The defendant made the highest bid for the plaintiff\u2019s goods at an auction\u00a0sale, but he withdrew his bid before the fall of the auctioneer\u2019s hammer. It was\u00a0held that the defendant was not bound to purchase the goods. His bid amounted to\u00a0an offer which he was entitled to withdraw at any time before the auctioneer\u00a0signified acceptance by knocking down the hammer. Note: The common law rule laid\u00a0down in this case has now been codified in s57(2) Sale of Goods Act 1979.<\/p>\n
A shopkeeper displayed a flick knife with a price tag in the window. The\u00a0Restriction of Offensive Weapons Act 1959 made it an offence to \u2018offer for sale\u2019\u00a0a \u2018flick knife\u2019. The shopkeeper was prosecuted in the magistrates\u2019 court but the\u00a0Justices declined to convict on the basis that the knife had not, in law, been\u00a0\u2018offered for sale\u2019.<\/p>\n
This decision was upheld by the Queen\u2019s Bench Divisional Court. Lord Parker\u00a0CJ stated: \u201cIt is perfectly clear that according to the ordinary law of\u00a0contract the display of an article with a price on it in a shop window is merely\u00a0an invitation to treat. It is in no sense an offer for sale the acceptance of\u00a0which constitutes a contract.\u201d<\/p>\n
The defendants\u2019 shop was adapted to the \u201cself-service\u201d system. The\u00a0question for the Court of Appeal was whether the sales of certain drugs were\u00a0effected by or under the supervision of a registered pharmacist. The question\u00a0was answered in the affirmative. Somervell LJ stated that \u201cin the case of\u00a0an ordinary shop, although goods are displayed and it is intended that customers\u00a0should go and choose what they want, the contract is not completed until, the\u00a0customer having indicated the articles which he needs, the shopkeeper, or\u00a0someone on his behalf, accepts that offer. Then the contract is completed.\u201d<\/p>\n
It was an offence to offer for sale certain wild birds. The defendant had\u00a0advertised in a periodical \u2018Quality Bramblefinch cocks, Bramblefinch hens, 25s\u00a0each\u2019. His conviction was quashed by the High Court. Lord Parker CJ stated that\u00a0when one is dealing with advertisements and circulars, unless they indeed come\u00a0from manufacturers, there is business sense in their being construed as\u00a0invitations to treat and not offers for sale. In a very different context Lord\u00a0Herschell in Grainger v Gough (Surveyor of Taxes)<\/i> [1896] AC 325, said this in\u00a0dealing with a price list:<\/p>\n
\u201cThe transmission of such a price list does not amount to an offer to\u00a0supply an unlimited quantity of the wine described at the price named, so that\u00a0as soon as an order is given there is a binding contract to supply that\u00a0quantity. If it were so, the merchant might find himself involved in any number\u00a0of contractual obligations to supply wine of a particular description which he\u00a0would be quite unable to carry out, his stock of wine of that description being\u00a0necessarily limited.\u201d<\/p>\n
An advert was placed for \u2018smoke balls\u2019 to prevent influenza. The advert\u00a0offered to pay \u00a3100 if anyone contracted influenza after using the ball. The\u00a0company deposited \u00a31,000 with the Alliance Bank to show their sincerity in the\u00a0matter. The plaintiff bought one of the balls but contracted influenza. It was\u00a0held that she was entitled to recover the \u00a3100. The Court of Appeal held that:<\/p>\n
(a) the deposit of money showed an intention to be bound, therefore the\u00a0advert was an offer;<\/p>\n
(b) it was possible to make an offer to the world at large, which is accepted by\u00a0anyone who buys a smokeball;<\/p>\n
(c) the offer of protection would cover the period of use; and<\/p>\n
(d) the buying and using of the smokeball amounted to acceptance.<\/p>\n
The plaintiffs sent a telegram to the defendant, \u201cWill you sell Bumper\u00a0Hall Pen? Telegraph lowest cash price\u201d.<\/p>\n
The defendants reply was \u201cLowest price \u00a3900\u201d.<\/p>\n
The plaintiffs telegraphed \u201cWe agree to buy\u2026 for \u00a3900 asked by\u00a0you\u201d.<\/p>\n
It was held by the Privy Council that the defendants telegram was not an\u00a0offer but simply an indication of the minimum price the defendants would want,\u00a0if they decided to sell. The plaintiffs second telegram could not be an\u00a0acceptance.<\/p>\n
The council sent to tenants details of a scheme for the sale of council\u00a0houses. The plaintiff immediately replied, paying the \u00a33 administration fee.<\/p>\n
