An offer is essentially a conditional but voluntary promise, given by a seller, or a buyer designated as the offeror to another buyer or seller designated as offeree, which once accepted becomes legally binding and enforceable. Unlike a solicitation or an invitation to treat, an offer denotes a clear indication by the offeror to willingly enter into an agreement with the offeree under certain specific terms that any reasonable person would understand. As such, acceptance of the given offer usually leads to the establishment of a binding contract. Offers usually include terms and conditions, as well as a closing date, without which a flat period of 30 days after the offer is assumed. The intention to be bound by the resulting contract in case the offer is accepted also forms a very important part of the contract and must be proven and undeniable for the contract to be enforceable. Considering that offers once made are legally binding, termination can only occur through the death of an offeror or an offeree, as well as in cases where a reasonable amount of time has elapsed (Treitel 1999).
Harvey v Facey (1893) AC Privy Council
The case between Harvey verses Facey confirms the importance of intention in a offer. With lack of clear intention the offer can not be legally bidding. Harvey wrote and sent a telegram to Facey asking the whether he would sell them a Bumper Hall Pen at the lowest prices. Facey then replied that the lowest price of the bumper hall pen was dollars nine hundred. Harvey received the message regarding the price and wrote back saying that they would purchase the product and that Facey should send the title deed to them for early possession. After the two parties failed to agree this telegraph messages would not be recognized as an offer since Facey had not replied that he would sell the bumper hall pen. Lack of evidence of an intention made the Privy Council to disqualify the telegram sent by Facey as an offer.
Carlill V Carbolic smoke Ball Co (1893) Court of appeal
Carbolic Smoke Ball Company wrote a newspaper advert saying that the company would reward a hundred dollars to any person who contracts influenza after having used the company’s smoke ball for a period of two weeks. For the reward to be given the balls must be used in accordance to the instructions printed on every ball. The advert also stated that the company had deposited a thousand dollars with Alliance Bank confirming the company’s sincerity to the issue. Carlill bought the smoke balls and used them for a period of two weeks as stated and also ensured that she followed all the instructions printed on the ball. She caught the flu and decided to sue to go ahead and claim the hundred dollars as stated on the advert. However, the company declined saying that the advert was not be considered as an intention to an offer but rather a treat.
Carlill decided to sue the company but company further stated that their was no notification of acceptance, no time limit of specified for catching the flu and besides it was not possible to make an offer to the world like the advert did. The company’s arguments were rejected by the court of appeal on the basis that the advert was not a treat since depositing the money at the bank showed intention of honor. The appeal also stated that Carill showed intention to accept by following the guidelines stated on the advert about adhering to the directions provided on the bottle. The case provides evidence on some key characteristics of an offer. To begin with the intention must exist and does not necessary have to be written but rather a party’s actions can be used to show intention. Further, an offer does not have a fixed number a limited number of parties and therefore the company could make the offer to as many people as possible.
Hyde V. Wrench (1840)
The case between Wrench and Hyde brings to right the impact of a counteroffer in determining the strength and validity of an original offer. Wrench decides to sell his estate for 1200 pounds to Hyde who declines. He is later asked to buy for 1000 pounds but insists he would like to buy it for 950 pounds. Wrench postpones the topic saying he would give his feedback after two weeks. After the time had elapsed, he declines to sell the estate at 950 pounds requested and also rejects Hyde’s request to buy at 1000 pounds that he had offered. Hyde decides to sue Wrench for breach of contract arguing that he had offered to sell the estate at 1000 pounds. The court ruled that by offering to buy the estate at a 950 pounds and agree to negotiate on the same, the initial offers were nullified. Therefore, with the existence of a counteroffer, the original offer is negated.
Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109
Montefoire offered to purchase shares in Ramsgate Victoria hotel at a given price, although the offer was only accepted by the claimant company 6 months later, after the values of the shares in question had already fallen considerably. When the defendant refused to honor the contract, the claimant brought an action suit seeking to compel the defendant to honor his side of the bargain. The courts however, held that the offer was no longer open because the nature of the subject of the contract, meant that the offer had to lapse after a reasonable period of time. If the contract lapsed, then it meant that there was no longer a contract that could be enforced to give the claimant a right to ask the defendant to perform the contract.
The case serves to highlight the importance of how long it takes before an offer is accepted, such that the resulting contract may be declared null and void if not accepted within the stipulated time, or a reasonable period of 30 days.
Dickinson v Dodds (1876) 2 Ch. D. 463
The defendant had offered to sell his house to the claimant and after meeting him agreed to keep the offer for the house open until Friday of that week. However, the defendant received a second offer on Thursday and accepted it, after which the claimant came that Friday and purported to make an offer before suing the defendant to force him to perform the contract. The courts howver held that the revocation of the offer was done in accordance with the law, and therefore no contract existed between the two parties. The seller was under no obligation to keep the offer open until the buyer was ready, as no consideration had been provided in exchange for the promise.
This highlights the importance of acceptance when it comes to making the offer become legally binding and essentially into a contract. However, this is dependent upon whether an offer is unilateral or bilateral, with unilateral offers where full performance is required.
Dahlia v Four Millbank Nominees (1978) Ch 231
Dahlia wished to purchase property from the Four Millbank Nominees, and although an agreement had been reached with no written contract agreed upon, the Four Millbank Nominees promised the defendant that if he arranged for a bankers draft within a given time, they would complete a written contract. This did not materialize, as after fulfilling the conditions of the offer and thereby accepting the terms of the offer, the offeror refused to comply after which a suit was instituted with the court holding that a unilateral contract did exist between the two parties. The case serves to highlight that a unilateral offer cannot be revoked because acceptance in most cases usually entails complete performance.
References
Carlill V Carbolic smoke Ball Co (1893) Court of appeal
Dickinson v Dodds (1876) 2 Ch. D. 463
Dahlia v Four Millbank Nominees (1978) Ch 231
Hyde V. Wrench (1840)
Harvey v Facey (1893) AC Privy Council
Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109
Treitel, G., 1999, The Law of Contract, Sweet & Maxwell.
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