OFFER AS AN ELEMENT OF CONTRACT

OFFER/PROPOSAL

Definition

s.2 (a) : when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence’

Communication

s. 4(1) : Offer must be communicated and it will be effective when it comes to the knowledge of the offeree.

R v CLARKE (1927) 40 C.L.R 227

The Western Australia Government offered a reward for information leading to the arrest and conviction of persons responsible for the murder of two police officers. X and Clarke were arrested and charged with the murders but shortly after, the latter gave information which lead to the arrest of another person, Y. X and Y were later convicted for the offence and Clarke who did not commit the murders claimed the reward.

Held- His claimed failed on the grounds that the information was given to clear himself and not in reliance on the offer of reward.

Particular person or public –

An offer can either be made to particular person or to the general public. Where it is made to particular person, it appears that only the offeree may accept the offer. Where it is made to the general public, then anyone who meets all the terms of the proposal may accept.

CARLILL v. CARBOLIC SMOKE BALL CO [1893] 1 QB 256

The defendants advertised they would offer a sum of money to anyone who would still succumb to influenza after using a certain product according to the instructions for a fixed period. The plaintiff duly used the product advertised but, nevertheless, became ill. The plaintiff upon , upon refusal of the defendants to honour their promise, proceeded to sue them.

The Court of Appeal held that the plaintiff had accepted the offer of the company made to the world at large and is , therefore, entitled to the money.

The Carbolic Smoke Ball Company made a product that it claimed could protect the user from contracting influenza. The Company published advertisements claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions set out in the advertisement. Specifically, they stated:

£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 each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.

Mrs Carlill, relying on the promises made in the advertisement, bought one of the balls and used it in the manner specified, yet still managed to contract influenza. 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 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 puff.

INVITATION TO TREAT

An offer must be distinguished from an invitation to treat. An invitation to treat is not an offer but a sort of preliminary communication which passes between the parties at the stage of negotiation.

Example of invitation to treat:

a. A price list

PRESTORN CORP SDN BHD v EDWARD LEONG & ORS [1982] 2 MLJ 22.

The issue: whether printing orders made by the appellants were an acceptance of a binding offer or merely offers in response to an invitation by the respondents.

The appellants publishers asked for quotations from the respondents printers which were duly given to them. The appellants then placed printing orders based on the quote.

The federal Court decided that the quotations were merely an invitation to enter into a contract in response to the appellants’ inqury. The printing orders were offers subject to acceptance by the respondents.

b. A displays of goods with price tag in a self-service supermarket

PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v BOOTS CASH CHEMIST LTD

[1953] 1 Q.B. 401

The defendants were charged under The Pharmacy and Poisons Act 1933 which made it unlawful to sell certain poisons unless such sale was supervised by a registered pharmacist. The case depended on whether there was a sale when a customer selected items he wished to buy and placed them in his basket. Payment was to be made at the exit where a cashier was stationed and, in every case involving drugs, a pharmacist supervised the transaction and was authorized to prevent sale.

The court held that the display was only invitation to treat. A proposal to buy was made when the customer put the articles in the basket. Hence the contract would only be made at the cashier’s desk. As such, the shop owners had not made an unlawful sale.

c. An advertisement

COELHO v THE PUBLIC SERVICES COMMISSIONS [1964] MLJ 12

The applicant had applied a position in response to a newspaper advertisement. He was later informed that his application had been accepted. Subsequently, The Public Services Commission attempted to terminate his employment on the basis that he was appointed on probation. The applicant then applied to the court for an order to quash the decision.

The High Court ruled that, that advertisement was an invitation to qualified persons to apply and the resulting applications were offer.

GIBSON v MANCHESTER CITY COUNCIL

Gibson, a tenant of a Council house, filled out a form in order to inquire what would be the price of buying his council house. The form was a brochure circulated by the council to tenants who had previously expressed an interest in buying their houses. The scheme provided for a sale at market price minus a discount for length of time the purchaser had been a council tenant. Gibson completed this form and relied on it as an unconditional acceptance of the council’s offer to sell the house; but cannot be so unless there was a contractual offer by the council available for acceptance. Gibson claimed that he relied on the offer (he went ahead an renovated the house, thinking he’d soon own it), and that the council clearly intended there to be a binding contract (the complex discussion of price and the numerous memos). The council asserted that the language of the form clearly and unequivocally expressed the fact that it was not an offer (the statement ‘this letter should not be regarded as firm offer of a mortgage’, and more importantly, the numerous appearances of the words ‘application form’, which clearly implies anything but offer)

Ruling: For D (NO contract) -- “The parties had not concluded a binding contract because the council had never made an offer capable of acceptance, since the statements in the city treasurer’s letter of the 10th February that the Council ‘may be prepared to sell’ and inviting the respondent ‘to make formal application to buy’ were not an offer to sell but merely an invitation to treat. The respondent was, therefore, not entitled to specific performance...”

