offer and acceptance

• The problem involves the law of contract; four essential elements are required to form a binding contract – offer, acceptance, consideration and intention, the problem focuses on the former two. An offer is a definite promise to be legally bound, which must be contrasted to an invitation to treat (ITT); this is simply the opening of negotiations. Acceptance is the unconditional assent to all the terms of the offer.
• A mere statement of price is not sufficient to establish a contract. In H v Facey, Facey's telegram was not a definite promise to sell but a mere statement of price and value therefore, when H tried to accept it, he could not as the statement was not an offer.
• An advert is an offer or an ITT depending on the detail in the advert. In Partridge v Crittenden, the advert for birds was an ITT as it lacked detail, the person wanting to buy the birds would have to offer to buy them at the price specified, which the seller could accept or reject. In contrast, in Carlill v CSBC the advert detailing a smoke ball’s use via a prescribed method in return for the promise of £100 if the user caught ‘flu' was an offer, a unilateral one, made to the world, capable of being accepted by performance.
• Goods on Supermarket Shelves and in Shop Windows are ITT and there are 4 general shopping principles which apply: the display or advert is an ITT; the customer offers to buy the goods at a particular price; the offer can be accepted by the seller by some action e.g. entering price on cash register; the offer and acceptance may then be a binding contract
• Shelves/Windows- ITTs: Pharmecutical Society of GB v Boots Cash Chemist Ltd, it was important to know where the contract was made and this depends on whether the goods on supermarket shelves were offers or ITTs. An offer is made when the customer picks up the item and the contract is confirmed (accepted) when the sale is agreed. Items on a shop window are ITTs (Fisher v Bell), a customer picks up the item and offers to buy, this can be accepted or rejected- freedom of contract (age of purchasing alcohol/knives, intoxication). Gibson v MCC, proposal was ITT, G made offer, offer rejected.
• Auctions are an offer and ITT, the basic rule was laid down in Payne v Cave. At an auction, when the auctioneer holds up the 'lots' this is an invitation, each bid is an offer and the acceptance takes place when the auctioneer's hammer falls. This was confirmed in British Car auctions v Wright, the auctioneers were sued for 'offering to sell an unfit vehicle' at an auction. This action failed as there was no offer, only an ITT.
• The law relating to machines was established in Thornton v SLP, the problem arose as to when the contract was made, this depended on whether the machine made an offer or ITT. The offer is made when the machine holds it ready to receive money, the acceptance takes place when the customer pays his money into the slot. This suggests that the machine makes an offer which is illogical as you cannot negotiate with a machine.
• There are several ways which an offer can terminate/be terminated: death; lapse of time; revocation; counter offer/rejection; acceptance.
• An offer can be terminated by death in two ways. The death of an offeror, it was laid obiter in Dickson v Dodds that when the offeror dies, the offer dies with him. However, in Bradbury v Morgan, it was laid obiter that if the offeror was not needed in person to carry out a contract then their death need not terminate the offer.
• The position that the death of the offeror was not entirely clear, it appeared that if the offeree was aware of the death, the offer would lapse however, if they were unaware of the death it probably would not. The best approach is most likely Dickenson v Dodds as the possibility of fraud is reduced. In Reynolds v Atherton, it was laid obiter that if the offeree dies, the offer dies with them.
• If a specific time frame is laid down in an offer then the offer will terminate at that time. Where a day is mentioned the offer will terminate at midnight of that day. Where no time limit is laid down in the offer, what is a reasonable time frame will depend on the subject matter of the contract (Ramsgate Victoria Hotel v Montefiore- 5 months is not a 'reasonable' length of time for acceptance, they are a commodity with a rapidly fluctuating price, offer lapsed before company tried to accept).
• The law states that revocation must take place any time before acceptance to be effective (Payne v Cave). Revocation must also be communicated.  This was seen in the case of Byrne v Tienhoven, where a letter of acceptance was sent, before the letter of revocation was received. As the revocation was not communicated, a valid contract existed. With unilateral contracts and revocation, it cannot take place if performance has started (Errington v Errington & Woods) and further to this, revocation of such an advert must be with the same medium (Shuey v US).
• If the offeree tried to change one or more of the terms of the original offer this is said to be a counter-offer and it destroys the original offer. Hyde v Wrench states that the counter offer of £950 rejected the original offer of £1000, in contrast, Stevenson v McLean showed that requests for information do not terminate the original offer. There is still a contract as an inquiry about payment method was simply a request for further information, not a counter-offer.
• The rule of acceptance may apply, in most cases there will not be a contract until the offeree has communicated their acceptance to the offeror. The only time this does not occur is where the offeror shows that performance of an act will be valid acceptance (Carlil v CSBC). Liability cannot be imposed by silence. The offeror cannot make an offer and state that a failure to reply indicates acceptance (Felthouse v Bindley). There must be evidence of agreement from both sides (consensus as idem).