UNIT 2

Offer
2.2.1 Objectives

At the end of this unit you should be able to:

Define an offer and what is required to make a valid offer; and

Distinguish between an offer and an invitation to treat.

2.2.2 Reading

Prescribed Reading

Corrin Care pp 27-35

Poole pp23-36

Prescribed Cases:

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 (Reserve Laucala

Library).

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd

[1953] 1 QB 401; Poole, 28.

Sivam's Transport Ltd v Nadi Town Council (1981) 27 FLR 192 (PLM).

Donley Beti v Peter Aufiu, unreported, High Court, Solomon Islands, cc170/90, 9
May 1991 (PLM).

Further Reading:

Furmston, Law of Contract pp30 - 37, 57 65

2.2.3 Definition

As stated above, an offer is the first requirement to find an agreement between parties.
The offer has been defined as:

An intimation, by words or conduct, of a willingness to enter into a legally binding

contract, and which in its terms expressly or impliedly indicates that it is to
become binding on the offeror as soon as it has been accepted by an act,
 forbearance or return promise on the part of the person to whom it is addressed.
[i]

Other terms that you will need to know in relation to offers are: offeror and offeree.
An offeror is the person who makes the offer, while an offeree is the person to whom the
offer is made.

? Make up a definition of an offer in your own words.

2.2.4 The Objective Test

As stated above, an offer will only have legal force if a reasonable person in the shoes
of the offeree would reasonably believe the offeror was making an offer.

? Consider the case of Carlill v Carbolic Smoke Ball Company. In this case
counsel for the defendants argued that the advertisement was a mere puff or
advertising gimmick and not an offer which could be enforced by the plaintiff.
Taking the view of a reasonable person in the shoes of the plaintiff, what main
factor led to the court finding that the advertisement was an offer, rather than a
mere puff?

ANSWER

2.2.5 Form of an offer

An offer may be express or implied from the offerors conduct. It may be written or oral,
or partly written and partly oral.

2.2.6 Who can an offer be made to?

An offer may be made to a specified person or persons, a class or group of people, or

the whole world.

Read again over Carlill v Carbolic Smoke Ball Company. Note what Bowen LJ said in
relation to counsel for the defendants argument that the advertisement amounted to a
contract with the whole world and so was invalid.

2.2.7 Invitation to treat

A distinction must be drawn between an offer and an invitation to treat. An invitation to

treat may resemble an offer but does not indicate a clear intention to be bound.
Therefore, an invitation to treat is a preliminary communication or part of the negotiating
process. Some examples of an invitation to treat are:

(a) Advertisements
Generally, an advertisement will not amount to an offer. However, if an advertisement
includes words which demonstrate a willingness to be bound then it may be construed
as an offer, for example, Carlill v Carbolic Smoke Ball Co.

(b) The display of goods in shops

The display of goods in a shop window or in a self-service store is generally regarded

as an invitation to treat. Pause now to make sure that you have read and understood
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1
QB 401; Poole, 28.

(c) Tenders

Calling for tenders or an advertisement for tenders is usually regarded as an invitation

to treat.

This is demonstrated by Sivam's Transport Ltd v Nadi Town Council.[ii] Pause now to
read this case.

As you have seen the plaintiff submitted a tender to the Council for refuse collection, but
said that the tender figure was open to negotiation. A committee of the defendant
resolved that the plaintiff's tender be recommended for approval by the full council,
subject to further negotiation with the plaintiff by a sub-committee with a view to
reducing the figure. The sub-committee met with the plaintiff and persuaded him to
submit a lower figure. This was referred to the full council, which rejected it. It was held
that the discussions which the sub-committee had with the plaintiff did not indicate an
acceptance by the sub-committee of the original tender (which in any event it had no
authority to do), but an effort to persuade the plaintiff to submit a reduced offer.
Accordingly no breach of contract.

Also, Donley Beti v Aufiu[iii] indicates that calling for tenders is only an invitation to
treat.[iv] Pause now to read this case.

As you have seen in Donley Beti v Aufiu the defendant advertised property for sale by
tender. The plaintiff put in an offer of $70,000. The defendant wrote to the plaintiff
informing him that the highest tenderer had changed his mind, and asked the plaintiff
to confirm his offer within twenty days. The plaintiff telephoned to confirm his offer
within the time limit. The defendant was subsequently offered a higher price and sold
to a third party. The defendant was held to be in breach of contract. Although the
invitation to tender was an invitation to treat and the plaintiffs original tender was an
offer, the defendants subsequent letter was an offer which was accepted by the
defendant when he telephone within the twenty days.

(d) Auction Sales

An auctioneers request for bids either at the auction or before the auction is an
invitation to treat.[v] The bid is the offer which the auctioneer can accept or reject.
The fall of the hammer provides the acceptance, so any bidder may withdraw his bid
before that time.[vi]

? SELF ASSESSMENT

1 You pick a bottle of shampoo off the supermarket shelf, take it to the counter and
buy it. What would amount to the offer in this situation?

2 What was the offer in Sivan's Transport Ltd v Nadi Town Council[vii]?

3 Describe the difference between an offer and an invitation to treat.

ENDNOTES

[i] Beatson, J, Ansons Law of Contract, 27th edn,1998, Oxford: Oxford

University Press, 32.

[ii] (1981) 27 FLR 192.

[iii] Unreported, High Court, Solomon Islands, cc170/90.

[iv] (1981) 27 FLR 192.

[v] Harris v Nickerson (1873) LR 8 QB 286 (QB)

[vi] This is provided for in England by the Sale of Goods Act 1979, s57(2).

[vii] (1981) 27 FLR 192.