Offer
We have already seen that contracts require an number of elements to be enforceable in law:
Essentials of a modern contract
Intention to create legal relations
Offer
Acceptance
Written formalities in exceptional cases
Consideration except for contracts under deed
Clear terms
Parties must have capacity to contract
The contract must not be ‘illegal’ or contrary to public policy
There must have been genuine consent, not vitiated by:
* Mistake
* Misrepresentation
* Duress
* Undue influence
In this section we focus on Offers. For a contract to come into existence the offere must accept the offer unconditionally.
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3.1 What is an Offer?
An intimation (viewed from an objective standpoint) by words or conduct of a willingness to enter into a legally binding contract, specifying the terms of the binding agreement which will be formed should the offer be accepted by the party to whom it is addressed.
3.1.1 An offer may be made to a specific person, a group of persons or an individual
Carlill v Carbolic Smokeball Co Ltd [1893] 1 QB 256
The Carbolic Smoke Ball Company made a product called the “smoke ball”. It claimed to be a cure for influenza and a number of other diseases.The Company published advertisements in the press claiming that it would pay £100 to anyone who became sick with influenza after using its product according to the instructions set out in the advertisement.
£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball.
£1000 is deposited with the Alliance Bank showing our sincerity in the matter.
Mrs Carlill saw the advertisement, bought one of the balls and used it in accordance with the instructions. l She contracted the flu She claimed £100 from the Carbolic Smoke Ball Company. Mrs Carlill brought a claim to court. She contended that the advertisement and her reliance on it was a contract between her and the company, and so they ought to pay. The company argued it was not a serious contract.
The Court of Appeal rejected the company’s arguments and held that there was a fully binding contract for £100 with Mrs Carlill.
Among the reasons given by the three judges were:
(1) that the advert was a unilateral offer to all the world
(2) that satisfying conditions for using the smokeball constituted acceptance of the offer
(3) that purchasing or merely using the smokeball constituted good consideration, because it was a distinct detriment incurred at the behest of the company and, furthermore, more people buying smokeballs by relying on the advert was a clear benefit to Carbolic
(4) that the company’s claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.
Lindley LJ:
| “ | I will begin by referring to two points which were raised in the Court below. I refer to them simply for the purpose of dismissing them. First, it is said no action will lie upon this contract because it is a policy. You have only to look at the advertisement to dismiss that suggestion. Then it was said that it is a bet. Hawkins, J., came to the conclusion that nobody ever dreamt of a bet, and that the transaction had nothing whatever in common with a bet. I so entirely agree with him that I pass over this contention also as not worth serious attention.Then, what is left? The first observation I will make is that we are not dealing with any inference of fact. We are dealing with an express promise to pay 100l. in certain events. Read the advertisement how you will, and twist it about as you will, here is a distinct promise expressed in language which is perfectly unmistakable —
“100l. reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball.” |
Lindley LJ disposed of the matter:
1. The advert was not ” mere puff ” as had been alleged by the company, because the deposit of £1000 in the bank evidenced seriousness.
2. The advertisement was an offer to the world.
3. Communication of acceptance is not necessary for a contract when people’s conduct manifests an intention to contract.
4. That the vagueness of the advert’s terms was no insurmountable obstacle.
5. The nature of Mrs Carlill’s consideration (what she gave in return for the offer) was good, because there is both an advantage in additional sales in reaction to the advertisement and a “distinct inconvenience” that people go to to use a smokeball.
Lord Justice Bowen’s judgment is more to my taste – a focused and more tightly argued analysis and may be read in full Here:
LORD JUSTICE BOWEN: I am of the same opinion. We were asked to say that this document was a contract too vague to be enforced.
The first observation which arises is that the document itself is not a contract at all, it is only an offer made to the public.
The defendants contend next, that it is an offer the terms of which are too vague to be treated as a definite offer, inasmuch as there is no limit of time fixed for the catching of the influenza, and it cannot be supposed that the advertisers seriously meant to promise to pay money to every person who catches the influenza at any time after the inhaling of the smoke ball. It was urged also, that if you look at this document you will find much vagueness as to the persons with whom the contract was intended to be made – that, in the first place, its terms are wide enough to include persons who may have used the smoke ball before the advertisement was issued; at all events, that it is an offer to the world in general, and, also, that it is unreasonable to suppose it to be a definite offer, because nobody in their senses would contract themselves out of the opportunity of checking the experiment which was going to be made at their own expense. It is also contended that the advertisement is rather in the nature of a puff or a proclamation than a promise or offer intended to mature into a contract when accepted. But the main point seems to be that the vagueness of the document shews that no contract whatever was intended. It seems to me 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 to be read by the public.How would an ordinary person reading this document construe it?
It was intended unquestionably to have some effect, and I think the effect which it was intended to have, was to make people use the smoke ball, because the suggestions and allegations which it contains are directed immediately to the use of the smoke ball as distinct from the purchase of it. It did not follow that the smoke ball was to be purchased from the defendants directly, or even from agents of theirs directly. The intention was that the circulation of the smoke ball should be promoted, and that the use of it should be increased. The advertisement begins by saying that a reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic after using the ball. It has been said that the words do not apply only to persons who contract the epidemic after the publication of the advertisement, but include persons who had previously contracted the influenza. I cannot so read the advertisement. It is written in colloquial and popular language,and I think that it is equivalent to this:
“£100 will be paid to any person who shall contract the increasing epidemic after having used the carbolic smoke ball three times daily for two weeks.”
And it seems to me that the way in which the public would read it would be this, that if anybody, after the advertisement was published, used three times daily for two weeks the carbolic smoke ball, and then caught cold, he would be entitled to the reward. Then again it was said:
“How long is this protection to endure? Is it to go on for ever, or for what limit of time?”
I think that there are two constructions of this document, each of which is good sense, and each of which seems to me to satisfy the exigencies of the present action. It may mean that the protection is warranted to last during the epidemic, and it was during the epidemic that the plaintiff contracted the disease. I think, more probably, it means that the smoke ball will be a protection while it is in use. That seems tome the way in which an ordinary person would understand an advertisement about medicine, and about a specific against influenza. It could not be supposed that after you have left off using it you are still to be protected for ever, as if there was to be a stamp set upon your forehead that you were never to catch influenza because you had once used the carbolic smoke ball. I think the immunity is to last during the use of the ball. That is the way in which I should naturally read it, and it seems to me that the subsequent language of the advertisement supports that construction. It says:
“During the last epidemic of influenza many thousand carbolic smoke balls were sold, and in no ascertained case was the disease contracted by those using”
(not “who had used”) “the carbolic smoke ball,”
and it concludes with saying that one smoke ball will last a family several months (which imports that it is to be efficacious while it is being used), and that the ball can be refilled at a cost of 5s. I, therefore, have myself no hesitation in saying that I think, on the construction of this advertisement, the protection was to enure during the time that the carbolic smoke ball was being used. My brother, the Lord Justice who preceded me,thinks that the contract would be sufficiently definite if you were to read it in the sense that the protection was to be warranted during a reasonable period after use. I have some difficulty myself on that point; but it is not necessary for me to consider it further, because the disease here was contracted during the use of the carbolic smoke ball.
