DEFINITION OF AN OFFER

An offer is an announcement of a person’s willingness to enter into a contract, either

expressly or impliedly. The offeror is the one who makes the offer, and the offeree is the
one who receives it.

An offer cannot be vague.

Gunthing v Lynn

The offeror offered to pay a sum for a horse if it was ‘lucky’. It was held that the offer
was too vague and no contract could be formed. However, a offer may be certain if
reference to the parties’ previous dealings can be made.

Hillas & Co Ltd v Arcos Ltd

The court held that the missing terms of the agreement could be ascertained by
reference to the parties’ previous transactions.

An offer may be made to the public at large.

Carlill v Carbolic Smoke Ball Co

The defendants’ advertisement stated that if anyone used their smokeballs and still
caught flu, they would pay the person £100, and that they had deposited £1000 to prove
they are serious. Carlill used a smokeball and caught a flu. When the defendants
refused to pay, the court held that the advertisement was an offer to the general public,
which became a contract when it was accepted by Carlill using the smokeball. She was
entitled to the £100.

INVITATION TO TREAT
An invitation to treat is an attempt to stimulate the other’s interest to make an offer
without any intention to be bound. Negotiations to enter into a contract can be an
invitation to treat but not an offer.

Gibson v Manchester City Council

Council wrote to Mr. Gibson that it may be prepared to sell the house to him for £2180.
Mr. Gibson said that the path was in a bad condition, but the Council refused to change
the price. Mr. Gibson asked the Council to carry on with the purchase, but the Council
said he could not buy it. It was held that the letter giving the purchase price was merely
a negotiation to enter into a contract, and can only amount to an invitation to treat, not
an offer.

ADVERTISEMENTS
Advertisements for unilateral contracts
Advertisements for unilateral contracts, like that in Carlill v Carbolic Smoke Ball Co, are
usually offers, as it can be accepted without any need for further negotiations.

Advertisements for bilateral contracts

Advertisements for bilateral contracts are usually invitations to treat, as it may lead to
further bargaining and that stocks could run out.

Partridge v Crittenden

A person was charged for offering for sale a wild bird under the Protection of Birds Act
1954, but his conviction was quashed on the grounds that the advertisement was not an
offer, but an invitation to treat.

Grainger & Sons v Gough

It was held that the circulation of a price-list by a wine merchant was not an offer to sell
at those prices, but an invitation to treat.

DISPLAY OF GOODS WITH PRICE TAG

Display of goods with price tag is usually an invitation to treat.

Fisher v Bell

The defendant had displayed flick knives in his shop window. His conviction of offering
such knives for sale was overturned, as the display of an article with a price in a shop
window was only an invitation to treat.
 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd

Boots was charged with an offence concerning the sale of medicines which could only
be sold under the supervision of a pharmacist. The court held that shelf display was like
an advertisement for a bilateral contract, and hence, an invitation to treat. The offer was
made by the customer when the medicines were presented at the cash desk, and was
only accepted by the shop at the cash desk, which was supervised by a pharmacist.

TIMETABLES AND TICKETS FOR TRANSPORT

For timetables and tickets for transport, the legal position is unclear.

Thornton v Shoe Lane Parking Ltd

It was suggested that passengers asking for tickets to their destination are making an
invitation to treat. The bus company make an offer by issuing the tickets and when the
passengers accept the tickets without objection, there is a contract.

AUCTION SALES
For auction sales, under s.57(2) Sale of Goods Act 1979, the general rule is that the
auctioneer’s request for bids is an invitation to treat, and each bid is an offer. An
advertisement of an auction is a mere declaration of intention.

Harris v Nickerson

The claimant failed to recover damages for travelling to an auction which was
subsequently cancelled.

An auction ‘without reserve’ is when the goods will be sold at the highest bidder,
however low their bid.

Warlow v Harrison

It was held that in an auction ‘without reserve’, the advertisement becomes an offer to
the public, that in the auction, they will sell to the highest bidder. The offer is accepted
when someone bids, and that acceptance completes the contract.
An auctioneer who puts a reserve price breaches this contract.

Barry v Davies

The claimant was the only person interested and placed a bid of just £200. The
auctioneer refused to accept the bid, but was successfully sued for breach of contract.

TENDER
As a general rule, a request for tenders is an invitation to treat, so there is no obligation
to accept any of the tenders (Spencer v Harding).

Exception #1: An exception to this is, firstly, where a tender makes it clear that the
lowest (or highest) tender will be accepted.

Harvela Investments Ltd v Royal Trust Co of Canada (Cl) Ltd

The defendants’ telex stating ‘we bind ourselves to accept the highest offer’ was a
unilateral offer, which is followed by a bilateral contract with the highest bidder.

Exception #2: Secondly, it may be an offer to consider all tenders correctly submitted,
even if it is not an undertaking actually to accept one.

Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council

The Council mistakenly thought the claimant’s bid arrived late and refused to consider it.
The court held that although the Council was not obliged to accept any tenders, the
terms of their invitation to tender was an offer at least to consider any tender which was
submitted in accordance with their rules.

