Revocation or Termination of an Offer

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 20th of March Hilary saw completion notice on the notice board.

On the 24th of March Hilary commences 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Bulging Bellies Ltd replied her that she did qualify for the competition as the offer had been withdrawn, number of lengths had to be continuous in one attempt, she swam more than the required lengths, and Hilary’s card was not received in time.

Is there a contract between Hilary and Bulging Bellies Ltd?

Contract or Agreement

What is a 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)

Offer and acceptance are basically what makes an agreement or a contract. However we must establish if the notice displayed constitutes an offer or an invitation to treat.

It is very important to know the difference between an offer and an invitation to treat, as they are not the same.

Firstly, we must ask whether the advertisement of Bulging Bellies Ltd is an offer or an invitation to treat as an invitation to treat cannot be capable of acceptance, it is an invitation to commence an offer or negotiation, whilst an offer is a specific proposition made with the intention that it shall become binding immediately it is accepted.

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.

Invitation to Treat

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.

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.

Bilateral Contract is offered 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 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 his made performs the specific act or required consideration.

Advertisements for a reward are unilateral contracts and they are traditionally 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). Carlill v. Carbolic Snow Ball Co. [1893] 1 QB 256

The fact suggests that Bulging Bellies Ltd displayed competition notice is a unilateral contract, though not completely analogous to Carlill but has basically the same ingredients.

The advertisement is specific that is, “…One year free membership for anyone who can swim 200 lengths of our pool before 1st April…” and because it is advertised as a reward from a business, the court will more likely be inclined to call it an offer.

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 the balls relying on the advert 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.

Bulging Bellies

Bulging Bellies would find it difficult to argue otherwise as the advert contains a reward “…One year’s free membership….” and an act on the Hilary’s part that is “……an enduring physical challenge of swimming 200 lengths of the pool.

The fact also suggests that the advert represent a unilateral offer of a contract which becomes a binding contract immediately the required act of acceptance is done. However, if the court is persuaded that it is an invitation to treat, Hilary prospects of a claiming would be difficult as her enduring swimming acts could be regarded as the making of an offer to Bulging Bellies Ltd, which they have a right to reject.

However, It would appear that Bulging Bellies Ltd are not claiming that the advertisement displayed is an invitation to treat as they have only informed Hilary in their letter that the offer had been withdrawn. We can therefore assume that they agree that their advertised competition constitutes an offer.

Acceptance

An offer alone does not constitute an agreement or a contract there must an acceptance in consideration or an act for the contract to be binding. The offeree that is the party accepting the offer must comply with the specific act or required consideration for the act or consideration to constitute an acceptance.

Hilary V Bulging Bellies Ltd

1). Does the withdrawal of the offer on the 28th March as per the notice placed on their website affect Hilary’s claim?

Bulging Bellie Ltd is not under any obligation to keep offer open to the stipulated time in the advert displayed on the notice board which was the 1st of April. In a unilateral contract as a rule the offerror can withdraw an offer at any time before acceptance and only a completion of the stipulated act can constitute an acceptance

In Bulging Bellies Ltd favour is the fact that Hilary was informed by Ralph the Manager of Bulging Bellies Ltd that the offer had been withdrawn before she entered the competition Ralph is strongly persuasive a reliable third party.

In Dickinson v. Dodds (1876) 2 Ch D 463, Dodds offered to sell his to Dickinson on the 10th of of June 1974, the offer was left open until 9am, Friday, June 12, Dodds sold his house on Thursday the 11th of June to Alan in the evening. Dickinson was informed by Berry of the sale that same evening. That evening Dickinson delivered a formal letter of acceptance to Dodds. Dodds fail to complete on the 12 of June and a decree of specific performance against Dodds. The application failed at the court of Appeal.

Mellish LJ stated that “…I am clearly of that opinion that, just as when a man who has made an offer dies before it is accepted it is impossible that it can be accepted, so when one person to whom the offer was made knows that the property has been sold to someone else, it is too late for him to accept the offer……” (Mellish LJ, A Casebook on Contract by Smith & Thomas )

In Hilary defence she embarked on the specific task of swimming the 200 lengths on the 24th of March. She can arguably be said to have accepted the offer before it was withdrawn on the 24th of March, 4 days before it was withdrawn (on the 28th of March) and Bulging Bellies Ltd can prevent her from completing the task.

In Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231 Daulia Ltd argued that though there was no formal contract with Four Millbank, they were offered a unilateral contract orally by Millbank,The specific act required was that they attend Four Millbanks office with a written contract of sale with the sale terms of agreement already negotiated and a deposit. Four Millbanks breached the oral agreement by refusing to complete when Daulia‘s representatives attended. Goff LJ observed that there would be a duty to not prevent full performance of terms in a unilateral offer, once performance had begun.

2). Number of lengths swum had to be continuous

Is there any suggestion in the displayed competition notice implying that the number of lengths swum had to be continuous?

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

It would appear that there is no suggestion in the notice that the number of lengths swum must be continuous. The specific act required in the advertisement notice is the swimming of 200 lengths before 1st April……… it is therefore reasonable for her to believe that the offer made to her was to swim 200 lengths before 1st April.

It would appear that the test of a reasonable persons would be applied to establish the intention of Bulging Bellies statement “.. member who can swim 200 lengths of our pool before 1st of April..” The size of the swimming pool, average time spent by members daily etc would be taken into consideration and could be strong persuasive.

3). Hilary had not swum 200 lengths exactly

It is arguable that completing the act of swimming more than 200 lengths of the pool does not constitute an acceptance as the specific act required in the advertisement was only 200 lengths of the Pool.

Assuming that the competition notice displayed by Bulging Bellies Ltd is a unilateral contract and therefore it is an offer. If the advert is a unilateral contract only the completion of the required act will constitute an acceptance. Hilary’s successfully completing the swim more than the required length could arguable not constitute an acceptance as the presumption in unilateral contracts is that only the completing of the required or stipulated act can constitute an acceptance. Bulging Bellies Ltd offer is to those who can swim 200 lengths and not more than 200 lengths…………………

4. They did not receive the card before 1st April

Bulging Bellies defence on the time they received the acceptance (card) could fail because of the postal rule. Assuming that Hilary posted the card before the 1st of April the postal rule will apply.

In Adams v. Lindsell (1818) 1 B & A 681 It was held that a contract is complete once an acceptance has been posted. Thesiger LJ refers to the post office as an agent of both parties for the communication of acceptance. In Household fire Insurance v. Grant (1879) 4 Ex D 216, the fact that the acceptance letter never actually arrived was held to be irrelevant. It was held that there was a binding contract as soon as the acceptance was posted. It would therefore appear that Hilary’s acceptance (card) is valid for the competition as long as the card was posted before the 1st of April.

Conclusion

In line with Carhill v. Carbolic Snow Ball case, It would appear that Hilary has good case against Bulging Bellies Ltd as there is no problem of the measure of damages if the revocation of her acceptance is reversed or nullified. As Hilary as completed the task she will be entitled to the “One year free membership” (reward) if the specific act required is held to have been completed by her before the withdrawal.

The fact that Hilary swam more than 200 lengths and it was not done continuously could be a defence from Bulging Bellies. Bulging Bellies intention will need to pass the test of a reasonable bystander or a reasonable person to succeed in this claim.