Was it intended that the £100 should, if the conditions were fulfilled, be paid? The advertisement says that £1000 is lodged at the bank for the purpose. Therefore, it cannot be said that the statement that £100 would be paid was intended to be a mere puff. I think it was intended to be understood by the public as an offer which was to be acted upon.
But it was said there was no check on the part of the persons who issued the advertisement, and that it would be an insensate thing to promise £100 to a person who used the smoke ball unless you could check or superintend his manner of using it. The answer to that argument seems to me to be that if a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.
It was also said that the contract is made with all the world- that is, with everybody; and that you cannot contract with everybody. It is not a contract made with all the world. There is the fallacy of the argument. It is an offer made to all the world;and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition? It is an offer to become liable to any one who,before it is retracted, performs the condition, and, although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement. It is not like cases in which you offer to negotiate, or you issue advertisements that you have got a stock of books to sell, or houses to let, in which case there is no offer to be bound by any contract. Such advertisements are offers to negotiate – offers to receive offers- offers to chaffer, as, I think, some learned judge in one of the cases has said. If this is an offer to be bound, then it is a contract the moment the person fulfils the condition.
That seems to me to be sense, and it is also the ground on which all these advertisement cases have been decided during the century; and it cannot be put better than in Willes, J.’s,judgment in Spencer v. Harding Law Rep. 5 C. P. 561, 563.
“In the advertisement cases,”
he says,
“there never was any doubt that the advertisement amounted to a promise to pay the money to the person who first gave information. The difficulty suggested was that it was a contract with all the world. But that,of course, was soon overruled. It was an offer to become liable to any person who before the offer should be retracted should happen to be the person to fulfil the contract, of which the advertisement was an offer or tender. That is not the sort of difficulty which presents itself here. If the circular had gone on, ‘and we undertake to sell to the highest bidder,’the reward cases would have applied, and there would have been a good contract in respect of the persons.”
As soon as the highest bidder presented himself, says Willes, J., the person who was to hold the vinculum juris on the other side of the contract was ascertained, and it became settled.
Then it was said that there was no notification of the acceptance of the contract. One cannot doubt that, as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer, in order that the two minds may come together. Unless this is done the two minds may be apart,and there is not that consensus which is necessary according to the English law – I say nothing about the laws of other countries- to make a contract. But there is this clear gloss to be made upon that doctrine, that as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so, and I suppose there can be no doubt that where a person in an offer made by him to another person, expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated method of acceptance; and if the person making the offer, expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification.
That seems to me to be the principle which lies at the bottom of the acceptance cases, of which two instances are the well-known judgment of Mellish, L.J., in Harris’s Case Law Rep. 7 Ch.587, and the very instructive judgment of Lord Blackburn in Brogden v. Metropolitan Ry. Co. 2 App. Cas. 666, 691, in which he appears to me to take exactly the line I have indicated.
Now, if that is the law, how are we to find out whether the person who makes the offer does intimate that notification of acceptance will not be necessary in order to constitute a binding bargain? In many cases you look to the offer itself. In many cases you extract from the character of the transaction that notification is not required, and in the advertisement cases it seems to me to follow as an inference to be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with. It seems to me that from the point of view of common sense no other idea could be entertained. If I advertise to the world that my dog is lost, and that anybody who brings the dog to a particular place will be paid some money, are all the police or other persons whose business it is to find lost dogs to be expected to sit down and write me a note saying that they have accepted my proposal?Why, of course, they at once look after the dog, and as soon as they find the dog they have performed the condition. The essence of the transaction is that the dog should be found, and it is not necessary under such circumstances, as it seems to me, that in order to make the contract binding there should be any notification of acceptance. It follows from the nature of the thing that the performance of the condition is sufficient acceptance without the notification of it, and a person who makes an offer in an advertisement of that kind makes an offer which must be read by the light of that common sense reflection. He does, therefore, in his offer impliedly indicate that he does not require notification of the acceptance of the offer.
A further argument for the defendants was that this was a nudum pactum – that there was no consideration for the promise -that taking the influenza was only a condition, and that the using the smoke ball was only a condition, and that there was no consideration at all; in fact, that there was no request, express or implied, to use the smoke ball. Now, I will not enter into an elaborate discussion upon the law as to requests in this kind of contracts. I will simply refer to Victors v. Davies 12 M. W. 758and Serjeant Manning’s note to Fisher v. Pyne 1 M. G. 265,which everybody ought to read who wishes to embark in this controversy. The short answer, to abstain from academical discussion, is, it seems to me, that there is here a request to use involved in the offer. Then as to the alleged want of consideration. The definition of “consideration” given in Selwyn’s Nisi Prius, 8th ed. p. 47, which is cited and adopted by Tindal, C.J., in the case of Laythoarp v.Bryant 3 Scott, 238, 250, is this:
“Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff,provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant.”
Can it be said here that if the person who reads this advertisement applies thrice daily, for such time as may seem to him tolerable, the carbolic smoke ball to his nostrils for a whole fortnight, he is doing nothing at all – that it is a mere act which is not to count towards consideration to support a promise (for the law does not require us to measure the adequacy of the consideration). Inconvenience sustained by one party at the request of the other is enough to create a consideration. I think, therefore, that it is consideration enough that the plaintiff took the trouble of using the smoke ball. But I think also that the defendants received a benefit from this user, for the use of the smoke ball was contemplated by the defendants as being indirectly a benefit to them, because the use of the smoke balls would promote their sale.
Then we were pressed with Gerhard v. Bates 2 E. B. 476. In Gerhard v. Bates 2 E. B. 476, which arose upon demurrer, the point upon which the action failed was that the plaintiff did not allege that the promise was made to the class of which alone the plaintiff was a member, and that therefore there was no privity between the plaintiffs and the defendant. Then Lord Campbell went on to give a second reason. If his first reason was not enough,and the plaintiff and the defendant there had come together as contracting parties and the only question was consideration, it seems to me Lord Campbell’s reasoning would not have been sound. It is only to be supported by reading it as an additional reason for thinking that they had not come into the relation of contracting parties; but, if so, the language was superfluous.The truth is, that if in that case you had found a contract between the parties there would have been no difficulty about consideration; but you could not find such a contract. Here, in the same way, if you once make up your mind that there was a promise made to this lady who is the plaintiff, as one of the public – a promise made to her that if she used the smoke ball three times daily for a fortnight and got the influenza, she should have £100, it seems to me that her using the smoke ball was sufficient consideration. I cannot picture to myself the view of the law on which the contrary could be held when you have once found who are the contracting parties. If I say to a person,”If you use such and such a medicine for a week I will give you £5,” and he uses it, there is ample consideration for the promise.
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3.1.2 Bilateral and unilateral contracts
Unilateral contracts arise where X promises to do something in return for an ACT by Y, e.g. to pay £100 if he walks from London to Brighton.
Y is not bound to do the act, but only if he performs the act will he be able to enforce the promise on X’s part.
