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Definition: 1.

Agreement: An agreement will only be seen generally if there is a clear, unequivocal offer mirrored with a clear, unequivocal acceptance. 2. Offer: An indication of willingness to do or retrain from doing something that is capable of being converted by acceptance into a legally binding contract. 3. Invitation to treat (ITT): invitation to others to make an offers. 4. Acceptance: Agreement to the terms of an offer that, provided certain other requirement are fulfilled, converts the offer into legally binding contract. 5. Counter offer: A response to an offer, made to the offeror by the offeree, that seeks either to introduce a new term or to vary an existing term of the offer. Agreement: Case: Butler v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401

The seller, Butler, offered to sell a machine tool to the buyers, the offer being made on Butler's standard terms of business, which included, inter alia, a price variation clause. The buyers sent an order for the machine tool which, in turn, was on their own standard terms of business, which made no provision for a price variation clause and stated that the price of the machine tool was to be fixed. The buyers' order from contained a tear-off acknowledgement slip, which stated that ' we (seller) accept your order on the terms and conditions stated thereon.' The sellers signed and returned this slip to the buyers, together with a letter stating that they were carrying out the order on the terms of their original offer. After constructing the machine tool, but before delivering it, the sellers sought to invoke the price variation clause contained in their original offer and claimed the additional sum of 2,892. The buyers refused to pay this increase in price, claiming that they were not contractually to bound to do so. The sellers accordingly sued the buyers for 2,892 in damages.

Held: The Court of Appeal held that they were not entitled to recover the sum claimed because contract had been concluded on the buyers' terms which did not include the price variation clause.

Lawton and Bridge LJ said:The traditional 'mirror image' rule of contractual formation. According to this rule, the court must be able to find in the documents which passed between the parties a clear and unequivocal offer which is matched or 'mirrored' by an equally clear and unequivocal acceptance. Offer and Invitation to Treat (ITT):

An offer is a statement by one party of a willingness to enter into contract on stated terms, provided that these terms are, in turn, accepted by the party or parties to whom the offer is addressed. Offer can be made in any particular form. It may be made in orally, in writing or by conduct.

The distinction between offer and invitation to treat is intention of the parties. Offer Invitation to treat Gibson v Manchester City Council [1978] 1 WLR 520 (CA) The city council adopted a policy of selling council houses to tenants. The respondent tenant applied on a printed form for details of the price and mortgage terms. The city treasurer wrote to the respondent that the Council 'may be prepared to sell the house to you at the purchase price of 2,725 less 20%= 2,180. The letter gave details of the mortgage likely to be made available and stated 'If you would like to make a formal application to buy...please complete the enclosed application form and return it to me as soon as possible.' The respondent completed the application form and returned it on 5 March. Before contracts were prepared and exchanged, political control of the Council changed and the Council decided to proceed only with those sales where contracts had already been exchanged. The respondent sought specific performance of the contract, claiming that the offer in the city treasurer's letter had been accepted by him. There was no binding contract because no offer capable of acceptance had been made by the Council. The statements in the city treasurer's letter that the Council 'may be prepared to sell' and inviting Mr. Gibson ' to make a formal application to buy' were not an offer to sell, but merely an invitation to treat. Lord Diplock

Case

Storer v Manchester City Council [1974] 1 WLR 1403

Background The Council decided to sell council houses to tenants and devised a simple form for quick agreements which dispensed with legal formalities. The plaintiff applied to buy his council house, and on 9 March 1971 the town clerk wrote to him 'I understand you wish to purchase your council house and enclose the Agreement for Sale. If you will sign the Agreement and return it to me I will send you the Agreement signed on behalf of the Council in exchange.' The enclosed 'Agreement for Sale' had been filled in with details which included the purchase price, the amount of the mortgage and the monthly repayments, although the date when the tenancy was to cease and the mortgage repayments begin had been left blank. On 20 March, the plaintiff signed and returned this Agreement Sale, but before the town clerk had signed the Agreement on the Council's behalf, the Council changed political control and discontinued such sales unless contracts had already been exchanged. The plaintiff sought specific performance alleging a binding contract. Held A binding contract had been concluded. The Council's intention was to become contractually bound when the plaintiff had signed the Agreement and returned it.

Judge

Lord Denning

Judgement

The words' willing to sell' are fatal to this; so is the offer. The acceptance was made when Mr. Storer did sign it, as he did, and return it, as he did on March 20. It was then that a contract was concluded. The town clerk was then bound to send back the agreement signed on behalf of the corporation. The agreement was concluded on Mr Storer's acceptance. It was not dependent on the subsequent exchange.

