FORMATION OF THE AGREEMENT: OFFER AND ACCEPTANCE
Contract Law is primarily based upon a promise to do something. It asks what promises will the law enforce, or what expectations are sufficient to justify imposing a legal obligation. It determines what obligations are
imposed on the respective parties to perform. It provides for certain remedies when the obligations are not performed or performed badly.
 The classification of private obligation in common law systems has traditionally depended on a distinction between
o (1) province of the law of contract: obligations based upon CONSENT to an exchange (often to take place in the future)
o (2) under the headings of torts and restitution: obligations created by the GENERAL LAW
 What is prerequisite of a Contract?
o Parties must have reached an agreement (by each party) (classical theory of contract = required for the enforcement by the court)
 "consensus ad idem"
o Consideration
 What the first prerequisite of a Agreement?
o Agreement requires an offer and acceptance:
“The basic idea running through the law of offer and acceptance is that the parties will be held to have reached an agreement when they have formed a mutual intention to enter into a bargain
with each other and, further, are in agreement as to the terms of that bargain. It is only then that the parties have reached a true “consensus ad idem” or “meeting of the minds,” which, in theory
at least, is an indispensable requirement for the formation of an agreement.”
McCamus, The Law of Contracts, p.31

The formal framework of offer and acceptance rules determines the existence of contractual agreement through a stylized sequence of actions
o What are those sequence of events?
1. Offer
2. Communication of the offer
3. An acceptance on the terms of the offer
4. Communication of the acceptance
 Criticism? The "rules" of offer and acceptance are merely tools of analysis to assist in defining the "moment of responsibility" rather than a priori statements to be blindly
applied in a broad variety of circumstances



There is a difference between
o A request for information/making a quotation VS making an offer
 AN OFFER MUST be intended (to be an offer, otherwise the meeting of the minds is absent), definite and communicated (yes or no response - cannot be less than an offer)
 Dyer: even if someone said they did not intend it, the court can find intention and hold the party responsible in that way
Invitation to treat: is an invitation to commence bargaining
o It is a statement of mere commercial intent
o It is part of the negotiations
o While there are no set rules in distinguishing an invitation to treat from an offer, the cases provide tools to permit one to analyze and define whether a “moment of responsibility” is created.
CASE & FACTS
ISSUE & HOLDING
REASONS & RATIO
NOTES & EXCEPTIONS
Canadian Dyres v. Burton
“”
Issue: What is a Breach of King’s
peace?
Sedley got drunk and stood on
balcony naked spewing
religious hatred. Sedley
charged with common law
offence of breaching the
King’s peace. Sedley pleaded
guilty
Pharmaceutical Society v.
Boots
“”
Held: Judges say what is illegal –
there is no statue or code  at the
judge’s discretion
Kings Bench claims to be the
custos morum (moral custodian)
and therefore can punish anyone
who’s actions were believed to be
contra bones morum (offensive to
the conscience and sense of
justice)
- At the time, there was no statutory violation, but rather it was a
violation imposed by the King
- Relied on judges to decide what is considered a criminal offence
- Until 1892, common law & precedent were main sources of
criminal law (i.e. in 1660s)
- In 1892, Parliament enacted Canada’s 1st Criminal Code modeled
on Sir James Stephen’s English Draft Code of 1879  who
wanted to abolish common law offences
Sedley
 Breach of King’s peace is
against morality / Christianity
Ratio: Judges decide what is
breach of King’s peace
Unilateral Contract:

An offer can be made to all the world which ripens into a contract when someone comes forward and performs the conditions governing its acceptance.

