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Lecture 1 Offer and acceptance I

What is an offer?

Key principles: An offer is a statement which objectively indicates that the offeror is prepared to

contract on specified terms.

Harvey v Facey [1893] A.C. 552 p7.

Fact: P: “Will you sell us Bumper Hall Pen? Telegraph lowest cash price” D: “Lowest price –

900 pounds”P: “We agree to buy for the sum of 900 pounds asked by you” D refused to sell.

Held: D is not bound. P’s first telegram asked two questions and D answered only the second. D

had made no promise, express or implied to sell. A statement of the minimum price at which a

party may be willing to sell will not amount to an offer.

Gibson v Manchester City Council [1979] 1 WLR 294 p7.

Fact: Council had a policy of selling council houses to tenant. “The council may be prepared to

sell the house to you” and invited Gibson to fill in a form. Gibson filled in but council refused to

sell.

Held: No contract. The words “may be prepared to sell” are fatal to this. The Council did not

make an offer but only invited offers and the tenant made a firm offer which was rejected by the

Council. The tenant’s application was an offer rather than an acceptance.

Recognized instances of invitations to treat

Advertisements

Key principles: Advertisements are normally invitations to treat because it is clear that the

advertiser does not intend to be bound.

Partridge v Crittenden [1968] 1 W.L.R. 1204

Fact: Concerns a newspaper advertisement that certain wild birds are available for sale for 25s

each. No details as to quantity.

Held: The ad did not amount to an offer to sell.

Exception: if the advertisement is unilateral

Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 p35.

Fact: In a newspaper ad, D stated that it would pay £100 to any person who became ill with flu

after using the smoke ball as directed and that to show its sincerity it had deposited £1000 in a

bank account. P used the smoke ball, but nevertheless caught flu.

Held: the ad was an offer to the world which was accepted by P when she used the smoke ball as

directed. She was entitled to the £100.

Shop displays

Key principles: the display of goods for sale on a supermarket shelf is an invitation to treat, and

the other to buy is made by the customer presenting the goods to the cashier.

Fisher v Bell [1961] 1 QB 394

Facts: where the defendant was charged with the offence of offering for a sale a flick knife.

Held : As a general rule, display of flick knife in a shop window is an invitation to treat and not

an offer.

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401 p17.

Facts: the D displayed medicines on their shelves which under statute must be sold under the

supervision of a registered pharmacist. In this shop, the pharmacist could refuse to allow the

purchase at the cash desk.

Held: Putting up goods on the shelves of a self-service shop was an invitation to treat. There was

no sale until the shopkeeper accepted the customer’s offer to buy. The main practical 2

consequence of this are under the law of contract, shops are not bound to sell goods at the price

indicated and a customer cannot demand to buy a particular item on display.

Tenders

Key principles: a circular inviting the submission of tenders is normally an invitation to treat and

the submission of the tender is the offer.

Spencer v Harding (1870) LR 5 CP 561 p9.

Facts:The defendants have a circular whereby to offer for sale some stocks by tender and to be

sold at a discount in one lot. The plaintiff argued that the defendant has to sell to the highest

tender.

Held: For the defendant. An offer for sale in the tender is just an invitation to treat. There is

nothing to suggest that the defendant will accept the highest bid.

City Polytechnic of Hong Kong v Blue Cross (Asia Pacific) Insurance Ltd [1995] 2 HKLR 103

Facts: City Polytechnic, through an insurance broker, invited tenders from several insurance

companies to cover its employees’ medical and life insurance.

Held: It was confirmed that an invitation to tender is no more than an intention to receive bids.

Situations where there is a contractual obligation to accept the most competitive bid

Key principles: an invitation to submit tenders may amount to an offer where it is clear that the

seller intends to sell to the highest bidder. (The invitation to tender may amount to an offer of

the unilateral type if that is that was intended)

Harvela Investments v Royal Trust of Canada [1986] AC 207 p13.

Facts: D1 invited P and D2 to make sealed competitive bids for a parcel of shares, stating “we

bind ourselves to accept (the highest) offer. P bid $2175000 and D2 bid $2100000 or $101000

“in excess of any other offer. D1 believed that they were bound to accept the bid of D2, as being

the highest bid.

Held: the invitation to tender amounted to an offer to sell to the highest bidder, however, the

“referential” bid of the type adopted by D2 was not permissible in a transaction of this kind and

therefore D1 was bound to accept the P’s bid. (the third party’s bid was a referential bid and was

not a valid offer.)

An obligation to consider tenders

Key principles: an invitation to submit tenders is an offer to open and consider all confirming

tenders together.

Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] 1 WLR 1195 p11.

Facts: D invited tenders for a concession to operate pleasure flights from the local airport. The

letter stated that ’No tender which is received after the last date and time specified’ would be

considered. P’s tender was posted by hand in the D’s letter box before the deadline expired, but

D’s staff did not empty the box and the P’s tender was not considered.

Held: all tenders submitted which complied with the tendering procedure would be opened and

considered together with the other conforming tenders. The invitation to tender was a unilateral

offer was accepted by the submission of a tender. The court held that the defendants were

contractually bound to consider the P’s tender.

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