TOPIC 2: CONTRACT LAW 1

OFFER AND ACCEPTANCE

1. Explain what the postal rule of acceptance is.

As a general rule, acceptance of an offer must be communicated and
actually received by the offeror for it to be effective. There are
exceptional situations where acceptance is valid communicated and
effective eventhough it was not received by the offeror. Postal rule of
acceptance is such an exception. In the landmark case of Adams v
Lindsell, it was held that acceptance by letter is complete and effective
once it is posted by the offeree. The conditions for application of the
postal rule are that the parties must have assented to its use or it was
reasonable in the circumstances to use the post. The letter must be
properly addressed and adequately stamped.

2. Explain whether the following situations are offers or invitations to treat.

Support your answers with relevant cases, if any:
a. Chris drives into a Shell station, selects a type of petrol from the
signboard displayed, and requests the attendant to fill his petrol tank
with $40 of unleaded petrol.
The signboard displayed is an invitation to treat. It is an invitation to
potential customers to select the type of petrol they would like to
purchase and make an offer to purchase the type of petrol selected and
the amount. The signboard may be treated as an advertisement
similar to the case of Patridge v Crittenden. In this case, Chris is the
offeror when he selects the type of petrol and requests the attendant
to fill his petrol tank with $40 of unleaded petrol. The attendant
accepts the offer when he proceeds to fill the petrol tank. Relevant
case is Pharmaceutical Society v Boots.

b. Rosie places an advertisement in The New Paper promising to pay $600

for the return of her missing Pekingese dog which answers to the name
Snowy.
The general rule is that an advertisement is an invitation to treat.
However, in this case, the advertisement is an offer to the whole world.
This case is similar to the facts as set out in Carlill v Carbolic Smoke
Ball Co. The offer is made to the world at large and it satisfies the
conditions for a unilateral contract which is that the terms are clear
that the offeror intended to be bound. In this case, Rosie intended to
be bound by her promise to pay $600 to the person who finds and
returns her missing Pekingese dog which answers to the name Snowy.
Her offer is an offer to the whole world and is capable of being
accepted by anyone who meets the stated conditions which is finding

and returning her missing Pekingese dog which answers to the name
Snowy.

3. Peter telephoned Annette in response to an advertisement in the Elite

Tatler, a high society magazine. As Annette was unavailable, her sister
Carol, who is learning English as a second language, answered the phone
but she had difficulty in understanding Peter. Peter enquired about the
colour, make and other details relating to the leather sofa, but as Carol
had difficulty in conversing, he said that he would follow up via fax later.
Carol subsequently informed Annette that Peter had called and offered to
purchase the leather sofa, as advertised.
Two days later, Annette found Peters fax which stated: I would like to buy
your leather sofa for $400.00. Annette replied immediately via fax
confirming I agree to sell the leather sofa to you for $450.00, as
advertised. However, although Peter did receive part of the message, it
was incomplete, due to a defect in his aging fax machine. The fax
transmitted contained only the words I agree to sell ... The next day,
there was major sale on furnitures, for leather sofas. As a result, Peter
declines to buy the leather sofa from Annette.
Advise Annette.

LAW:
Students to cite the relevant law relating to formation of contract
and identify the two main elements which are offer and acceptance.
Students to quote the legal principles relating to offer, invitation to
treat, acceptance. This will be followed by an analysis of the facts
of the case and application of the law to the case.

APPLICATION:
The students are guided on the analysis of the facts and application
of law in the following manner:
Advertisement: this is an invitation to treat. The general rule
applies. Annette is inviting readers of Elite Tatler to make an offer
to purchase her leather sofa set at the price indicated in the
magazine.
Peters telephone conversation: merely enquiring about sofa set.
Not an offer by Peter. Therefore, Carol, merely related Peters
conversation to Annettee. No offer in this case.
Peters fax: Strong evidence that this will amount to an offer. Terms
were clearly set out in the fax.

Annettes reply: Not an offer but a counter-offer as she wanted her

price as indicated in the magazine. The counter-offer is to be
communicated to Peter. Communication was not effective as it was
not received by Peter.

CONCLUSION:
There is no valid and effective contract between Peter and Annette.
Peter is not obliged to buy the sofa set from Annette.