An offer is a clear statement addressed by one party to another, of the terms on which the offeror is willing to contract if the person offered decides to accept. Acceptance, in the legal sense, is a clear and definitive acceptance of the terms of the offer by the party to whom it is addressed. An acknowledgement of receipt of the offer is not enough. The offer might be accepted by either expressing agreement or by actually performing and acting in accordance with the offer.
It is presumed that the display of goods by itself is not an offer. This is presumed to be an “invitation to treat” i.e. a request to make an offer. The offer is deemed made by the customer by approaching the till and tendering purchase money. The offer is accepted by the retailer completing the purchase through the agency of the sales staff.
Advertisements are presumed to be invitations to treat. In exceptional cases, an advertisement may be deemed an offer. In a very famous case, a medicine manufacturer stated in an advertisement that any person catching influenza after taking the medicine would be entitled to a sum in compensation. In that case, the advertisement was so precise in its terms that it was deemed an offer to any person who accepted it, by the purchase of the product.
A request for information may not generally be an offer. A request for the lowest price by itself would not usually imply an offer to buy. However, it is a matter of interpretation as to whether this is an offer in the circumstances
There are rules in the Sale of Goods Act in relation to the auction sales of goods. Each lot is presumed to be the subject of a separate contract. The bidder makes an offer. It is accepted by the auctioneer, on behalf of the seller, when the hammer falls.
In the case of the sale of land, where a written record of the contract is required, the auctioneer has the right to sign on the bidder’s behalf.
An auction may be advertised or notified to be subject to a reserve or subject to the seller’s right to bid.
The announcement of an auction in itself does not create an offer. Attendance in response to an advertisement or notice, would not constitute acceptance and the making of a contract. If the notice advertisement states that the lot is sold without reserve and that it will be knocked down to the highest the bona fide highest bidder, there may be deemed to be a separate “collateral” contract between the auctioneer and the bidders to do so.
The bidder may retract his bid at an auction until it is accepted.Where an auction is stated to be without reserve and commences, there may be an obligation to sell.
Where bidding commences in an auction without reserve, there is likely to be found an offer that the property will be knocked down to the highest bidder. This is a separate unilateral contract by the vendor or by the auctioneer on behalf of the vendor. If the auctioneer acts without authority, he may in breach of his implied warranty of authority. There is an old case that suggests that the auctioneer is primarily liable, but this would appear to be inconsistent with the basic principles of agency.
Display of Goods
Generally, an advertisement or the mere display of goods in a shop window or on a shop shelf is a so-called “invitation to treat” and not an offer. The display of goods with a false indication as to price or other qualities will constitute an offence under Unfair Commercial Practices legislation.
The general principle is that the offer is made when the person takes the good to the till or checkout. The retailer accepts at the checkout. The principle protects retailers from a customer who demands items in the shop or in the window, that may not be available.
Exceptionally, it might be held that the display of goods constitutes an offer to sell them. If a newspaper advertisement or other publicity specifically states that a particular product is available, for example, at a very low promotional price, on a first come first served basis, this may constitute the offer of a unilateral contract.
A unilateral offer is one that is addressed to a class or group of persons, or to the public at large. Each person within the group may accept the offer by coming forward and accepting it by words or conduct as the offer requires. This creates a contract.
An invitation to tender may be a unilateral offer. In the usual way, participation in the tender constitutes sufficient consideration.
Unilateral contracts may be found in an offer to the public (usually by a commercial organisation or public body) to take up particular terms and conditions. For example, offers by an examination board regarding the terms and conditions under which persons may undertake exams may be unilateral contracts.
As is the case generally, the person who acts must do so in response to and with knowledge of the particular terms and conditions. The acceptance by conduct makes a contract, only when it is relied on and specifically taken up by the person addressed. The conduct in acceptance itself may constitute the consideration.
Many declarations of intent will not be sufficiently certain so as to constitute a unilateral offer to contract. The test is what a reasonable objective person would understand. Such a person must be able to conclude that the advertisement is a legal offer, rather than a piece of publicity. The setting or context should give a strong indication of the position.
Some advertisements may constitute a unilateral contract offer. In a famous case, an advertisement offered to pay a significant sum of money to any person who contracted influenza after using a medicinal product. This was interpreted as a unilateral offer to the whole world, which was accepted by use of the products. An offer of reward may be a unilateral offer for a contract.
