Persons to whom an offer may be made/Unilateral contract Carlill v Carbolic Smoke Ball Co (CACL 3.72)
Facts: A company offered to pay any persons who used their product as instructed and contracted influenza £100. A consumer used their product as instructed and became sick however she did not receive the promised £100.
The consumer argued that a contract existed between her and the company.
The company argued that no contract could exist since the advertisement was an invitation to treat, not an offer.
Decision & Reason: The advertisement is an offer rather than an invitation to treat as the deposit of
£1000 demonstrated an intention to create legal relations. It is also an offer to anybody who performs the conditions stated in the advertisement and anybody who does perform the condition accepts the offer. Therefore the customer was entitled to the reward as she accepted the offer by completing the advertisements conditions.
Rule:
1. In a unilateral contract the offeror has waived its right to communication of acceptance.
2. An offer can be made to:
a specific person or persons,
a particular class of persons,
to the ‘world at large’ (anyone who reads the advertisement)
o This was not a mere sales puff (as evidence, in part, by the statement that the company had deposit a sum of money to demonstrate sincerity)
o Any reasonable person would assume that this was an offer and not a mere puff But the person or persons whom it was intended are the only ones who can accept it.
Leonard v Pepsi (CACL 3.76)
Facts: Pepsi ran an advertising campaign in which consumers were encouraged to collect “Pepsi Points”. A commercial showed a series of products which could be purchased with the collected points including a “Harrier Fighter” worth 7 000 000 points. A consumer submitted an order form with a cheque for enough of these points but was not delivered the “Harrier fighter. He sought specific performance of the unilateral contract that he alleged had been formed when he performed his obligations.
Decision: The advertisement was not “clear, definite and explicit” enough to constitute an offer.
Due to the comical nature of the advertisement, a reasonable person could not conclude that Pepsi was offering a jet. It was a mere puff.
Reason: An advertisement, which a reasonable person would not take seriously, is not an offer.
An offer must be communicated R v Clarke (CACL 3.200)
Facts: A proclamation offered a reward for information that would lead to the arrest and conviction of a person who had committed murder. In order to clear himself of a false murder charge, a convicted suspect volunteered the required information and claimed the reward offered. Was there a contract?
Decision: Because the convicted suspect did not act in reliance upon the offer, there was no
acceptance of the offer and therefore no contract between the two parties. The reward could not be claimed.
Reason: There can be no acceptance if the offeree is unaware of the offer.
Revocation of an offer
Byrne v Van Tienhoven (CACL 3.130) Facts:
1 Oct – offer by post from seller to buyer
8 Oct – no response from seller, buyer sends letter of revocation
11 Oct – buyer receives offer letter and sends letter of acceptance by telegram (acceptance received)
15 Oct – buyer sends letter of acceptance 20 Oct – buyer receives letter of revocation Is there a valid and binding contract?
Decision & Reason: A legal and binding contact exists as the revocation of an offer was not communicated by the offeror to the offeree before the offeree communicated their acceptance of the offer.
Rule: The revocation of an offer must be communicated to the offeree before acceptance by the offeree.
Enforceable option contract
Goldsborough Mort v Quinn (CACL 3.115)
Facts: The property owner offered the buyer a week to purchase a certain property at a stated price.
The buyer accepted this offer by paying an amount of money in consideration for this option. The buyer accepted the offer to buy the property at the stated prices within a week however the property owner repudiated (abandoned) the offer.
Decision & Reason: It was held that the offer by the property owner to sell the property at a stated price was irrevocable as consideration was provided, creating an enforceable option contract.
Rule: A promise to keep an offer open for a period of time is not enforceable unless the offeree provides consideration (usually a small amount of money). If consideration is provided, an enforceable option contract is made.
An offer will lapse if
it is not accepted within a reasonable time
it is not accepted within the time stated
a counter offer is made (NOT a request for information)
Hyde v Wrench (CACL 3.154)
Facts: A land owner offered to sell a piece of land to a buyer for a certain amount but was answered with a counter offer by the buyer. The land owner refused the counter offer. The buyer then agreed to purchase the land at the price offered before the counter offer. The land owner refused to sell at this price. Does a contract, in which the land owner has to sell at the price offered before the counter offer, exist?
Decision & Reason: There was no agreement as the earlier offer (before the counter offer) was terminated by the buyer’s counter offer and it could not subsequently be revived.
Rule: An offer will lapse (terminate) if a counter-offer is made.
A request for information is not a counter offer
An offeree may want to clarify or seek more information about the terms of the offer
He or she may want to know whether they can modify one of the terms of the offer
This kind of response is NOT a counter offer, so the offer does not lapse
Is it a counter offer OR a request for information?
Stevenson Jaques v McLean (CALC 3.159)
Facts: There was an offer made to sell iron. The iron merchant (buyer) asked if the seller would accept the payment over two months, or the longest limit he was willing to give. Before receiving a telegram of revocation, the iron merchant accepted the sellers offer however, the goods had already been sold. Did this constitute a counter offer or a mere inquiry for more information?
Decision & Reason: It was held that the seller was liable for breach of contract as the response from the merchant was merely seeking to clarify the terms of the offer, not impose new or different terms.
Rule: Enquiries have nothing specific by way of offer or rejection. They should be answered and not be treated as a rejection of the offer.
An offer will lapse if
When one party dies/incapacitated before acceptance
Carter v Hyde (CACL 3.165)
Facts: A hotel had been leased for five years by a lessee. The lessee offered to assign the lease back to the hotel owner and, for $1, granted him the option for three months. Before the three months were up, the hotel owner died and his executors sought to exercise the option. The lessee argued that the option had lapsed on the hotel owner’s death.
Decision & Reason: The hotel owner’s executors could exercise the option as there was nothing of a purely personal nature in the bargain.
Rule: When one party dies/incapacitated before acceptance however where the offer is made to the offeree or his or her heirs and successors or where an option contract has been signed and has yet to expire, the offer may be accepted by the deceased offeree’s estate.