The council replied: \u201cThe corporation may be prepared to sell the house to\u00a0you at the purchase price of \u00a32,725 less 20 per cent. \u00a32,180 (freehold).\u201d<\/p>\n
The letter gave details about a mortgage and went on \u201cThis letter should\u00a0not be regarded as a firm offer of a mortgage. If you would like to make a\u00a0formal application to buy your council house, please complete the enclosed\u00a0application form and return it to me as soon as possible.\u201d G filled in and\u00a0returned the form. Labour took control of the council from the Conservatives and\u00a0instructed their officers not to sell council houses unless they were legally\u00a0bound to do so. The council declined to sell to G.<\/p>\n
In the House of Lords, Lord Diplock stated that words italicised seem to make\u00a0it quite impossible to construe this letter as a contractual offer capable of\u00a0being converted into a legally enforceable open contract for the sale of land by\u00a0G\u2019s written acceptance of it. It was a letter setting out the financial terms on\u00a0which it may be the council would be prepared to consider a sale and purchase in\u00a0due course.<\/p>\n
Royal Trust invited offers by sealed tender for shares in a company and\u00a0undertook to accept the highest offer. Harvela bid $2,175,000 and Sir Leonard\u00a0Outerbridge bid $2,100,000 or $100,000 in excess of any other offer. Royal Trust\u00a0accepted Sir Leonard\u2019s offer. The trial judge gave judgment for Harvela.<\/p>\n
In the House of Lords, Lord Templeman stated: \u201cTo constitute a fixed\u00a0bidding sale all that was necessary was that the vendors should invite\u00a0confidential offers and should undertake to accept the highest offer. Such was\u00a0the form of the invitation. It follows that the invitation upon its true\u00a0construction created a fixed bidding sale and that Sir Leonard was not entitled\u00a0to submit and the vendors were not entitled to accept a referential bid.\u201d<\/p>\n
BBC invited tenders to operate an airport, to be submitted by noon on a fixed\u00a0date. The plaintiffs tender was delivered by hand and put in the Town Hall\u00a0letter box at 11am. However, the tender was recorded as having been received\u00a0late and was not considered. The club sued for breach of an alleged warranty\u00a0that a tender received by the deadline would be considered. The judge awarded\u00a0damages for breach of contract and negligence. The council\u2019s appeal was\u00a0dismissed by the Court of Appeal.<\/p>\n
B supplied coal to MRC for many years without an agreement. MRC sent a draft\u00a0agreement to B who filled in the name of an arbitrator, signed it and returned\u00a0it to MRC\u2019s agent who put it in his desk. Coal was ordered and supplied in\u00a0accordance with the agreement but after a dispute arose B said there was no\u00a0binding agreement.<\/p>\n
It was held that B\u2019s returning of the amended document was not an acceptance\u00a0but a counter-offer which could be regarded as accepted either when MRC ordered\u00a0coal or when B actually supplied. By their conduct the parties had indicated\u00a0their approval of the agreement.<\/p>\n
Lord Denning said that one must look at the correspondence as a whole and the\u00a0conduct of the parties to see if they have come to an agreement.<\/p>\n
T built industrial units and subcontracted the windows to L. The work was\u00a0done and paid for. T then claimed damages from L because of defects in the\u00a0windows. L argued that even though there had been letters, phone calls and\u00a0meetings between the parties, there was no matching offer and acceptance and so\u00a0no contract.<\/p>\n
The Court of Appeal held that the fact that there was no written, formal\u00a0contract was irrelevant, a contract could be concluded by conduct. Plainly the\u00a0parties intended to enter into a contract, the exchanges between them and the\u00a0carrying out of instructions in those exchanges, all supported T\u2019s argument that\u00a0there was a course of dealing between the parties which amounted to a valid,\u00a0working contract. Steyn LJ pointed out that:<\/p>\n
(a) The courts take an objective approach to deciding if a contract has been\u00a0made.<\/p>\n
(b) In the vast majority of cases a matching offer and acceptance will create a\u00a0contract, but this is not necessary for a contract based on performance.<\/p>\n
6 June W offered to sell his estate to H for \u00a31000; H offered \u00a3950<\/p>\n
27 June W rejected H\u2019s offer<\/p>\n
29 June H offered \u00a31000. W refused to sell and H sued for breach of contract.<\/p>\n
