WEEK 1: Offer and Acceptance &
Consideration
Offer and Acceptance
Question 1
The Yankey Yacht Club, decide to hold a race and so
place the following advertisement in the January issue of
‘Yachting Monthly’ (the leading sailing magazine): “The
Yankey Yacht Club will hold a yacht race on 1st April at
10am. A prize of £1,000 has been deposited with
Coots, the clubs’ bankers, for the first yacht to
complete the course. No formal entry required, just turn
up.”
Advise The Yankey Yacht Club of their contractual
liability, if any, in the following circumstances:
a) The Yankey Yacht Club later decides that the
race might attract ‘the wrong sort of sailors’ and
places an advertisement in the February issue of
Practical Boat Owner (a small circulation
magazine) cancelling the race. Alastair does not
see the February advertisement and spends
£5,000 preparing his boat for the race before he
learns of the cancellation from a friend on 1st
March.
b) Brenda is leading the field and approaching the
finish line when Lord Dim, The Yankey Yacht Club
captain, shouts from the committee boat that the
race has been abandoned.
c) Chandler saw the boats lining up for the race and
followed them. With a lucky spurt of speed he
overtook the leading boat just before the finish
line. Chandler was not aware that a prize had
been offered.
Discuss the fact that advertisements are usually
invitations to treat: Partridge v Crittenden.
Consider the Carlill case and conclude that this is a
unilateral contract to the world at large – with
particular reference to the deposit at the bank.
Explain communication of acceptance not required –
acceptance is by performance of the act. Go on to
consider:
(a) Withdrawal of offer? Same method to be used: Shuey v
US – is it the same? Communication by a third party can be
effective: Dickinson v Dodds. Expenses recoverable? No
preparatory steps didn’t complete the race.
(b) Can withdrawal of unilateral offer take place once
performance has begun?
Refer to principles in Errington and Dahlia – but don’t
overstate the principle that it can’t – depend on a term
being implied to that effect.
(c) Can Chandler accept an offer of which he is unaware?
Discuss R v Clarke, Gibbons v Proctor.
Question 2
On Wednesday Frederick advertised his Nikon D800E
digital camera in the local newspaper for £2,000.
George, on seeing the advertisement, called at
Frederick’s house on the same day to see the camera.
After discussion, Frederick offered to sell the camera
to George for £1,500. George stated that he would
need some time to think it over but that Frederick
should assume if he heard nothing from George by
Thursday evening, that George had bought it. Frederick
replied that this arrangement was fine by him.
At 3pm, Hari telephoned Frederick and offered to buy
Frederick’s camera for £2,300. Frederick immediately
accepted Hari’s offer and e-mailed George revoking his
original offer. Unknown to Frederick and George, there
was a problem with George’s internet service provider
and the message to George was never directed to him.
Although Frederick did not know this, he was worried
about the matter and tried to telephone George again at
6pm. Frederick spoke to Isabel, George’s wife, and told
her that the camera had been sold. Isabel said that she
expected George home at 6.30pm and would pass the
message on to him then. However, George had already
decided to buy the camera and had faxed his acceptance
to Frederick’s home at 5.15pm. Frederick did not read
George’s acceptance until 6.30pm. George came home at
7.15pm and Isabel then gave him the message from
Frederick. Advise Frederick.
The question is concerned with the formation of a
contract and, in particular, which (if any) of the various
communications between Frederick and George
constitute an offer met by a binding acceptance.
Candidates need to begin by considering at what point
an offer is made. The criteria established in cases such
as Storer v Manchester City Council (1974), Gibson v
Manchester City Council (1979) are relevant to the
resolution of this issue.
Note that Frederick begins this process by an
advertisement, which is likely, not an offer based not
only on the criteria of the above cases but also the
decision and reasoning in Partridge v Crittenden (1968).
Frederick, however, then clearly states that he will sell
the camera to George at a particular price and this
statement likely does satisfy the criteria set out in the
cases mentioned above and constitutes an offer. The
next issue which arises concerns the acceptance of
this offer. Is George’s statement an acceptance?
The cases establish that an acceptance must be
unconditional and must ‘mirror’ the offer and George
clearly does not do this. He does, however, state that
if Frederick does not hear from him by Thursday that
Frederick is to assume that George has bought the
camera.
The particular issue presented here, of course, is
whether there is any communication of the acceptance.
Is it possible to accept an offer through silence?
What if the offeree waives the necessity for
communication?
Good answers to this question would assess the extent
to which these questions are, or are not, answered by
the legal authorities.
It was clear in Carlill v Carbolic Smoke Ball Co that the
requirement of communication was waived but the
authority can be seen to be distinguishable on the basis
that it concerned the offer of a unilateral contract.
