OFFER AND ACCEPTANCE

The definition of a contractual offer.

The distinction between a unilateral and a bilateral offer.

The difference between an offer and other communications.

The moment of effective communication of an offer.

What is (and is not) a valid acceptance.

The requirement of communication of acceptance and its exceptions.

Contract defines the circumstances when a promise or promises are enforceable.For a promise or prom-
ises to be initially enforceable as a contract certain elements must be present. There must be:

agreement, constituted by a corresponding offer and acceptance, supported by

consideration, being the mutual exchange of something which the law recognises as having a value and

an intention to create legal relations.

According to Professor Atiyah, the courts could either ‘reason forwards’ or ‘reason backwards’.

Reasoning forwards: the courts reason from the legal concepts of offer and acceptance towards the solu-
tion to the dispute – traditional approach adopted by the courts

Reasoning backwards: the courts reason from the appropriate solution back to the legal concepts of offer
and acceptance. The courts can decide which solution it wishes to adopt and then fit the negotiations
within the offer and acceptance framework in order to justify the decision which they have already
reached. Hence sometimes finding the existence of contract based on the above mentioned grounds is
somewhat artificial, practically speaking.

UNILATERAL AND BILATERAL CONTRACTS: A unilateral contract is an exchange of a promise

for an act. A typical unilateral contract would be the offer of a reward for the return of lost property. It is
a frequent, but not a necessary, feature of a unilateral contract that the offer, such as that of a reward, is
made to a large group of people. As a unilateral contract, by definition, involves a promise by one party
only it follows that it generates an obligation for one party only. The offer of a reward for the return of
lost property does not oblige anyone to look for that property. The only obligation it creates is a contin-
gent one upon the offeror to pay the stipulated reward to any person who chooses to perform the stipu -
lated act.

OFFER
A contract begins with an offer. An offer is an expression of willingness to contract on certain terms. It
must be made with the intention that it will become binding upon acceptance. There must be no further
negotiations or discussions required (in such a case the offer is defeated by the counter offer). An offer
may be made orally, in writing or by conduct.

It is not the subjective intentions of the parties that determine the legal effect of their words or actions but
the reasonable inference that they would support. This is the so called ‘objective’ theory of agreement as-
sociated with Smith v Hughes (HORSE TRAINER AND FARMER CASE-OATS DELIVERY; no dis-
cussion of old oats what was shown was delivered so, the objective test revealed that a reasonable person
would expect the sale of good quality oats in a similar contract. Since there was no express discussion of
old oats. The sample gave him the chance to inspect the oats and this was an example of caveat emptor
(buyer beware).

Cases like Centrovincial Estates v Merchant Investors Assurance Co [1983] have made explicit that in a
so called B2B contract (i.e. between two businesses) the interpretation of an offer upon which the offeree
is entitled to rely is that of a hypothetical and reasonable businessman in the position of the offeree
(Dhanani v Crasnianski [2011] ).
It should be noted, however, that there is one circumstance when the courts will depart from the usual ob-
jective approach and take account of the actual subjective knowledge of the offeree. Under this approach,
sometimes known as the ‘snapping up’ doctrine, an offeree is not allowed to accept an offer which he
knows is mistaken as to its terms (Hartog v Collins and Shields [1939]).
This last factor is important and is what limits the scope of this disapplication of the usual objective ap-
proach. It is not enough to come within this exception that the offeree was aware that the offeror had
made a mistake; the exception will only apply where the offeree is aware that the offeror is mistaken as
to the terms he intended to offer . The doctrine will apply both where, as in Hartog, the offeree is aware
of the offeror’s mistake as to the terms he is offering but also where, as in Scriven Bros v Hindley [1913],
the offeree should know that the offeror is mistaken as to the terms he has offered perhaps because, as in
Scriven, the offeree induced that mistake by his own carelessness (in Scriven, contrary to accepted trade
custom, marking two distinct commodities with the same shipping mark).
This principle was applied in the context of an internet site by the Singapore Court of Appeal in Chwee
Kin Keong v Digilandmall.com Pte Ltd (2005)).

COMMUNICATIONS WHICH ARE NOT OFFERS BUT STEPS IN THE NEGOTIATION PROCESS

Invitation to Treat:

The difference between offer and invitation is encapsulated by two cases involving the same defendant,
Manchester City Council. The Council decided to sell houses that it owned to sitting tenants. In two
cases, the claimants entered into agreements with the Council. The Council then resolved not to sell hous-
ing unless it was contractually bound to do so. In these two cases the question arose as to whether or not
the Council had entered into a contract.

Offer: Storer v Manchester City Council - the Court of Appeal found that there was a binding contract.
The Council had sent Storer a communication that they intended would be binding upon his acceptance.
All Storer had to do to bind himself to the later sale was to sign the document and return it.
Hence offer is a statement by one party of a willingness to enter into a contract on stated terms, pro -
vided that these terms are, in turn, accepted by the party or parties to whom the offer is addressed.
Invitation to treat: Gibson v MCC – the Council sent Gibson a document which asked him to make a
formal invitation to buy and stated that the Council ‘may be prepared to sell’ the house to him. Gibson
signed the document and returned it. The House of Lords held that a contract had not been concluded
because the Council had not made an offer capable of being accepted.
Lord Diplock stated: The words ‘may be prepared to sell’ are fatal…so is the invitation, not, be it noted,
to accept the offer, but ‘to make formal application to buy’ on the enclosed application form. It is…a let-
ter setting out the financial terms on which it may be the council would be prepared to consider a sale
and purchase in due course.
An ITT is expression of willingness to enter into negotiations, which it is hoped, will lead to the conclu-
sion of a contract at a later date. The distinction between an offer and an ITT is said to be primarily one
of intention i.e. did the maker of the statement intend to be bound by an acceptance of his terms with -
out further negotiation, or did he only intend his statement to be a part of the continuing negotiation
process?
An invitation to treat is an indication of a willingness to do business. It is an invitation to make an offer
or to commence negotiations.
There are a group of cases where the courts are less concerned with the intention of the parties and are
more concerned to establish clear rules of law to govern the particular transaction; in most of these
cases the courts have found the communication in question to be an invitation to treat.