The words ' may be prepared to sell' are fatal to this; so is the invitation, not, be it noted, to accept the offer but 'to make formal application to buy' upon the enclosed application form. It is, to quote Geoffrey Lane LJ, a letter setting out the financial terms on which it may be the council will be prepared to consider a sale and purchase in due course.

Display of Goods

The General Rule- displays of goods to sale is ITT. ITT Offer Chapelton v Barry Urban District Council [1940] 1 KB 532 (CA) The plaintiff wished to hire a deck chair to sit on the beach. The defendant council had left a pile of deck chairs with a notice giving the hire charge and stating that tickets were obtainable from the deck chair attendant. The notice itself contained no exempting conditions. The plaintiff did not know that the tickets contained conditions because he simply glanced at them and put them into his pocket. On the reserve side of the ticket were the words: 'The council will not be liable for any accident or damage arising from the hire of the chair.' Due to the negligence of the defendant council, the canvas on the plaintiff's chair gave way when he sat on it. The council argued that the clause on the ticket exempted them from the liability. A pile of deck chair accompanied

Case

Pharmaceutical Society of Great Britain v Boots Cash Chemists(Southern) Ltd [1953] 1 QB 401 (CA) Background Boots was charged with an offence under the Pharmacy and Poisons Act 1933, s18, which required that sales of poisons in Part I of the Poisons List take place under the supervision of a registered pharmacist. Boots operated a self-service system, and the pharmacist at the cash desk was authorised to prevent the removal of any drug from the premises. The factor determining whether an offence had been committed was the point at which the sale in this self-service shop too place.

Held

Boots had not committed the offence.

Judge Judgement

The displays of goods on a supermarket's shelves was merely an invitation to customer to make offers to buy. Somervell LJ I agree with Lord Goddard CJ in everything that he said, but I will put the matter shortly in my own words. Whether the view contended for by the plaintiffs is a right view depends on what are the legal implications of this layout-ITT. Is a contract to be regarded as being completed when the article is put into receptacle, or is this to be regarded as a more organised way of doing what is done already in many types of shops-and a bookseller is perhaps the best example-namely, enabling customers to have free access to what is in the shop, to look at the different articles, and then, ultimately, having got the ones which they wish to buy, to come up to the assistant saying 'I want this'? The assistant in 999 times out of 1,000 says 'That is all right,' and the money passes and the transaction is completed. I agree with what the Lord Goddard CJ has said, and with the reasons which he has given for his conclusion, that in the case of an ordinary shop, although goods are displayed and it is intended that customers should go and choose what they want, the contract is not completed until, the customers should go and choose what they want, the contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. Then the contract is completed. I can see no reason at all, that being clearly the normal position, for drawing any different implication as a result of this layout. The Lord Chief Justice, I think, expressed one of the most formidable difficulties in the way of the plaintiffs' contention when he pointed out that, if the plaintiffs are right, once an article has been placed in the receptacle the customer himself is

by a notice indicating the hire charge and stating that tickets should be obtained from the attendants, amounted to an offer. Slesser LJ Slesser LJ stressed that there was no reason why a person taking a chair should obtain the ticket at that time. They might sit on the chair for an hour or more before the attendant came for the money.

bound and would have no right, without paying for the first article, to substitute an article which he saw later of a kind and which he perhaps preferred. I can see no reason for implying from this self-service arrangement any implication other than that which the Lord Chief Justice found in it, namely, that it is a convenient method of enabling customers to see what there is and choose, and possibly put back and substitute, articles which they wish to have, and then to go up to the cashier and offer to buy what they have so far chosen. On that conclusion the case fails, because it is admitted that there was supervision in the sense required by the Act and at the appropriate moment of time.

Advertisements

The General Rule- Advertisements is ITT. ITT Offer Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 The defendants, who were the manufacturers of the carbolic smoke ball, issued an advertisement in which they offered to pay 100 to any person who caught influenza after having used one of their smoke balls in the specified manner, and they deposited 1,000 in the bank to show their good faith. The claimant caught influenza after using the smoke ball in the specified manner. She sued for the 100. The advertisement was not an ITT but was an offer to the whole world and that a contract was made with those persons who performed the condition 'on the faith of the advertisement'. The claimant entitled was therefore entitled to recover 100.

