Offers

An offer may be described as a final statement or proposal given by one person to another
person. That final statement or proposal is usually made upon certain and definite terms. Offers
usually follow a process of negotiation before a final proposal is made and they can either be
accepted or rejected by the parties involved. There may be cases where offers may not be
considered to be ‘offers’. The courts are then invited to determine if what was purported to be an
offer is, in fact, an offer and they may employ the ‘reasonable man’ test. Whether a statement
amounts to an offer depends on whether the offeree would reasonably interpret it to be an offer.
It must be noted that this is an objective test and not a subjective test. The reasonable offeree is
the standard at which the courts will apply to seek and determine whether or not an offer exists.
Several rules have been developed to determine the validity of an offer. If these rules are not
followed, then an offer cannot exist:
- The offer must be communicated by the offeror to the offeree
- An offer may be made to a particular person, a group of persons, or to the entire world
- The offer must be clear and unequivocal
- The offer must not be a mere puff, a request for further information, or an invitation to
treat
Communication of Offers
Offers may be communicated by words and even one’s conduct. An offer is ineffective until it is
communicated by the offeror to the offeree, so that if the offeree is unaware of what the offer is,
then he cannot accept it. It would be impossible for him to accept it. See R v Clarke 1927. In this
case, there was a reward offered for an item and the claimant was not aware of the reward. He
could not benefit from the reward that was offered, because the courts found that the reward was
not communicated to him. In communicating offers, one must understand that offers may be
unilateral, where one party is proposing a promise. See Carlill v Carbolic Smoke Company. This
case decided that an offer can be made to the entire world. See the judgement of Bowen LJ in the
said case.
Mere Puffs
A puff is an exaggerated statement and it does not bear the intention of forming an offer. It is
non-promissory, usually made at the time of negotiation, and is something that a reasonable
person would not expect to be true. For example, advertisements that claim that a product will
make one’s teeth whiter than white. This is a mere sale’s puff and it does not amount to an offer.
Request for Information
In looking at the rules concerning the validity of an offer, one must know what a request for
information entails as opposed to an offer. A request for information is not an offer. The case of
Harvey v Facey 1893 explains this principle. The request may, however, amount to some
negotiation between the parties. When an unequivocal proposal is made, an offer may be found
to exist.
Invitations to Treat
Distinguish between an offer and an invitation to treat. See Pharmaceutical Society of Great
Britain v Boots Cash Chemists. In this case, the courts found that, regarding the scenario of a
self-service shop that had items on display on the counter, when the shop assistant accepted the
customer’s offer to buy the goods, it was at that point where the offer was communicated and
also accepted.
Advertisements for sale in catalogues, newspapers books, brochures, or even on the internet may
amount to invitations to treat and not offers. The reason for this is that the reader, when seeing
the advertisement, has an option of whether he wants to purchase or not. If the reader does not
express the intention to take on any obligation concerning the product that is being shown to
him, then there is no offer. The offer is not made by the advertiser in this case, but by the
consumer. This concept was enforced in the case of Grainger v Gough and was also affirmed in
Partridge v Crittenden.
Sales by Auction & Sales by Tender
Some agencies may call an auction sale to dispose of their assets. In the case of auctions, the
bidder is making the offer. The auctioneer is making invitations to treat. A tender is an invitation
for interested persons to submit offers. The receipt of the bids can then be used to determine a
contract. See Harvela Investments Ltd. v Royal Trust Company of Canada.
Auctions with reserves involve certain prices which the auctioneer would not be willing to go
below. When bids are requested, they cannot go below the specified price. Auctions without
reserves would involve the request of any price, therefore, any price could be offered by the
bidders. In both cases, the offer is made when the bidder submits a proposal, therefore, he is the
offeror and the auctioneer is the one who is accepting it.
Termination of Offers
Revocation of offers
An offer can be revoked at any time before it is accepted. The revocation of an offer is
ineffective until it is communicated by the offeror. Therefore, one cannot revoke an offer that
they are not aware of. See Byrne v Leon Van Tienhoven.
Secondly, when one is revoking an offer, the offeror does not have to specifically communicate
the said revocation. It is sufficient that the offeree learns of the revocation from a third party. See
Dickenson v Dodds, where the defendant wrote to the plaintiff, agreeing to sell property. The day
before the offer was due to expire, a neighbour told the plaintiff that the defendant sold the farm
to a third party. The plaintiff then purported to accept the offer before the time had expired and
the defendant then refused to sell the property. The court found that the note involved was an
offer and it could have been withdrawn before acceptance. It does not have to be expressed. See
Errington v Errington. See Shuey v United States where the courts declared that the revocation of
a unilateral contract could take place in a manner similar to that involving the declaration of the
offer.
Rejection of an offer
The rejection need not be explicit. It can be terminated simply by making a counter offer. A
counter offer is a response that indicates a willingness to contract on different terms from the
offer that was made previously. See Hyde v Wrench.
Request for further information about an offer, however, is not a counter offer. See Stevenson,
Jaques & Company v Mclean.
Lapse of Time
This may occur through the effluxion of time, death of the offeror or offeree, or the failure of a
condition. See Ramsgate Victoria Hotel v Montefiore. This case dealt with shares in the hotel of
the plaintiff. The plaintiff allotted the shares to the defendant and the defendant refused to accept
them. The court held that the defendant was entitled to refuse the shares because his offer had not
been accepted within a reasonable time.
In cases where offers do not specify a certain time frame, the court determines the said time
frame through what should be reasonable in the circumstances.
Death of the offeree or offeror
Death of either party before acceptance of an offer generally causes the offer to terminate. See
Fong v Cilli.
Failure of a Condition
If an offer is made subject to a condition, then the offer will lapse where the condition is not
satisfied. See Gilbert J McCall (Australia) Ltd v Pitt Club Ltd.