1. Display of goods:
General rule: A display of goods is an invitation to treat rather than an offer. The offer is made
by the customer when he presents the goods at the cash desk, where the offer may be accepted by
the shopkeeper.
Fisher v Bell: The defendant shopkeeper displayed in his shop window a flick knife accompanied
by a price ticket displayed just behind it. He was charged with offering for sale a flick knife, con-
trary to s. 1 (1) of the Restriction of Offensive Weapons Act 1959. The Court held that display of
the knife was not an offer of sale but merely an invitation to treat, and as such the defendant had
not offered the knife for sale within the meaning of s1(1) of the Act. Although it was acknowl-
edged that in ordinary language a layman might consider the knife to be offered for sale, in legal
terms its position in the window was inviting customers to offer to buy it. The statute must be
construed in accordance with the legal meaning.
Pharmaceutical Society v Boots: display of goods on the shelves was simply held to be an ITT
and the sale took place at the cash desk and not when goods were taken from the shelves.
This analysis was supported by the fact that the customer would have been free to return any of
the items to the shelves before a payment had been made.

Exception: In exceptional situations, a display of goods may be treated as an offer.

Chapleton v Barry: display of deck chairs for hire on a beach was an offer which was accepted
by a customer taking a chair from the stack.
Vending machines/ Automatic machines: Thornton v Shoe Lane Parking: Lord Denning stated
that an automatic machine which issues tickets outside a car park made a standing offer which
is accepted by a motorist driving so far into the car park that the machine issued him with a
ticket.
2. Advertisements:
General rule: An advertisement is an invitation to treat rather than an offer.
Partridge v Crittenden:The defendant advertised for sale a number of Bramblefinch cocks and
hens, stating that the price was to be 25 shillings for each. Under the Protection of Birds Act
1954, it was unlawful to offer for sale any wild live bird. The Royal Society for the Prevention of
Cruelty to Animals (RSPCA) brought a prosecution against the defendant under the Act. At his
trial, the defendant was found guilty of the offence by the magistrates; he appealed this convic-
tion.The issue on appeal was whether the advertisement was properly construed as an offer of sale
(in which case the defendant was guilty) or an invitation to treat (in which case he had committed
no offence). Parker CJ stated that there was ‘business sense in treating such advertisements as in-
vitation to treat because if they were treated as offers, the advertiser might find himself contractu-
ally obliged to sell more goods than he in fact owned’

Exception: in exceptional situations, an advertisement may be interpreted as a unilateral offer

rather than an invitation to treat.
Carlill v Carbolic Smoke Ball: A medical firm advertised that its new wonder drug, a smoke ball,
would cure people’s flu, and if it did not, buyers would receive £100. When sued, Carbolic argued
the ad was not to be taken as a serious, legally binding offer. It was merely an invitation to treat,
and a gimmick. But the court of appeal held that it would appear to a reasonable man that Car-
bolic had made a serious offer. People had given good “consideration” for it by going to the “dis-
tinct inconvenience” of using a faulty product. The advertisement was interpreted as a unilateral
offer to the whole world and a contract was made with those persons who performed the condi-
tion ‘on the faith of the advertisement’.
The advert was such that only one party would be bound by the obligation (here the medical
firm), so the offer was of a unilateral contract.
Bowerman v Association of British Travel Agents: Illustrates the more modern application of the
rule in Carlill v Carbolic. Basically, the key issue of the case was whether the Association of
British Travel Agents (ABTA) had made an offer that could be accepted with their widely publi -
cised “ABTA promise” to refund holiday expenses fully if booking with an ABTA member.
ABTA made an offer to the public at large that they would reimburse any money paid in respect
of their holiday arrangements if the holiday was cancelled.In the ABTA’s handbook the refund of
the holiday insurance premium was explicitly stated to be not refundable.
The central issue of the case was very similar to that of Carlill v Carbolic Smoke Ball Company
(1893). In that case it was judged that in certain circumstances adverts could be held to be offers
capable of acceptance by members of the public. In the ABTA case it was similarly held that the
ABTA promise could be held to be an offer that was capable of acceptance by members of the
public. In this case acceptance would be completed upon booking a holiday with an ABTA mem-
ber and therefore when this occured a contract would be formed between the member of the pub-
lic and the ABTA to fully reimburse holiday expenses in certain circumstances such as the insol -
vency of the ABTA member.