Ratio: A mere quotation of price does not constitute an offer -- it’s simply an invitation to make an offer to buy.

PARTRIDGE V. CRITTENDEN [1968] 2 All ER 421, [1968] 1 WLR 1204, 132 JP 367

On the 13th April 1967 an advertisement by the appellant (Arthur Robert Partridge) appeared in the periodical "Cage and Aviary Birds", under the general heading "Classified Advertisements" which contained, amongst others, the words Quality British A.B.C.R... Bramblefinch cocks, Bramblefinch hens 25s. each. In no place was there any direct use of the words "offer for sale". A Thomas Shaw Thompson wrote to Partridge asking him to send him an ABCR Bramblefinch hen (a brambling) and enclosed a cheque for 30s. On the 1st May 1967 Partridge dispatched a brambling, which was wearing a closed-ring around its leg, to Thompson in a box. Thompson received the box on 2nd May 1967 and was able to remove the ring from the bird's leg without injuring it.

Partridge was charged by Anthony Ian Crittenden, on behalf of the RSPCA, with illegally offering for sale a wild life bird which was not a close-ringed specimen, bred in captivity, against s. 6(1)* and Sch. 4* of the Protection of Birds Act 1954. The magistrates decided that the advertisement was an offer for sale and that the ABCR Bramblefinch hen was not a close-ringed specimen bred in captivity, because it was possible to remove the ring from the bird's leg. Partridge was convicted, was fined £5 and ordered to pay £5 5s. advocate's fee and £4 9s. 6d. witnesses' expenses. Partridge appealed against conviction. The legal question facing the High Court was whether the appellant's advertisement constituted a legitimate offer for sale, and whether the bird was not a close-ringed specimen bred in captivity under the Protection of Birds Act 1954 if it were possible to remove the ring from its leg. It was held that the advertisement in question constituted in law an invitation to treat and not an offer to sell; therefore the offence with which the appellant was charged was not established. The judges also said that if the only issue were whether the bird was a close-ringed specimen under the Protection of Birds Act 1954, the magistrates' judgment would have been upheld.

d. An auctioneer inviting bids for a particular article.

S. 10 of the Auction sales Act : ‘A sale by public Auction shall be complete when the auctioneer announces its completion by the fall of the hammer …..’

TERMINATION

Revocation must also be communicated

BYRNE v. VAN TIENHOVEN (1880) 5 C.P.D. 344

The defendant offered to sell 1,000 boxes of tinplates to the plaintiff. The following communications took place:

1 October: defendant posted letter of offer in Cardiff to the Plaintiff in New York.

8 October: defendant posted a letter revoking the offer of October 1.

11 October: Plaintiff received the letter of offer posted on October 1 and sent acceptance on 15 October

20 October: Defendant’s letter of revocation received by plaintiff.

Held: There was a contract between the parties because the revocation of the offer posted on 8 October was not effective till 20 October when it was received by the plaintiff but in the meantime, the latter had already accepted the offer on 11 October when the telegram was sent.

Revocation of an offer possible if acceptance is not complete

S. 6 : A proposal may be withdrawn under four circumstances:

By communication of notice of revocation by the proposer to the other party
By lapse of time (prescribed or reasonable)

RAMSGATE VICTORIA HOTEL v MONTEFIORE (1886) L.R 1 Ex. Ch 109.

The defendant applied for shares in the company in June and paid a deposit into the company bank. It was not till November that the company informed the defendant that shares had been allotted to him and that the balance of the purchase price should be paid. The defendant refused to accept the shares.

The court held the refusal justified because such a proposal should have been accepted within a reasonable time. The period between June and November was clearly not reasonable.

By failure of acceptor to fulfill a condition precedent to acceptance
By death or mental disorder of the proposer if such fact comes to the knowledge of the acceptor before acceptance.

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