex meant that regular rules of acceptance by post did not apply. The general principle that acceptance takes place when communicated applies to all instantaneous forms of communication.
Entores was a London-based trading company that sent an offer for the purchase of copper cathodes by telex from a company based in Amsterdam.
The Dutch company sent an acceptance by telex.
The contract was not fulfilled by the Dutch Company and so Entores attempted to sue the owner of the Dutch company for damages.
The controlling company, Miles Far East Corp., was based in the U.S. and so Entores could only bring the action in the U.S. if it could be found that the contract was formed in London rather than Amsterdam.
It was held that the contract was formed in London. The instantaneous nature of telex meant that regular rules of acceptance by post did not apply. The general principle that acceptance takes place when communicated applies to all instantaneous forms of communication.
Tuesday, 27 April 2010
Hyde v Wrench (1840) 49 ER 132
Hyde v Wrench (1840) 49 ER 132
Facts
Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks.
Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of contract and sought specific performance, contending that Wench’s offer had not been withdrawn prior to acceptance.
Issue
If one party makes an offer and the offeree makes a counteroffer, does the original offer remain open?
Holding and Rule
No. A counteroffer negates the original offer.
Kindersely and Keene
To constitute a valid contract there must be a simple acceptance of the terms proposed. Hyde rejected the defendant’s offer to sell and made a counter proposal which terminated the offer. The offer was never accepted and cannot be revived later.
Pemberton and Freeling
Wrench’s offer had not been withdrawn before Hyde accepted it and his acceptance created a binding contract.
The Master of the Rolls (Lord Langdale)
By making a counteroffer, the plaintiff rejected the original offer and he was not entitled to revive it. Under these facts the parties did not form a binding contract.
Disposition
Judgment for Wrench.
Facts
Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks.
Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of contract and sought specific performance, contending that Wench’s offer had not been withdrawn prior to acceptance.
Issue
If one party makes an offer and the offeree makes a counteroffer, does the original offer remain open?
Holding and Rule
No. A counteroffer negates the original offer.
Kindersely and Keene
To constitute a valid contract there must be a simple acceptance of the terms proposed. Hyde rejected the defendant’s offer to sell and made a counter proposal which terminated the offer. The offer was never accepted and cannot be revived later.
Pemberton and Freeling
Wrench’s offer had not been withdrawn before Hyde accepted it and his acceptance created a binding contract.
The Master of the Rolls (Lord Langdale)
By making a counteroffer, the plaintiff rejected the original offer and he was not entitled to revive it. Under these facts the parties did not form a binding contract.
Disposition
Judgment for Wrench.
Dahlia v Four Millbank [1978] Ch 231
Dahlia v Four Millbank [1978] Ch 231 In this case potential purchasers were told that if they could produce a bank draft for a certain amount of money by 10 am the following day, they could buy a property. When the plaintiffs tried to hand over the draft before the deadline the defendants changed their minds and duly refused to accept the draft or complete the deal.
Held: There is an implied obligation for the offeror not to prevent the condition becoming satisfied. The obligation must arise as soon as the offeree starts to perform. However, until then the offeror can revoke, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.
Held: There is an implied obligation for the offeror not to prevent the condition becoming satisfied. The obligation must arise as soon as the offeree starts to perform. However, until then the offeror can revoke, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.
Errington v Errington Wood [1952] 1 KB 290
Errington v Errington Wood [1952] 1 KB 290
FactsFather bought a house for his son and daughter-in-law. He paid _250 as a down-payment, and put the title of the house in his name. He told his daughter-in-law that if they paid off the remaining mortgage (_500) in weekly instalments, he would transfer the title to them when the house was completely paid for. He died before they paid it all off. The late Father's widow then sued for the house.
IssueDoes the young couple have a contractual right to continue paying instalments, and upon completion of payments, take title of the house? Does their agreement remain binding despite the father's death?
RatioWithin a unilateral contract, there is an implied promise not to revoke once performance has commenced.
The father's promise was a unilateral contract. It could not be revoked by him once the couple entered on performance of the act. As long as the young couple fulfill their side of the contract (continue paying instalments), the contract remains binding, and they will have the property transferred to them once the payments are completed.