3. Auctions:
General rule: an auctioneer, by inviting bids to be made, makes an invitation to treat. The offer
is made by the bidder which, in turn, is accepted when the auctioneer strikes the table with his
hammer.
BCA v Wright The Claimants were selling an unroadworthy car actions was brought under the
Roads Traffic Act as it was illegal to do so under this statute.It was argued that they were adver-
tising to auction which is not an offer. Held: The advertisement for an auction sale is generally
only an invitation to treat.
Harris v Nickerson The defendant was an auctioneer who had advertised in the London papers
that certain brewing materials, plant, and office furniture would be sold by him by auction at
Bury St. Edmunds over a period of three specified days. The plaintiff was a commission broker in
London, who attended the sale on the final day (on which it had been advertised that the office
furniture, which he had commission to purchase, would be sold). However, on that day, all the
lots of furniture were withdrawn by the defendant. The issue was whether the advertisement
placed by the defendant was a legally binding offer of sale, which had been accepted by the
claimant’s attendance at the auction, forming a completed contract.
The court held, dismissing the claimant’s case, that the advertisement was merely a declaration to
inform potential purchasers that the sale was taking place. It was not an offer to contract with
anyone who might act upon it by attending the auction, nor was it a warranty that all the articles
advertised would be put or sale

Exception: if the words ‘highest bidder’ or ‘without reserve’ are used, the auctioneer is treated as
making a unilateral offer rather than an ITT.
Warlow v Harrison: A public auction of a horse, without reserve, was advertised by the defen-
dant, an auctioneer. The plaintiff bid 60 guineas and the owner of the horse bid 61 guineas. There
were no further bids and the defendant put down his hammer on the bid for 61 guineas. The plain-
tiff claimed the horse should be his as he was the highest bona fide bidder.
Without Reserve - Owner could not bid on it's own property.
Martin B stated obiter that in such a case the auctioneer makes an offer that the sale will be with -
out reserve and that offer is accepted by the highest bidder at the auction.
The auctioneer who puts the property up for sale upon such a condition pledges himself that the
sale shall be without reserve; or, in other words, contracts that it shall be so; and that this contract
is made with the highest bona fide bidder; and, in case of a breach of it, that he (the bidder) has a
right of action against the auctioneer.
Barry v Davies: affirmed the analysis in Warlow v Harrison. Two brand new engine analyser
machines owned by Customs and Exise were put up for auction by the defendant auctioneer. Each
could be procured from the manufacturer for £14,521 but despite this were listed without a re-
serve price. The auctioneer failed to obtain bids of £5000 and £3000, upon which the claimant bid
£200 for each machine, but the auctioneer refused to accept these bids and withdrew the ma-
chines from auction. A few days later the machines were sold for £750 each through an advert in
a magazine.
The Court held that the holding of an auction for sale without reserve is an offer by the auctioneer
to sell to the highest bidder, so the defendant was contractually obliged to sell to the claimant.
The reasoning behind this was that the auctioneer acted as agent of the owner in the formation of
the contract with the highest bidder, and this gave rise to a collateral contract with the auctioneer
himself. There was consideration in the form of detriment to the bidder, as his bid could be ac-
cepted unless and until it was withdrawn, and benefit to the auctioneer as the price was driven up
(and also that attendance at the auction is likely to increase if it is said that there is no reserve).

4. Tenders:
General Rule: A person inviting tenders for a particular project is simply making an invitation to
treat. The offer is made by the person who submits the tender and the acceptance is made when
the person inviting the tenders accepts one of them.

Exception: if the words ‘highest bidder’ or ‘lowest bidder’ are used, invitation to tender may be
interpreted as a unilateral offer
Harvela Investments v Royal Trust Co of Canada The first defendant held shares in company. By
means of a telex communication they invited the claimant and the second defendant to make an
offer to purchase shares by sealed tender. They stated in this invitation that they bound them-
selves to accept the highest offer. The claimant made a bid for a fixed sum; the second defendant
made a bid for a fixed sum or alternatively for ‘$101,000 in excess of any other offer’, whichever
was to be higher. The first defendant accepted the bid made by the second defendant, despite the
fact that the fixed sum which they offered was lower than that offered by the claimant.
The House of Lords held that the referential bid was invalid, and as such, the first defendant was
bound to accept the claimant’s offer. It reasoned that to allow a referential bid would create the
possibility of conflicting obligations for the first defendant (had both parties made a bid offering a
certain sum in excess of any other offer), in which case the offeror would be bound by the terms
of its own promise to accept both offers. This would therefore be an unreasonable construction of
the invitation to tender. It would also undermine the purpose of a sealed tender, which is to pre-
vent a bid being made based on the sum offered by the competitor.

Other cases for the exception:

Blackpool v Blackpool: The defendants were a local authority that managed the local airport as
its owners. They had granted the plaintiffs, who were a flight club, a concession to operate casual
flights out of the airport. The concession came up for renewal and the tender invitation was re -
leased to the plaintiff and six other companies. The tender had a clause stating that tenders would
not be considered if they missed the time and date deadline stipulated. The town ’s clerk failed to
empty the letterbox on time and as such, the plaintiff’s tender missed the deadline and the defen-
dant accepted a lower proposal. The plaintiffs brought an action for damages against the defen -
dant for negligence and for breaching their contract. At an initial hearing, the judge held that the
request for tenders by the defendant required them to consider all the tenders received and on
this basis, they were liable to the plaintiff. The defendants appealed this decision.
The court dismissed the defendant’s appeal. They found that the invitation to submit a tender was
usually no more than an offer to receive bids but in this circumstance, examining the behaviour of
the parties created clear intention to create a contract and therefore the failure to consider the
plaintiff’s application made them liable.The courts adopted a two-contract analysis. A contract
was concluded with the party whose tender was accepted, but the invitation to tender also consti-
tuted a unilateral offer to ‘consider’ any conforming tender which was submitted and that offer
was accepted by any party who submitted such a tender.
 When will an offer to ‘consider’ be implied by the courts?
The COA relied on a number of factors:
- The invitation to tender was directed to a small number of interested parties
- The duty to consider was alleged to be consistent with the intention of the parties
- The tender procedure was ‘clear, orderly and familiar’
Other factors could include:
- The defendants were a local authority
- The claimants were the existing holders of the concession and so may be said to have a legiti-
mate expectation of being considered

What is the scope of this ‘duty to consider’?

