Offer and Acceptance Must Be Established Before an Agreement

Offer and Acceptance must be established before an agreement or a contract can be said to have occurred. For two parties to reach an agreement one party must make a definite statement in specific terms and must be willing to be bound by those terms. Bulging Bellies Ltd the party making the offer is called the offeror and any member of the fitness club, the party to whom the offer addressed made is called the offeree.

Revocation or termination of an offer or acceptance is possible if done in line with legal requirements.

Case Analysis

On the 24th of March Hilary commence swimming of the lengths of the Bulging Bellies Ltd pool in attempt of the competition displayed on the notice board.

To qualify for the offer you are required to swim 200 lengths of the pool before 1st of April.

Hilary successfully completed the swim with more lengths over 4 days.

On the 29th of April Hilary posted the entry card despite having been informed that the competition was closed.

Bulging Bellies Ltd replied her that she did qualify for the competition as the offer had been withdrawn, number of lengths had to be continuous in one attempt, she swam more than the required lengths, and Hilary’s The Law of Contract entry card was not received in time.

Agreement (Contract)

A contract can be defined as “a legally binding agreement made between two or more persons, by which rights are acquired by one or more acts or forbearances on the part of the other or others”

(Beatson Anson’s Law of Contract). An offer and acceptance is basically an agreement

Competition notice displayed on notice board

Is the displayed notice an offer or an invitation to treat? It is important to distinguish an offer from an invitation to treat.

What is an offer? Treitel defined an offer as “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed” (Treitel, 11th edition, page 8).

The word expression may take any form, that is, it could be advertisement, newspaper, oral, conduct, telephone or letter. An offer should in any form it is expressed communicate the conditions, on which the person making the offer is prepared to come to an agreement.

The word “intention” (contractual intention) in the definition above does not necessarily mean the actual intention of the offeror as the court cannot discover the true actual intention of the parties that is, or what was going on their minds at the time of agreement. The approach of the courts is to look at what was said and done between both parties, using the point of view of a reasonable person, to decide what a reasonable person would have thought was going on.

An offer is a specific and definite proposition indicating the offeror’s (the person making the offer) clear intention to be legally bound. An offeror’s statement must be differentiated from a mere invitation to treat statement.

There is a strong presumption that adverts, goods displayed in a shop window or goods placed on shelves in a self service shop constitute an invitation to treat (ITT).

Example is in Fisher v Bell [1961]1 QB 394, the defendant had displayed a flick knife and was charged with offering a flick knife for sale contrary to s. 1 (1) of the Restriction of Offensive Weapons Act of 1959. The court held that the displayed knife was simply an invitation to treat.

In Pharmaceutical Society of Great Britain v Boots Cash Chemist (1953) 1 QB 406 Boots Chemist was in breach of Pharmacy and Poisons Act 1933, s 17, by displaying a listed poison on their shelves for sale without the supervision of a registered pharmacist. The court held that goods on shelves were only invitation to treat and that it was the customer who made the offer when he presents the goods for payment (point of no return). The person or the pharmacist could accept or reject the customers offer at this point.

However, there are situations that the advertisement constitutes an offer as a contract could be bilateral contract or unilateral contract. An advertisement for a reward has traditionally been treated as an offer as there is intention to be bound as soon as the information is given (Williams v.Carwardine (1833) 5 C & P 566).

Bilateral Contract

A bilateral contract is when a party makes a promise in return of a promise from the other party. The offer and acceptance are made in form of promises. The parties are legally bound by these promises.

Unilateral Contract.

A unilateral contract is offered when a party promises another party that he would pay or reward the act of the other party. It is a promise in return for an act or performance. The promisor is only bound if the person to whom the promise is made performs the specific act.

Carlill v. Carbolic Snow Ball Co.

In Carlill v. Carbolic Snow Ball Co. [1893] 1 QB 256, the defendants inserted an advert in the newspapers “£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic of influenza, colds, or any disease caused by cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1,000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter……..”. The plaintiff a lady bought relying on the advert bought the smoke balls and used it as directed, three times a day but she caught the influenza.

In dismissing the appeal the Appeal Court held that

1. The fact that the defendants claim in the advertisement to have deposited the sum of £1,000 with Alliance Bank as evidence of their sincerity. A reasonable person reading the advert would have taken the offer seriously, which would have created a binding obligation.

2. The defendants pleaded that the advertisement was not addressed to specific person was reject by the court as an offer is made to particular person of class or group of persons. The Court of Appeal held that the offer had been made to anyone that fulfilled the conditions as stated in the advertisement such as Mrs Carlill

3. The defendants plea that their offer had been accepted by Mrs Carlill as she had not given them a notice of acceptance and therefore there was no consenus ad idem. This defence was reject as the Appeal Court held that from the wording of the advertisement the Carbolic Smoke Ball Company could be taken as having waived the need for the offer to be communicated. It was also held the company could not have expected every purchaser of the ball to contact them, rather the purchasers who used the smoke balls as directed and was attacked by the influenza.

Hilary

As stated above a contract could be a bilateral contract or a unilateral contract. It would appear that the competition notice displayed by Bulging Bellies Ltd is a unilateral contract and therefore it is an offer as the notice contains all the necessary conditions of an offer.

The displayed competition notice “One year free membership is offered to any member who can swim 200 lengths of our pool before 1st April……..” suggest that

1. The offer is to any member of the Bulging Bellies Ltd fitness centre (a group of persons) and as Hilary is a member of the fitness centre (in the group), it is reasonable for her to believe that the offer has been made to her.

2. The fact also suggests that it is a conditional offer to the fitness club members, as it is made to any member who can swim 200 lengths of the before 1st of April. Therefore the advertiser Bulging Bellies Ltd can be reasonably said to be bound as act is required for a reward. However it is arguable that completing the act of swimming 200 lengths of the pool does not constitute an acceptance as the statement in the advertisement requires