The offer is the starting point of a contract. However, the word offer has a special meaning in contract law. An offer is an expression of willingness to enter into an agreement on specified terms.
This expression is made with the intention that it is to be binding once accepted by the person to whom it is made. An important distinction must be drawn between an offer and a statement made preparatory to an offer which is known as an invitation to treat.
An invitation to treat is an indication of willingness to enter negotiations NOT the starting point of a contract.
INVITATION TO TREAT CASES
This is a somewhat arbitrary term that many law students struggle with so the easiest way to learn this is to look at specific examples that count as invitations to treat instead of offers.
Adverts are generally not offers:
Partridge v Crittenden (1952). In this case, the advert in a magazine to sell Bramblefinch birds was an invitation to treat and not an offer for sale.
However, sometimes and advert can be an offer if they are in fact forming a unilateral agreement (see below)
Goods in a self-service store are not offers:
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd (1952) established that goods in a self-service store are an invitation to treat and not an offer for sale.
In practical terms, this means a costumer does not accept the offer as soon as they pick up the item from the shelf. The customer makes an offer when they take the item to the till and the acceptance takes place when the shopkeeper accepts the money for the item. This makes sense because if a good on the shelf were an offer a customer would be bound to pay for it as soon as they pick it up from the shelf as this would be the acceptance. This would make shopping at a place like Boots very challenging.
Goods displayed in a shop window are not offers:
Fisher v Bell (1961) A shopkeeper displayed a flick knife in the window of the shop with a price tag next to it, yet this was held to be an invitation to treat and not an offer for sale. The decision was based on the principle that the customer makes the offer and the shop keeper decides whether to sell or not.
A response to a request of information is not an offer
Harvey v Facey (1893): a response to a request for information is an invitation to treat and not an offer.
SITUATIONS THAT ARE OFFERS:
A parking machine is an offer a costumer accepts by putting money in it
Thornton v Shoe Lane Parking (1971): a ticket from an automatic machine in a car park is an offer and the customer accepts that offer by putting money in the machine. So the contract is binding as soon as the costumer pays.
A pile of deck chairs for hire was an offer
Chapelton v Barry UDC (1940): it was held that a pile of deckchairs available for hire on the beach was an offer that the customer could accept.
COMMUNICATION OF THE OFFER
An offer cannot be accepted unless the person who is seeking to accept it knows it exists; therefore, the offer must be communicated.
Carlill v Carbolic Smoke Ball Co (1892) The Carbolic Smoke Ball Co offered a £100 reward for anyone who use the smoke ball and still caught influenza (flu). The company refused to pay the claim of Mrs Carlill as they said the offer was a mere marketing ‘puff’ and not intended to form any basis of a contract. Mrs Carlill won the case and the courts explained that an offer could be made to the whole world and still be enforceable if the person seeking to rely on it can prove the offer was communicated to that individual.
In this case this advert was considered a unilateral agreement.
This is a legal contract in which one individual, in this case the advertiser, pays for a specific action from another party. In this case using the smoke ball.
It is called a unilateral agreement because it is one-sided. If the action is completed, the contract is binding but the other party cannot be forced to complete the action.
In other words, a member of the public looking at the advert could not be forced to use the smoke ball but once they saw the advert and used the smoke ball the advertiser was bound to pay the £100.
A good example of this principle is a lost cat sign that offers a reward for finding the cat. Anyone who sees the sign is not bound to find the cat but if someone sees the sign and finds the cat then they are entitled to the reward.
ENDING AN OFFER
An offer can be accepted whilst it remains open, but it can come to an end in the following ways:
LAPSE OF TIME
If an offer has an expiry date it will cease to exist after that time however the majority of offers do not have a specified end date so they will lapse after a period of reasonable time.
Ramsgate Victoria Hotel v Montefiore (1866)
The defendant offered to buy shares in the hotel which was accepted 5 months later, at which point the defendant no longer wanted to buy the shares. The offer had lapsed because an excessive amount of time had passed.
A person who makes an offer can revoke or withdraw it at any point, but they must give notification of the withdrawal to the party that received the offer.
Routledge v Grant (1828) Grant made an offer to buy Routledge's house and the offer would remain open for 6 weeks. The offer was revoked after 3 weeks and Routledge’s tried to accept the offer two weeks later. The court held the offer had ended because the withdrawal had been communicated.
Dickinson v Dodds (1876): the revocation of an offer can be made by a third party so long as they are a reliable person and they inform the person that has received the offer that the offer has ended.
The person to whom the offer has been made does not get a second chance; once it has been rejected it cannot be accepted. A failure to reply does not mean the offer has been rejected, it could still remain open.
Stevenson v McLean (1880) The claimant and defendant were negotiating the sale of iron. The defendant offered to sell the iron for cash. The claimant asked if it could be delivered in two weeks. The claimant had not rejected the offer. He had merely made an inquiry. The offer was still open for the claimant to accept.
A counter-offer rejects the original offer and creates a new one.
Hyde v Wrench (1840) The defendant offered to sell his farm to the claimant for £1000. The claimant made a counter-offer of £950. The defendant rejected this offer. The claimant then tried to accept the original offer of £1000. This case established that the original offer ends once a counter-offer has been made so the original offer can no longer be accepted.
If a person makes an offer before their death that offer cannot be accepted if the other party is aware of their death. However, the offer can still be accepted if the party is not aware of their death