CONTRACT LAW: OFFER AND ACCEPTANCE CASES COMPILATION


Invitations to Treat

Gibson v Manchester City Council [1979] UKHL 6

Theme: Negotiations to enter into a contract may amount to an invitation to treat but not to an offer.

Facts:
The city council decided to sell its houses to the tenants. Mr. Gibson applied for details of his house price and mortgage terms so he can buy it. 

In February 1971 the council treasurer replied to Mr. Gibson via letter that, the council may sell the house to him at the purchase price of £ 2,180 it was further stated in the letter that 



“…..This letter should not be regarded as an offer of a mortgage. If you would like to make a formal application to buy our Council house please complete the enclosed application form and return to me as soon as possible.”


In March 1971 Mr. Gibson fills the application form and returned it to the Council. 

In May 1971 council stopped the sale of houses consequently Mr. Gibson could not complete the purchase. Mr. Gibson sued the Council on the basis that the letter he had received stating the purchase price was an offer which he had accepted on March 1971



Held
The Council had not made an offer; the letter giving the purchase price was merely one step in the negotiations for a contract and amounted only to an invitation to treat.



Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA civ 6

Theme: Goods displayed in shops together with a price tag are merely an invitation to treat and not an offer.


Facts
Boot cash chemist is a medical store that sells medicines. 

In their store, customers could pick drugs off the shelves by themselves and pay for them at the till. 


The Pharmaceutical Society of Great Britain stated that practice is unlawful under the Pharmacy and poisons Act 1993. The society argued that the display of drugs was an offer.

Held
The Court of Appeal decided the shelf display was like an advertisement for a bilateral contract and was therefore merely an invitation to treat. 

The offer was made by the customer when medicines were placed in the basket and presented at the cash desk, and was only accepted by the shop at the cash desk. Since a pharmacist was supervising at that point no offense had been committed.


Fisher v Bell [1961] 1 QB 394

Theme: goods displayed in shops together with a price tag is merely an invitation to treat and not an offer.

Facts
The defendant had displayed flick knives in his shop window contrary to section 1 of Restriction of Offensive Weapons Act 1959 and was convicted of the criminal offense of offering such knives for sale.

Held
On appeal, Lord Parker CJ stated that the display of an article with a price on it in a shop window was only an invitation to treat and not an offer, and the conviction was overturned.

Offer Made to General Public

Louisa Elizabeth Carlill v Carbolic Smoke Ball Company [1893] 1QB 256 

Theme: Offer can be made to the general public through advertisement.

Facts
The defendant is a manufacturer of “smoke balls” which was termed to be a cure of flue during the flu pandemic. 

The defendant advertised in several newspapers that he will provide a reward of £ 100 to any person who will use smoke balls three times daily for two weeks and contracted flue. 


Mrs Carlill saw the advertisement and bought the ball. After using it three times daily for months she contracted flue. She claimed £ 100 from the defendant which he refused to pay on the ground that they had no contract with the plaintiff.

 Held
The court held that the defendant’s advertisement constitutes an offer to the world at large, which became a contract when it was accepted by Mrs. Carlill using the smoke ball and getting flu. The court ordered the defendant to pay £ 100 to the plaintiff.

Counter-offer

Hyde v Wrench [1840] 49 ER 132

Theme: The counter offer terminates the original offer.

Facts
Hyde sued wrench for the breach of contracts because wrench offered to sell his farm to Hyde for £ 1,000, Hyde refused the offer and offered to buy it for £950 (counter-offer). 

Wrench refused the counter-offer. After sometimes, Hyde accepts to buy the land for £1,000 as initially offered, Wrench refused to sell to him.

Held
It was held the counter offer terminated the offer. Therefore the original offer was no longer available. Hyde lost the case.


Stevenson Jaques & Co v McLean [1880] 5 QBD 346

Theme: Request more information about the offer does not amount to counter-offer

Facts
The plaintiffs were the iron merchants who buy iron and sell it to third parties. the defendant made an offer on a Saturday to sell iron to the plaintiffs at a cash-on-delivery price of 40 shillings and stated that the offer would remain available until the following Monday. 