Case

Partridge v Crittenden [1968] 1 WLR 1204 (QB) Background The plaintiff had placed an advertisement in a periodical which read 'Bramblefinch cocks, Bramblefinch hens, 25s each.' The plaintiff was charged with unlawfully offering for sale a wild live bird contrary to s.6(1) of and Sch.4 to the Protection of Birds Act 1954

Held

The advertisement was an ITT not an offer to sale. It followed that the plaintiff could not be guilty of the offence charged.

Judge Judgement

Lord Parker CJ There was 'business sense' in treating such advertisements as ITT because if they were treated as offers the advertiser might find himself contractually obliged to sell more goods than he in fact owned. However, as we have seen, this argument is not conclusive because it could be implied that the offer is only capable of acceptance 'while stock last'.

Bowen LJ The document itself is not a contract at all, it is only an offer made to public. The defendants contend next, that is an offer the terms of which are too vague to be treated as a definite offer, inasmuch as there is no limit of time fixed for the catching of the influenza, and it cannot be supposed that the advertisement seriously meant to promise to pay money to every person who catches the influenza at any time after the inhaling the smoke ball. It was urged also, that if you look at this document you will find much vagueness as to the persons with whom the contract was intended to be made-that, in the first place, its terms are wide enough to include persons who may have used the smoke ball before the advertisement was issued; at all events, that it is an offer to the world in general, and also, that it is unreasonable to suppose it to be a definite offer, because nobody in their sense would contract themselves out of opportunity of checking the experiment which was going to be made at their own expense.

Auction Sales

The General Rule- auction sales is an ITT. If the auction is advertised as being 'without reserve' (there is to be no reserve price and the property will be sold to the highest bidder). The auctioneer has to sell the property to highest bidder. ITT Offer Barry v Davies (Trading as Heathcote Ball & Co) [2000] 1 WLR 1962 At an auction without reserve the plaintiff had made the only bid (of 200 each) for two engine analysers. The auctioneer considered this bid to be too low ( on the basis that each machine was worth about 14,000) and withdrew the engine analysers from the sale. They were sold privately a few days later for 750 each.

Case

Harris v Nickerson (1873) LR 8 QB 286 Background The defendant auctioneer advertised that lots including certain office furniture would be sold by him at Bury St Edmunds on specified days. The plaintiff had a commission to buy this furniture and travelled from London for the sale. However,

the lots were withdrawn from sale. The plaintiff brought an action against the defendant to recover for his loss of time and expenses.

Held

He had no such right of action. The advertisement was only an ITT and did not amount to a promise that all the articles advertised would be put up for sale.

Judge Judgement

BLACKBURN J, QUAIN J In the present case, it is to be observed that the plaintiff bought some other lots; but it is said he had a commission to buy the furniture, either the whole or in part, and that therefore he has a right of action against the defendant. Such a proposition seems to be destitute of all authority; and it would be introducing an extremely inconvenient rule of law to say that an auctioneer is bound to give notice of the withdrawal or to be held liable to everybody attending the sale.

The plaintiff sought damages alleging breach of contract by the auctioneer since he was the highest bidder at an auction without reserve. The plaintiff claimed damages of 27, 600, being the difference between the value of both machine (28,000) less the total amount of his bid (400). The auctioneer was liable. Following Warlow v Harrison, at an auction without reserve there was a collateral contract between the auctioneer and the highest bidder based on the auctioneer's undertaking to sell to the highest bidder. By withdrawing the machine from the auction, the auctioneer was in breach of contract and was liable to pay the highest bidder the difference between old amount and the market price at the date of the auctioneer of the goods withdrawn. The only evidence of market price was the manufacturer's list price for new machines, namely 14,000 each. Sir Murray Stuart Smith LJ It would be the general and reasonable expectation of persons attending at an auction sale without reserve that the highest bidder would and should be entitled to the lot for which he bids. Such an outcome was in his view fair and logical. As a matter of law, he held that there was a collateral contract between the auctioneer and the highest bidder constituted by an offer by the auctioneer to sell to the highest bidder which was accepted when the bid was made.

Tenders

In general rule, tenders are ITT. A request for tenders is an ITT and each tender is an offer. The requestor is free to accept or reject any tender to purchase goods, even if it is the highest bid.