Lord Langdale MR held that if the defendant\u2019s offer to sell for \u00a31,000 had\u00a0been unconditionally accepted, there would have been a binding contract; instead\u00a0the plaintiff made an offer of his own of \u00a3950, and thereby rejected the offer\u00a0previously made by the defendant. It was not afterwards competent for the\u00a0plaintiff to revive the proposal of the defendant, by tendering an acceptance of\u00a0it; and that, therefore, there existed no obligation of any sort between the\u00a0parties.<\/p>\n
On Saturday, the defendant offered to sell iron to the plaintiff at 40\u00a0shillings a ton, open until Monday. On Monday at 10am, the plaintiff sent a\u00a0telegram asking if he could have credit terms. At 1.34pm the plaintiff sent a\u00a0telegram accepting the defendant\u2019s offer, but at 1.25pm the defendant had sent a\u00a0telegram: \u2018Sold iron to third party\u2019 arriving at 1.46pm. The plaintiff sued\u00a0the\u00a0defendant\u00a0for\u00a0breach\u00a0of\u00a0contract\u00a0and\u00a0the\u00a0defendant\u00a0argued\u00a0that\u00a0the\u00a0plaintiff\u2019s telegram\u00a0was a counter-offer so the plaintiff\u2019s second telegram could not be an\u00a0acceptance.<\/p>\n
It was held that the plaintiff\u2019s first telegram was not a counter-offer but\u00a0only an enquiry, so a binding contract was made by the plaintiff\u2019s second\u00a0telegram.<\/p>\n
The plaintiffs offered to sell a machine to the defendants. The terms of the\u00a0offer included a condition that all orders were accepted only on the sellers\u2019\u00a0terms which were to prevail over any terms and conditions in the buyers\u2019 order.<\/p>\n
The defendants replied ordering the machine but on different terms and\u00a0conditions. At the foot of the order was a tear-off slip reading, \u201cWe\u00a0accept your order on the Terms and Conditions stated thereon.\u201d The\u00a0plaintiffs signed and returned it, writing, \u201cyour official order\u2026 is\u00a0being entered in accordance with our revised quotation\u2026 \u201c.<\/p>\n
The Court of Appeal had to decide on which set of terms the contract was\u00a0made. Lord Denning M.R. stated:<\/p>\n
\nIn many of these cases our traditional analysis of offer, counter-offer,\u00a0rejection, acceptance and so forth is out-of-date. This was observed by Lord\u00a0Wilberforce in New Zealand Shipping Co Ltd v AM Satterthwaite<\/i>. The better way is\u00a0to look at all the documents passing between the parties and glean from them, or\u00a0from the conduct of the parties, whether they have reached agreement on all\u00a0material points, even though there may be differences between the forms and\u00a0conditions printed on the back of them. As Lord Cairns L.C. said in Brogden v\u00a0<\/i>Metropolitan Railway Co<\/i> (1877):<\/p>\n
\u2026 there may be a consensus between the parties far short of a complete mode\u00a0of expressing it, and that consensus may be discovered from letters or from\u00a0other documents of an imperfect and incomplete description.<\/p>\n<\/blockquote>\n
Applying this guide, it will be found that in most cases when there is a\u00a0\u201cbattle of forms\u201d there is a contract as soon as the last of the forms\u00a0is sent and received without objection being taken to it. Therefore, judgment\u00a0was entered for the buyers.<\/p>\n
GNR v Witham (1873)<\/h3>\n
GNR advertised for tenders for the supply of stores and W replied \u2018I\u00a0undertake to supply the company for 12 months with such quantities as the\u00a0company may order from time to time\u2019. GNR accepted this tender and placed orders\u00a0which W supplied. When W later refused to supply it was held that W\u2019s tender was\u00a0a standing offer which GNR could accept by placing an order. W\u2019s refusal was a\u00a0breach of contract but it also revoked W\u2019s standing offer for the future, so W\u00a0did not have to meet any further orders.<\/p>\n
Lord Denning in Entores v Miles Far East Corp (1955)<\/h3>\n
If a man shouts an offer to a man across a river but the reply is not heard\u00a0because of a plane flying overhead, there is no contract. The offeree must wait\u00a0and then shout back his acceptance so that the offeror can hear it.<\/p>\n
Powell v Lee (1908)<\/h3>\n
The plaintiff applied for a job as headmaster and the school managers decided\u00a0to appoint him. One of them, acting without authority, told the plaintiff he had\u00a0been accepted. Later the managers decided to appoint someone else. The plaintiff\u00a0brought an action alleging that by breach of a contract to employ him he had\u00a0suffered damages in loss of salary. The county court judge held that there was\u00a0no contract as there had been no authorised communication of intention to\u00a0contract on the part of the body, that is, the managers, alleged to be a party\u00a0to the contract. This decision was upheld by the King\u2019s Bench Division.<\/p>\n