A bilateral contract arises where X promises to do something for Y if Y promises to do something for X in return. The exchange of such promises normally renders them enforceable.
3.2 Offer Distinguished from Invitation to Treat
If an individual is merely feeling his way towards making an offer or has stated an intention only, this will amount to an invitation to treat only.
Whether an act is construed as an offer or an invitation to treat is dependant on the intention of the parties.
3.2.1 Shop and self service situations
The display of goods in a shop amounts only to an invitation to treat.
Fisher v Bell [1961] 1 QB 394
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401
LORD JUSTICE SOMERVELL : This is an appeal from the Lord Chief Justice on a Case Stated on an agreed statement of facts raising a question under section 18(1)(a)(iii) of the Pharmacy and Poisons Act, 1933. The Plaintiffs are the Pharmaceutical Society who were incorporated by Royal Charter. One of their duties is to take all reasonable steps to enforce the provisions of the Act. The provision in question is:
“Subject to the provisions of this part of this Act it shall not be lawful for a person to sell any poison included in Part I of the Poisons List, unless …… (iii) the sale is effected by, or under the supervision of, a registered pharmacist”. The Defendants, Messrs Boots Cash Chemists (Southern) Limited have recently introduced into one or more of their premises what is called a self-service system. We have a number of photographs and one can see a number of articles such as toilet articles, laxatives, ointments and tonics, the kind of articles which one normally finds in one of Messrs Boots’ shops, laid out on shelves. The customer when he comes in is invited to take a receptacle and goes round and can choose the articles which he wants. He then goes to one of two desks at the end of the room, and there, admittedly, there is a registered pharmacist, able to carry out, subject to the point which I will mention in a moment, such duties as are involved in his position. It is not disputed that in a chemist’s shop where this system does not prevail a man may go in and ask a young lady, who will not herself be a registered pharmacist, for one of these articles on the List and the transaction may be completed and the article paid for, although the registered pharmacist, who will no doubt be on the premises, will not know anything himself of the transaction unless the assistant serving the customer, or the customer, requires to put a question to him.
It is right that I should emphasise, as the Lord Chief Justice did, that these are not dangerous drugs. They are things which contain very small proportions of poison and I imagine many of them are the type of drug which has a warning as to what doses are to be taken. They are drugs which can be obtained under the law without a doctor’s prescription.
The point which is taken by the Plaintiffs is this: It is said that the purchase is complete if and when a customer going round the shelves takes an article and puts it in the receptacle which he or she is carrying, and therefore if that is right when the customer cornea to the pay desk, having completed the tour of the premises, the registered pharmacist, if so minded, has no power to say: “This drug ought not to be sold to this customer”. Whether and in what circumstances he would have that power we need not enquire, but one can, of course, see that there is a difference if supervision can only be exercised at a time when the contract is completed.
I agree with the Lord Chief Justice in everything he says, but I will put it shortly in my own words. Whether that is a right view depends on what are the legal implications of this layout, the invitation to the customer. Is it to be regarded as an offer which is completed and both sides bound when the article is put into the receptacle, or is it to be regarded as a more organised way of doing what is done already in many types of shops — and a bookseller is perhaps the beat example – namely, enabling customers to have free access to what is in the shop to look at the different articles and then, ultimately, having got the ones which they wish to buy, coming up to the assistant and saying “I want this”? The assistant in 999 times out of 1,000 says “That is all right”, and the money passes and the transaction is completed. I agree entirely with what the Lord Chief Justice says and the reasons he gives for his conclusion that in the case of the ordinary shop, although goods are displayed and it is intended that customers should go and choose what they want, the contract is not completed until, the customer having indicated the articles which he needs, the shop-keeper or someone on his behalf accepts that offer. Then the contract is completed. I can see no reason at all, that being I think clearly the normal position, for drawing any different implication as a result of this layout. The Lord Chief Justice, I think, expressed one of the most formidable difficulties in the way of the suggestion when he pointed out that, if the Plaintiffs are right, once an article has been placed in the receptacle the customer himself is bound and he would have no right without paying for the first article to substitute an article which he saw later of the same kind and which he perhaps preferred. I can see no reason for implying from this arrangement which the Defendants have referred to any implication other than that which the Lord Chief Justice found in it, namely, that it is a convenient method of enabling customers to see what there is and choose and possibly put back and substitute articles which they wish to have and then go up to the cashier and offer to buy what they have so far chosen. On that conclusion the case fails, because it is admitted that then there was supervision in the sense required by the Act and at the appropriate moment of time. For these reasons, in my opinion, the appeal should be dismissed.
3.2.2 Advertisements and circulars
These are generally classified as invitations to treat.
Partridge v Crittenden [1968] 2 All ER 421
Advert for birds in a magazine was not an offer.
ASHWORTH J: This is an appeal by way of case stated from a decision of Chester justices. On July 19, 1967, they heard an information preferred by the prosecutor on behalf of the RSPCA alleging against the appellant that he did unlawfully offer for sale a certain live wild bird, to wit a brambling, being a bird included in schedule 4 to the Protection of Birds Act 1954, of a species which is resident in or visits the British Isles in a wild state, other than a close-ringed specimen bred in captivity, contrary to section 6, subsection (1) of the Act.
The case arose because in a periodical known as “Cage and Aviary Birds,” the issue for April 13, 1967, there appeared an advertisement inserted by the appellant containing, inter alia, the words “Quality British A.B.C.R. … bramblefinch cocks, bramblefinch hens, 25s each.” In the case stated the full advertisement is not set out, but by the agreement of counsel this court has seen a copy of the issue in question, and what is perhaps to be noted in passing is that on the page there is a whole list of different birds under the general heading of “Classified Advertisements.” In no place, so far as I can see, is there any direct use of the words “Offers for sale.” I ought to say I am not for my part deciding that that would have the result of making this judgment any different, but at least it strengthens the case for the appellant that there is no such expression on the page. Having seen that advertisement, Mr. Thompson wrote to the appellant and asked for a hen and enclosed a cheque for 30s A hen, according to the case, was sent to him on May 1, 1967, which was wearing a closed-ring, and he received it on May 2. The box was opened by Mr. Thompson in the presence of the prosecutor, and the case finds that Mr. Thompson was able to remove the ring without injury to the bird, and even taking into account that the bird had travelled from Leicester in a box on the railway, its condition was rough, it was extremely nervous, it had no perching sense at all and its plumage was rough.
Stopping there, the inference from that finding is that the justices were taking the view, or could take the view, that from its appearance, at any rate, this was not such a bird as a person can legitimately sell within the Act of 1954. The case goes on to find:
“The expression ‘close-ringed’ is nowhere defined nor is there any universally recommended size ring for a bramble finch… (g) The ring is placed on the bird’s leg at the age of three to 10 days at which time it is not possible to determine what the eventual girth of the bird’s leg will be.”
Having been referred to the decision of this court in Fisher v. Bell the justices nonetheless took the view that the advertisement did constitute an offer for sale; they went on further to find that the bird was not a close-ringed specimen bred in captivity, because it was possible to remove the ring. Before this court Mr. Pitchers for the appellant, has taken two points, first, this was not an offer for sale and, secondly, that the justices’ reason for finding that it was not a close-ringed bird was plainly wrong because the fact that one could remove the ring did not render it a non-close-ringed bird.
