key features for a binding contract
1- offer (expression of willingness to contract on certain terms)
2- acceptance (needs to correspond to the offer)
3-consideration (an act or promise given in exchange for the offer)
4-intention to be bound (objective intention to create legal relations)
storer v manchester city council
M was allowed to sell council houses to tenants. S completed the form, returned to the council but left the date blank. After the elections, the council decided not to sell.
Is the council bound to sell, because their offer
(form) was accepted by the tenant?
Court: Yes. “Exchange” of contracts is not necessary to form a concluded contract where all terms are agreed in correspondence between the parties.
carlill v carbolic smoke ball co.
CBS, a medical manufacturer, advertised a “smoke ball” capable of preventing users from contracting flu. Mrs C purchased it and used as directed, but contracted flu.
Is CBS liable to damages because they broke a
contractually biding promise (buyers would not
catch flu)?
Yes. The advert was specific enough to represent an offer. The buyer performed as requested. The seller was bound to their promise
definition of invitation to treat
“an invitation to another party to make an
offer or provide further information as
part of the negotiation process”
harvey v facey
Mr Harvey asked Mr Facey the lowest price to buy a property in Jamaica. Once Facey replied, Harvey said: “Agreed”. Facey did not respond, Harvey argued that there was a contract between them.
Was Facey’s telegraph with the “lowest price” an offer, which Harvey had accepted?
Court: No. Facey’s response merely provided information about the price and was not an offer capable of being accepted. There was no clear intention to sell the property.
pharmaceutical society of GB v Boots
Under the law, medications must be sold by a
pharmacist. But Boots’ customers were allowed to take some medications from the shelves to the till. The pharmacist checked at the till.
Was the display of priced goods an “offer” to the whole world (like in Carlill)?
Court: No. The customer should be able to change their mind. The customer offers to buy the goods at the till. The cashier (supervised by the pharmacist) decides to accept or reject the offer.
partridge v crittenden
Under the law, live wild birds cannot be offered for sale. But Mr P inserted an advert in a periodical stating: “Quality British A.B.C.R. … 25s each”.
Was the advert an “offer” to the whole world (like in Carlill)?
Court: No. The court distinguished between an offer for sale (which is a definite promise to be bound once accepted) and an invitation to treat (which merely invites others to negotiate). As a result, adverts are simply – as a general rule – an invitation to treat (unless they have all the characteristics outlined in Carlill)
lefkowitz v great minneapolis surplus stores inc.
GMSS published an advert stating: “3 brand new fur coats worth to $100.00. First come first served. $1 each”. Mr L was denied the fur because it was a “house rule” that only women were eligible.
Has GMSS breached their offer by preventing Mr L from buying a fur?
Court: Yes. The offer was very detailed (limited in quantity and time). When Lefkowitz was the first to arrive, he accepted the offer, so the store was bound by contract.
gibson v manchester city council
M was allowed to sell council houses to tenants. G completed the form, returned to the council but left the price blank. After the elections, the council decided not to sell.
Is the council bound to sell, because their offer
(form) was accepted by the tenant?
Court: No. The HL held that there was no binding offer because the negotiations between the parties never reached fruition
spencer v harding
Harding asked people to submit offers to buy all the goods in his warehouse at a discounted price. S was the highest bidder. The sale was not finalised.
Is a specific tender for the sale of goods an offer?
Court: Not in this case. The tender was specific, but there was no clear promise to sell to the highest bidder. Hence, not an offer.
great northern railway company v witham
W undertook to supply GNR Co. for 12 months
“with such quantities as they think fit” and in accordance with their T&Cs. The tender was accepted. After fulfilling some orders, W stopped supplying goods to GNR Co.
Is a specific tender for the sale of goods an offer?
Court: Yes in this case. The tender was specific, AND there was a clear promise to provide goods to the buyer. Hence, it was an offer.
harris v nickerson
N advertised a sale of office furniture, to be held in Bury. H travelled from London to Bury. The lots were withdrawn on the day of the auction.
Was the advertising of the sale an offer to hold the auction?
Court: No. The advert is a declaration of intent to hold a sale. If this does not take place, the bidder is not entitled to compensation for damages.
barry v davies
D put on auction without reserve two engine analysers worth £28,000. B bid £400 for both. H (auction house) withdrew the goods from the auction.
Does an auction without reserve creates an obligation to sell to the highest bidder?
Court: Yes. The highest bidder at an auction without reserve could not be rejected simply because the bid was too low.
methods for terminating an offer
1- Revocation (free unless consideration given to keep offer open)
2- Rejection (replacing an offer with another offer)
3- Lapse of Time (period in which the offeror intends to be bound by their words)
4- Death or Other Events (conditional offers and frustrating events)
byrne v van tienhoven
VT offered 1,000 boxes of tinplates to B on 1 oct., revoked on 8 Oct. B received the offer on 11 Oct. and accepted it on the same day. B received the revocation on 20 Oct.
Is the revocation ineffective, and have the parties entered into a contract?
Court: Yes, to both questions. An offer remains open until the offeree receives a communicated revocation, and the revocation is ineffective if acceptance had already occurred.
dickinson v dodds
Dodds offered to sell a property at a fixed price to Dickinson. The offer was valid until Friday. On Thursday afternoon (before accepting), Dickinson was informed that Dodds sold the house to a TP.
Is the revocation effective even if no notice was given by Dodds to Dickinson?
Court: Yes. There is no need for revocation to be communicated by the offeror themself.
How to know if there is a contract
5 questions to ask:
Was the offer time limited?
Was there intention to be bound?
Was there acceptance?
Was there consideration?
Was this a “mere puff” (exaggeration)?
