Offer or An Invitation to Treat

Based on this statement, we have to analyze whether it is offer or invitation to treat. According to the Section 2 (a) Contracts Act 1950, offer is defined as “when one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to the act or abstinence he said to make a proposal”. It can be in oral, writing or implied from conduct but must be clear, definite, certain, precise and complete during the process of communication between two parties. Example case law White v Bluett [1] states that son was unsuccessful to sue father for breaking the promise because the offer was not clear definite and certain. Example of case law 2 about an offer must be communicated; Taylor v Laird [2] states that Taylor gave up the captaincy of a ship and then worked his passage back to Britain as an ordinary crew member. His claim for wages failed. The ship owner had received no communication of Taylor’s offer to work in that capacity.

In the theory of invitation to treat, invitation to treat can be defined as inviting the public to make an offer. Invitation to treat is not an offer because it (offeree) is asking public (offeror) to make an offer. Invitation of treats can be categorized in 3 types which are display of good, advertisement and auctions. We just focus on advertisement since the statements deal with advertisement of Yamaha Piano. Advertisement can be unilateral offer which the definition is nearly similiarity with invitation to treat, offer made to the world or public. To differentiate it, we can refer to the case law Carlill V Carbolic Smoke Ball co [3]. Carbolic Smoke Ball co Ltd advertised that they would offer 100 pound for anyone got influenza after using their product. The plaintiff used their product but nevertheless contracted influenza. The plaintiff sued them for 100 pound. Court of Appeal said that Plaintiff was entitled to the 100 pound as she had accepted the offer from the Carbolic Smoke Ball co Ltd which made to the world at large and deals with unilateral offer. Example case law 2 is the Partridge v Crittenden [4] states that the appellant placed an advertisement in a magazine in order to sell cocks and hens for 25 shilling each. He was charged with offering for selling a wild bird, contrary to statute, but the High Court said he must be acquitted. The advertisement was an invitation to treat and not an offer since there are limited stock and the advertiser could not reasonably intend to be bound to sell to all those who might accept. From both case, we can conclude that whether an advertisement is an offer or an invitation to treats is depends on the intention of the parties. Applied both case law concept to the statement 1, we are clearly know that it is invitation to treat since Steven advertised his Yamaha Piano in the New Focus Paper with stated price RM15,000 and asking public to make an offer to him by contacting his number 016 123456.

Statement 2: 1 November 2010, Tanny sees the piano and offered RM 10,000 to buy the piano.

Here, we are told that Tanny see the advertisement and come to make an offer to the Steven and Steven inviting Tanny to see the piano. After seeing the piano, Tanny offers the price of RM 10,000 to purchase the piano. In this case, there are offer from Tanny but there are no acceptance from Steven. In the Contracts Act S2 (b) states that acceptance can be defined as “when offeree dignifies his assent to the offer, the offer is said to be accepted and becomes a promise”. Steven does not accepting anything but only just inviting Tanny to see the piano. Inviting or silence manner is not considered as an acceptance. Example of case law is Felthouse V Bindley [5] , Plaintiff discussed the purchase price of horse with nephew J. On 2 January, Plaintiff wrote to J saying that the horse will be considered to be sold to him at price £30.75 if there are no reply from the J. J decided to sell the horse to plaintiff and told the auctioneer defendant to withdraw the sale of horse. Defendant forgot and sells to somewhere else. Plaintiff sued defendant. Court of Appeal said that there was no contract because Plaintiff’s letter was an open offer that had not been accepted.

Steven said,

“I will not sell it below RM14.000 ….”