It is convenient, perhaps, to deal with the question of the ring first. For my part I confess I was in ignorance, and in some state of confusion, as to the real meaning and effect of this particular phrase in the section, and I express my indebtedness to Mr. Havers, for the prosecutor, for having made the matter, as far as I am concerned, perfectly clear. I would say if one was looking for a definition of the phrase “close-ringed” it means ringed by a complete ring, which is not capable of being forced apart or broken except, of course, with the intention of damaging it. I contrast a closed-ring of that sort — it might take the form, I suppose, of an elastic band or of a metal circle ring — with the type of ring which sometimes exists which is made into a ring when a tongue is placed through a slot and then drawn back; that is a ring which can be undone and is not close-ringed. In this case what is contemplated, according to Mr. Havers, and I accept it, is that with a young bird of this sort between three and ten days after hatching a closed-ring of the type described is forced over its claws, which are obviously brought together so as to admit the passage of the ring, and it is then permanently on or around the bird’s leg, and as it grows, it would be impossible to take that ring off because the claws and the like would have rendered a repetition of the earlier manoeuvre impossible.
Therefore, approaching the matter this way, I can well understand how the justices came to the conclusion that this was not a close-ringed specimen, because they could take the ring off. If that were the only issue, I should not find any difficulty in upholding their decision. But the real point of substance in this case arose from the words “offer for sale,” and it is to be noted in section 6 of the Act of 1954 that the operative words are “any person sells, offers for sale or has in his possession for sale.” For some reason which Mr. Havers for the prosecutor has not been able to explain, those responsible for the prosecution in this case chose, out of the trio of possible offences, the one which could not succeed. There was a sale here, in my view, because Mr. Thompson sent his cheque and the bird was sent in reply; and a completed sale. On the evidence there was also a plain case of the appellant having in possession for sale this particular bird. But they chose to prosecute him for offering for sale, and they relied on the advertisement.
A similar point arose before this court in 1960 dealing, it is true, with a different statute but with the same words, in Fisher v. Bell. The relevant words of section 1 (1) of the Restriction of Offensive Weapons Act 1959, in that case were: “Any person who … offers for sale. … (a) any knife. …” Lord Parker C.J., in giving judgment said:
“The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I confess that I think that most lay people and, indeed, I myself when I first read the papers, would be inclined to the view that to say that if a knife was displayed in a window like that with a price attached to it was not offering it for sale was just nonsense. In ordinary language it is there inviting people to buy it, and it is for sale; but any statute must of course be looked at in the light of the general law of the country.”
The words are the same here “offer for sale,” and in my judgment the law of the country is equally plain as it was in regard to articles in a shop window, namely that the insertion of an advertisement in the form adopted here under the title “Classified Advertisements” is simply an invitation to treat.
That is really sufficient to dispose of this case. I should perhaps in passing observe that the editors of the publication Criminal Law Review had an article dealing with Fisher v. Bell in which a way round that decision was at least contemplated, suggesting that while there might be one meaning of the phrase “offer for sale” in the law of contract, a criminal court might take a stricter view, particularly having in mind the purpose of the Act, in Fisher v. Bell the stocking of flick knives, and in this case the selling of wild birds. But for my part that is met entirely by the quotation which appears in Lord Parker’s judgment in Fisher v. Bell, that “It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation.”
I would allow this appeal and quash the conviction.
Grainger & Son v Gough [1896] AC 325
Circulation of a wine catalogue was an invitation to treat.
Gibbons v Proctor (1891) 64 LT 594
Advertisements promising rewards for the recovery of lost property are generally construed as offers.
Williams v Cawardine (1833) 5 C & P 566
Walter Carwardine was murdered. The plaintiff, Mrs Williams, gave evidence against two suspects, but did not say all she knew. The suspects were acquitted. The victim’s brother and defendant, Mr Cawardine, published a handbill, stating there would be a reward for information leading to the discovery of Cawardine’s murderer. Mrs Williams then gave more information which led to the conviction of two men (including a Mr John Williams, the plaintiff’s husband). She claimed the reward. Mr Carwardine refused to pay. At the trial her motives were examined. It was found that she knew about the reward, but that she did not give information specifically to get the reward. It was apparent that after the first murder trial, Mrs Williams had been savagely beaten by Mr Williams.
The Court held, that the plaintiff was entitled to recover the reward. The advertisement amounted to a general promise or contract to pay the offered reward to any person who performed the condition mentioned in it, namely, who gave the information – motives were irrelevant.
Littledale J: “If the person knows of the handbill and does the thing, that is quite enough.” Patteson J said “We cannot go into the plaintiff’s motives.”
The case is also authority for the rule that the offer must be communicated.
In R v Clarke (1927) information was given in connection with a reward, the prime motivation being the obtaining of a royal pardon. In Williams v Carawrdine the judges were not concerned with the motive. In R v Clarke the High Court of Australia held that motive was important.
Wikipedia notes: Higgins J interpreted the evidence to say that Clarke had forgotten about the offer of the reward. Starke J and Isaacs ACJ only went so far as to say that he had not intended to accept the offer. The Court held it was necessary to act in “reliance on” an offer to accept it and therefore create a contract. Starke J said “the performance of some of the conditions required by the offer also establishes prima facie an acceptance of the offer.” But here it was held that the evidence showed, Mr Clarke was not acting on the offer. So a presumption that conduct which appeared to be an acceptance was relying on an offer was displaced.
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Adverts giving rise to unilateral contracts are generally regarded as offers. It is, however, always a matter of construction.
Carlill v Carbolic Smokeball Co Ltd [1893] 1 QB 256
R v Warwickshire, ex parte Johnson [1993] AC 583.
A shop notice stating that “We will beat any TV…price by £20” gave rise to a continuing offer, so it became a misleading sign under consumer protection law when the shop refused to honour it.
The manager of a shop was not necessarily liable for a misleading price indication in the shop. There had been a national price reduction advertisement. A customer came into the shop to try to buy a television under the scheme. The store manager refused. The manager was charged with and convicted of giving misleading information as to price. Held: The appeal was allowed. Looking at statements made in Parliament on the passing of the Act, it could be seen that employees as such were exempted from liability for statements made by their employers.
Consumer Protection Act 1987 20(1)
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3.2.3 Negotiations for the sale of land
Land transactions must now by made in writing under the Law of Property (Miscellaneous Provisions) Act 1989 . However even cases predating the Act show that clear evidence of an intention to be bound, and the existence of a certain offer, were needed in cases involving land.
Harvey v Facey [1893] AC 552
P telegraphed “Will you sell us ‘Bumper Hall Pen’? Telegraph lowest cash price” D replied “Lowest cash price….£900” P telegraphed “We agree to buy….for £900 asked by you. Please send us title deed.”
HELD: D’s telegram was an invitation to treat not an offer.
Spencer v Harding (1870) LR 5 CP 561
“We are instructed to offer…by sale by tender” was held to be an invitation to treat.