The advertisement of a public competition may be such as to constitute a unilateral offer, capable of having contractual effect on acceptance. The terms of the contract may be incorporated by reference to the published rules. In contrast, where the ticket or a form must be registered, there is less likely to be a unilateral offer. The return process may require a specific later acceptance, with a contract being formed at this point.
In principle, the offer of a reward can be a unilateral contract. Where a person has acted in specific response to the unilateral offer and has satisfied its conditions, he will have a contractual entitlement to the reward which has been offered. He must have knowledge of the offer and have acted in response to it.
In an Irish case, a notice was posted offering to pay half salary to persons who joined the defence forces during the war. This was a sufficiently certain to constitute an offer of a unilateral contract.
A quotation will not generally constitute an offer. It is more likely to be interpreted as a price at which somebody may be willing in principle to sell; an offer to treat. However, as with an advertisement, a quotation may be sufficiently clear and certain in its context so as to constitute an offer to sell.
There may be a distinction between a quotation advertised to large numbers of persons and a specific quotation given to a particular person. The latter is more likely to be interpreted as an offer. Some quotations may be interpreted as offers to supply the relevant goods, subject to the capacity of the business to deliver.
Tenders are generally an invitation to treat. The tender documentation will usually specify that the offer is not made by the person requesting the tender or by the person making it. Therefore, there will be an offer and acceptance, only when the tenderer offers to accept the successful bid, and this is, in turn, accepted.
Participation in a formal tender process may itself be subject to a contract comprising the terms of the tender competition. There may be a right to have a bid considered. There may be rules for the bidding. Often, referential bids will not acceptable; because they undermine the competition and may cause uncertainty.
It is possible in principle for a tendering authority to agree to accept the lowest bid. Generally, the tendering authority will provide in its invitation to tender, that it is not obliged to accept the lowest bid so that the issue will rarely arise in practice. It will generally retain the power to make a more sophisticated analysis of the costs and benefits of each tender.
If a tenderer states it will accept the lowest, there may be a contractual obligation to do so. As with an auction, there may be a second “collateral” contract between the party seeking and those making tenders, relating to the terms of the tender.
In principle, a tenderer (offeror) may withdraw his tender before acceptance. However, tender documents, almost invariably require that the offer is irrevocable for a period. The tender cannot be withdrawn after acceptance under general principles, as by definition, a contract has been formed.
The courts have held that it may be an implied term of the tender process that it will be held in accordance with the published criteria and procedures. In the case of public tenders above a certain level, mandatory EU legislation provides specific remedies for failure to comply with the tender process. Below this level, published Government guidelines provide for similar rules.
In a case involving a referential bid, the House of Lords held that it was implied in the tender rules that a referential bid would be excluded. In an Irish case, the referential bid was not excluded by implication, so that the referential bidder was deemed successful. It is ultimately a matter of interpretation of the tender documents. Referential bids are often expressly excluded
The tender document will frequently provide that a tender cannot be withdrawn, once made. There may be an implied term that the tender process will be undertaken fairly. In the context of public procurement, a disappointed tenderer may be able to apply to the court for damages for breach of the tender rules. Under EU rules for public procurement, there are special rights to apply to the court to challenge non-compliance with tender procedures by public authorities.
Termination of Offer
An offer may be terminated in a number of ways and for a number of reasons. An offer may be withdrawn before it is accepted. The postal rule does not apply to revocation. The revocation must be communicated to the person to whom the offer is made. If the prescribed method of acceptance is not completed, the offer may be revoked.
The rejection of an offer or the making of another “counter” offer usually destroys the original offer. It cannot be accepted after the counter offer has been made.
An offer may lapse by the passage of time. This is a question of interpretation in the circumstances. If an offer is made in circumstances where it impliedly must be accepted within a certain time frame, then it will no longer be available for acceptance outside this time frame.
Termination of Offer Issues I
Generally, a unilateral offer must be withdrawn before performance commences. Once performance commences, it is usually too late to withdraw the offer. Even if the Court were to allow withdrawal of an offer after the commencement of performance, the offeree is likely to be entitled to the value of work done, on the basis of restitution principles.
A unilateral offer may be revoked before performance commences. The notice of revocation should be made in the same manner as the offer.
Once an offer has been rejected or terminated, it cannot be subsequently accepted. A counter offer is a rejection of the offer.
It may be that an offer is subject to an express or implied time limit for acceptance. If no time limit is specified, that limit is what is reasonable in the circumstances.