This judgement protects the interest of the party who is acting on the promise of the offeror.
HeldJudgement for the Defendant. Appeal dismissed.
IssueDoes the young couple have a contractual right to continue paying instalments, and upon completion of payments, take title of the house? Does their agreement remain binding despite the father's death?
RatioWithin a unilateral contract, there is an implied promise not to revoke once performance has commenced.
The father's promise was a unilateral contract. It could not be revoked by him once the couple entered on performance of the act. As long as the young couple fulfill their side of the contract (continue paying instalments), the contract remains binding, and they will have the property transferred to them once the payments are completed.
This judgement protects the interest of the party who is acting on the promise of the offeror.
HeldJudgement for the Defendant. Appeal dismissed.
Dickinson v Dodds (1876) 2 Ch. D. 463
Dickinson v Dodds (1876) 2 Ch. D. 463
On Wednesday, the 10th of June, 1874, the Defendant John Dodds signed and delivered to the Plaintiff, George Dickinson, a memorandum, of which the material part was as follows:
I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of ˆÇ¬£800. As witness my hand this tenth day of June, 1874.
ˆØ¬ø¬‡ (Signed) John Dodds.
P.S.-This offer to be left over until Friday, 9 o'clock, a.m. J.D. (the twelfth), 12th June, 1874.
(Signed) J. Dodds.
The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M. within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of ˆÇ¬£800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.
In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.
On the following (Friday) morning, at about seven o'clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, "You are too late. I have sold the property."
It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for ˆÇ¬£800, and had received from him a deposit of ˆÇ¬£40.
The bill in this suit prayed that the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.
The cause came on for hearing before Vice Chancellor Bacon on the 29th of January, 1876 [who decreed specific performance for the plaintiff. From this decision the defendants appeal].
James, L.J., after referring to the document of the 10th of June, 1874, continued:
The document, though beginning, "I hereby agree to sell," was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff being minded not to complete the bargain at that time adds this memorandum: "This offer is to be left over until Friday, 9 o'clock a.m. 12th June 1874. "That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer." It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the offer." This is evidence from the Plaintiff's own statements in the bill.
The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring to bind him, "I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper." It is to my mind quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.
I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of ˆÇ¬£800. As witness my hand this tenth day of June, 1874.
ˆØ¬ø¬‡ (Signed) John Dodds.
P.S.-This offer to be left over until Friday, 9 o'clock, a.m. J.D. (the twelfth), 12th June, 1874.
(Signed) J. Dodds.
The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M. within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of ˆÇ¬£800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.
In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.
On the following (Friday) morning, at about seven o'clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, "You are too late. I have sold the property."
It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for ˆÇ¬£800, and had received from him a deposit of ˆÇ¬£40.
The bill in this suit prayed that the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.
The cause came on for hearing before Vice Chancellor Bacon on the 29th of January, 1876 [who decreed specific performance for the plaintiff. From this decision the defendants appeal].
James, L.J., after referring to the document of the 10th of June, 1874, continued:
The document, though beginning, "I hereby agree to sell," was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff being minded not to complete the bargain at that time adds this memorandum: "This offer is to be left over until Friday, 9 o'clock a.m. 12th June 1874. "That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer." It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the offer." This is evidence from the Plaintiff's own statements in the bill.
The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring to bind him, "I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper." It is to my mind quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109The defendant offered to purchase shares in the claimant company at a certain price. Six months later the claimant accepted this offer by which time the value of the shares had fallen. The defendant had not withdrawn the offer but refused to go through with the sale. The claimant brought an action for specific performance of the contract.
Held: The offer was no longer open as due to the nature of the subject matter of the contract the offer lapsed after a reasonable period of time. Therefore there was no contract and the claimant's action for specific performance was unsuccessful.