What if the original offer was one of a bilateral
contract? In such instances a consideration of the
decision in Felthouse v Bindley is well placed.
Before the date set by George, Hari offers to buy the
camera at a much higher price. Frederick accepts this;
a contract is formed between the two and Frederick
consequently purports to revoke his offer to George
before an acceptance has been communicated to
Frederick by George. Revocation must be
communicated to be effective, following the criteria
established in Byrne v van Tienhoven (1880).
Simply selling the camera to Hari will not suffice to
revoke the offer to George. When, if at all, has
revocation been communicated? Two particular
possibilities exist on the facts provided – first by
Frederick’s email to George and secondly by his
telephone call to George and Frederick’s message to
Isabel.
There is, in particular, no clear authority as to when a
revocation has been communicated through the medium
of an email. Is it reasonable for Frederick to attempt
to communicate by email? Is it possible to apply the
reasoning of Dickinson v Dodds (1876) to such a
technological method? Frederick makes a further
attempt to revoke the offer by speaking to Isabel –
has she the authority to receive such a communication?
If there has been an effective revocation, was
George’s acceptance communicated before any
revocation?
Finally, George faxes the acceptance to Frederick – at
what point is this acceptance effective? If the offer
has been successfully revoked, the acceptance cannot
be good but if the offer has not been revoked, when is
George’s acceptance effective? Good answers would
consider the reasoning in cases such as Entores v Miles
Far East Corp (1955) and Brinkibon Ltd v Stahag Stahl
(1982).
Question 3
Angel, a wholesaler, wrote to tell Boston and other
retailers that she had just taken delivery of a quantity
of high quality energy saving vacuum cleaners and was
offering them at one lot of 10 units for sale at £100.
On 1st March, Boston sent a written order for 50
vacuum cleaners ‘to be delivered by 28th March and
asked Angel to send a ‘written confirmation as soon as
possible’.
Boston heard nothing further from Angel, so on 21st
March he telephoned to find out whether she had
received the order. Angel told him that everything was
fine and that the confirmation of his order would be on
its way soon.
On the morning of 3rd April, Angel posted a
confirmation of Boston’s order. Later the same day
Angel discovered that a large number of the vacuum
cleaners were defective and that she no longer had
enough to satisfy all the orders which had been placed.
She immediately sent an email to Boston which read,
‘cannot accept your order, as vacuum cleaners have all
been sold’. After reading the email, Boston received the
written confirmation in the post the next morning. The
vacuum cleaners have not been delivered to Boston.
Advise Boston.
This question is concerned with issues surrounding
contractual formation – primarily whether there has
been an offer matched with a corresponding
acceptance. Candidates need to consider the effect of
A’s letter to B – is it an offer?
The next issue to consider is the effect of B’s written
order – is it an acceptance of A’s offer or, as is more
likely, is it a counter offer introducing a new term as
to delivery? What effect, if any, does A’s lack of
response have?
The third significant issue is the effect of the
telephone conversation – has A now accepted B’s
counter offer? It probably has the effect of keeping
B’s counter offer open. When A posts the confirmation,
is this an acceptance of B’s counter offer? Does the
postal acceptance rule apply to this confirmation?
If it does apply, can A’s (quicker) email act to cancel
the effect of the written confirmation before it is
received?
Doctrine of Consideration
Question 4
Answer BOTH parts (a) and (b).
a) Consideration need not be adequate but it must be
sufficient.
Discuss.
b) Daniel, who is disabled, returns to his car after
work to find that someone has syphoned off the
petrol to his car. He informs Eva, a passing
police officer, who says ‘Don’t worry, I will get
the person who did this’. Daniel replies ‘thank
you, if you do I will pay you £100’. Fiona
overhears this conversation and offers to go and
get some petrol for Daniel. Daniel gives Fiona a
can and £10 to pay for the petrol. When Fiona
returns Daniel says ‘Thank you for your trouble. I
do not have any more money with me but I want
to give you £20 for getting the petrol’. Eva
caught the thief but Daniel now refuses to pay
Eva or Fiona anything.
Advise Eva and Fiona.
(a) Give the classic definition of consideration and go on to
explain the meaning of the given statement – only certain
things will be recognised as consideration but if they fit
that category then there is no further enquiry into the
equivalence of the exchange. Refer to cases such as Thomas
v Thomas, Chappell v Nestle, Ward v Byham
(b) Eva – is a pre-existing duty good consideration? Identity
public duty: Collins v Godefroy; Glasbrook v Glamorgan;
Leeds United v CC West Yorks.