ITT Case Spencer v Harding (1870) LR 5 CP 561

Offer

Blackpool & Fylde Aero Club ltd v Blackpool Borough Council [1990] 1 WLR 1195 (CA) Background The defendants sent out a The Council invited the plaintiff club and circular, as follows:We are six other parties to tender for a concession instructed to offer to the to operate pleasure flights from Blackpool wholesale trade for sale by tender airport. Tenders would not be considered if the stock in trade of A., they were received after 12 noon on 17 amounting, &c., and which will March 1983. The club's tender was put in be sold at a discount in one lot: the Town Hall letter box at 11 am on 17 payment to be made in cash: the March, but the letter box was not cleared, tenders will be received and as it should have been at 12 noon. The opened at our offices, club's tender was not considered on the basis that it was received too late. On discovering what had happened, the Council decided to carry out the tendering exercise again. However, when the successful tenderer threatened to sue, the Council retracted. The club sought damages for breach of warranty, arguing that the Council had warranted (promised) that the tender would be considered if it was received by the deadline. However, there was no express promise to this effect. Held This did not amount to a contract An Invitation to tender could give rise to or promise to sell to the person an implied binding contractual obligation who made the highest tender. to consider tenders conforming to the conditions of tender in these circumstances, namely: (a) the tenders had been solicited by the Council from specified parties who were known to the Council; (b) there was absolute conditions governing submission including an absolute deadline. Judge WILLES J Bingham LJ, STOCKER LJ Judgement The action is brought against The format of the invitation to tender persons who issued a circular document itself suggests, in my view, that offering a stock for sale by a legal obligation to consider a tender tender, to be sold at a discount in submitted before any award of a one lot. The plaintiffs sent in a concession was made to any other operator tender which turned out to be the was to be implied in the case of any highest, but which was not operator of aircraft to whom the invitation accepted. They now insist that was directed who complied with its terms the circular amounts to a contract and conditions. The fact that the invitation or promise to sell the goods to the to tender was limited to a very small class highest bidder, that is, in this of operators is itself of significance. The

case, to the person who should tender for them at the smallest rate of discount; and reliance is placed on the cases as to rewards offered for the discovery of an offender. In those cases, however, there never was any doubt that the advertisement amounted to a promise to pay the money to the person who first gave information. The difficulty suggested was that it was a contract with all the world. But that, of course, was soon overruled. It was an offer to become liable to any person who before the offer should be retracted should happen to be the person to fulfil the contract of which the advertisement was an offer or tender. That is not the sort of difficulty which presents itself here. If the circular had gone on, and we undertake to sell to the highest bidder, the reward cases would have applied, and there would have been a good contract in respect of the persons. But the question is, whether there is here any offer to enter into a contract at all, or whether the circular amounts to anything more than a mere proclamation that the defendants are ready to chaffer for the sale of the goods, and to receive offers for the purchase of them. In advertisements for tenders for buildings it is not usual to say that the contract will be given to the lowest bidder, and it is not always that the contract is made with the lowest bidder. Here there is a total absence of any words to intimate that the highest bidder is to be the purchaser. It is a mere attempt to ascertain whether an offer can be obtained within such a margin as the sellers are willing to adopt.

circumstances surrounding the issue of the invitation to tender and the formal requirements imposed by it support the conclusion. Of particular significance, in my view, was the requirement that tenders be submitted in the official envelope supplied and endorsed by the council. He purpose of this requirement must surely have been to preserve the anonymity of the tenderer and, in conjunction with the council's standing orders, to prevent any premature leak of the nature and amount of such tender to other interested or potentially interested parties. Such a requirement, as a condition of the validity of the tender submitted, seems pointless unless all tenders submitted in time and in accordance with the requirements are to be considered before any award of the concession is made. There can be no doubt that this was the intention of both parties, as exemplified by the council's actions when their error with regard to the time of receipt of the club's tender was appreciated. Such a common intention can, of course, exist without giving rise to any contractual obligations, but the circumstances of this case indicate to me that this is one of the fairly rare exceptions to the general rule expounded in the leading cases of Spencer v. Harding (1870) L.R. 5 C.P. 561 and Harris v. Nickerson (1873) L.R. 8 Q.B. 286 . I therefore agree that in all the circumstances of this case there was an intention to create binding legal obligations if and when a tender was submitted in accordance with the terms of the invitation to tender, and that a binding contractual obligation arose that the club's tender would be before the officer or committee by whom the decision was to be taken for consideration before a decision was made or any tender accepted. This would not preclude or inhibit the council from deciding not to accept any tender or to award the concession, provided the decision was bona fide and honest, to any tenderer. The obligation was that the club's tender would be before the deciding body

for consideration before any award was made. Accordingly, in my view, the conclusion of the judge and his reasons were correct.