Bingham LJ stated that the duty would have been breached if the defendants had opened and
thereupon accepted the first tender received, even though the deadline had not expired and other
invitees had not yet responded or if they had considered a tender admittedly received well after
the deadline. However, the obligation to consider would not preclude or inhibit the council from
deciding not to accept any tender, provided the decision was bona fide and honest. Therefore the
defendants have the right to reject all the tenders (Fairclough v Port Talbot)
Pratt v Transit: the courts imposed on the party inviting the tenders an implied duty to act fairly
and in good faith.

5. Timetables:
A number of suggestions have been put forward:

- Wilkie v LTB: the bus timetable and the running of the bus are an offer by the bus com-
pany which is accepted by boarding the bus.
- Alternatively, it could be said that the acceptance takes place when the passenger asks for
the ticket and pays the fare
- A further possibility is to say that the bus timetable is an invitation to treat, the offer is
made by the passenger in boarding the bus, and the acceptance takes place when the bus conduc-
tor accepts the money and issues a ticket
- Finally, it could be said that the bus conductor makes the offer when he issues the ticket
and this offer is accepted by paying the fare and retaining the ticket

Trietel has stated that the cases ‘yield no single rule’ and ‘the exact time of contracting depends in
each case on the wording of the relevant document and on the circumstances in which it was is-
sued’.

6. Request for information:

Stevenson v McLean: The defendant, Mclean, offered to sell iron to the complainant, Stevenson Jaques
& Co. This was for the price of 40s and the offer would remain open until Monday. The complainant sent
a telegram to the defendant, asking whether he would accept a payment of 40 over a two-month period, or
what his longest limit would be for payment. McLean did not respond to this telegram. The defendant
sold the iron to another party, but did not inform the complainant of this action. On Monday morning, the
complaint sent a telegram to accept the offer, unware it had been sold.
The court heard the complainant was only inquiring for more information about whether the terms of the
offer could be changed; there was no specific wording to indicate that it was a counter offer or rejection.
This meant that the offer made by the defendant was still valid and the second telegram by the complaint
formed a binding contract. While the promise of the offer remaining open until Monday was not itself
binding and an offeror can revoke this at any time, there had been no revocation communicated to the
complainant in this case.

7. Supply of information:
Harvey v Facey: The appellant sent a telegram regarding purchase of property to Mr. Facey who was
traveling on the train on that day.
Telegram said “Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid.” Replying to
the question Mr. Facey said “Lowest price for Bumper Hall Pen£900.” Furthermore, Mr. Harvey 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.”
Mr. Facey refused to sell the property resulting in Mr. Harvey sueing him, claiming that the contract ex -
isted between him and stated that the telegram was an offer and that he has accepted it.
The Privy Council held that no agreement ever existed between the parties. The first conversation was
only a request for information, not an offer that could be accepted. Therefore, the telegram sent by Mr.
Facey was not credible. It was concluded that the telegram sent by Mr. Facey is only a piece of informa-
tion. At no point in time, Mr. Facey made an offer that could be accepted.
Difference between statement of intention and Offer
In this instance, one party states that he intends to do something. This differs from an offer in that he is
not stating that he will do something. The case of Harris v Nickerson [1873] illustrates this point. The
auctioneer’s advertisement was a statement that he intended to sell certain items; it was not an offer that
he would sell the items.

Unilateral offer: Carlill v Carbolic Smoke Ball – promise for an act

BILATERAL CONTRACTS

• Communication of the offer:

Once the offer has been made, it must be communicated to the offeree. To be effective an offer
must be communicated: there can be no acceptance of the offer without knowledge of the offer.
The reason for this requirement is that if we say that a contract is an agreed bargain, there can be
no agreement without knowledge. There can be no ‘meeting of the minds’ if one mind is unaware
of the other.
 Fitch v Snedaker: A unilateral offer was made by the offeror (defendant) for a reward for finding
a lost dog. Claimant returned the dog in ignorance of the offer so he was not entitled to any re -
ward.

Gibbons v Proctor (1891) : A reward of £25 was offered for any information leading to the con-
viction of an offender. The plaintiff, Gibbons, oblivious of the reward of £25, offered the infor-
mation to a third party to be relayed to the party who made the announcement of the reward. Be -
fore the third party could relay the information to the Proctor, Gibbons heard about the notice and
offer initially put out by the rewarder. Gibbons attempted to claim the reward. The policeman was
allowed to recover a reward when he sent information in ignorance of the offer of reward.
It is commonly held that since Gibbons obtained knowledge of reward before the information
about the offender got to Proctor, Gibbons knew about the offer. However, this is a rather narrow-
minded reasoning. Gibbons performed the terms of the contract without knowing about them, and
any claim that he accepted the contract is a claim of retrospective acceptance post the perfor -
mance of the act.