Thornton v Shoe Lane Parking [1971] 2 WLR 585
Thornton v Shoe Lane Parking [1971] 2 WLR 585 The plaintiff was injured in the defendant's car park. There was a sign indicating "All cars parked at Owner's risk" at the entrance to the car park. The ticket was issued by a machine as the plaintiff entered the car park. The plaintiff was later injured when he returned to pick up his car. The trial judge found that fault lay partially with the defendant who was found liable. The defendant appealed claiming to rely upon exemption clauses. In small print on the ticket appeared the words "This ticket is issued subject to the conditions of issue as displayed on the premises." The plaintiff says he looked at the ticket on entering the car park but only noticed the time printed thereon, and not the small print. The conditions which appeared on a panel near the entrance were exhaustive and sought to exclude the defendant's liability inter alia for any personal injury caused by their negligence.
HELD Lord Denning MR
He referred to earlier cases where tickets were issued by booking clerks to passengers on railways etc. The issuing of a ticket was considered the offer, incorporating any conditions appearing on the ticket, and the retaining of it without objection was considered an acceptance of the offer. The theory that the customer could refuse to enter the contract on those terms and request a refund was a fiction. Not one customer in a thousand read the conditions on such tickets.
These cases have no application to tickets issued by automatic machines. The offer is made when the machine is held out as being ready to accept money. The contract is complete when the customer puts money in the slot. The terms of the offer are those placed near the machine, sufficiently brought to the customer's attention. In this case the sign saying that the car was parked at the owner’s risk. Further conditions appearing on the ticket have no effect.
If however the machine is a ticket person in disguise, the older cases should be considered. The court should not hold a person bound by a broad exempting condition appearing on the ticket, unless it is brought to that person's attention in the most explicit way - printed in red ink with a red hand pointing to it - or something equally startling. How can a car park give effective notice? In this case sufficient notice was not given of these conditions. Even on the older authorities, the defendant then fails.
HELD Megaw LJ
He reserved judgment on the precise time when the contract was concluded. Analysing the case in terms of the older authorities, Megaw agreed with Denning that the defendant's had not sufficiently drawn the exempting condition to the plaintiff's attention. Megaw pictured the indignation of the defendant if the potential customers, having taken their tickets, and observed the reference appearing there, were to leave their cars blocking the entrance while they went in search of these conditions. Clearly they were not expected to do this, and so were not given fair opportunity to discover these conditions.
Sir Gordon Wilmer agreed.
HELD Lord Denning MR
He referred to earlier cases where tickets were issued by booking clerks to passengers on railways etc. The issuing of a ticket was considered the offer, incorporating any conditions appearing on the ticket, and the retaining of it without objection was considered an acceptance of the offer. The theory that the customer could refuse to enter the contract on those terms and request a refund was a fiction. Not one customer in a thousand read the conditions on such tickets.
These cases have no application to tickets issued by automatic machines. The offer is made when the machine is held out as being ready to accept money. The contract is complete when the customer puts money in the slot. The terms of the offer are those placed near the machine, sufficiently brought to the customer's attention. In this case the sign saying that the car was parked at the owner’s risk. Further conditions appearing on the ticket have no effect.
If however the machine is a ticket person in disguise, the older cases should be considered. The court should not hold a person bound by a broad exempting condition appearing on the ticket, unless it is brought to that person's attention in the most explicit way - printed in red ink with a red hand pointing to it - or something equally startling. How can a car park give effective notice? In this case sufficient notice was not given of these conditions. Even on the older authorities, the defendant then fails.
HELD Megaw LJ
He reserved judgment on the precise time when the contract was concluded. Analysing the case in terms of the older authorities, Megaw agreed with Denning that the defendant's had not sufficiently drawn the exempting condition to the plaintiff's attention. Megaw pictured the indignation of the defendant if the potential customers, having taken their tickets, and observed the reference appearing there, were to leave their cars blocking the entrance while they went in search of these conditions. Clearly they were not expected to do this, and so were not given fair opportunity to discover these conditions.
Sir Gordon Wilmer agreed.
Heathcote Ball v Barry [2000] EWCA Civ 235
Heathcote Ball v Barry [2000] EWCA Civ 235 The claimant had submitted the highest (and only) bids at an auction stated to be without reserve. The items were two Alan Smart engine analysers which were worth £14,000. The claimant had submitted bids of £200 each. The auctioneer refused to sell them at that price. The claimant brought an action for breach of contract claiming damages of £27,600.