A referential tender is when the tenderer offers to top anyone else’s bid.

Harvela Investments Ltd v Royal Trust Co of Canada (Cl) Ltd

A party offered to pay more ‘in excess of any other offer’, if this was not the highest bid.
It was held that this type of referential tender was not legally an offer.
Specific tenders specify that a particular quantity of goods is required on a particular
date. Agreeing to the tender will be acceptance of offer, thus creating a contract.

Non-specific tenders simply state that certain goods may be required, up to a particular
quantity, with deliveries to be made ‘if and when’ requested. Once approved, it becomes
a standing offer.

Percival v LCC

The LCC approved Percival’s non-specific tender, but placed its orders with other
suppliers. The court held that acceptance of the non-specific tender did not constitute a
contract.

Great Northern Railway Co v Witham

The nature of standing offer was considered in Great Northern Railway Co v Witham,
the railway company accepted the defendant’s non-specific tender. When the defendant
refused to supply, it was held that the defendant was in breach, as the railway company
could accept the standing offer each time it placed an offer, thereby creating a contract
each time.

SALE OF LAND
The rules of contract are applied on sale of land more strictly.

Harvey v Facey

It was held that the telegram from the defendant (“Lowest price for Bumper Hall Pen,
£900”) was just a statement of what the minimum price would be, hence it was not an
offer.

Bigg v Boyd Gibbins

One party wrote: “For a quick sale I would accept £2600.” The other party wrote: “I
accept your offer.” It was held that this amounted to an acceptance.

TERMINATION OF OFFER
An offer may cease to exist under certain circumstances.

1. Specified time
Where an offeror states that an offer will remain open for a specific time, it lapses when
the time is up.

2. Reasonable length of time

Where not specified, an offer will lapse after a reasonable length of time has passed. In
Ramsgate Victoria Hotel Ltd v Montefiore, the court held that five months was not a
reasonable length of time for acceptance of an offer to buy shares, due to its fluctuating
prices.

3. Preconditions not met

An offer will lapse when certain preconditions are not met. In Financings Ltd v Stimson,
the defendant decided to buy a car on hire-purchase terms. Not knowing the car had
been damaged, the claimant signed the ‘agreement’. The court held that the
‘agreement’ was an offer by the defendant which was subject to the implied condition
that the car remained in the same state. As the condition had been broken, the offer
was no longer open.

4. Rejection
An offer lapses when the offeree rejects it.

5. Counter-offer
A counter-offer terminates an original offer.

Hyde v Wrench

The defendant offered to sell his farm for £1000, and the claimant responded by offering
to buy it at £950 (counter-offer). When the claimant tried to accept the previous offer, it
was held that this offer had been terminated by the counter-offer.

*Requests for information

A request for information does not amount to an offer, so the original offer remains
open.

Stevenson Jacques & Co v McLean

The defendant offered to sell iron at a cash-on-delivery price. It was held that the
claimants’ reply to ask if they could buy on credit was a request for information and not
a counter offer

6. Withdrawal of offer
An offer will be terminated if withdrawn or revoked. Payne v Cave established that an
offer may be withdrawn at any time until it is accepted.

Routledge v Grant

The defendant offered to buy the claimant’s house at a price, ‘a definite answer to be
given within six weeks’. It was held that the defendant could withdraw the offer, even
though the time limit had not expired.

The general rule is that withdrawal must be communicated.

Byrne & Co v Leon Van Tienhoven

It was held that there was a binding contract, as the acceptance of the defendant’s offer
took place before revocation was received (i.e. before the second letter to revoke the
offer reached the claimants).

Dickinson v Dodds

The court held that the offer had already been revoked when Dickson heard from a
fourth man, that Dodds had sold the house to a third party.

The exceptions to this general rule is where an offeree moves to a new address without
notifying the offeror. But, where a withdrawal reaches the offeree, but the offeree simply
fails to read it, the withdrawal still takes effect.

Pickfords Ltd v Celestica Ltd

The first fax estimated the cost being £100,000. The second fax fixed the cost at
£98,760. The third fax, titled ‘Confirmation’ was referring to the first fax. It was held that
something more than the mere submission of the second fax is required to indicate that
Pickfords had withdrawn the first offer.
The general rule for an offer to enter into unilateral contract is that cannot be revoked
once the offeree has commenced performance.

Errington v Errington, The father offered the son and daughter-in-law that the
house would be signed over once the mortgage was paid off by them. After the father
died, the courts held that it was too late to withdraw the offer, as they had already begun
to pay the mortgage.

The exceptions to this general rule is that part-performance prevents revocation,

especially in the context of paying commission for the sale of a property.

Luxor (Eastborne) Ltd v Cooper

An owner of land promised to pay commission to an estate agent. The court held that
the owner could revoke his promise before the sale was completed, even if the agents
had made efforts or had stopped trying to find a buyer.

Where a unilateral offer is made to the world at large, it can probably be revoked without
the need for communication if the revocation takes place before performance has
begun.

Shuey v United States

It was held that an offer made by advertisement in a newspaper could be revoked by a

second advertisement, even though the second one was not read by all the offerees.