Termination of Offer Issues II
If the offer is for immediate acceptance or for acceptance within a time limit, then this being a required mechanism for acceptance, it must be complied with. Where no time limit is specified, the acceptance must take place within a reasonable time. What is reasonable depends on the circumstances. Where goods are perishable or where a commodity changes in price quickly, it will be readily implied that acceptance must take place quickly.
If the subject matter of the contract has been destroyed or is no longer in existence, then the offer can no longer be accepted. If for example, the relevant property has been sold and the offeree learns of this, an acceptance is no longer valid. Communication of revocation is not necessary.
The postal rule does not apply to the revocation of an offer. The offeree must receive actual notice of the revocation where notice of revocation is required. In other cases, an offer may be impliedly revoked or may lapse by the passage of time or by reason of changed circumstances.
Effect of Death
If a person dies after a contract is made, it may be enforceable against his estate, if it does not require personal performance. If a personal obligation is involved, it may be frustrated. Many contracts of personal service are frustrated by death. They would be accordingly discharged.
Where a contract does not require personal performance, it will bind the estate and substitute performance will be required by the personal representatives.
If a person dies before acceptance, there are different views as to what the legal position is. If the offeree learns of the of the death of the offeror, it is likely that the death will terminate the offer.
Where the offeree is addressed personally and dies before acceptance, this will generally cause the offer to lapse. The offeree is incapable of accepting it. An irrevocable offer that does not require personal performance may be capable of acceptance by his personal representatives.
Keeping Offer Open
Generally, an offer can be withdrawn at any time before it is accepted. However, the offeror may bind himself not to withdraw the offer within a certain period.
An offeror may make a unilateral collateral offer to keep the principal offer open for acceptance for a period. The collateral offer may be held capable of to be acceptance by conduct without communication, so the that the offeror is bound to keep open the principal offer.
References and Sources
Irish Textbooks and Casebooks
Clark, R. Contract Law in Ireland 8th Ed. (2016) Ch.1
Friel, R. The Law of Contract 2nd Ed, (2000)
McDermott, P. Contract Law (2001) 2nd Ed (2017) Ch.1
Enright, M. Principles of Irish Contract Law (2007)
Clark and Clarke Contract Cases and Materials 4th Ed (2008)
English Textbooks and Casebooks
Poole, J. Casebook on contract law. (2014) 12th edition
Stone and Devenney, The Modern Law of Contract 10th Ed (2015)
McKendrick, Contract Law 10th Ed (2013)
Chen-Wishart, Contract Law 5th Ed (2015)
Anson, Reynell, Beatson, J., Burrows, Cartwright, Anson’s law of contract. 29th Ed (2010)
Atiyah and Smith, Atiyah’s introduction to the law of contract. 6th Ed.
Chen-Wishart, M. (2015) Contract law. 5th Ed.
Cheshire, Fifoot and Furmstons, Furmstons and Fifoot Cheshire, Fifoot and Furmston’s law of contract. OUP.
Duxbury, Robert (2011) Contract law. 2nd Ed.
Halson, Roger (2012) Contract law. 2nd Ed.
Koffman & Macdonald’s Law of Contract. 8th Ed. (2014)
O’Sullivan, Hilliard, The law of contract. 6th Ed. (2014)
Peel, and Treitel, The law of contract. 13th Ed. (2011).
Poole, J.Casebook on contract law. 12th Ed. (2014).
Poole, J. Textbook on contract law. 12th Ed. (2014)
Richards, P Law of contract. 10th Ed. (2011)
Stone, R. The Modern law of Contract. 10th Ed. (2013)
Treitel, G. H. An outline of the law of contract. 6th Ed (2014).
Turner, C Unlocking contract law. 4th Ed. (2014).
Upex, R. V., Bennett, G Chuah, J, Davies, F. R. Davies on contract. 10th Ed. (2008).
Stone,Devenney, Text, Cases and Materials on Contract Law 3rd Ed (2014)
McKendrick, Contract Law Text, Cases and Materials 6th Ed (2014)
Stone, R, Devenney, J Cunnington, R Text, cases and materials on contract law. 3rd Ed (2014)
Burrows, A. S. A Casebook on Contract. 4th Ed.
Beale, H. G., Bishop, W. D. and Furmston, M. P. Contract: cases and materials. 5th ed. (2008)
Blackstone’s Statutes on Contract, Tort & Restitution 2017 (Blackstone’s Statute Series)
UK Practitioners Texts
Chitty on Contracts 32nd Edition, 2 Volumes & Supplement (2016)
The above are not necessarily the latest edition.