Held:The claimant was entitled to damages. Where an auction takes place without reserve the auctioneer makes a unilateral offer which is accepted by submitting the highest bid. There was thus a binding contract and the claimant entitled to damages covering the loss of bargain.
Held:The claimant was entitled to damages. Where an auction takes place without reserve the auctioneer makes a unilateral offer which is accepted by submitting the highest bid. There was thus a binding contract and the claimant entitled to damages covering the loss of bargain.
Spencer v. Harding Law Rep. 5 C. P. 561
Spencer v. Harding Law Rep. 5 C. P. 561 is an English contract law case concerning the requirements of offer and acceptance in the formation of a contract. The case established that an offer inviting tenders to be submitted for the purchase of stock did not amount to an offer capable of acceptance to sell that stock, but rather amounted to an invitation to treat.
Facts
The Defendants sent out a circular containing the following wording:
The Defendants did not promise to sell the stock to the highest bidder for cash. The Claimants sent a tender to the Defendants which, following the submission of all tenders, was the highest tender. The Defendants refused to sell the stock to the Claimants.
The Defendants submitted that the circular was not intended to be a binding offer capable of acceptance. Rather, it was merely a circular inviting others to make offers. The Claimants submitted that the circular did constitute a valid offer and that the Claimant had, by submitting the highest tender and attending all the necessary meetings, accepted that offer.
Judgment
Willes J held that the circular was not an offer, but merely an invitation to gather tenders, upon which the Defendants were entitled to act. Willes, J. held that the absence of any specific wording such as "and we undertake to sell to the highest bidder" rebutted any presumption that the Defendants had intended to be bound by a contract and distinguished the present circumstances from instances of reward contract offers or an offer to the world.
Keating J and Montague Smith J concurred.
Facts
The Defendants sent out a circular containing the following wording:
The Defendants did not promise to sell the stock to the highest bidder for cash. The Claimants sent a tender to the Defendants which, following the submission of all tenders, was the highest tender. The Defendants refused to sell the stock to the Claimants.
The Defendants submitted that the circular was not intended to be a binding offer capable of acceptance. Rather, it was merely a circular inviting others to make offers. The Claimants submitted that the circular did constitute a valid offer and that the Claimant had, by submitting the highest tender and attending all the necessary meetings, accepted that offer.
Judgment
Willes J held that the circular was not an offer, but merely an invitation to gather tenders, upon which the Defendants were entitled to act. Willes, J. held that the absence of any specific wording such as "and we undertake to sell to the highest bidder" rebutted any presumption that the Defendants had intended to be bound by a contract and distinguished the present circumstances from instances of reward contract offers or an offer to the world.
Keating J and Montague Smith J concurred.
Partridge v Critenden (1968) 2 All ER 425
Partridge v Critenden (1968) 2 All ER 425
The defendant placed an advert in a classified section of a magazine offering some bramble finches for sale. S.6 of the Protection of Birds Act 1954 made it an offence to offer such birds for sale.
Held:The defendant's conviction was quashed. The advert was an invitation to treat not an offer. The literal rule of statutory interpretation was applied.
Fisher v Bell [1961] 1 QB 394
Fisher v Bell [1961] 1 QB 394
LORD PARKER CJ:
The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I confess that I think most lay people and, indeed, I myself when I first read the papers, would be inclined to the view that to say that if a knife was displayed in a window like that with a price attached to it was not offering it for sale was just nonsense. In ordinary language it is there inviting people to buy it, and it is for sale; but any statute must of course be looked at in the light of the general law of the country. Parliament in its wisdom in passing an Act must be taken to know the general law.