Bigg v Boyd Gibbons Ltd [1971] 1 WLR 913
“For a quick sale I would accept £26,000” was held to be an offer capable of acceptance.
Clifton v Palumbo [1944] 2 All ER 497
“I am prepared to offer you my estate for £600,000.”
Because the estate was large and scattered the Court of Appeal held that this was not a definite offer. The price was but one issue to be settled between the parties.
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3.2.4 Tenders and standing offers
An announcement that contracts for the provision of goods or services is open to tender, is an invitation to treat and not an offer.
Spencer v Harding (1870) LR 5 CP 561
D issued a circular offering for sale certain stock in trade for which tenders were invited.
Harvela Investments v Royal Trust Co of Canada Ltd [1986] 2 AC 207
In cases where the standing offer is in effect a unilateral offer, complying with the rules on certainty and clarity of intention, it will not be held to be an invitation to treat but can be accepted and create a binding contract.
See: Great Northern Railway v Witham (1873) LR 9 CP 16
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3.2.5 Auction sales
The call for bids is an invitation to treat. The bid is an offer. The auctioneer may accept or reject such offers.
Payne v Cave (1789) 3 Term Rep 148
Section 57 Sale of Goods Act 1979
57 Auction sales
(1) Where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.
(2) A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may retract his bid.
(3) A sale by auction may be notified to be subject to a reserve or upset price, and a right to bid may also be reserved expressly by or on behalf of the seller.
(4) Where a sale by auction is not notified to be subject to a right to bid by or on behalf of the seller, it is not lawful for the seller to bid himself or to employ any person to bid at the sale, or for the auctioneer knowingly to take any bid from the seller or any such person.
(5) A sale contravening subsection (4) above may be treated as fraudulent by the buyer.
(6) Where, in respect of a sale by auction, a right to bid is expressly reserved (but not otherwise) the seller or any one person on his behalf may bid at the auction.
McManus v Fortescue [1907] 2 KB 1
Auctions subject to reserve:
No contract if bids fail to reach advertised/notified reserve.
No contract between owner of property and highest bidder if auctioneer fails to accept highest bid.
Warlow v Harrison (1859) 1 E & E 309
The aggrieved bidder would, in such a case, be able to sue the auctioneer for breach of contract.
An advertisement that an auction is to be held is an invitation to treat, not an offer, and no liability arises in contract if the auction is later cancelled.
It is not decided whether these rules will require adjustment for electronic auctions aimed at consumers e.g. Ebay.
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3.3 Termination of Offer
An offer remains ‘live’ that is, capable of being accepted, until terminated. Termination may occur in six ways:
Revocation
Rejection
Lapse of time
Death
Insanity, incapacity, impossibility
Occurrence of a terminating condition.
Revocation
The offeror may revoke his offer at any time up until acceptance
Byrne v Van Tienhoven (1880) 5 CPD 344
On 1 October Van Tienhoven wrote offering tin plates for sale to Byrne, who was in New York . They sent a letter revoking the offer on the 8th, which did not reach New York until the 20th. Byrne received the first letter offering plates on the 11th, and sent a telegram back the same day accepting the offer. A letter was then sent on the 15th again confirming the acceptance of the offer.
Lindley J:
“There is no doubt an offer can be withdrawn before it is accepted, and it is immaterial whether the offer is expressed to be open for acceptance for a given time or not. The offer was posted on the 1st of October, the withdrawal was posted on the 8th, and did not reach the plaintiff until after he had posted his letter of the 11th accepting the offer. It may be taken as now settled that where an offer is made and accepted by letters sent through the post, the contract is completed the moment the offer is posted: Harris’s Case ; Dunlop v Higgins , even although it never reaches its destination. When, however, those authorities are looked at, it will be seen that they are based upon the principle that the writer of the offer has expressly or impliedly assented to treat an answer to him by a letter duly posted as a sufficient acceptance and notification to himself, or, in other words, he has made the post office his agent to receive the acceptance and notification of it. But this principle appears to me to be inapplicable to the case of the withdrawal of an offer. In this particular case I find no authority in fact given by the plaintiffs to the defendants to notify a withdrawal of their offer by merely posting a letter, and there is no legal principle or decision which compels me to hold, contrary to the fact, that the letter of the 8th of October is to be treated as communicated to the plaintiff on that day or on any day before the 20th, when the letter reached him.”
Revocation must be communicated and is effective upon receipt.
Offeror promises not to revoke his offer before a specified date
Such promises are unenforceable unless supported by consideration, that is something of value in return.
Routledge v Grant (1828) 4 Bing 653
Offer open for six weeks. Entitled to revoke before expiration of six weeks. Offeree could only insist on six week period if he had bought an option supported by separate consideration.
Revocation must be communicated
Dickinson v Dodds (1876) 2 Ch D 463
Revocation need not be communicated directly. It is sufficient that Offeror knew of revocation before purported acceptance.
James, L.J:
The document, though beginning, “I hereby agree to sell,” was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff being minded not to complete the bargain at that time adds this memorandum: “This offer is to be left over until Friday, 9 o’clock a.m. 12th June 1874. “That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o’clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o’clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, “Now I withdraw my offer.” It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, “I withdraw the offer.” This is evidence from the Plaintiff’s own statements in the bill.
The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring to bind him, “I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o’clock the next morning, and I went to the train just before 9 o’clock, in order that I might catch him and give him my notice of acceptance just before 9 o’clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper.” It is to my mind quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.
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Revocation of unilateral offers
X promises to pay £1000 to anyone who swims from Dover to Calais. Y starts swimming. Half way across the Channel X communicates the revocation of the offer to Y.
If the general rule was applied – Y would have no claim. An offer may be withdrawn at any time up until acceptance.
This is clearly unfair in the case of a unilateral contract where acceptance if the completion of the act required.
The solution lies in the concept of the ‘two contracts’. The first offer is an offer that X will not withdraw his offer until Y is given a reasonable opportunity of completing the act required. The consideration for this unilateral offer being the commencement of performance of the act required under the main contract. The second offer – the main offer – is the offer to pay £100 to the first person to swim from Dover to Calais. X may not withdraw his offer once Y has begun swimming but is liable to pay the £100 only if Y completes the required task – if Y reaches Calais.
This idea has been tendered in America (McGovney 27 Harvard Law Review 644).
CASE STUDY on Revocation of Unlaiteral Contracts
Daulia Ltd v Four Millbank Nominees Ltd [1978] 2 All ER 557
Daulia Ltd wanted to buy the premises in, London from Four Millbank Nominees Ltd, Formal contracts were never exchanged, but Daulia argued they did obtain a unilateral contract by the first defendants that they would enter into a written contract of sale, if they attended Four Millbank’s offices with a draft contract on terms already negotiated and a deposit. But when Daulia Ltd’s representatives attended, Four Millbank refused to exchange. Daulia Ltd claimed breach of the oral agreement.
At first instance, Brightman J struck out Daulia Ltd’s statement of claim for failing to comply with s.40(1) of the Law of Property Act 1925 (now, the requirement of form for contracts for interests in land under s.2, Law of Property (Miscellaneous Provisions) Act 1989 ). Daulia Ltd appealed.
