OFFER

Topic of the day

- What is an Offer

- When is an Offer accepted

- When is an Offer terminated

WHAT IS AN OFFER

When understanding the concept of an offer in legal terms, it is important to break it down into its parts and look at relevant cases that helped shape its definition.

Definition of offer:

In legal terms, an offer is a clear and unequivocal proposal or expression of willingness to enter into a contract on specified terms. It is an essential element of contract law and must indicate an intention to be legally bound upon acceptance.

Key elements of an offer:

a. Clear intention: this is where the offeror must demonstrate a clear intention to be bound by the proposed terms.

b. Clarity: this is when the terms of the offer must be sufficiently specific and unambiguous to form the basis of an enforceable contract.

c. Communication: This required that the offer be communicated to the offeree either directly or by an acceptable means.

Relevant cases of offer:

a. Carlill v. Carbolic Smoke Ball Co. (1893): in this case, a carbolic smoke ball company advertises a reward for anyone who uses its product and still gets the flu. Mrs. Carlill used the product and became ill. The company argued it was not a valid offer. The court held that the advertisement constituted a unilateral offer. The offer is clear, specific and made to the public, and when someone fulfills the conditions outlined in the offer, a binding contract is formed.

b. Gibbons v. Proctor (1891): this is the case where Gibbons offers to sell Proctor an iron for a certain price. Proctor responded with a revised offer, but before Gibbons could accept it, Proctor sold the iron to another party. The court held that Proctor's counteroffer terminated the original offer. An offer can be terminated by a counteroffer, effectively rejecting the original terms.

c. R v Clark (1927): in this case, Inmate Clark provided police with information about a crime in exchange for a reduced sentence but the police already knew the information but did not notify Clark. The courts held that an offer must be communicated to the offeree to be valid and because the police knew this information before the offer was made, the offer made by Clark was not valid.

WHEN IS AN OFFER ACCEPTED

Acceptance is a key element in contract law that underpins the formation of a legally binding agreement. Below is a summary of when an offer is deemed accepted, along with relevant case and legal sections.

Acceptance of an offer:

Acceptance is an expression of the offeree's agreement to the terms of the offer. In order to form a contract, acceptance must be clear and reflect the terms of the offer.

Key elements for acceptance:

a. Mirror Rule: in this rule, the acceptance must reflect the terms of the offer as any changes will constitute a counter-offer.

b. Communication: Acceptance must be communicated to the offeror unless the offer specifies a specific mode of acceptance.

Relevant cases on acceptance:

a. Felthouse v. Bindley (1862): in this case, Felthouse offered to buy a horse from Bindley, stating that if he heard nothing he would consider the horse his and the nephew mistakenly sold the horse at auction. The court held that silence cannot constitute acceptance. The offeree must engage in positive conduct or communication in order to accept the offer.

b. Entores Ltd v Miles Far East Corp (1955): this is a case where Entores while in the UK sent a letter of acceptance via telex to Miles Far East Corp in the Netherlands for the sale of goods. The court held that acceptance is valid both at the time and place of communication. In this case, receipt of the telex in the Netherlands would constitute acceptance, making the contract binding in England.

c. R v Clark (1927): (also relevant to an offer) in this case, Inmate Clark provided police with information about a crime in exchange for a reduced sentence but the police already knew the information but did not notify Clark. The courts held that an offer must be communicated to the offeree to be valid and because the police knew this information before the offer was made, the offer made by Clark was not valid.

WHEN IS AN OFFER TERMINATED

An offer terminates when certain actions or circumstances invalidate the offer, making it no longer acceptable. Below are details of when an offer may be terminated, along with relevant legal terms and cases.

Methods of terminating the offer:

a. Where there is revocation by the offeror: this is where the offeror may revoke an offer at any time before acceptance, as long as the revocation is effectively communicated to the offeree.

b. Where the offeree refuses or makes a counter-offer: Any rejection or counteroffer by the offeree terminates the original offer. In the case of a counteroffer, the offeree becomes the offeror.

c. Where time passes: If an offer specifies a period for acceptance, the offer terminates if the offer is not accepted within this period. If no time limit is specified, the offer will expire after a reasonable period of time.

d. In the case of death or incapacitation: An offer terminates if the offeror or the offeree dies or becomes incapacitated before acceptance.

Relevant cases on offer termination:

a. Routledge v Grant (1828): in this case, Grant offered to sell a property to Routledge and said the offer would remain open until Friday but on Thursday, Grant sold the property to someone else. Routledge then tried to accept the offer on Friday. The court ruled that the offer effectively terminated when Grant sold the property to someone else before the stated closing date. Routledge was unable to accept the offer as the property was no longer available.

b. Ramsgate Victoria Hotel Co. v. Montefiore (1866): this is a case where Montefiore offered to buy stock in a hotel company. The offer was made in June, but he didn't hear back until the company accepted it in November. Montefiore refused to continue. The court held that the offer had expired due to unreasonable delay in accepting it. Because the offer has expired, Montefiore is under no obligation to purchase the shares.

c. Shreve v. Franklin (1815): in this case, Shreve made an offer to Franklin before setting off on his trip. Before receiving the admission letter, Shreve learned of the unfavorable conditions and withdrew the admission letter upon his return. Franklin accepted after Shreve returned but after revocation. The court held that when Shreve revoked the offer, the offer effectively terminated prior to acceptance. Acceptance after revocation does not bind Shreve to the Agreement.