R v Clarke [1927]: there cannot be assent without knowledge of the offer; and ignorance of the
offer is the same thing whether it is due to never hearing of it or forgetting it after hearing.

FOLLOWING FORMS OF COMMUNICATION WILL NOT AMOUNT TO ACCEPTANCE

• Counter offers: A purported acceptance which does not accept all the terms and conditions pro-
posed by the offeror but which in fact introduces new terms is not an acceptance, but a counter
offer, which is then treated as a new offer which is capable of acceptance or rejection. The effect
of a counter offer is to ‘kill-off’ the original offer so that it cannot subsequently be accepted by
the offeree.
Hyde v Wrench The defendant, Mr Wrench, offered to sell the farm he owned to the com-
plainant, Mr Hyde. He offered to sell the property for £1,200, but this was declined by Mr Hyde.
The defendant decided to write to the complainant with another offer; this time to sell the farm to
him for £1,000. He made it clear that this would be his final offer regarding the property. In re-
sponse, Mr Hyde offered £950 for the farm in his letter. This was refused by Mr Wrench and he
confirmed this with the complainant. Mr Hyde then agreed to buy the farm for £1,000, which was
the sum that had previously been offered. However, Mr Wrench refused to sell his farm.
No specific performance of the contract as the original offer was killed off by the counter offers
of the complainant.
In this case, when Mr Hyde offered £950, he cancelled the £1,000 offer and could not back track
and accept.

• Cross offers: cross offers which are identical do not create a contract unless or until they are ac-
cepted – Tinn v Hoffman
• Request for information/Queries: see above

ACCEPTANCE:
- For a contract to be formed there must be an acceptance of the offer. An acceptance is an
unqualified expression of assent to the terms proposed by the offeror – Carlill v Carbolic

- Acceptance may be made by words or by conduct – Carlill v Carbolic

Reveille Independent LLC v Anotech International [2016]: acceptance by conduct.

A U.S. television company (Reveille) brought a claim against a UK-based cookware dis-
tributor (Anotech) for breach of contract. The claim was based on an alleged agreement
that Claimant would integrate and promote Defendant's products in episodes of the Mas-
terChef U.S. television series and license to D certain rights to use the MasterChef brand.

The parties started to negotiate a short form agreement known as the "Deal Memo". The
Deal Memo stated that it would "not be binding on [Reveille] until executed by both
[Anotech] and [Reveille]". Anotech amended, signed and returned Reveille's Deal Memo
to Reveille (therefore making a counter-offer). Reveille did not sign the Deal Memo. Ne-
gotiations over the long form agreements, which were intended to replace the Deal
Memo, later broke down and were never completed.
The trial judge held that the Deal Memo was binding on the basis that Reveille had ac-
cepted the contract by conduct. The Court of Appeal unanimously upheld the trial
judge's decision that, notwithstanding the fact that Reveille had not signed the Deal
Memo, Reveille had accepted the terms of the amended Deal Memo by its conduct and
therefore a legally binding contract had been formed.
The Court of Appeal ruled that a binding contract can be made by the parties' conduct
even when a written 'Deal Memo' stated that it was not binding until it was signed by
both parties, and it had been signed by one party only. It was held that a draft agreement
was accepted by subsequent conduct that sufficiently indicated assent to its terms even
though the draft expressly stated that it was only binding when signed.
The Court of Appeal found that Reveille had waived the provision that there would be no
binding contract in absence of its signature on the Deal Memo, and there was no preju-
dice to Anotech. Reveille accepted the terms of the Deal Memo by conduct, which led
to a binding contract. In particular, Reveille: (i) integrated Anotech's products into
episodes of MasterChef; (ii) approved Anotech's request to deploy the MasterChef
brand at a show; and (iii) treated Anotech as one of its licensees by jointly emailing it
and other licensees and inviting it to join Reveille 's weekly licensee calls.

Arcadis Consulting v AMEC : The acceptance must be an agreement to each of the terms
of the offer. A communication which falls short of this (e.g. by merely expressing grati -
tude for ‘instructions’),will not constitute acceptance.
In this case the parties had not officially agreed on anything in writing hence lots of
terms exchanged back and forth but no agreement! The court found the parties bound by
a contract on the basis of letter of intent.

- Conduct will only amount to an acceptance if it is clear that the offeree did the act in
question with the intention, objectively assessed, of accepting the offer – Day Morris v
 Voyce
So acceptance occurs when the offeree’s words or conduct give rise to the objective in-
ference that the offeree assents to the offeror’s terms.
Brogden v Metropolitan Railway Company The House of Lords held that there was a
valid contract between suppliers, Brogden and the Metropolitan Railway. The draft con-
tract that was amended constituted a counter offer, which was accepted by the conduct of
the parties. The prices agreed in the draft contract were paid and coal was delivered. Al -
though there had been no communication of acceptance, performing the contract without
any objections was enough.

Claxton Engineering Services Ltd v TXM Olaj-ES Gazkutato KFT (2010) where the
choice of a Hungarian company to continue trading with its English counterpart after the
latter had rejected a proposal for the arbitration in Hungary of any disputes was held to
be an acceptance of the English company’s counter offer that the resolution of disputes
should be subject to English jurisdiction only.