LORD JUSTICE GOFF: This is an appeal from an order dated 31st March 1977 of Mr. Justice Brightman made on a Notion under 0.18 r.19 whereby he directed that as against the first defendants the statement of claim should be struck out and the action dismissed with costs.
The appellant plaintiffs were keen to buy certain commercial and residential properties from the first defendants who were in a position to sell those properties as mortgagees.
The appellants never in fact succeeded in obtaining an exchange of contracts or any other written agreement for sale and purchase, but they claim they did obtain a unilateral contract by the first defendants that they would enter into a written contract of sale on certain agreed terms and the appellants claim damages for breach of that unilateral contract.
The facts on which they base that claim are extensively set forth in the re-amended statement of claim but I need only refer to them quite briefly.
I take them from the following paragraphs of the re-amended statement of claim:
“7. On Tuesday, 21st December, 1976 the terms of the proposed sale between the plaintiffs and the first defendants were finally agreed between one Shebson acting on behalf of the plaintiffs and the said Langley”
– who was a partner in the second defendants and acting on behalf of the first defendants –
“whereby the plaintiffs were to purchase the said properties from the first defendants for a price of £823,000 payable by a deposit of £41,250 which said deposit was to be payable by a Bankers Draft and the balance of £783,750 was to be payable on completion. The said terms were partly oral and partly in writing. Insofar as they were in writing they were contained in the draft contracts which the plaintiffs and the first defendants already had. Insofar as they were oral, they had been agreed on the telephone between the said Shebson and the said Langley, and the said oral terms were evidenced by riders to the said contract sent by the said Shebson to the said Langley on Tuesday, 21st December, 1976”.
“8. On the afternoon of Tuesday, 21st December, 1976 one Osgoodby acting on behalf of the first defendants promised the said Shebson acting on behalf of the plaintiffs that the first defendants would enter into a contract for the sale of the said properties with the plaintiffs if the plaintiffs procured a Bankers Draft for the said deposit, attended at the first defendants offices before 10.00 a.m. on Wednesday, 22nd December 1976, at 4, Millbank and tendered to the first defendants the plaintiffs’ part of the contract in the terms already agreed and the said Bankers Draft”.
“In reliance on the said promise the plaintiffs procured the Bankers Draft for the said deposit, executed and signed their part of the said contract for sale in the terms already agreed”.
“9. The plaintiffs duly attended at the first defendants’ said offices before 10.00 a.m. on Wednesday, 22nd December, 1976 with their said deposit and their said part of the contract for sale ready for tender to the first defendants. But the first defendants refused to exchange their part of the said contract for sale with the plaintiffs”.
Mr. Justice Brightman held that those facts disclosed no cause of action, and the appellants now appeal to this court.
Under this procedure the facts so pleaded must be taken as admitted, and they give rise to three questions of law: (a) Do they establish a valid unilateral contract? If they do, then there is no question but that they disclose a breach, (b) If the answer to (a) is Yes then is that contract unenforceable for want of a written note or memorandum to satisfy Section 40 of the Law of Property Act 1925, unless there be sufficient acts of part performance to take the case out of the statute? (c) If Section 40 applies are there such acts?
It is well settled that it is only in plain and obvious cases that the court should exercise its powers under the summary process provided by 0.18 r.19 and it was suggested that these questions should not be resolved by us but should, in any event go to trial.
I am satisfied, however, that so far as the facts are concerned the appellants’ position cannot be improved by evidence beyond that in which they stand on the facts pleaded which for the purposes of this motion and appeal are taken to be admitted. Further the points of law have been very fully argued before us, and I have no doubt that we ought to determine them now.
I therefore turn to the first question. Was there a concluded unilateral contract by the first defendants to enter into a contract for sale on the agreed terms?
The concept of a unilateral or “if contract” is somewhat anomalous, because it is clear that, at all events until the offeree starts to perform the condition, there is no contract at all, but merely an offer which the offeror is free to revoke.
Doubts have been expressed whether the offeror becomes bound so soon as the offeree starts to perform or satisfy the condition,-or only when he has fully done so.
In my judgment, however, we are not concerned in this case with any such problem, because in my view the appellants had fully performed or satisfied the condition when they presented themselves at the time and place appointed with a banker’s draft for the deposit, and their part of the written contract for sale duly engrossed and signed and there tendered the same, which I understand to mean proferred it for exchange. Actual exchange, which never took place, would not in my view have been part of the satisfaction of the condition but something additional which was inherently necessary to be done by the appellants to enable, not to bind, the first defendants to perform the unilateral contract.
Accordingly in my judgment, the answer to the first question must be in the affirmative.
Even if my reasoning so far be wrong the conclusion in my view is still the same for the following reasons.
Whilst I think the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.
This brings me to the second question.
There are certain English cases touching this matter, but none precisely in point.
The appellants rely strongly on Warlow v. Harrison 1 Ellis & Ellis 295 and Johnson v. Boyes (1899) 2 Chancery, 73.
In the former an auctioneer knocked down as sold for 61 guineas, which was bid by the owner, a pony which according to the particulars was to be sold without reserve, and the auctioneer, not the vendor, was sued for damages by the plaintiff who was the highest independent bidder at 60 guineas.
In the Court of Queen’s Bench, see page 308, Lord Campbell held that there was no contract because the vendor had revoked the auctioneer’s authority to accept the plaintiff’s bid, and therefore no question of the impact of Section 17 of the Statute of Frauds arose.
The Exchequer Chamber agreed with this conclusion on the pleadings as they stood, but allowed an amendment, and held the defendant liable; per Baron Martin as upon a contract that the sale should be without reserve, and per Mr. Justice Willes and Mr. Justice Bramwell upon a breach of warranty of authority to sell without reserve, and at page 316 Baron Martin said:
“Upon the same principle, it seems to us that the highest bona fide bidder at an auction may sue the auctioneer as upon a contract that the sale shall be without reserve. We think the auctioneer who puts the property up for sale upon such a condition pledges himself that the sale shall be without reserve; or, in other words, contracts that it shall be so; and that this contract is made with the highest bona fide bidder; and in case of breach of it, that he has a right of action against the auctioneer. The case is not at all affected by the l7th Section of the Statute of Frauds, which relates only to direct sales, and not to contracts relating to or connected with them”.
This case affords support for the appellants’ contention as far as it goes, but it is distinguishable, since there the action was against the auctioneer, not the vendor, and it was not upon a contract by the auctioneer that he himself would sell to the highest bidder but that his principal would do so.
Warlow v. Harrison was approved by Mr. Justice Cozens Hardy in Johnson v. Boyes (1899) 2 Chancery at page 77, where he related it to the vendor himself, saying
“A vendor who offers property for sale by auction on the terms of printed conditions can be made liable to a member of the public who accepts the offer if those conditions be violated: see Warlow v. Harrison 1 Ellis & Ellis,295, and the recent case of Carlill v. Carbolic Smoke Ball Co. (1893) 1 Queen’s Bench, 256. Nor do I think that the Statute of Frauds would afford any defence to such an action. The plaintiff is not suing on a contract to purchase land: she is suing simply because her agent, in breach of the first and second conditions of sale, was not allowed to sign a contract which would have resulted in her becoming the purchaser of the land. I think this conclusion results from the decision of the Exchequer Chamber in Warlow v. Harrison”.
