Offer and acceptance
An offer is a definite promise ready to be accepted; an invitation to treat is not. Acceptance must be unconditional and communicated before the offer ends.
Offer
An offer is a clear statement of the terms on which a person (the offeror) is willing to be bound, made so that a simple 'yes' from the other person (the offeree) creates a contract. An offer can be made to one person, a group, or the whole world. In Carlill v Carbolic Smoke Ball Co, the company advertised a reward of £100 to anyone who caught influenza after using its smoke ball as directed. Mrs Carlill used it, caught influenza and claimed. The court held the advertisement was an offer to the world, accepted by performing the conditions, so no separate notice of acceptance was needed.
Offer or invitation to treat?
| Situation | Legal position | Case |
|---|---|---|
| Goods on supermarket shelves | Invitation to treat; the customer makes the offer at the till | Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) |
| Goods in a shop window with a price tag | Invitation to treat | Fisher v Bell (1961) |
| Newspaper advertisement to sell goods | Usually an invitation to treat | Partridge v Crittenden (1968) |
| Advertised reward with conditions | An offer to the world | Carlill v Carbolic Smoke Ball Co (1893) |
| Reply giving only the lowest price | Information, not an offer | Harvey v Facey (1893) |
| Auction | The bid is the offer; the fall of the hammer is acceptance | General rule |
How an offer comes to an end
- Revocation: the offeror withdraws it before acceptance; the withdrawal works only when the offeree receives it (Byrne v Van Tienhoven).
- Rejection by the offeree.
- Counter-offer: a reply with new terms rejects the original offer (Hyde v Wrench).
- Lapse of time: after the stated time, or a reasonable time if none is stated.
- Death of either party before acceptance, in most cases.
- Failure of a condition attached to the offer.
Rules of a valid acceptance
- Absolute and unconditional: it must match the offer exactly (the 'mirror image' rule).
- Communicated to the offeror: silence is not acceptance (Felthouse v Bindley).
- Made by the offeree, or someone authorised by the offeree.
- In the method the offeror asked for, or a method at least as quick.
- Made while the offer is still open.
- Can be by conduct, e.g. performing the conditions of a reward offer (Carlill).
- Postal rule: an acceptance by post is complete when properly posted (Adams v Lindsell).
- Instant communication (telephone, telex): complete when received (Entores v Miles Far East, 1955); email is usually treated the same way.
From offer to agreement
If the offer ends first (revocation, rejection, lapse, death), there is nothing left to accept.
A shopper who takes a packet of Ceylon tea from a supermarket shelf makes the offer at the checkout, and the cashier accepts by taking payment. A garment buyer's email saying 'we accept, but with delivery in 30 days instead of 45' is a counter-offer, not an acceptance.
Short answer: “Distinguish an offer from an invitation to treat.” An offer can be accepted to form a contract; an invitation to treat only invites offers (e.g. goods on display, Pharmaceutical Society v Boots).
Structured question: “State the rules of a valid acceptance.” Unconditional (mirror image), communicated (Felthouse v Bindley), by the offeree, in the required mode, while the offer is open; postal rule (Adams v Lindsell).
Essay: “Explain the rules relating to offer and acceptance with decided cases.” Define offer; offer vs invitation to treat (Boots, Fisher v Bell); offer to the world (Carlill); termination (Hyde v Wrench, Byrne); rules of acceptance (Felthouse, Adams v Lindsell, Entores); close.
Offer ends by R-R-C-L-D-F: Revocation, Rejection, Counter-offer, Lapse, Death, Failed condition. Silence never accepts (Felthouse).