Here, we must understand that agreement will only be valid if there is consensus ad idem which means meeting of offeror(offer) and offeree (acceptance) on a common subject. Steven rejects the price offered by Tanny. Steven is making counter offer by reducing the original price RM15,000 to RM14,000. Here, Steven is making bilateral offer to Tanny. Steven make an offer to Tanny that he will sell the piano with the price of not less than RM14,000 to Tanny. This situation similar with the case law Hyde v Wrench [6] , Lord Langdale MR. This case is about defendant wrote to plaintiff offering to sell his farm for £1000. Plaintiff responded with an offer of price £950, which defendant needs some time to think about it. After a fortnight, defendant said he can’t accept the lower offer, whereupon plaintiff decided to accept defendant’s original offer and brought an action for specific performance. In the Roll Court, the judge said there was no contract:by making his own offer plaintiff, impliedly rejected the offer made by defendant and could not subsequently revive and accept it. From this case, we know that by making counter offer, Tanny rejected the original offer and he was not entitled to revive it. Under this condition, there are no binding contracts between both parties.

“…..and I will not sell it to anyone else before 7 November 2010.”

This statement deals with condition of term. If offeror specify the terms to accept, the acceptance must be according to the manner or mode specified by the offeror. Section 7 states “acceptance must be absolute, unqualified and must correspond with all the terms of offer”. Example of case Neale v Merrett [7] stated that Merrett offered land to Neale at 280 pounds and Neale replied accepting. However, Neale enclosing 80 pounds with a promise to pay balance by monthly installment of 50 pounds each. Hence, there is no contract since there was an unqualified acceptance. Through this case,we apply this case concept in the statement where Steven said that he will not sell it to anyone else before 7 November 2010. Steven indirectly states a term to the Tanny where Steven will only offer price of RM14, 000 to Tanny if only if purchase piano within the time set. In order to make an acceptance, Tanny must correspond with all the terms of the offer by purchasing it within the period offered.

“Tanny went for Australia and back to Malaysia on the 7 November 2010.”

This statement shows that the time frame offering by Steven to the Tanny has been expired and this shows that the contract between them is invalid due to the breach of term. According to Section 6(2) “The offer must be accepted by the offeree within the time mentioned in the offer and if no time is mentioned, then within a reasonable time. The offer lapses after the time stipulated in the offer expires if by that time offer has not been accepted. If no time is specified, then the offer lapses within a reasonable time. What is a reasonable time is a question of fact and would depend upon the circumstances of each case.”

Example of case law is Ramsgate Victoria Hotel v Montefiore [8] , Exchequer whereby defendant made an offer in June to buy shares in plaintiff ‘s company but no reply from plaintiff. Plaintiff made an allocation of shares in November, and purported to accept defendant’s offer, but defendant refused to go ahead. The court said that although the offer had not been formally withdrawn, it would expire after “a reasonable time”, and given the fluctuating nature of the subject matter the time interval had gone beyond what was reasonable.

“8 November 2010, Tanny post a letter accepting to buy the piano for RM 14,000. Steven received this letter on the 11 November 2010.”

According to the Section 4(2)(b) Contracts Act 1950,postal rule states that “acceptance by posting a letter is deemed to take effect when the letter which is correctly addressed and stamped, is actually placed in the post box”. Acceptance is said to be complete as soon as it is posted. Example case law Adam v Lindsell [9] . On 2 September, the defendants wrote a letter to the plaintiffs and offer to sell them wool and requiring an answer in the course of post. The plaintiffs only receive it on 5 September. The plaintiffs posted their letter to accept the offer from defendants on the 5 September but the defendant only received the replied letter on 9 September. Meanwhile, on 8 September, the defendant sold the wool to someone else cause did not receive any answer by 7 September as expected. There is no binding contract between plaintiffs and defendant because there is no answer was actually received and therefore defendant frees to sell the wool to someone else.

However, in this condition, postal rule cannot applied since the acceptance had been revoked on the 7 November 2010 due to the expired of time frame. Example of case law is Ramsgate Victoria Hotel v Montefiore [10] , Automatically, the situation is now changed whereby the letter posted to Steven is considered to be making an offer to purchase piano with the price of RM 14.000. On the 11 November 2010, Steven received the offer letter from Tanny. In this case, Steven is not bound by any contracts and Steven got the rights to choose whether to accept the offer or reject the offer. Example of case law is Felthouse V Bindley.

Citation

Business Law Lecture notes

http://www.stbrn.ac.uk/other/depts/law/index.htm

http://www.docstoc.com/docs/8745462/Business-Law-assignment