Chapter 3 Agreement: Offer and
Acceptance
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Introduction
• Offer and Acceptance and Consideration
and No Lack of Intention = Contract
(generally)
• Distinguish Bi-Lateral from Unilateral (will
return to latter)
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Offers
• Clark definition
• Be really sure that something is an “offer”
– Gibson v Manchester City Council (1979)
– Storer v Manchester City Council (1974)
– Harvey v Facey (1893)
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Offers and Invitations to Treat
• Rationale for distinction (p.10)
– Minister for Industry and Commerce v Pim
(1966)
– Pharmaceutical Society v Boots Cash
Chemist (1953)
– Partridge v Crittenden (1968)
• Exceptions
– Lefkowitz v Great Minneapolis Surplus Store
(1957)
– Carlill v Carbolic Smoke Ball Co Ltd (1893)
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• Mere Puffs
– Carlill
– Dimmock v Hallet (1866)
– Leonard v PepsiCo (1999)
• The Need to Communicate an Authorised
Offer
– Taylor v Laird (1856)
– Wilson v Belfast Corporation (1921)
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When an Offer Ends
• Passage of Time
– The Principle
• Dooley v Egan (1991)
• Commane v Walsh (1983)
– Examples
• Ramsgate Victoria Hotel Co v Montefiore (1866)
• Commane v Walsh
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• Revocation
– Revoked at any time until acceptance even if promise to keep open
• Walker v Glass (1979)
– Need to Communicate Revocation
• Dickinson v Dodds (1876)
– Dodds offers to sell house to Dickinson; offer open until Friday, 12 June
at 9am
– On Thursday, Dickinson told by third party that Dodds had sold it to
someone else – Dickinson then tried to accept the offer made to him
– Dodds rejected
– Court of Appeal held that since Dickinson had notice of the sale to the
third party, the offer was “incapable of acceptance”
– Postal Rule Has No Application – Byrne v Van Tienhoven (1880)
• Death
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Re Whelan (1897)
Dickinson v Dodds
Earle v Angell (1892)
Re Irvine (1928)
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• Rejection
– Rejection Per Se
– Rejection by Counter Offer
• Hyde v Wrench (1840)
• Stevenson v McLean (1880)
• Pars Technology v City Link Transport Holdings
(1999)
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Acceptance
• Mirror Image Rule (p.17)
• Communication of Acceptance
– General Rule
• Entores v Miles Far East Corporation (1955)
– Inferred By Conduct
• Brogden v Metropolitan Railway (1877)
– The Postal Rule
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Adams v Lindsell (1818)
Kelly v Cruise Catering (1994)
Holwell Securities v Hughes (1974)
British and America Telegraph v Colson (1871)
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• Electronic Communication of Acceptance
– Re-state the General Rule
– How does it apply to Telex?
• Entores v Miles Far East Corporation (1955) (acceptance
telexed from Amsterdam to London)
– What happens if there are problems at the receivers
end?
– What is the real concept of “receipt”?
• Entores v Miles Far East Corporation
• The Brimnes (1975)
– Overall evaluation?
• Brinkibon Ltd v Stahag Stahl (1982)
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• Relevance of E-Commerce Act, 2000 etc?
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• Modes of Acceptance
– Waiving the Need For Communication
• Carlill v Carbolic Smoke Ball Co (1893)
– Can Waive, but Can’t Impose Silence
• Felthouse v Bindley (1862)
– Prescribing Modes of Acceptance
• Tinn v Hoffman (1873)
• Staunton v Minister for Health (1986)
• Yates Builders v JR Pulleyn (1975)
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Bi-Lateral and Unilateral Contracts
• Concepts – p.23
• Rule 1: Acceptance is Performance
– Billings v Arnotts (1945)
– Tansey v College of Occupational Therapists
(1995)
– Kennedy v London Express Newspapers
(1931)
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• Rule 2: Revocation Cannot Occur Once
Performance Begun
– Daulia v Four Millbank Nominees (1978)
– Errington v Errington (1952)
– Luxor (Eastbourne) v Cooper (1941)
• Implied Promise or Rule of Law Theory?m
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Offer and Acceptance in Particular Cases
• Auctions
– Harris v Nickerson (1873)
– Tully v Irish Land Commission (1961)
– Warlow v Harrison (1859)
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Tenders
• Principles clear enough (not in Ireland!)
– When one bids in a tender, one is “accepting” the
offer held out the person inviting the tender that the
tender process takes place in accordance with the
express terms it is offer on
– McDermott (p20) refers to this as “Contract A /
Contract B” theory – Contract B is the contract for,
say, the building of the ship. Contract A is the
contract which arises governing the process.
– In Canada and other jurisdictions it has also been
held that implied terms may govern “Contract A”
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• Tenders
– Harvela Investments Ltd v Royal Trust Co of
Canada (1986)
- “If your offer is highest offer we bind ourselves to
accept provided it complies with terms of this telex”
- Bid was X or 100K more than any other fixed
monetary bid
- HL – noted that the telex was offer to accept
highest bid made but held that it referred to fixed
monetary amounts – it was said that this was an
implied term (i.e. that the bids could only be
non-referential – this is critical)
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Tenders III
• Howberry Lane v Telecom Eireann (1999)
– Very complicated case concerning sale of Cablelink.
– Essentially, P wanted to stop 2nd and 3rd D’s from selling
Cablelink to 1st D.
– Prior to submitting a final bid, Esat entered into an agreement
with two other companies, Charter and Vulcan, to form the
plaintiff company and it made a bid of £410 million
– The third named defendant (NTL) submitted a formula bid that it
was willing to pay 15% more than the highest bid.
– P gets upset and says 2nd and 3rd D’s cannot accept a referential
bid (but there was nothing in the contract to say that)
– Morris J rejected that he could imply anything into the contract
– Also rejected implication of term to deal with “fair dealing” in
circumstances where it was alleged that new round of bidding
had been opened without reason (i.e. they had opened a new
round saying, now formula bids would not be accepted)
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• Smart Telecom v RTE (2006)
RTE were seeking sponsors for the weather forecast at
€1.25m per year for a minimum of two years.
Decided to use sealed bids.
There were no express provisions saying referential bids
were prohibited.
Kelly J noted that the point of the sealed bid system
was, inter alia, to ensure “fairness and transparency” and
to invite each party to “submit its best offer”.
Notes that, the terms of the tender anticipated that
identical offers may be received and had provisions to
deal with such (i.e. which would seem inconsistent with
referential bids were acceptable).
Interpreting the document as a whole, Kelly J held that
referential bids were not part of the presumed intention
of the parties and, indeed, noted that this was entirely
consistent with the methodology used in Harvela
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Judicial Approach to Offer and Acceptance
• Consider it if you wish
• Battle of the Forms
– Butler Machine Tool v Ex-Cell-O-Corp
– Chicester Joinery v Mowlam
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