Fiona – consideration is past: Lampleigh v Braithwaite; Re
Casey’s Patents; Re McArdle.
Question 5
(a) ‘Past consideration is never good consideration.’
Discuss.
(b) The roof of Amelia’s house was damaged in a winter
storm. She contracted with Bertie who told her it was
about a week’s work and would cost £10,000. Amelia
accepted Bertie’s price and they further agreed that the
work would be completed before 1 May so that Amelia
could host a 21st birthday party at her house on 3 May
for her daughter Camilla.
Bertie began the work on 1 April but bad weather
caused many delays. As a result Bertie said he would
only be able to complete the job by 1 May if he
employed extra workmen and this would increase his
costs. Amelia offered to pay him £12,000 if he
completed the job on time. Bertie went on to complete
the repairs before 1 May and Amelia paid him £10,000
but refuses to pay any more.
Advise Bertie.
This question is about consideration requiring a short
essay response to part (a) and a problem question in
part (b).
Part (a) required a simple description of the principles
of past consideration and supporting case law. Part (b)
is about modification of an existing contract and
whether there was consideration for the promise to
pay more.
a) Define rule by reference to Roscorla v Thomas and
Eastwood v Kenyon. Refer to the exception in Lampleigh v
Braithwaite and the development of that in Pao On and Re
Casey’s Patents.
b) Does B provide consideration for A’s promise? Discuss
rules in Stilk v Myrick, Williams v Roffey. Discuss practical
benefit (MWB v Rock).
Question 6
Rose runs an organic food shop, FreeFrom, and leases
her premises from Holly for £2,000 per month. In
December, she accidentally slips over and badly breaks
her ankle. She is advised by the doctor to stay away
from work for six months and needs to employ a
temporary shop assistant to work in the shop for six
months. This will put her in financial difficulty and
means that she will struggle to pay the rent on her shop
until she is back at work in July. Rose telephones Holly
saying: ‘I will not be able to pay the full rent for the
next six months, can I pay a reduced amount of £1,000
per month until I return to work in July?’ Holly agrees
to accept the reduced rent since Rose’s shop also sells
some of the vegetables Holly grows on her allotment and
she does not want the shop to close.
Rose contracts with Ivy to work in FreeFrom for a
period of six months, whilst her ankle recovers. Rose’s
daughter, Grace, often helps out in the shop and always
gets paid by her mother. She spends two weeks working
in the shop helping Ivy to learn about the business. Rose
is delighted and at the end of the fortnight tells Grace
she will give her £500. As a result of her reduced rent,
Rose is also able to spend £3,000 on refurbishment to
the shop.
Holly accepts the reduced rent of £1,000 for three
months and then asks Rose to start paying the full
amount of £2,000 again and to repay immediately the
£3,000 that she owes for the first three months. Rose
tells Holly that she will not accept her demands. She is
so worried about her financial difficulties that she tells
Grace that she cannot pay her the £500 she promised.
The issue here was the enforceability of the
arrangements between Rose and Holly and Rose and
Grace.
The second arrangement also raises the issue of
intention to create legal relations.
The answer could begin with a short definition of
consideration, with reference to relevant authority.
Rose v Holly – you should discuss whether there is
consideration for promise by Holly to accept the
reduced rent.
Good answers would discuss whether the principle of
factual benefit of Williams v Roffey Bros applies to
the facts here and the limits to that doctrine (if there
are any) identified in Re Selectmove.
You should then explain the principle of Foakes v Beer
/ Pinnel’s Case and the common law approach to such
promises. Here it could be argued that selling
vegetables in the shop is an extra benefit for Holly.
This logically comes before moving to equity.
You should then discuss whether Holly can be estopped
from denying the promise to accept less, including
whether there is reliance on the promise and whether
it would be inequitable to go back on promise (in light
of her expenditure). This requires close reference to
relevant authority.
Rose v Grace – you should also discuss whether the
promise to Grace is enforceable or whether it is past
consideration and unenforceable.
With application to the principles in Pao On the first
two elements can be considered on the facts, such as
previous payments.
Next issue is: intention to create legal relations. You
could note issues such as the impact the familial
relationship has on any liability and the significance of
Grace’s previous payments for working in the shop.
Currie v Misa (1875) LR 10; Williams v Roffey Bros
[1991] 1 QB 1; Foakes v Beer (1884) 9 App Cas 605;
Pinnel’s Case (1602) 5 Co Rep 117a; Re Selectmove
[1995] 1 WLR 474; CLP v High Trees House [1947] KB
130; Re McArdle [1951] Ch 669; Pao On v Lau Yiu Long
[1980] AC 614; Jones v Padavatton [1969] 1 WLR 328.