This however, was merely obiter because not only was the action once again not against the vendor but against the auctioneer, but also the court held that there could be no liability anyway, quite apart from the effect of the statute, because the plaintiff’s agent had not tendered cash, but only a cheque, wnich the auctioneer was not bound to accept. The case is in any event unsatisfactory because the complaint made was that the auctioneer had refused to allow the plaintiff’s agent to sign a memorandum on her behalf, but that would not have been of any use to her. What was required was a note or memorandum signed by or on behalf of the vendor.
On the other hand the case of Rainbow v. Howkins (1904) 2 King’s Bench, 322, so far as it goes tells against the appellants but again it is distinguishable, because the action was brought on the ground that the auctioneer was personally liable as if he were vendor under a contract of sale not upon a collateral contract, and alternatively for breach of warranty of authority, but it was held that he could not be sued on the first ground because of the statute, and could not be sued for breach of warranty of authority, because there was none since, apart from the statute, he had effectively bound the vendor.
Mr. Hoffman also relied on Wood v. Midgley reported at first instance in 2 Smale & Gifford, page 115, and on appeal 5 de Gex Macnaughten & Gordon, 41. That, however, was not a case of an agreement to enter into a written agreement but of a concluded oral agreement for sale with a concurrent or collateral agreement to reduce it to writing, so that again is distinguishable.
In these circumstances in my judgment it is necessary to consider how the matter stands in principle. As I see it the question is whether the unilateral contract is – and I quote these words from Section 40 –
“a contract for the sale or other disposition of land or any interest in land”.
It is clear to me that ex hypothesi it is not a contract for the sale of land or any interest in land because it is a separate and independent contract to enter into such a contract.
In my judgment, however, it is equally clearly a contract for some other disposition of an interest in land.
It is not necessary in my view that the interest in land to be disposed of should actually exist at the time of the contract. I cannot doubt that a contract for valuable consideration to grant an easement over Blackacre would be a contract for the disposition of an interest in land within the meaning of the section.
Now, in the present case we have a contract to enter into a proper written contract for the sale of land because a contract if entered into would be specifically enforceable and would therefore give the appellants a right to the land in equity and so would create and give them an equitable interest in the land. It follows in my judgment that the unilateral contract was a contract to dispose of an interest in land, because it was a contract to do something which would have that effect in law.
The appellants say “But we are not claiming specific performance; only damages”. That, however, in my view is an irrelevant consideration for two reasons. The first, which is I think conclusive, is that we are not concerned with whether the “unilateral contract” could be specifically enforced so as actually to create an interest in land, but whether it is a contract to do that which, if done, would create such an interest. The words of the section look only to the contract.
The second is that the appellants cannot escape the impact of the section by limiting the nature of the relief they seek, and moreover, the damages for breach of the unilateral contract must, as I see it, be exactly the same as damages for breach of the contract of sale would have been if contracts had been exchanged and then broken by the appellants.
If, however, contrary to my view it be necessary that the unilateral contract should be one capable of specific performance, in my judgment it is so notwithstanding the decision of Mr. Justice Stirling on motion in Johnson v. Boyes Volume 42 Solicitors’ Journal page 610, which with all respect to that learned judge is in my view incorrect.
For this purpose one must regard the matter apart from Section 40, for if one postulates that the section applies one begs the whole question. So regarded, I cannot see how a vendor can escape an order for specific performance by agreeing (with sufficient particularity to be effective in law) to agree to soil rather than by a direct agreement to sell.
The dictum of Lord Wright in Hillas v. Arcos 147 Law Journal at page 515 “a contract de praesenti to enter into what, in law, is an enforceable contract, is simply that enforceable contract, and no more and no less”, with which I respectfully agree, does not directly apply, because prior to exchange of contracts which never took place the appellants were not themselves bound to purchase or to enter into a contract to purchase. They could have resiled at the very last moment, even after tender, so that this was not a contract between A and B to make a contract between A and B, but a unilateral contract by A to enter into a particular contract with B, but in my view the principle must be the same.
I am fortified in this conclusion by the American case of Union Car Advertising Co. v. Boston Elevated Railway Co. a decision of the Circuit Court of Appeals, First Circuit, reported in 26 Federal Reports 2nd Series, page 755.
Mr. Gregory pointed out that the court said (at page 759) that “. . . it was virtually conceded by the plaintiff at the argument that under the law of Massachusetts an oral contract to execute a written contract for the sale or transfer of an interest in land is within the statute of frauds and invalid” but the case before the court was not such a case but one of a contract not to be performed within the year. Therefore, he said this American decision does not help because the position with regard to a contract for the sale or other disposition of an interest in land was not before the court, and anyway the court was dealing only with the law of Massachusetts.
So far as the second point is concerned the case is none the less persuasive authority, and as to the first, the citations in the judgment from other cases show that the concession was in truth in accordance with the law of that State, and show that law to be founded upon reasoning which commends itself to me and entirely accords with my own.
Thus in Sarkisian v. Teele where the subject matter was an oral contract to execute an unsigned written contract to sell stock in trade and to let the business premises, tne court said (see page 758):
“If the bill is considered as seeking to enforce an oral promise by the defendant to enter into the formal writing, as containing all the essential elements of the contract, it cannot be maintained”,
and again
“By the statute of Frauds such an agreement was required to be in writing, and an oral promise to execute a contract embodying these terms also comes within the statute”.
Further in McLachlin v. Village of Whitehall (see again page 758):
“. . . the trustees of the defendant village entered into an oral contract wherein it was agreed that if the plaintiff would increase his plant, so that he could furnish incandescent lights for private houses in the village, the trustees would renew . . “.
the written contract he then had for lighting its street, which would otherwise expire in 1897- In that case the court said:
“The question is therefore presented whether damages can be recovered for the broach of an oral agreement to enter into a contract which, under the statute of frauds, is required to be in writing. It is true that the oral agreement to enter into the written contract might be fully performed within a year or within a day. The action is not in form one to recover damages for a breach of contract for lighting the streets and public places for a term of five years, but for damages consequent upon a breach of the verbal agreement to award such a contract to the plaintiff. The damages, however, claimed as consequent upon such breach are none other than the same damages as would have been recoverable for a breach of the contract for lighting if it had been awarded to the plaintiff. It is conceded that a contract for lighting for a term of five years would be void if not in writing, but if an oral agreement to enter into such a written contract is not also void, where the damages claimed for the breach of the oral agreement are not independent of it, but necessarily are the same as those which would arise from the breach of the written contract, the door would be open for the practical nullification of the statute of frauds in a large class of cases”.
The law is similarly stated in 72 American Jurist, 2nd Edition, Section 4.
“The general rule is that an oral agreement to reduce to writing a contract which is within the scope of the operation of the Statute of Frauds or to sign an agreement which the Statute of Frauds requires to be in writing is invalid and unenforceable”.
