LAWS104 Lecture Notes - Lecture 2: Cash Register, Puffery, Posting Rule
21 May 2018
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i. FORMATION OF A CONTRACT – OFFER AND ACCEPTANCE
Offer
- A statement by the offeror that s/he is willing to enter into a contract on particular
terms.
- Depends whether a reasonable person in the position of the offeree would consider
that offer was made.
- Distinguished from:
o Invitation to treat or negotiate (Boots Pharmaceutical)
o Puffery – Carlill – a self-evident exaggeration, not intended to be taken
seriously by a reasonable person
o Supply of information (Stevenson Jacques)
o Counter offers (original offer is then terminated) Stevenson
- Offer is only effective when communicated to the offeree – cannot be accepted
unless the acceptor is aware of the existence (Carlill, MacRobertson).
- Carlill v Carbolic Smoke Ball Co -> D offered a 100 reward for those who contracted
influenza when using the smoke ball for a certain period of time. 1000 was deposited
to show the sincerity. Mrs Carlill bought one of the balls and contracted influenza –
company refused pay and she sued. Legal issue was whether it was a mere puff or a
contract. Must analyse the plain meaning, notice of acceptance and performance,
can be expressly or implied to notify acceptance – in this case it was buying the balls.
English Court of Appeal rejected the defendants argument and said it was an
enforceable contract – the statement about putting 1000 in the bank meant that a
promise was intended – ordinary person would believe it was real – offer was made
to the whole world, anyone who buys it is accepting it, contract formed – there was
benefit-detriment, P benefited the D, and a detriment to P, enough for consideration
(her buying the ball).
- MacRobertson Miller Airline Services v Commissioner of State Taxation -> appellant
airline issued tickets to prospective passengers after a fare had been paid. One of the
conditions printed on the ticket was that the airline reserved the right to abandon
any flight or cancel any ticket or booking, and in such circumstances a passenger was
eligible for a refund. Was the ticket an agreement? Acceptance was only made when
the passenger presents himself or herself for travel – not able to sue, ticket is an
offer, not an agreement.
- Pharmaceutical Society of Great Britain v Boots Cash Chemists -> Pharmacy and
Poisons Act 1933 (UK) made it unlawful for a person to sell certai drugs uless the
sale is effeted , or uder the superisio of, a registered pharaist. Boots
operated a self-service shop of which drugs are displayed, and would also supervise
the transaction at the cash register, whereby they could prevent a sale if they say fit
– was it acceptance or offer? It is merely an invitation to treat, they can take it from
the shelf but it is not acceptance with the contract completed until at the cashier,
whey they accept the transaction at the cash register. Goods on display are an
invitation not an offer.
- Stevenson Jacques & Co. v McLean -> McLean offered to sell iron to the
complainant, Stevenson Jacques. This was for 40s and offer would remain open till
Monday. Complainant sent a telegram to the defendant, asking whether he would
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accept a payment of 40 over a two-month period. McLean did not respond and sold
the iron to another party, but he did not perform the complainant of this action. On
Monday morning he had sent a telegram to accept, unaware it had been sold – he
then sued for non-delivery of the iron for breach of contract.
Issue: Whether there was a binding contract between the parties and if the telegram
sent by the complainant was an inquiry for information or a counter-offer
Law: Revocation has no effect until it has been communicated, a telegram follows
postal acceptance and can remain open for the stipulated time, but can also be
revoked at anytime before acceptance.
Court held that Stevenson was only inquiring for more information on if the terms of
the offer could be changed, no indication to it being a counter-offer, this meant the
offer made by the defendant was still valid, to remain open till Monday was not itself
binding and offeror can revoke at any time, however he did not communicate it
before he accepted, and he accepted within the period stipulated – valid contract.
- Termination of an Offer
o Will be open for a reasonable time determined by court if there is no time
stipulated.
o Revocation:
▪ May be withdrawn up until any time before acceptance (Dickinson),
▪ If it is made to the whole world, offeror must use appropriate means
to communicate revocation of offer to all potential offerees (Mobil
Oil),
▪ Offeror may be bound by a promise to keep offer open for a period of
time if embodied in deed/option – consideration for it to remain
open.
o Rejection:
▪ Ca e epressed or iferred fro offerees atios that are
inconsistent with an intention to accept, such as making of a counter
offer (Stevenson).
o Lapse of Time:
▪ If no time period is stipulated, offer will end at end of expiration of a
reasoale period of tie. reasoale depedat o irustaes.
o Non-occurrence of a condition
o Death of the person who made the offer.
- Dickinson v Dodds -> D wrote to P with an offer to sell the house for 800 pounds,
promising to keep the offer open until Friday. Thursday – Dodds created an offer
from a third party and sold the house to them. P claimed he was going to accept the
offer but had not said anything to D because he understood that he had until Friday.
D communicated the offer had been withdrawn through a friend to P. P then went to
D to accept the offer, then brought action for specific performance. Issue: was the
promise to keep the offer open binding, or could it be revoked before? Relevant law:
no obligation to keep an offer open for a certain time unless consideration has been
proved (a deposit) – does not need to be communicated by offeror either, as long as
the info is reliable. P gave no consideration to keep it open, so it was nothing more
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Document Summary
Formation of a contract offer and acceptance. A statement by the offeror that s/he is willing to enter into a contract on particular terms. Depends whether a reasonable person in the position of the offeree would consider that offer was made. Invitation to treat or negotiate (boots pharmaceutical: puffery carlill a self-evident exaggeration, not intended to be taken seriously by a reasonable person, supply of information (stevenson jacques, counter offers (original offer is then terminated) stevenson. Offer is only effective when communicated to the offeree cannot be accepted unless the acceptor is aware of the existence (carlill, macrobertson). Carlill v carbolic smoke ball co -> d offered a 100 reward for those who contracted influenza when using the smoke ball for a certain period of time. Mrs carlill bought one of the balls and contracted influenza company refused pay and she sued. Legal issue was whether it was a mere puff or a contract.