It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract. That is clearly the general law of the country. Not only is that so, but it is to be observed that in many statutes and orders which prohibit selling and offering for sale of goods it is very common when it is so desired to insert the words ‘offering or exposing for sale,’ ‘exposing for sale’ being clearly words which would cover the display of goods in a shop window. Not only that, but it appears that under several statutes - we have been referred in particular to the Prices of Goods Act, 1939, and the Goods and Services (Price Control) Act, 1941 - Parliament, when it desires to enlarge the ordinary meaning of those words, includes a definition section enlarging the ordinary meaning of ‘offer for sale’ to cover other matters including, be it observed, exposure of goods for sale with the price attached.
In those circumstances I am driven to the conclusion, though I confess reluctantly, that no offence was here committed. At first sight it sounds absurd that knives of this sort cannot be manufactured, sold, hired, lent, or given, but apparently they can be displayed in shop windows; but even if this - and I am by no means saying it is - is a casus omissus it is not for this court to supply the omission. I am mindful of the strong words of Lord Simonds in Magor and St. Mellons Rural District Council v Newport Corporation. In that case one of the Lords Justices in the Court of Appeal had, in effect, said that the court having discovered the supposed intention of Parliament must proceed to fill in the gaps - what the Legislature has not written the court must write - and in answer to that contention Lord Simonds in his speech said: ‘It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation.’
Approaching this matter apart from authority, I find it quite impossible to say that an exhibition of goods in a shop window is itself an offer for sale…Accordingly, I have come to the conclusion in this case that the justices were right, and this appeal must be dismissed.
Full text
The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I confess that I think most lay people and, indeed, I myself when I first read the papers, would be inclined to the view that to say that if a knife was displayed in a window like that with a price attached to it was not offering it for sale was just nonsense. In ordinary language it is there inviting people to buy it, and it is for sale; but any statute must of course be looked at in the light of the general law of the country. Parliament in its wisdom in passing an Act must be taken to know the general law.
It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract. That is clearly the general law of the country. Not only is that so, but it is to be observed that in many statutes and orders which prohibit selling and offering for sale of goods it is very common when it is so desired to insert the words ‘offering or exposing for sale,’ ‘exposing for sale’ being clearly words which would cover the display of goods in a shop window. Not only that, but it appears that under several statutes - we have been referred in particular to the Prices of Goods Act, 1939, and the Goods and Services (Price Control) Act, 1941 - Parliament, when it desires to enlarge the ordinary meaning of those words, includes a definition section enlarging the ordinary meaning of ‘offer for sale’ to cover other matters including, be it observed, exposure of goods for sale with the price attached.
In those circumstances I am driven to the conclusion, though I confess reluctantly, that no offence was here committed. At first sight it sounds absurd that knives of this sort cannot be manufactured, sold, hired, lent, or given, but apparently they can be displayed in shop windows; but even if this - and I am by no means saying it is - is a casus omissus it is not for this court to supply the omission. I am mindful of the strong words of Lord Simonds in Magor and St. Mellons Rural District Council v. Newport Corporation. In that case one of the Lords Justices in the Court of Appeal had, in effect, said that the court having discovered the supposed intention of Parliament must proceed to fill in the gaps - what the Legislature has not written the court must write - and in answer to that contention Lord Simonds in his speech said: ‘It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation.’
Approaching this matter apart from authority, I find it quite impossible to say that an exhibition of goods in a shop window is itself an offer for sale. We were, however, referred to several cases, one of which is Keating v. Horwood, a decision of this court. There, a baker’s van was being driven on its rounds. There was bread in it that had been ordered and bread in it that was for sale, and it was found that that bread was under weight contrary to the Sale of Food Order, 1921. That order was an order of the sort to which I have referred already which prohibited the offering or exposing for sale. In giving his judgment, Lord Hewart C.J. said this: ‘The question is whether on the facts there were, (1) an offering, and (2) an exposure, for sale. In my opinion, there were both.’ Avory J. said: ‘I agree and have nothing to add.’ Shearman J., however, said: ‘I am of the same opinion. I am quite clear that this bread was exposed for sale, but have had some doubt whether it can be said to have been offered for sale until a particular loaf was tendered to a particular customer.’ There are three matters to observe on that case. The first is that the order plainly contained the words ‘expose for sale,’ and on any view there was an exposing for sale. Therefore the question whether there was an offer for sale was unnecessary for decision. Secondly, the principles of general contract law were never referred to, and thirdly, albeit all part of the second ground. the respondent was not represented and there was in fact no argument. I cannot take that as an authority for the proposition that the display here in a shop window was an offer for sale.