In my judgment, therefore, the unilateral contract in this case is prima facie unenforceable, and I turn to the third question.
The appellants rely on all and every of the acts done by them to satisfy the conditions of the “unilateral contract”, as being also sufficient acts of part performance.
The first defendants say that cannot be so because nothing can be part performance if done before there is any binding contract Mr. Hoffman puts his case as high as saying that by definition there can never be part performance of a unilateral contract.
I doubt whether that is right as a general principle, since in most cases the performance of the condition by the offeree is also the discharge of all his obligations and is certainly done pursuant to the inchoate contract. I think in many cases the offeree’s acts may amount to part performance, though I doubt whether in this case they caused sufficient prejudice to the appellants to raise an equity on which the first defendants could be charged.
In my view, however, it is unnecessary to decide these questions since in my judgment the case fails because none of the alleged acts of part performance of themselves suggest that there was any contract between the parties. Indeed they point to the exact opposite and suggest that the parties were about to make or contemplated making a contract. It is only if one first looks to see what the oral contract is, and finds that it is a unilateral contract, such as pleaded in this case, that the acts can begin to be regarded as part performance, but that is an inquiry which one is not permitted to make: see per Lord Reid in Steadman v. Steadman [1976] AC at page 541, just above E, where he said:
“I think that there has been some confusion between this supposed rule and another perfectly good rule. You must not first look at the oral contract and then see whether the alleged acts of part performance are consistent with it. You must first look at the alleged acts of part performance to see whether they prove that there must have been a contract and it is only if they do so prove that you can bring in the oral contract”,
and again at H:
“In my view, unless the law is to be divorced from reason and principle, the rule must be that you take the whole circumstances, leaving aside evidence about the oral contract, to see whether it is proved that the acts relied on were done in reliance on a contract: that will be proved if it is shown to be more probable than not”.
Lord Salmon appears to have taken a contrary view: see page 571 where he said at G:
“In the present case the payment of £100 by the husband to his wife who had divorced him – looked at without regard to its surrounding circumstances – would not be any evidence of any contract, let alone of a contract concerning land”.
The other members of the court did not state the position so specifically one way or the other, but both Viscount Bilhorne at page 553 at F and Lord Simon at page 561 at G accepted, the statement in Pry on Specific Performance 6th Edition, page 278, Section 582:
“The true principle however of the operation of acts of part performance seems only to require that the acts in question be such as must be referred to some contract, and may be referred to the alleged one; that they prove the existence of some contract and are consistent with the contract alleged”,
approved by Lord Justice Upjohn in Kingswood Estate Co. Ltd. v. Anderson (1963) 2 Queen’s Bench at 189. Here, of course, the acts do not prove any contract.
The appellants argue that whilst one may not look to see what oral contract is alleged, one may look at the promise made as part of the surrounding circumstances and then the alleged acts of part performance are explained and shown to be referable to the existence of a contract; but that, with all respect, I reject as too subtle, and in reality looking to and examining the alleged acts of part performance in the light of the alleged contract.
For these reasons in my judgment the appellants fail on the third question also, and I would dismiss this appeal, although I do so with considerable regret as the respondents’ conduct appears to me to be unmeritorious.
See: Kathleen Soulsbury v Elizabeth Soulsbury [2007] EWCA Civ 969 and application of Lord Dennin’s approach in Errington v Errington to the effect that where a person having started to perform the terms of the unilateral offer and continues to do so, the unilaterial offer may not be revoked. Goff LJ’s dictum in Daulia applied.
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3.3.2 Rejection
If the offeree rejects the offer the offer terminates.
If the offeror makes a counter-offer, this is a rejection of the offer. The offeree may not then go back and accept the offer, because the offer has terminated by rejection.
Hyde v Wrench (1840) 3 Beav 334
D offered farm for £1000. P offered £950 which D refused. P then tried to ‘accept’ original £1000 offer. HELD: original offer rejected by counter-offer. Original offer no longer existed.
The Master of the Rolls (Lord Langdale): Under the circumstances in this bill, I think there exists no valid binding contract between the parties for the purchase of the property. The Defendant offered to sell it for £1000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract; instead of that, the Plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the Defendant. I think that it was not afterwards competent for him to revive the proposal of the Defendant, by tendering an acceptance of it; and that, therefore, there exists no obligation of any sort between the parties; the demurrer must be allowed.
Tinn v Hoffman & Co (1873) 29 LT 271
Offer to sell 1200 tons met with a request to purchase 800. This was a counter-offer which rejected the offer.
Gibson v Manchester City Council [1979] 1 All ER 972
An enquiry whether the vendor would sell for a lower price was not a counter-offer, ‘merely exploratory.’
In practice it is often hard to know where the courts will draw the line between a counter-offer (terminating the offer) and a communication which is merely a request for clarification or further details (which is not a counter-offer, so does not terminate the offer).
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3.3.3 Lapse of time
Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Ex Ch 109
M applied for shares in the hotel company. He heard nothing and then after 5 months he received a letter of acceptance. By this time he had decided that he did not want the shares.
HELD : The lapse of time was so great that the offer to buy the shares had lapsed.
Offers will lapse on the expiration of the time stated for the lapse (if such be stated) or upon the expiration of a reasonable time. What is reasonable is a question of fact in the circumstances of the case.
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3.3.4 Death
Where an offer depends on the continued existence of the offeror, the offer will lapse upon the death of the offeror.
In other cases the offer will be unaffected by the death of the offeror and may be accepted and bind the estate.
Bradbury v Morgan (1862) 1 H & C 249
3.3.5 Insanity, incapacity, impossibility
Some old cases say companies are not bound by contracts made ultra vires the memorandum of association. In most cases this is no longer true ( Companies Act 1985 s.35).
3.3.6 Occurrence of a terminating condition
If an offer is made subject to a terminating condition the offer will lapse if the terminating condition arises.
Questions
1. Not every bargain gives rise to a contract. Illustrate the proposition by reference to decided cases. In what circumstances is a court likely to hold an agreement legally binding?
2. Distinguish between an offer and an invitation to treat
Consider, with reasons, into which of the above categories each of the following may fall:
(a) a mail order catalogue
(b) a tender
(c) an advertisement of an auction which states: – “Goods to be sold to the highest bidder”
(d) a notice which states: “I will pay £100 to the first person who runs from London to Brighton.”
3. The display of goods in a shop window has been held to be an invitation to treat: Fisher v Bell [1961] 1 QB 394. What arguments can be put forward both for and against this rule?
4. To celebrate the opening of his shop Michael advertises on television and in the national press that he will sell five recently acquired Ming vases at 50% of their true value to the first five customers who enter his shop intending to purchase on the following Monday morning.
Consider the liability of the parties in the following sets of circumstances:
(a) Peter is the first party to enter the shop on Monday morning and asks for a Ming vase but Michael refuses to sell him one at the bargain price.
(b) Richard, the second customer to enter and a dealer in Ming vases, travels at great expense on behalf of a client to the shop but finds that the Ming vases are withdrawn from sale.