Formation — offer & acceptance

CON.01 — Formation: Offer & Acceptance

A contract needs offer + acceptance + consideration + intention to create legal relations + certainty. This note covers offer and acceptance.

Offer

An offer is a clear statement of terms made with intention to be bound on acceptance. Test it objectively (Smith v Hughes): would a reasonable person think the offeror intended to be bound?

Distinguish an offer from an invitation to treat (a willingness to negotiate, not an offer):

• Shop displays / goods on shelves — invitation to treat; offer is made by the customer at the till (Fisher v Bell; PSGB v Boots).
• Advertisements — usually invitations to treat (Partridge v Crittenden), but a unilateral offer if a clear promise + condition (Carlill v Carbolic Smoke Ball Co — deposit of £1,000 showed intent).
• Auctions — the bid is the offer; the auctioneer's request is an invitation to treat. Without reserve = unilateral offer to highest bidder (Barry v Davies).
• Tenders — invitation to treat; the tender is the offer (but obligation to consider conforming bids).

Termination of an offer

• Revocation — any time before acceptance, but must be communicated (Byrne v Van Tienhoven). Communication by a reliable third party suffices (Dickinson v Dodds). A unilateral offer cannot be revoked once performance has begun (Errington v Errington).
• Rejection / counter-offer — a counter-offer kills the original (Hyde v Wrench). A mere request for information does not (Stevenson v McLean).
• Lapse — of time, or death.

Acceptance

Unqualified assent to all terms. Key rules:

• Must be communicated to the offeror; silence is not acceptance (Felthouse v Bindley).
• Acceptance must match the offer (mirror image); "battle of the forms" usually decided by last set of terms (Butler Machine Tool).
• Postal rule — acceptance is effective when posted, not received (Adams v Lindsell) — only if post was reasonable and not excluded; does not apply to instantaneous communication (Entores; Brinkibon).
• Unilateral contracts — acceptance is by performing the act; no separate communication needed (Carlill).

Common SBAQ traps

• Treating a shop display/advert as an offer.
• Forgetting revocation must reach the offeree before acceptance.
• Misapplying the postal rule to email/telex (instantaneous = receipt rule).
• Counter-offer vs request for information.
• Battle-of-the-forms: identify who fired the "last shot".