The purpose of this lecture is twofold:
first,to make you aware of how an offer may
be brought to an end, that is, terminated,
under 4 headings:
i. Revocation of offer
ii. Lapse of time
iii. Death
iv. Failure of an offer-related condition
..and second, to introduce you to the key
cases concerning
Intention to Create Legal Relations.
Revocation of an offer
Here we consider when and how an
offer can be revoked. Three cases of
interest are:
• Byrne v Van Tienhoven 1880
• Dickinson v Dodds 1876
• Cartwright v Hoogstoel 1911
Revocation of offer and unilateral
contracts
When is it too late to revoke an offer
when one is looking at a unilateral
contact?
Interesting cases are:
• Errington v Errington 1952 and obiter in
• Daulia Ltd v Four Millbank Nominees Ltd
1978
In the Errington case, the father bought a
house with a mortgage and let his son and
daughter in law live in it with the promise that
if they paid off all the mortgage payments the
house would be theirs. When the father died,
the house was left to the widow who sought
possession of the house. In the court case
that followed, it had to be determined whether
the widow could evict them because they
were just tenants at will, or whether they had
a contractual licence to occupy the house.
In the Daulia case, Goff L J stated obiter:
‘Whilst I think the true view of a unilateral contract
must in general be that the offeror is entitled to
require full performance of the condition which he
has imposed and short of that he is not bound,
that must be subject to one important qualification,
which stems from the fact that there must be an
implied obligation on the part of the offeror not to
prevent the condition becoming satisfied, which
obligation it seems to me must arise as soon as
the offeree starts to perform. Until then the offeror
can revoke the whole thing, but once the offeree
has embarked on performance it is too late for the
offeror to revoke his offer.’
Termination of offer by lapse of
time
If an offer is open for a specific length of time,
acceptance will not be valid after the date has
passed. If no time is specified then the offer
will normally only be held to be open for a
reasonable amount of time. A case in point is
Ramsgate Victoria Hotel Co v Montefiore
1866.
The death of the offeror may or may not
revoke an offer. If the contract can be
performed by the deceased’s estate, then
death may not revoke it.
But, if the contract can only be performed by
the deceased personally, then death
obviously revokes the contract.
If the offeree dies before acceptance, then
usually there is no contract unless the
offeree’s estate can perform the contract.
Intention to Create Legal
Relations
How do the courts determine which
agreements demonstrating offer and
acceptance are actually ‘enforceable’ in
the courts?
The two tests of enforceability are
Intention to Create Legal Relations
(ITCLR) and Consideration. Here we
deal with ITCLR.
When ITCLR is looked at, it usually
done so under 2 headings:
1.
with regard to COMMERCIAL
AGREEMENTS
i.
ii.
iii.
The usual presumption
Can an advertisement provide evidence of ITCLR?
Rebutting the presumption of ITCLR in the commercial
setting
iv. Where the words purporting to rebut the presumption
are ambiguous
2.
with regard to SOCIAL/DOMESTIC
AGREEMENTS.
The ‘usual’ presumption
In commercial agreements there is a
presumption that in dealings between
business people both sides intended
their agreement to create legal relations
- they intended that should things go
wrong, the problem could be taken to
court.
Can an advertisement provide
evidence of ITCLR?
Two of the leading cases here are
already familiar to us from an earlier
lecture:
• Carlill v Carbolic Smoke Ball Co 1893
and
• Bowerman v ABTA Ltd 1996.
What happened in the Bowerman
v ABTA case
At first instance the plaintiffs lost – the trial judge correctly took
the approach of reading the notice as ‘the public’ would
understand it. However, even doing this, he found that there
was no contract because there was:
no offer
no intention to create legal relations
the terms in the notice were too vague to amount to a
legally enforceable promise – there was thus uncertainty of
terms
• However, in the Court of Appeal, the plaintiffs were successful,
per Lord Justices Waite and Hobhouse – with Lord Hirst
dissenting.
The dissenting judgment of Hirst LJ
Hirst LJ only looked at the
WORDS IN THE DOCUMENT
not at the document as a whole as per
the majority
and concluded that they were
too vague to amount to a promise.
Esso Petroleum Ltd v
Commissioners of Customs and
Excise 1976
The Customs & Excise could only recover
purchase tax if the coins were ‘produced in
quantity for general sale’ under s 2(1) of the
Purchase Tax Act 1963, per Schedule 1.
Were the coins ‘sold’ at the garages? Part of
the argument in the House of Lords was that
the coins could only be ‘for sale’ if there was
an ITCLR. Was there?
Rebutting ITCLR in the
commercial setting
In the Bowerman v ABTA 1996 case
Hobhouse LJ said that ABTA could have
avoided ITCLR by expressly saying so
in the advert.
This is what was done in Jones v
Vernons Pools Ltd 1939 and in Rose
& Frank v Crompton 1923.
Where the words purporting to
rebut the presumption are
ambiguous
Two important cases are:
• Edwards v Skyways Ltd 1964 and
• Kleinwort Benson Ltd v Malaysian
Mining Corporaton Bhd 1989
Edwards v Skyways Ltd 1964
In this case Skyways refused to match
the lump sum pension payment they
had promised saying that although there
was consideration for the promise, there
was no ITCLR due to the phrase ‘ex
gratia’. Was this what the court found?
Kleinwort Benson Ltd v Malaysian
Mining Corporaton Bhd 1989
In the various meetings between Bankers
and the Corporation it was made clear that it
was the Corporation’s POLICY ‘not’ to
‘guarantee’ the borrowings of their subsidiary
companies. A ‘letter of comfort’ was
eventually provided by the Corporation to
Bankers rather than a guarantee. It read:
‘It is our policy to ensure that the business of MMC
Metals Ltd is at all times in a position to meet it’s
liabilities to you under the above agreement’.
Did this demonstrate the ITCLR or not?
Edmonds v Lawson 2000
Was the pupillage of a pupil
barrister a contract of employment
for the purposes of the National
Minimum Wage Act 1998?
ITCLR in Domestic/Social
agreements
Here we can consider some of the key
cases:
• Balfour v Balfour 1919
• Merritt v Merritt 1970
• Jones v Padavatton 1969