The plaintiffs replied by asking if they could buy the goods on credit. 


They received no answer. On Monday afternoon they contacted the defendant to accept the offer, but the iron had already been sold to someone else. The plaintiffs sued for the breach of contract.

Held
It was held that their reply to the offer had been merely a request for information, not a counter-offer, so the original offer still stood and there was a binding contract.

How Long Does an Offer Last?

Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109

Theme: Where the offeror has not specified how long the offer will remain open, it will lapse after a reasonable length of time has passed.

Facts
Montefiore offered to buy shares from the Ramsgate Victoria Hotel Company at a certain price. 

The company did not accept the offer until six months lapsed. 


By that time the price of shares had decreased. Montefiore refused to pay for the shares. The company sued Montefiore and prays for the specific performance of the contract because Montefiore did not withdraw his offer.

Held
It was held that there was no contract between them. The offer has already lapsed. Basing on the nature of the transaction six months was a reasonable time for an offer to lapse.



Withdraw/ revocation of Offer

Payne v Cave (1789) 3 TR 148

Theme: An offer may be withdrawn at any time before acceptance.

Facts
Mr. Cave was made the highest bid for goods sold in an auction. However, he withdraws his bid before the auctioneer’s hammer hits down.

Held
Mr. Cave is not bound to purchase the goods. He was entitled to withdraw his bid (offer) at any time before auctioneer’s hammer hit down (acceptance)


Byrne & Co v Leon Van Tienhoven [1880] 5 CPD 344

Theme: The revocation of an offer must be communicated to another party.

Facts
On 1 October Leon Van Tienhoven posted a letter from their office offered 1000 boxes of tinplates for sale to Byrne & Co. Byrne & Co received the letter on 11 October and accepts the offer on the same day via the telegraph. On 8 October Van Tienhoven sent another letter withdrawing the offer. The revocation letter reached Byrne & Co on 20 October.

Held
The revocation of an offer could only be effective when communicated to the other party, while the acceptance of an offer by telegram is effective as soon as it was sent. Therefore there is a binding contract between parties.

Acceptance

Felthouse v Bindley (1862) 142 ER 1037

Theme Silent cannot amount to an acceptance.

Facts
Paul Felthouse wanted to buy a horse from his nephew John Felthouse. While they are discussing  the price Paul Felthouse wrote to John said: “if I hear no more about him, I consider the horse mine at £ 30.15.” John did not reply, but he told Bindley, the auctioneer, not to sell the horse, unfortunately, Bindley sold the horse.

Held:
Acceptance must be communicated clearly and cannot be imposed due to the silence of one party.

Acceptance by Post

Generally, to be effective, acceptance must be communicated to another party. 

That was stipulated by Lord Denning in the case of Entores Ltd v Miles Far East Corporation(1955) EWCA Civ 3 where Lord Denning stated inter alia that 



the principal reason for this rule is that, without it, people might be bound by a contract without knowing that their offers had been accepted, which could obviously create difficulties in all kinds of situations.

The following case is an exception to that rule:

Adams v Lindsell (1818) 1 B & Ald 681

Theme: An acceptance by post takes effect when it is posted, rather than when it is communicated.

Facts
On 2 September the defendants wrote a letter to Plaintiffs offering to sell wool. The letter required a reply to be made via post. 

However, the Letter was incorrectly posted and delayed to reach the Plaintiff. It received by Plaintiffs on 5 September. 


The Plaintiff posted their acceptance on the same day, but the acceptance reached the Defendants on 9 September. T


he Defendants had sold the wool to another buyer on 8 September since they had not received an answer from Plaintiffs on 7 September as expected. 


The issue was whether a contract had been made before the sale to the third party on 8 September.

Held
The court held that a contract was concluded as soon as the acceptance was posted so that the defendants were bound from the evening of 5 September and had, therefore, breached the contract by selling the wool to the third party.




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