Law on Offer and Acceptance - Essay Example

? Law on Offer and Acceptance Offer and Acceptance A contract is a legally binding agreement made between two or more parties; be it natural persons or a corporate body, which is enforceable in a court of law. The existence of a contract requires at the most basic level is the presence of an offer and an acceptance. The main rule that governs contract law in common law jurisdictions that the offer is revocable until acceptance has occurred. Once acceptance has occurred a valid contract exists, and the offeror must fulfill the legitimate expectations created by the contract. An offer can be defined as an expression of a willing to contract, on particular terms which becomes binding, upon the acceptance of the one to whom it was directed to. The expression of a contract generally means the form in which the contract is embodied in. It could be expressed in a letter, in the traditional sense, an email, fax and construed from the conduct of the offeror communicating the main grounds for the contract terms. The case of Smith v Hughes defines what entails intention to create legally binding agreement entails. It was held that the court objectively deduct an intention, not on the basis of the offeror’s intention per se but on the premise of what a reasonable man would construe as intention. However, beyond the classic definition of an offer being a bilateral expression of willingness to contract; there are instances in which the court has interpreted unilateral contract and held that they were legally binding. An excellent example emerges from the case of Calil v Carbolic Smoke Ball Company. In this case, the smoke ball company, made an advertisement in the newspaper stating that it will give a reward of 100 pounds for anybody who used the smoke ball as prescribed and still gets influenza, a cold or a related disease. Calil on seeing the advertisement bought the smoke ball used it as per the instructions and, when she contracted the influenza she proceeded with the lawsuit. Lord Lindley, held that it emerged from the conduct of the offeror a waiver of the offeree duty to notify them acceptance from the nature of the public advertisement; and thus an acceptance by Calil was held to be valid thus they were instructed to pay the price of 100 pounds. There are cases in which an offer may be confused with an invitation to treat. An invitation to treat is not an offer, but an invitation of a negotiation of terms of a contract. This was illustrated in the case of Harley v Facey where the owner of some property had indicated that he was willing to sell his property at a certain rate. The person to whom this was directed took it as an offer and moved to court to enforce the said offer. It was held that it was an invitation to treat thus, made with the intention of receiving offers. There are four kinds of invitation to treat in common law in common law. One is an auction, where a bid is held to be an offer for the auctioneer to either accept or reject. In Payne v Cave, D made the highest bid for an item in an auction but withdrew the bid before the fall of the hammer. It was held that the bid was an offer and thus revocable before acceptance. Acceptance occurs at the fall of the hammer. An advertisement is also an invitation to treat and not an offer. In the case of Partridge v Crittenden, D made an advertisement for the sale of a protected species of birds and was sued under respective Act. It was held that the advertisement was a mere invitation to treat and not an offer. Exhibition for goods for sale like it is done in supermarkets constitute an invitation for customers to make offers and are not offers in itself. In the case of Fisher v Bell where it was held, displaying goods with the price on them was an invitation to treat and receive offers which the shopkeeper could either accept or reject. An invitation for tenders is the last example of invitations to treat and not an offer. Response to the tenders is the offers that the person who advertised the tenders can either accept or reject. Acceptance, on the other hand, may be defined a final expression of acquiesce to the terms of the offer. An assent is construed, not from the offeree intention or words, but from their action. If the offeree acts in such a manner that shows, for instance attempts to perform the terms of the offer or signs a contract or promises to perform the terms of the offer, then an acceptance of the offer has been made and thus a legally binding contract exists as was in the case of Wettern Electric Ltd v. Welsh Development Agency. There are various rules that govern the acceptance of an offer. The mode of acceptance for instance depends on the form of the contract. The basic rule is that acceptance must be communicated as was decided in the case of Powell v Lee and revocation as stated earlier and as was held in the case of Robophone Facilities Ltd v. Blank