The other case to which I should refer is Wiles v. Maddison. I find it unnecessary to go through the facts of that case, which was a very different case and where all that was proved was an intention to commit an offence the next day, but in the course of his judgment Viscount Caldecote C.J. said: ‘A person might, for instance, be convicted of making an offer of an article of food at too high a price by putting it in his shop window to be sold at an excessive price, although there would be no evidence of anybody having passed the shop window or having seen the offer or the exposure of the article for sale at that price.’ Again, be it observed, that was a case where under the Meat (Maximum Retail Prices) Order, 1940, the words were ‘No person shall sell or offer or expose for sale or buy or offer to buy.’ Although the Lord Chief Justice does refer to the making of an offer by putting it in the shop window, before the sentence is closed he has in fact turned the phrase to one of exposing the article. I cannot get any assistance in favour of the prosecutor from that passage. Accordingly, I have come to the conclusion in this case that the justices were right, and this appeal must be dismissed.
The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I confess that I think most lay people and, indeed, I myself when I first read the papers, would be inclined to the view that to say that if a knife was displayed in a window like that with a price attached to it was not offering it for sale was just nonsense. In ordinary language it is there inviting people to buy it, and it is for sale; but any statute must of course be looked at in the light of the general law of the country. Parliament in its wisdom in passing an Act must be taken to know the general law.
It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract. That is clearly the general law of the country. Not only is that so, but it is to be observed that in many statutes and orders which prohibit selling and offering for sale of goods it is very common when it is so desired to insert the words ‘offering or exposing for sale,’ ‘exposing for sale’ being clearly words which would cover the display of goods in a shop window. Not only that, but it appears that under several statutes - we have been referred in particular to the Prices of Goods Act, 1939, and the Goods and Services (Price Control) Act, 1941 - Parliament, when it desires to enlarge the ordinary meaning of those words, includes a definition section enlarging the ordinary meaning of ‘offer for sale’ to cover other matters including, be it observed, exposure of goods for sale with the price attached.
In those circumstances I am driven to the conclusion, though I confess reluctantly, that no offence was here committed. At first sight it sounds absurd that knives of this sort cannot be manufactured, sold, hired, lent, or given, but apparently they can be displayed in shop windows; but even if this - and I am by no means saying it is - is a casus omissus it is not for this court to supply the omission. I am mindful of the strong words of Lord Simonds in Magor and St. Mellons Rural District Council v Newport Corporation. In that case one of the Lords Justices in the Court of Appeal had, in effect, said that the court having discovered the supposed intention of Parliament must proceed to fill in the gaps - what the Legislature has not written the court must write - and in answer to that contention Lord Simonds in his speech said: ‘It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation.’
Approaching this matter apart from authority, I find it quite impossible to say that an exhibition of goods in a shop window is itself an offer for sale…Accordingly, I have come to the conclusion in this case that the justices were right, and this appeal must be dismissed.
Full text
The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I confess that I think most lay people and, indeed, I myself when I first read the papers, would be inclined to the view that to say that if a knife was displayed in a window like that with a price attached to it was not offering it for sale was just nonsense. In ordinary language it is there inviting people to buy it, and it is for sale; but any statute must of course be looked at in the light of the general law of the country. Parliament in its wisdom in passing an Act must be taken to know the general law.
It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract. That is clearly the general law of the country. Not only is that so, but it is to be observed that in many statutes and orders which prohibit selling and offering for sale of goods it is very common when it is so desired to insert the words ‘offering or exposing for sale,’ ‘exposing for sale’ being clearly words which would cover the display of goods in a shop window. Not only that, but it appears that under several statutes - we have been referred in particular to the Prices of Goods Act, 1939, and the Goods and Services (Price Control) Act, 1941 - Parliament, when it desires to enlarge the ordinary meaning of those words, includes a definition section enlarging the ordinary meaning of ‘offer for sale’ to cover other matters including, be it observed, exposure of goods for sale with the price attached.