LAST SHOT RULE: the principle of contract law which says that the last set of terms sent before a con-
tract is performed is the governing agreement.

Butler Machine Tool v Ex-Cell-o [1979] : Majority of the CA held the last shot rule to win the "battle of
forms”- the plaintiffs offered to provide delivery of a machine tool for the price of £75,535. The delivery
of the tool was set for 10 months, with the condition that orders only qualified as accepted once the terms
in the quotation were met and prevailed over any of the buyer’s terms. The buyer responded to the offer
with their own terms and conditions, which did not include the ‘price variation clause’ listed in the seller’s
terms. This included a response section which required a signature and to be returned in order to accept
the order. The sellers returned this response slip with a cover letter signalling that delivery would be in
accordance with their original quotation. The tool was ready for delivery but the buyers could not accept
delivery, for which the sellers increased the price which was in line with their initial terms. This was de-
nied by the buyer and an action was brought by the seller to claim the cost of delay and interest.
The court found that the buyer’s order was not an acceptance of the initial offer from the seller but a
counter-offer which the sellers had accepted by returning the signature section of the buyer’s letter. On
this basis, the court found that the contract was completed without the price variation clause and therefore
the seller could not increase the cost of the tool.
Tekdata Interconnections Ltd v Amphenol Ltd [2009] : the Court of Appeal reasserted the traditional ap-
proach emphasising the importance of certainty in commercial transactions. The last form was that of
Amphenol and so its terms were accepted as the binding ones.

NOTE: If it is found that there is no contract between the parties it does not follow that they will not have
to pay for any benefits received. A different branch of the civil law of obligation, known as the law of
restitution, may impose on the recipient of a benefit an obligation to pay something to the party who con-
ferred that benefit irrespective of whether a contract comes into existence to bind the two parties (BSC v
Cleveland Steel [1984]

Communication of acceptance:
• General rule: An acceptance must be communicated to the offeror until then no valid accep -
tance.

It is generally only validly communicated when it is actually brought to the attention of the of-
feror – Entores v Miles
Lord Denning in Entores v Miles:
- If an oral acceptance is drowned out by an overflying aircraft, such that the offeror can-
not hear the acceptance, then there is no contract unless the offeree repeats his accep -
tance once the aircraft has passed over
- Where two people make a contract by telephone and the line goes ‘dead’ so that the ac-
ceptance is incomplete, then the offeree must telephone the offeror to make sure that he
has heard the acceptance
- However, where the acceptance is made clearly and audibly, but the offeror does not
hear what is said, a contract is nevertheless concluded unless the offeror makes clear to
the offeree that he has not heard what was said
• Rule for Instantaneous communications: in the case of instantaneous communication, such as
telephone and telex, the acceptance takes place at the moment the acceptance is received by the
offeror and at the place at which the offeror happens to be – Brinkibon v Stahl Stahag
• Acceptance by fax: An acceptance by fax was held to be an instantaneous communication – JSC
v Romly Holdings
• Acceptance by email: the postal rule should not apply to the contracts concluded through the ex-
change of emails – Thomas v BPE (obiter). Supported by the Singaporean decision of Chwee
Kin Keong v Digilandmall
• Required method for communicating acceptance may be inferred from the making of the offer –
Quenerduaine v Col
• Tenax Steamship Co v Owners of the Motor Vessel Brimnes (The Brimnes) [1975] : any with-
drawal of an offer sent through a form of instantaneous communication, such as Telex, would be
effective when it could have been read by the other party; not when it was actually read. In this
case, the defendant should have read this Telex message, but through their own actions, this did
not happen.

• Prescribed method of acceptance: The general rule is that where the offeror prescribes a spe-
cific method of acceptance, the offeror is not bound unless the terms of his offer are complied
with. However, the offeror must use strict and clear words to achieve this purpose. Where the
offeror has not used sufficiently clear words, he will be bound by an acceptance which is made in
a form which is no less advantageous to him than the form which he prescribed .

MDCE v Commercial and General Investments - The complainants, Manchester Diocesan Coun-
cil of Education, called for tenders relating to property. The defendant, Commercial and General
Investments Ltd, submitted a tender offer to buy the property from the complainants. It was stated
 that the acceptance of tender would be notified to the person by a posted document and to the ad -
dress that was to be given in the tender. The complainants decided to accept the tender given by
the defendants. They sent their acceptance of the tender. However, they sent the document to the
defendant’s solicitor and not the address given on the offer. Later on, the complainant sent an-
other acceptance to the defendant’s address detailed on the tender.
The court held that there was no prescribed or mandatory method for acceptance of a tender. If
the offeror wanted to create a mandatory acceptance method, this would need to be made clearly
and explicitly to the other parties. An equally effective method of acceptance would be enough to
form a valid contract.
Here the mode of communication used by the claimants was no less effective hence contract was
held to be complete.