may be intimated any time before the communication of acceptance. The communication of acceptance maybe within a reasonable time, unless it is a unilateral contract like in the case of Carlil. The communication must also be done in a manner indicated by the terms of the offer. An offer, therefore, can only be accepted by the offeree to whom the offer was made too. A third party, like for instance an agent cannot accept an offer on behalf of the offeree. An offeror can also imply that communication of acceptance is not necessary, but in any case, silence cannot be the amount to acceptance as was decide in the case of Felthouse v Bindley. However, there instances when there are two companies both have different standard forms, and on the emergence of a dispute, the court is torn on which of the standard forms to use to show the existence of a final contract. In the case of Butler Machine Tool Co Ltd v. Ex-Cell-O Corporation (England) Ltd [1979] WLR 401 the matter was raised in regards to which standards form dictated the terms of their engagement. Lord Denning stated that all the documents should be analyzed in whole and in order to determine if there exists a contract. However, Lord Lawton and Bridge in the matter, stated that the traditional rules of offer and acceptance apply to the matter and that the last counter-offer before the beginning of performance made void all preceding offers. Thus, it was held that the last counter-offer and a non refusal by the other party implied acceptance. The postal rule of acceptance is another mode of acceptance that has potential of disputes. In this rule, in this rule acceptance of the offer dates from the moment of posting the letter in the mail box and should the offeror wish to revoke the offer, and so chooses to do so by letter, then the letter of revocation has no effect until it is received by the offeree. This was illustrated by the case of Henthron v Fraser in this case; X gave Y an option to buy some houses. The next day between noon and 1.00pm X posted a letter of withdrawal, which arrived at 5.00pm the same day. However, at 3.50pm that day, Y had posted a letter of acceptance that was delivered after X’s office had closed and, therefore, they did not read it until the following day. The court held that there was a valid contract as the important time was at 3.50pm the moment the letter of acceptance was posted. The withdrawal, although posted earlier, did not have any effect until it was delivered. The other rule of acceptance is that, as was held in the case of R v Clarke, it is made in response to an offer made and to the person to whom it is directed to. There are various instances when an offer is terminated. As stated earlier, an offer is only terminated before acceptance by the other party. One is revocation that happens when the offeror changes his mind due to a variety of reasons. The revocation thus must be communicated in a timely manner whose effect depends on the mode of communication as discussed above. Lapse of time indicates situations when an offer is terminated after a considerable amount of time has lapsed before the acceptance of the offer. The measure of reasonability depends on the subject matter of the offer. If X offers to sell his car to Y, the offer will not lapse as opposed to if the subject matter was tomatoes. Virji Kimji v Clutterbuck X order timber from Y. There was no reply from the offeree, but four and a half month later Y sent the consignment of timber. X successfully alleged that such a delay amounted to a lapse of time where by his original offer was revoked. A conditional offer is whereby X tell Y I will sell my house to you at a value of 10000 pounds if I get a new and better house. Thus, the validity of the offer is begged on the given condition. That X gets a new house. Thus if, it is impossible to get the new house, then the offer is terminated. Death is further another condition for termination of an offer. The death of offeror or the offeree terminated the offer since there would be no one to enforce. Counter-offers and rejection are also other means of terminating an offer. Should X make an offer to Y, it is supposed to be accepted in totality as it is. If Y varies it in any way, then that amounts to a counter offer which effectively terminates the first offer and goes to create a new offer from Y which X can either accept or reject. Thus, express rejection is also another way of terminating an offer. Bibliography Case citation Smith v Hughes (1871) LR 6 QB 597  Felthouse v. Bindley (1862) 142 ER 1037 Powell v Lee (1908) 99 L.T. 284 Wettern Electric Ltd v. Welsh Development Agency [1983] Q.B. 796 The Butler Machine Tool Co Ltd v. Ex-Cell-O Corporation (England) Ltd [1979] WLR 401 Virji Kimji v Clutterbuck 6 E.A.L.R. 56 Books Treitel, W E :(2011) The Law of Contract, 13th ed. Sweet & Maxwell Chen-Wishart. M. (2010) Contract Law, 3rd edition; Oxford University Press Read More