Offer And Acceptance

Without offer and acceptance there can be no contract and so it is essential that the law provides rules to identify what constitutes both an offer and an acceptance. An offer may be defined as a statement of willingness to contract on specified terms made with the intention that, if accepted, it shall become a binding contract. An offer may be express or implied from conduct. In many cases it is crucial to determine when and where a contract is actually formed and this too needs rules. In the vast majority of contracts these rules do not prove difficult to explain or complicated to apply but in some areas there is confusion.

Initially there can be significant problems in identifying what an offer actually is. An offer must be distinguished from and invitation to treat which is generally just an indication that one party is trying to elicit offers from the other. Invitations to treat include newspapers advertisements (Partridge v Crittenden), goods in shop windows (Fished v Bell) and goods on shop shelves (Pharmaceutical society of GB v Boots). Even if a sign in a shop window declares “special offer” it is still not legally an offer.

All these distinctions are well established but there is some difficulty in separating an invitation to treat from a unilateral offer. Unilateral offers are ones made to the entire world which generally require some conduct to fulfil. In Carlill v Carbolic Smoke Ball the claimant tried to get compensation promised to customers who, responding to an advert, used a product and still contracted influenza (flu). It was held that the advert was so specific it was lifted above and invitation to treat, thus becoming an offer.The difficulty this poses for lawyers is where the distinction lies. How specific does and advertisement have to be in order to qualify as an offer? Not only do consumers suffer from this confusion but retailers too, perhaps finding themselves inadvertently making unilateral offers to which they will be bound вЂ" something Hoover found to its costs when offering free flights to NYC with the purchase of its products.

A further confusion can arise where a request for information is responded to. This cannot be assumed to be an offer as in the case of Harvey v Facey where a request for a “lowest price” was not an offer when it was answered. However, where a request is part of a sequence of negotiations it may be seen as a counter-offer which can actually be accepted, forming a binding contract. How the courts distinguish between requests and counter-offers is not always clear. In Stevenson v Maclean a question regarding the availability of stock was not a counter-offer but putting forward a lower price is, as in the case of Hyde v Wrench. A lack of clarity in the law always has the potential to cause confusion.

Withdrawing an offer can only be done before it is accepted вЂ" to do so after acceptance is actually to breach the contract (Byrne v Van Tienhoven). Withdrawing an offer during negotiations between two parties is generally easy to do. The difficulty is with withdrawing unilateral offers as you do not know how many people have seen it and are performing the conduct which will amount to acceptance. The rule about withdrawing unilateral offers comes from a nineteenth-century US case Shuey v US, where is was decided that for a withdrawal to work it must be displayed/advertised as prominently as the original unilateral offer. This is clearly and utterly impractical and unused in the real world вЂ" how often does a “don’t worry about the reward вЂ" my cat has been returned” poster appear in the street? Surely it is only a lack of subsequent cases that allows this rule to remain.

In terms of acceptance the issues also cause confusion. The postal rule, as established in Adams v Lindsell, which states that acceptance by post takes place literally on posting, is now so old and distinguished from the rule that it is near worthless. Instead we have a number of cases trying to deal with instantaneous communication. Entores established the general rule that instantaneous acceptance takes place on receipt and Brinkibon followed this and identified