In those circumstances I am driven to the conclusion, though I confess reluctantly, that no offence was here committed. At first sight it sounds absurd that knives of this sort cannot be manufactured, sold, hired, lent, or given, but apparently they can be displayed in shop windows; but even if this - and I am by no means saying it is - is a casus omissus it is not for this court to supply the omission. I am mindful of the strong words of Lord Simonds in Magor and St. Mellons Rural District Council v. Newport Corporation. In that case one of the Lords Justices in the Court of Appeal had, in effect, said that the court having discovered the supposed intention of Parliament must proceed to fill in the gaps - what the Legislature has not written the court must write - and in answer to that contention Lord Simonds in his speech said: ‘It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation.’
Approaching this matter apart from authority, I find it quite impossible to say that an exhibition of goods in a shop window is itself an offer for sale. We were, however, referred to several cases, one of which is Keating v. Horwood, a decision of this court. There, a baker’s van was being driven on its rounds. There was bread in it that had been ordered and bread in it that was for sale, and it was found that that bread was under weight contrary to the Sale of Food Order, 1921. That order was an order of the sort to which I have referred already which prohibited the offering or exposing for sale. In giving his judgment, Lord Hewart C.J. said this: ‘The question is whether on the facts there were, (1) an offering, and (2) an exposure, for sale. In my opinion, there were both.’ Avory J. said: ‘I agree and have nothing to add.’ Shearman J., however, said: ‘I am of the same opinion. I am quite clear that this bread was exposed for sale, but have had some doubt whether it can be said to have been offered for sale until a particular loaf was tendered to a particular customer.’ There are three matters to observe on that case. The first is that the order plainly contained the words ‘expose for sale,’ and on any view there was an exposing for sale. Therefore the question whether there was an offer for sale was unnecessary for decision. Secondly, the principles of general contract law were never referred to, and thirdly, albeit all part of the second ground. the respondent was not represented and there was in fact no argument. I cannot take that as an authority for the proposition that the display here in a shop window was an offer for sale.
The other case to which I should refer is Wiles v. Maddison. I find it unnecessary to go through the facts of that case, which was a very different case and where all that was proved was an intention to commit an offence the next day, but in the course of his judgment Viscount Caldecote C.J. said: ‘A person might, for instance, be convicted of making an offer of an article of food at too high a price by putting it in his shop window to be sold at an excessive price, although there would be no evidence of anybody having passed the shop window or having seen the offer or the exposure of the article for sale at that price.’ Again, be it observed, that was a case where under the Meat (Maximum Retail Prices) Order, 1940, the words were ‘No person shall sell or offer or expose for sale or buy or offer to buy.’ Although the Lord Chief Justice does refer to the making of an offer by putting it in the shop window, before the sentence is closed he has in fact turned the phrase to one of exposing the article. I cannot get any assistance in favour of the prosecutor from that passage. Accordingly, I have come to the conclusion in this case that the justices were right, and this appeal must be dismissed.
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 QB 401, Court of Appeal
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 QB 401, Court of Appeal
The defendants operated a retail self-service chemist. The customers took the items they required from the shelves, put them into a basket, and then took them to the cash desk. The pharmacist supervised the transaction at the cash desk. The issue was whether the sale was completed at the shelf when the goods were selected, or at the cash desk. The provisions of the Pharmacy and Poisons Act 1933 s18 stated that it was unlawful to sell certain drugs, unless the sale is affected under the supervision of a registered pharmacist.
HELD Somervell LJ
The usual view has been that customers (say in a bookshop) select the item they wish to purchase, and then take it to the assistant, who accepts it and completes the contract. I cannot see that this situation is any different. The plaintiff contends that the defendant has offered to sell the goods by displaying them on the shelves, and that the plaintiff accepts the offer by taking them from the shelf. If this is correct, then a person who takes something from the shelves cannot then replace the item if they see something which they would prefer more. It seems clear that the sale takes place at the cash register, under the supervision of the pharmacist, in conformity with the Act.
