Business Law Tutorials

Tutorial 5

Exercise 5.1

1(a) In your own words, define the terms ‘offer’ and ‘invitation to treat’? (Parker and Box - Chapter 6)

Answer:

Offer: An offer is a promise to do or to refrain from doing something in exchange for something from another party. An offer is a firm proposal, an acceptance of which will lead to a binding agreement.it is more than simply supplying information to another person. There must be some real indication that a firm of offer is being made, and that it is capable of acceptance to form a contract.

Invitation to treat: it is necessary to distinguish between offer and invitation of treat.it is only an indication of a person readiness to listen to an offer. It is some time called as “an invitation to deal”. Various decisions over the years have established that some activities, which could be constructed as offers, are in fact only invitation to treat, these include displaying goods for sale, an advertisement placed in media for the purpose of selling to interested buyers. relevant case for invitation to treat are:

Fisher v Bell

Pharmaceutical Society of Greta Britian v Boots Cash Chemists(Southern)ltd

(b) How are they different from one another and why is this important?

All proposals or propositions that appear to be offer may not be in fact offer in legal sense. So it is necessary to distinguish between offer and invitation to treat.

An invitation to treat is when client invites contractors to make him/her an offer. For example, when the client advertises a job on Internet or newspaper, it is invitation of treat but not offer. The offer only comes to existence after the client reviews the tenders handed in by the contractors and accept it.

An offer is when the client offers the job to one contractor without advertising the job or having contractors to submit in the tender.

Making an invitation to treat, rather than offer, protect the client from finding him/her self agreed into a contract he/she must fulfill. Instead the client can refuse the contractor’s offer for different reasons.

This can be very important protection for the client making the offer if the advertisement for the jib offers to a long distance. For example, through Internet or newspaper. Always ensure that the website, advertisement etc. are invitation to treat not an offer.

2) From Parker and Box - Chapter 7)

(a) Define acceptance (Parker and Box, pp 96-97) 

Answer:

Acceptance: It is a definite and unqualified assent to an offer, which complies with the term of the offer. Acceptance may be expressed  (stated in verbal contract, or written n contract which is writing), or implied. Implied acceptance occur when the conduct of offeree is such that it can be expressed only on the basis that he or she has accepted the offeror’s proposal. The inescapable inference, or implication, is that the offer has been accepted.

A typical situation where acceptance is to be implied for conduct is where a customer selects goods in a self service shop and takes them to the check out. The acceptance must be clear and unambiguous and unequivocal. There are four rule for acceptance

i) It must be clear and undoubted

II) Correct method must be used

Iii) It must be given with knowledge of, and in reliance upon, the offer.

iv) It must be communicated.

(b) Define counter-offer (Parker and Box, pp 111-112)

Answer:

Counter offer: Offers are frequently made and then met with some counter proposal by the offeree. This might be done by the submission a price lower than the price asked by the offeror, if we are discussing an offer to sell. This is a very obvious example of counter offer. A counter offer can also be made if the offeree tries to alter or add to the terms of the offer, as for example: by changing the terms of delivery or even the method of delivery. A counter offer has 2 effects

1. It replaces the original offer with a new offer (the original offer becomes the new offeror).
2. It permanently extinguishes the original offer.

Relevant case:

Hyde v wrench 1840 49 ER 132

3) From Parker and Box (pages 89-91) what are generally regarded as invitations to treat? (Cite the names of relevant cases)

Answer: Invitation to treat: it is necessary to distinguish between offer and invitation of treat.it is only an indication of a persons readiness to listen to an offer. It is some time called as “an invitation to deal”. Various decisions over the years have established that some activities, which could be constructed as offers, are in fact only invitation to treat, these include displaying goods for sale, an advertisement placed in media for the purpose of selling to interested buyers. Relevant cases for invitation to treat are:

Fisher v Bell

Pharmaceutical Society of Greta Britian v Boots Cash Chemists(Southern)ltd

Exercise 5.3

1. What arguments were used by the Carbolic Smoke Ball Company to try to establish that there was no offer?

Answer: The arguments used by the carbolic smoke ball company (defendant) to show that there was no formal contract between parties are:

1. It was a advertisement and the advertisement is rather in the nature of a puff or a proclamation rather than a promise or offer intended to mature into a contract when accepted
2. The vagueness of the document shows that no contract whatever was intended
3. One cannot enter into a contract with the whole world
4. There was no check on the part of the persons who issued the advertisement, and it would be an insensate thing to promise 100 pounds to a person who used the smoke ball unless you could check or superintend his manner of using it.

1. How did the court decide that the advertisement should be read?

Answer: As the advertisement was intended to be used by the public and read by the public, it was important to understand how an ordinary person would construe the advertisement. Bowen LJ stated that ‘... in order to arrive at a right conclusion, we must read this advertisement in its plain meaning, as the public would understand it. It was intended to be issued to the public and read by the public.’