Contract – an agreement legally binding

between parties
An agreement enforceable by law
 Offerrer – person who makes the offer
 Offerree – person who accepts the offer
 An offer is something which is capable of
acceptance
 Offerrer must communicate the offer to the offerree
 Offerree accepts offer from offerrer = agreement
Offer:
 Can be made orally
 Expressed in writing, e.g. a letter
 Implied (other than words), e.g. by conduct

 offer can be made to an individual or to a group or

to the world at large
 Clarke v Dunraven (1897)
 One of the yachts in a regatta fouled and sank one
another.
 Participants agreed to obey club rules
 One of the rules: participants should pay all the damages
cause by fouling
 Question: was there any contract between the
participants or did each of them contracted with the club
only?
 HL affirmed the view taken by the CA
 Lord Herschell: “The effect of their entering for the race,
and undertaking to be bound by these rules to the
knowledge of each other, is sufficient…where those rules
indicate a liability on the part of the one to the other, create
a contractual obligation to discharge that liability”.
 Participants did not communicate with each other
 No offer acceptance in the usual manner
 Court found contract based on their agreement to
participate.
 Time frame given to accept or reject the offer
 E.g. 1 week, 1 month, 3 days
 For the option to be enforceable, the
offeree/purchaser must give some consideration
 Consideration: in the form of money or money’s
worth
IMPORTANT:
the offeree must pay something in order
to keep the offer remain open
If not, the offerrer can revoke the offer at
anytime
 Goldsborough, Mort & Co Ltd. V Quinn (1910)
 The defendant gave 5 shillings to the plaintiff – a
consideration for agreement made
 Before accepting, the defendant rejected the offer
 The company accepted the offer within a week –
agreement accepted
 Option having been given for value was not revocable –
acceptance of offer constituted a binding contract,
enforceable by specific performance
There are two type of statements which
may be confused with legally binding
offer:
Invitation to treat
Statements in negotiations
An invitation to enter with negotiation or to
make an offer
Acceptance of invitation to treat does not form
an agreement
Objective: to invite potential customers to
make an offer
 Coelho v The Public Services Commission
 The applicant, a Health Inspector under the Town Board,
Tanjong Malim, applied for the post of Assistant Passport
Officer in the Federation of Malaya Government Overseas
Mission advertised in the Malay Mail.
 That the Malay mail advertisement was an invitation to
qualified persons to apply and the resulting application
were offers
Advertisement
 An offer or an invitation to treat?
 Usually depends on the intention of the parties in
each case
 The courts have held that advertisements of
bilateral contracts are not offers whereas
advertisements of unilateral contracts are
construed to be offers.
 Unilateral contracts: the acceptance takes place through performance of an act
 Example case: Carlill v. Carbolic Smoke Ball Co. Ltd
 Carbolic Smoke Ball Co advertised that they would offer
£100 to anyone who still succumbed to influenza after using
a certain remedy for a fixed period.
 The plaintiff duly used it but, nevertheless, contracted
influenza.
 Plaintiff sued for the money.
 Court of Appeal held that the plaintiff was entitled to the
£100 as she had accepted the offer made to the world at
large.
 Bowen LJ Said:
 “ It is an offer made to all the world and why should not an
offer be made to all the world which is to ripen into a
contract with anybody who comes forward and performs
the condition?
 Although the offer is made to the world, the contract is
made with that limited portion of the public who come
forward and perform the condition on the faith of the
advertisement.”
 Therefore, it was an offer, an agreement was made.
An offer must be distinguished from a mere
answer to a request for information.
These are often made during communications
between prospective parties to form a
contract.
 Harvey v Facey (1893)
 The plaintiffs telegraphed to the defendants ‘will you sell us Bumper Hall Pen?
Telegraph lowest cash price’.
 The defendants telegraphed in reply ‘Lowest price for Bumper Hall Pen £900.’
 The plaintiffs then telegraphed ‘ We agree to buy Bumper Hall Pen for £900
asked by you’.
 ‘Please send us your title deeds.’
 The court held that no contract existed as the defendant’s response was only an
answer to a request for information rather than offer.
 The statement of the price was merely an early step in negotiations and did
not amount to a valid offer.
 Revocation
 The fundamental rule is that the offer can be revoked at any time before acceptance.
 offer must communicate the revocation to the offeree
 offeree must have the knowledge of the revocation
 offerer can revoke the offer anytime before acceptance
 knowledge of the revocation need not necessarily come from the offerer, it can come from
a reliable third party
 Dickinson v Dodds
 On 10 June Dodds made an offer to Dickinson to sell him
a dwelling-house for £800: ‘This offer to be left over until
Friday, 9 o’clock am, 12 June.
 On 11 June Dodds contracted to sell the house to A
 Dickinson heard of this from one Berry on the same
afternoon.
 He nevertheless handed Dodds an acceptance of the
offer at a few minutes before 9 am on 12 June.
 Dodds said ‘ You are too late. I have sold my property’.
 Dodds, by entering into a contract to sell to A, showed an
unequivocal intention to revoke his offer to sell to Dickinson.
 This revocation was communicated by Berry to Dickinson
before Dickinson had accepted.
 There was therefore no contract between Dickinson and
Dodds.
 Notice of the revocation was good, although it was
communicated by a third party, Berry, and not by Dodds
himself.
Rejection of offer by offerree
The rejection can be expressed.
It can also be implied.
 Death of the Offeror
 After Acceptance – contract already formed ( if all three elements
present)
 Before acceptance – whether the offer lapses depends on the
knowledge of the offeree at the time of purported acceptance and
the nature of the contract.
 If the offeree is aware of death – no contract.
 If the offeree is not aware of death:
 If the offer is personal to the offeror – no contract.
 If the offer is not personal to the offeror – there may still be a
valid acceptance.