Acceptance by Silence:
General rule: acceptance of an offer will not be implied from mere silence on the part of the of-
feree and an offeror cannot impose a contractual obligation upon the offeree by stating that, un -
less the latter expressly rejects the offer, he will be held to have accepted it – Felthouse v Bindley
Most people would agree that is inconsistent with the view of a contract as a voluntarily assumed
obligation to allow one party to ‘force’ a contract upon a party that that party does not want at the
time of contracting. So qualified the proper rule becomes: silence will not constitute acceptance
when to so hold would involve forcing a contract on an unwilling party. It then follows that si -
lence can constitute acceptance when this does not involve forcing a contract upon an unwilling
party. Rust v Abbey Life [1979]

Exception -
The Hannah Blumenthal: HOL held - a contract to abandon a reference to arbitration could be
concluded by the silence of both parties
Vitol v Norelf: Lord Steyn – ‘our law does in exceptional cases recognise acceptance of an offer by
silence’
Situations where silence may amount to an acceptance:
- A course of dealing between the parties may give rise to the inference that silence
amounts to acceptance
- Where the offeree assumes that his silence has been effective to conclude a contract and
then acts in reliance upon that belief
- Where the offeree himself prescribes silence as a mode of acceptance

In certain circumstances the offeror may waive the necessity for communication. This is what occurred in
Carlill v Carbolic Smoke Ball Co which was a case involving a unilateral offer.

Postal rule:
THIS RULE IS THE EXCEPTION AND NOT THE RULE FOR COMMUNICATION OF ACCEP-
TANCE.
• General rule: acceptance takes place when the letter of acceptance is posted by the offeree–
Adams v Lindsell
• Justifications put forward in support of the rule:
- The Post Office is the agent of the offeror and so the receipt of the letter by the agent is
equivalent to receipt by the offeror - can be criticised as the Post Office has no power to
contract on behalf of the offeror
- The offeror has chosen to start negotiations through the post and so the risk of delay and
loss in the post should be imposed on him – can be criticised as it is possible that the of-
feree initiated negotiations through the post by asking the offeror for the terms on which
he is prepared to do business
- The offeree should not be prejudiced once he has dispatched his acceptance and he
should be able to rely on the efficacy of his acceptance – the argument is a strong one but
it could be met by providing that, once the acceptance has been posted, the offeror can
no longer revoke the offer

• Letter lost in the post:

Where the letter of acceptance is lost in the post, a contract is still concluded as the acceptance
takes place when it is posted and not when it reaches the offeror– Household Fire Insurance v
Grant (English authority)
However, this view was rejected by Lord Shand in Mason v Benhar (Scottish authority) and he
stated that no contract comes into existence in such a case
• Letter incorrectly addressed: where the reason for the loss of the letter is that it has been incor-
rectly addressed by the offeree, acceptance does not take place on posting because, while the of-
feror may take the risk of delay or loss in the post, he does not take the further risk of carelessness
by the offeree – Korbetis v Transgrain

• Rejection by a faster means:

A logical application of the general rule leads to the result that the contract was concluded when
the letter of acceptance was posted and the subsequent communication is not a rejection of the of-
fer but a breach of contract
However, it was held in the Scottish case of Countess of Dunmore v Alexander that where the of-
feree posts a letter of acceptance and then sends a rejection by a quicker method so that both are
received by the offeror at the same time, no contract is concluded between the parties.

• Limitations on the postal rule:

- the postal rule only applies where it was reasonable for the offeree to use the post –
Henthorn v Fraser
- the offeror can avoid the operation of the rule by stating that the acceptance will only be
effective when it actually reaches him
- the postal rule does not apply to instantaneous forms of communication and so accep-
tance is held to be when received by the offeror – Entores v Miles and Brinkibon v Sta-
hag Stahl. (telex communication - instantaneous communication)
- the postal rule does not apply where it would lead to manifest inconvenience and ab-
surdity – Holwell Securities v Hughes
 - In JSC Zestafoni Nikoladze Ferroalloy Plant v Romly Holdings [2004] an acceptance by
fax was held to be an instantaneous communication. In Thomas v BPE Solicitors [2010]
Blair J said obiter that the postal rule should not apply to contracts concluded through the
exchange of emails and this is supported by the Singapore decision of Chwee Kin Keong
v Digilandmall. com Pte Ltd [2004].

Postal rule applied to telegrams in early cases – Bruner v Moore

Athena Brands Ltd v Superdrug Stores plc [2019] - Contract was found to exist through commu-
nication between the parties via e mail.
However whether postal rule will apply to instantaneous communication is yet to be decided by
the English Courts. We can call this rule to be an anachronism now in light of the modern world.