Birkett LJ. and Romer LJ. agreed.
The defendants operated a retail self-service chemist. The customers took the items they required from the shelves, put them into a basket, and then took them to the cash desk. The pharmacist supervised the transaction at the cash desk. The issue was whether the sale was completed at the shelf when the goods were selected, or at the cash desk. The provisions of the Pharmacy and Poisons Act 1933 s18 stated that it was unlawful to sell certain drugs, unless the sale is affected under the supervision of a registered pharmacist.
HELD Somervell LJ
The usual view has been that customers (say in a bookshop) select the item they wish to purchase, and then take it to the assistant, who accepts it and completes the contract. I cannot see that this situation is any different. The plaintiff contends that the defendant has offered to sell the goods by displaying them on the shelves, and that the plaintiff accepts the offer by taking them from the shelf. If this is correct, then a person who takes something from the shelves cannot then replace the item if they see something which they would prefer more. It seems clear that the sale takes place at the cash register, under the supervision of the pharmacist, in conformity with the Act.
Birkett LJ. and Romer LJ. agreed.
Carlill v Carbolic Smoke Ball Co. (1893) 1 QB 256
Carlill v Carbolic Smoke Ball Co. (1893) 1 QB 256
The defendants were the proprietors of a medical preparation called The Carbolic Smoke Ball. they issued an advertisement in which they offered to pay £100 to any person who contracted influenza after having used one of their smoke balls in a specified manner and for a specified period of time. Specifically, they stated that: £100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter. The plaintiff, on the faith of the advertisement, bought one of the balls, and used it in the manner and for the period specified, but nevertheless contracted influenza.
Carbolic Company
The Carbolic Company claimed that there was no enforceable contract between it and the user of the smoke ball on the grounds that there was no acceptance of its offer, because Mrs Carlill had never notified the Company that she accepted its offer, or provided consideration, since the Company did not receive any benefit from a purchaser's use of the product once the sale had been completed. The court rejected both arguments, ruling that the advertisement was an offer of a unilateral contract between the Carbolic Smoke Ball Company and anyone who satisfies the conditions set out in the advertisement. Once Mrs Carlill had satisfied the conditions she was entitled to enforcement of the contract; the notification of performance of the conditions formed part of the acceptance. Furthermore, weight was placed on the £1000 bank deposit that claimed to 'show their sincerity in the matter' in showing that the advertisement was not just a 'mere puff'.It was therefore judged that a unilateral contract had been established and that the defendants were to pay the plaintiff £100 in the occurrence of the aforementioned events. Accordingly the plaintiff was entitled to recover.
Carbolic Company
The Carbolic Company claimed that there was no enforceable contract between it and the user of the smoke ball on the grounds that there was no acceptance of its offer, because Mrs Carlill had never notified the Company that she accepted its offer, or provided consideration, since the Company did not receive any benefit from a purchaser's use of the product once the sale had been completed. The court rejected both arguments, ruling that the advertisement was an offer of a unilateral contract between the Carbolic Smoke Ball Company and anyone who satisfies the conditions set out in the advertisement. Once Mrs Carlill had satisfied the conditions she was entitled to enforcement of the contract; the notification of performance of the conditions formed part of the acceptance. Furthermore, weight was placed on the £1000 bank deposit that claimed to 'show their sincerity in the matter' in showing that the advertisement was not just a 'mere puff'.It was therefore judged that a unilateral contract had been established and that the defendants were to pay the plaintiff £100 in the occurrence of the aforementioned events. Accordingly the plaintiff was entitled to recover.
Appeal dismissed.
Harvey v Facey 1893 Privy Council
Harvey v Facey 1893 Privy Council
Harvey sent a Telegram to Facey which stated: -"Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid;" Facey replied by telegram:-"Lowest price for Bumper Hall Pen £900."Harvey then replied:-"We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession."
Held: The Privy Council held that there was no contract concluded between the parties. Facey had not directly answered the first question as to whether they would sell and the lowest price stated was merely responding to a request for information not an offer. There was thus no evidence of an intention that the telegram sent by Facey was to be an offer.
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