The offeror is said to have dispensed with the need for communication of the acceptance.
Proposition of Law:

Unilateral contracts are accepted into Canadian law and are binding to whomever accepts them

In a unilateral contract acceptance generally occurs in the form of the performance of the act requested in the offer
1. Offer
2. Acceptance
3. Consideration
4. But offer does not always come clear.
5. Unilateral Contracts did not exist before the Carlill v. Carbolic Smoke Ball Co. Case o (in 1893) Based on an advertisement for the use of the Carbolic Smoke Ball could prevent many things, notably the flu. Claimed that if someone contracted influenza while using the
Carbolic Smoke Ball, they would get a 100 pound reward. Ms. Carlill (Plaintiff) who uses the Carbolic Smoke Ball diligently (purchased this from the pharmacist - had a contract with the
pharmacist but no advertisement was never made/displayed/encouraged by the pharmacist), contracts influenza.
o When she communicates to Carbolic Smoke Ball Co. by suing them asking for her 100 pound reward. She needs to establish that she had a contract directly with the manufacturer. She
used the advertisement as a contract which she claims she "accepted"
 Her problems/challenges:
 Where is her acceptance? How did she communicate her acceptance?
 Even if we can find the acceptance, where is the consideration?
 The Defendant argues that the three requirements of a contract are not present: no offer, no communication of acceptance, no consideration.
 The Plaintiff argues that the offer is pretty clear, the acceptance comes in a different format (she didn't have to communicate it to the offeree - the communication of
the offer was dispensed with - the defendant could have mentioned that a clear communication needs to be made - but she did do this action as advertised, AND in
so doing they are inconvenienced AND that inconvenience is consideration →crystallizing into a unilateral contract) (she also claims that the company gains
and the inconvenience of use as directed in the advertisement is acceptance of offer - acceptance by actual use)
 Does following the terms of the advertisement constitute acceptance to the offer?
 Did the advertisement actually (clearly) communicate an intended and definitive offer?
 What could the defendant do not to be liable?
 "could" instead of "will" cure
 Not definite rewardable amount
 Having a disclaimer
 Have to communicate acceptance (asking those who want to take up the offer to communicate it directly to Carbolic Smoke Ball Co. when/if the customer is taking the
smoke ball the way it was advertised)
 All of these could have been added to the advertisement but was not - for this reason the Court held that the master of the contract must hold themselves to
the terms that they set on the onset and after the fact cannot just insert new terms that suit them)
 The court says in some circumstances in which the offeror has made an offer to the public and they EXPLICITLY (even by omission) do not
require communication of acceptance back but what they require is an action THEN we will hold the offeror to the terms of the offer that they
created - Court found that the offer dispensed with the need for acceptance to be communicated
 It is not the right of the Court to impose what they "think" or the advertiser "meant" pertaining to an advertisement/offer - they must
look at what is written/what the offer said (because the offer is constructed by the offeror - they can not argue after the fact about
what they meant)
 You cannot unilaterally insert a condition
Unilateral offers do not need to be made to the general public, it can be made between two people - i.e. telling a neighbour to swim the Detroit without
mentioning that they need to confirm/communicate acceptance but just fulfill an act in exchange for a reward, if they do this, a unilateral agreement is made.
 Acceptance is still necessary but acceptance is made by performance of an act
 Promise of provision of a reward, an exchange of a promise, service, a requirement to do something in a later date, a requirement to do
something for someone else.
6. There are three ways AND ONLY 3 ways the court can insert a term
7. Implied terms (as a matter of law)
o Exactly what they mean - they are not orally or written but the Court can imply a term in VERY limited circumstances
 i.e. if there is a statute that governs parts or your entire argument, for example, the lease agreement may not mention the property to be fit and habitable for use but even if it is
not mentioned the Court will likely imply this
8. Fact →business efficacy
o Only makes sense if the presumed intentions of the parties where necessary to give business efficacy (what the parties intended at all events) to the contract or where it meets the 'officious
bystander test'
 Would the parties (BOTH OF THEM) would have agreed to this?
9. Custom and Usage
o The custom is for "lost dog" poster is that the dog be returned and not just called/shown the picture but not return the dog
Courts PREFER bilateral contracts/agreements between two parties
1. A unilateral contract: A promise is made in return for the performance
Carlill v. Carbolic Smoke Ball Co.
of an act. [Carlill v. Carbolic Smoke Ball Co].
“”