Felthouse v Bindley (1862)<\/h3>\n
The plaintiff discussed buying a horse from his nephew and wrote to him\u00a0\u201cIf I hear no more about him, I consider the horse mine\u2026 \u201d The\u00a0nephew did not reply but wanted to sell the horse to the plaintiff, and when he\u00a0was having a sale told the defendant auctioneer not to sell the horse. By\u00a0mistake the defendant sold the horse. The plaintiff sued the defendant in the\u00a0tort of conversion but could only succeed if he could show that the horse was\u00a0his.<\/p>\n
It was held that the uncle had no right to impose upon the nephew a sale of\u00a0his horse unless he chose to comply with the condition of writing to repudiate\u00a0the offer. It was clear that the nephew intended his uncle to have the horse but\u00a0he had not communicated his intention to his uncle, or done anything to bind\u00a0himself. Nothing, therefore, had been done to vest the property in the horse in\u00a0the plaintiff. There had been no bargain to pass the property in the horse to\u00a0the plaintiff, and therefore he had no right to complain of the sale.<\/p>\n
Entores v Miles Far East Corp (1955)<\/h3>\n
The plaintiffs in London made an offer by Telex to the defendants in Holland.<\/p>\n
The defendant\u2019s acceptance was received on the plaintiffs\u2019 Telex machine in\u00a0London. The plaintiffs sought leave to serve notice of a writ on the defendants\u00a0claiming damages for breach of contract. Service out of the jurisdiction is\u00a0allowed to enforce a contract made within the the jurisdiction. The Court of\u00a0Appeal had to decide where the contract was made.<\/p>\n
Denning L.J. stated that the rule about instantaneous communications between\u00a0the parties is different from the rule about the post. The contract is only\u00a0complete when the acceptance is received by the offeror: and the contract is\u00a0made at the place where the acceptance is received. The contract was made in\u00a0London where the acceptance was received. Therefore service could be made\u00a0outside the jurisdiction.<\/p>\n
The Brimnes (1975)<\/h3>\n
The defendants hired a ship from the plaintiff shipowners. The shipowners\u00a0complained of a breach of the contract. The shipowners sent a message by Telex,\u00a0withdrawing the ship from service, between 17.30 and 18.00 on 2 April. It was\u00a0not until the following morning that the defendants saw the message of\u00a0withdrawal on the machine.<\/p>\n
Edmund-Davies L.J. agreed with the conclusion of the trial judge. The trial\u00a0judge held that the notice of withdrawal was sent during ordinary business\u00a0hours, and that he was driven to the conclusion either that the charterers\u2019\u00a0staff had left the office on April 2 \u2018well before the end of ordinary business\u00a0hours\u2019 or that if they were indeed there, they \u2018neglected to pay attention to\u00a0the Telex machine in the way they claimed it was their ordinary practice to do.\u2019<\/p>\n
He therefore concluded that the withdrawal Telex must be regarded as having been\u00a0\u2018received\u2019 at 17.45 hours and that the withdrawal was effected at that time.<\/p>\n
Note: Although this is a case concerning the termination of a contract, the\u00a0same rule could apply to the withdrawal and acceptance of an offer.<\/p>\n
Brinkibon v Stahag Stahl (1983)<\/h3>\n
The buyers, an English company, by a telex, sent from London to Vienna,\u00a0accepted the terms of sale offered by the sellers, an Austrian company. The\u00a0buyers issued a writ claiming damages for breach of the contract.<\/p>\n
The House of Lords held that the service of the writ should be set aside\u00a0because the contract had not been made within the court\u2019s jurisdiction. Lord\u00a0Wilberforce stated that the present case is, as Entores itself, the simple case\u00a0of instantaneous communication between principals, and, in accordance with the\u00a0general rule, involves that the contract (if any) was made when and where the\u00a0acceptance was received. This was in Vienna.<\/p>\n
Adams v Lindsell (1818)<\/h3>\n
2 Sept. The defendant wrote to the plaintiff offering to sell goods asking\u00a0for a reply \u201cin the course of post\u201d<\/p>\n
5 Sept. The plaintiff received the letter and sent a letter of acceptance.<\/p>\n
9 Sept. The defendant received the plaintiff\u2019s acceptance but on 8 Sept had sold\u00a0the goods to a third party.<\/p>\n
It was held that a binding contract was made when the plaintiff posted the\u00a0letter of acceptance on 5 Sept, so the defendant was in breach of contract.<\/p>\n