Termination of offer:
An offer can be terminated by:
• Counter offer: Hyde v Wrench - has the effect of superseding the original offer.
• Revocation:
- An offer can be withdrawn by the offeror at any time before it has been accepted –
Payne v Cave - at an auction Mr. Cave withdrew his bid/offer before auctioneer could
bring down his hammer. no contract!
- However, to withdraw an offer the notice of withdrawal must actually be brought to
the attention of the offeree.
Byrne v Van Tienhoven - The defendants wrote a letter, on October 1, to the plaintiffs
offering the sale of 1000 boxes of tin plates. The defendant was based in Cardiff and the
plaintiff was based in New York, and letters took around 10-11 days to be delivered. The
plaintiffs received this letter on October 11 and accepted it on the same day by telegram,
as well as by letter on October 15. However, on October 8, the defendant sent a letter to
the plaintiffs which withdrew their offer and this arrived with the plaintiff on October 20.
The plaintiffs claimed for damages for the non-delivery of the tin plates. The court held
that the withdrawal of the offer was ineffective as a contract had been constructed be-
tween the parties on October 11 when the plaintiffs accepted the offer in the letter dated
October 1. On this basis, it was held that an offer for the sale of goods cannot be with -
drawn by simply posting a secondary letter which does not arrive until after the first let-
ter had been responded to and accepted.
In situations where an offeror has stipulated that the offer will be open for a certain time
period, he or she can nevertheless withdraw the offer within this time period. This will
not be the case, however, where the offeror is obliged (by a separate binding collateral
contract) to keep the offer open for a specified period of time: Routledge v Grant
[1828] .
- the offer can be revoked through a reliable third party/source – Dickinson v Dodds
(friend in this case)
- it is not entirely clear when the revocation is treated as being brought to the attention of
the offeree i.e. when the letter reaches his business or when he actually reads it. There is
no clear English authority on this point, however it has been held that in the case of a no-
 tice of withdrawal sent by telex during ordinary business hours, the withdrawal was ef-
fective when it was received on the telex machine – The Brimnes
- it is possible to revoke the offer before the time period lapses provided the offer has not
been accepted
Offord v Davies- In this case, the defendant undertook to guarantee certain debts of an-
other party for a period of a year. Before any bills were due, and within the year, the de-
fendant cancelled the guarantee. The Court held that as the offer was not binding, it
could be revoked at any time prior to the other party acting upon it. The time limit cre-
ated no extra liabilities but merely stipulated a period at which liabilities will definitely
come to an end.
- the offeror cannot revoke if obliged to keep the offer open for a specified period of time
– Routledge v Grant
• Rejection: an offer can be terminated by a rejection by the offeree – Hyde v Wrench
• Lapse of time: an offer may be terminated by lapse of time. An offer which is expressly stated to
last only for a specific period of time cannot be accepted after that date whereas an offer which
specifies no time limit is deemed to last for a reasonable period of time – Ramsgate Victoria
Hotel v Montefiore
• Offer conditional upon the occurrence of a certain event: an offer which is stated to come to
an end if a certain event occurs cannot be accepted after that event has actually taken place.
• Offer made subject to a condition which is not fulfilled: where the offer is made subject to a
condition which is not fulfilled, the offer terminates. The condition may be implied – Financings
v Stimson
• Death:
- if the offeror dies, the offer may lapse and an offeree cannot accept the offer once he
knows that the offeror has died. On the offeree’s death, the offer comes to an end by op-
eration of law (no case law).
- However, the acceptance may be valid if the offeree did not know of the offeror ’s death
and the deceased offeror’s estate may be held liable after his death (unless the contract
was for the performance of personal services) – Bradbury v Morgan

UNILATERAL CONTRACTS
A unilateral contract is an exchange of a promise for an act. A typical unilateral contract would be
the offer of a reward for the return of lost property; whereby one party promises to pay to the
other a sum of money or to do some act if that other party will do or refrain from doing some -
thing without making a promise to that effect – Carlill v Carbolic

1. Acceptance in unilateral contracts:

There is no need to give advance notification of acceptance.
Acceptance is made by fully performing the requested act – Carlill v Carbolic Smoke Ball,
Soulsbury v Soulsbury- leaving it incomplete or unperformed halfway may not constitute accep-
tance.

2. Acceptance in ignorance of the offer:

• General rule: a person who, in ignorance of the offer, performs the act or acts requested by the
offeror is not entitled to sue as on a contract. In other words, acceptance cannot be made in ig-
norance of the offer – Gibbons v Proctor - Before the information reached the Superintendent,
the police officer became aware of the offer hence entitled to the reward. It was held that the offi-
cer was entitled to claim the reward.
• Hudson (1968): the best approach to adopt is to hold that knowledge of the offer is not neces-
sary in the reward type of cases and should only be required in the case of bilateral contracts (not
followed by English courts)
• Once it is shown that the offer is communicated, a person who is aware of the offer may do the
act required for acceptance with some motive other than that of accepting the offer. Motive is ir-
relevant – Williams v Carwardine
• Offer must be present in the offeree’s mind when he did the act which constituted the accep-
tance and if he forgets about the offer of a reward at the time he is doing the act required for ac-
ceptance, he will not be entitled to the reward– R v Clarke

3. Revocation of the offer once performance has begun

• Once the offeror has started or begun the performance, a unilateral offer cannot be revoked
• There is an implied obligation on the part of the offeror not to prevent the condition becoming
satisfied and this obligation arises as soon as the offeree starts to perform – Daulia v Four Mill-
bank
• A unilateral offer cannot be revoked once the offeree has embarked upon performance, provided
that he does not leave performance ‘incomplete and unperformed’ -Errington v Errington (son
and daughter in law were living in the house and paying off the mortgage)
• However, a unilateral offer can be revoked even after the offeree has started performance, if the
offeree took ‘the risk in the hope of a substantial remuneration for a comparatively small ex-
ertion’ – Luxor v Cooper (the HOL refused to imply an obligation in this case and held that the C
was not entitled to commission because it was only payable on completion of the sale)
• However, the COA has emphasized in Schweppe v Harper that cases such as Luxor, where the of-
feror is able to revoke after performance has begun, will be rare.

4. Revocation of a Unilateral offer:

English law provides no answer to this question, but it is thought that the principle in Shuey v
USA should apply in English courts too. Therefore an unilateral offer must be revoked using a
similar method as the one used to make the offer. If this is done then revocation, contrary to the
usual rule, may be effective even if it does not actually come to the attention of the offeree.

Offeree who changes his or her mind -Treitel suggests that ‘the issue is whether the offeror would
be unjustly prejudiced by allowing the offeree to rely on the subsequent revocation’.