Goldthrope v. Logan
“”
Williams v. Carwardine
“”
2.
Unilateral contracts: An offer can be made to the entire world which
ripens into a contract when someone comes forward and performs the
conditions governing its acceptance. The offeror is said to have
dispensed with the need for communication of the acceptance. [Carlill
v. Carbolic Smoke Ball Co.; Goldthorpe v. Logan]
3.
The unilateral contract gives recognition to the fact that reasonable
reliance on a promise is worthy of protection even though the promise
was not bargained for. [Carlill v. Carbolic Smoke Ball Co.]
1.
Unilateral contracts: An offer can be made to the entire world which
ripens into a contract when someone comes forward and performs the
conditions governing its acceptance. The offeror is said to have
dispensed with the need for communication of the acceptance. [Carlill
v. Carbolic Smoke Ball Co.; Goldthorpe v. Logan]
2.
The unilateral contract provides a technique to ensure the enforcement
of promises made to the public at large. [Goldthorpe v. Logan]
R. v. Clarke
“”
Livingstone v. Evans
“”
Butler Machine Tool v. Ex-CellO
“”
Tywood Industries v. St. AnneNackawic
“”
Century 21 Canada Ltd.
Partnership v. Rogers
Communications Inc.
“”
ProCD v. Zeidenberg et al
Proposition of Law:
“”
Eliason v. Henshaw
“”
Dawson v. Helicopter
Exploration Co.
“”
Felthouse v. Bindley
“”
Saint John Tug Boat Co. v.
Irving Refinery Ltd.
“”
Household Fire v. Grant
Holwell Securities v. Hughes
Eastern Power Ltd. v. Azienda
Comunale Energia & Ambiente
Douez v. Facebook, Inc.
Termination of an Offer:
Generally, an offer can be terminated by:
1. Refusal
2. Revocation
3. Non-occurrence of Condition
4. Lapse of Time
5. Death
o Exception - if the offeree is not aware that the offeror has passed away and the offer does not require the offeror's personal service (i.e. car sale) which is accepted - then the offer can be
reasonably accepted/undertaken
 In a will where the car is given to the son but there is also an contract law says the agreement was accepted, the consideration was made (price of car) and the acceptance is made
- the agreement crystallizes and it supersedes the will. The will only operates the date of the death - the gift would have said to lapsed (not there for giving). The contract would
HAVE to be seen to be undertaken and the son would be out of luck - However if the contract was lapsed or terminated through other means then the will would carry through



Non-occurrence of a condition (sell car on a Tuesday that rains - if it does not rain then not accepted - this is permissible) is DIFFERENT from conditions that are required for acceptance
(mine deposits helicopter)
 If it does rain is the offeror REQUIRED to sell? No, the offeror should communicate revocation to cancel the offer. Even better would be to show that the agreement doesn't
stand because of the reason of lapse.
 The condition required for acceptance should NOT be dependent on the offeror's conduct after which the offeree can accept (the weather is not in the hands of the offeror and
therefore permissible)
While silence does not constitute acceptance it does parle to the lapse of time
o The only way that lapse of time is not applicable option clause or consideration
Termination of an Offer PRIOR to Acceptance
o You can't terminate an offer after acceptance because there is a contract - binding agreement NOW
 One cannot revoke an offer after this acceptance
 Cannot unilaterally add/remove terms of the contract without consent
o As long as an offer is terminated before the acceptance, and the revocation is communicated (doesn't have to be communicated directly, can be indirectly - while indirect must
STILL BE the indirect communication MUST be AUTHORIZED meaning a third party without the authorization of the party that is interested in terminating the offer for the
third party to communicate to the other party)
o Revocation in relation to a unilateral agreement is complicated but we will see through
o An offer is never open indefinitely even if it explicitly says that it is open indefinitely - the offeror is not bound by the terms indefinitely (open until such time that even if
unknown to both parties it is open for a reasonable amount of time)