4. AGREEMENT
meeting of minds ; Share understanding and intention
Two or more persons
1. Offeror – made and offer
2. Oferee - accepted the offer
3. Oferee communicated their acceptance to offeror
Generally characterised by an ‘offer’ by one party and
‘acceptance’ by another
AGREEMENT = OFFER and ACCEPTANCE
5. OFFER
An expression of willingness to enter into an enforceable
relationship with the person to whom the offer is
directed
• One person to another
• Group of people
• World at large
6. OFFER
Accepted
: the offer is accepted by the oferee
Rejected
: the offer may be rejected by oferee
Revoke
: the offeror entitled to revoke the offer, if….
The offer has not been accepted or rejected
The oferee has not provide consideration for the
offeror to make the offer open for a particular period
Lapse
: the offer is not accepted, rejected or validly
revoke, It will lapse after the expiry of a
reasonable amount of time
7. Goldsborough Mort [GMC] & Co Ltd v Quinn (1910)
Quinn offered to sell his land to GMC and promised
to keep the offer open for one week in return for
GMC paying to Quinn a deposit of fifty cents.
Before the week had expired Quinn informed GMC
that he was revoking his offer and selling the land
to someone else. GMC then accepted the offer and
sued Quinn for breach of contract.
The court decided that because GMC had
paid Quinn to keep his offer open for one
week Quinn was not permitted to withdraw
the offer, which meant that when GMC
accepted the offer a contract was formed.
Quinn had breach the contract by selling the
land to someone else
8. Ramsgate Victoria Hotel Co Ltd [RVH] v Montefiore (1866)
On 8 June Montefiore made an offer to RVH to
purchase shares in that company. More than 5
months later, on 23 November, RVH wrote back to
montefiore accepting the offer and informing
montefiore that the balance owing on the shares
was now due. Montefiore refused to pay and RVH
sued him for breach of contract.
The court decided that there was no contract
because there was no agreement. Montefiore’s offer
has lapsed before RVH accepted it because more
than reasonable period of time had lapsed
9. OFFER X INVITATION TO TREAT
An invitation to another person to make an offer
, which he or she (another person) is then free to accept
or reject.
1. Advertisement
Advertisement of goods for sale are normally
interpreted as invitation to treat
However, can be offer as well, depending on its wording
and on the circumstances.
10. OFFER X INVITATION TO TREAT
2. Display of goods
The display of goods with a price ticket attached in a
shop window or on a supermarket shelf is not an offer to
sell but an invitation for customers to make an offer to
buy
3. Auction
In an auction the auctioneer’s call for bids is an
invitation to treat, a request for offers. The bids made by
persons at the auctioneer offers, which is the auctioneer
can accept or reject as he chooses. Similarly, the bidder
may retract his bid before it is accepted
11. OFFER X INVITATION TO TREAT
4. Tenders
Where goods are advertised for sale by tender, the
statement is not an offer, but an invitation to treat; that
is, it is a request by the owner of the goods for offers to
purchase them.
12. OFFER X INVITATION TO TREAT
Example :
a shop owner puts a very low price of an product
in the shop window. If you take the item to the
counter, the shopkeeper does not have to sell it to
you.
to
Because it is you that makes the offer by offering
buy the product with your money. A shopkeeper
who has mistakenly priced a product too cheaply
is therefore not obliged to sell at that price.
13. ACCEPTANCE
An indication by an oferee by words or by action that
they are willing to immediately enter into a legally
enforceable relationship with the offerror on the terms
offered.
Who may accept ?
An offer can be accepted by the person to whom it is
made.
Offer is made by A to B, the acceptance to C would be
inappropriate.
14. VALID ACCEPTANCE
The offeree must accept the offer without
qualification.
An acceptance must be unconditional and unqualified.
Accepting an offer with condition and variation and
reservation amounts to counter offer and rejection of
original offer.
Counter offer – a response to an offer that modifies the terms of
the offer.
15. COMMUNICATION
The agreement is not complete until the oferee
communicates their acceptance to the offeror
• Acceptance must be communicated
• The method of acceptance must conform with the
offeror’s requirements
• Only the offeree or someone with actual authority to
do so can communicate acceptance.
16. Powell v Lee (1908)
Powell applied for the position of headmaster with
the school. The school board decided to appoint
Powell, but did not immediately inform him of the
decision. A member of the board, without the
authority of the board, told Powell that the board
had accepted his offer of employment. The board
subsequently changed its decision and appointed
another person as headmaster. Powell sued the
board claiming that a contract had already been
formed.
The court decided that there was no
agreement between Powell and the board. The
board had not communicated its acceptance
and an agreement is nor formed until
acceptance of the offer is communicated to the
offeror. The communication by the board
member acting without authority is invalid.
17. COMMUNICATION
There are 3 exceptions to the requirement of
communicating the acceptance.
1. where there is an ongoing commercial relationship
between the parties. In these circumtances, a failure
to respond to an offer that similar to previously
accepted offers and that was previously accepted
effectively by silence can amount to an indication of
acceptance, and the agreement can be enforce by
either party.
18. COMMUNICATION
2. Unilateral contract, a contract where acceptance of
the offer and performance by the offeree are achieved
by the same act.
example :
if john puts up a notice offering a reward to
whoever find his lost dog, ken’s finding and returning
the dog is both acceptance of the offer and performance
of hi side of bargain. Ken does not need to communicate
his acceptance of the offer prior to his performance.
19. COMMUNICATION
3. Postral Rules
a contractual negotiations that are taking place
through the post. An offeree’s acceptance is
effective, and a contract is formed, as soon as the offeree
posts the letter of acceptance.
Not when the offeror actually receives the letter.
20. COMMUNICATION
Adams v Lindsell (1818)
Lindsell made an offer to sell goods to adams ina letter
posted on 2 september. The letter was incorrectly
addresed and Adams did not receive the letter until 5
september. Adams immediately wrote back accepting
the offer. On 8 september Lindsell, assuming that
Adams was not going to respond, sold the goods to
someone else. Lindswell received Adam’s acceptance 9
september. Adams sued Linswell for breach of contract
?
21. COMMUNICATION
The court decided that there was a contract
between adams and Lindsell: Adams’
acceptance was effective 5 september and the
contract was formed on that date.
22. QUESTION OF THE DAY
What the difference between an offer, and invitation to
treat?
In what circumstances will an acceptance be valid, even
though it is not communicated to the offeror?
Three requirement of contract need to be satisfied, before
becoming a legally enforceable agreement?
By understanding the concept of offer and acceptance, the rules are used to determine the precise point in time that agreement is reached. The moment when the contract become valid and the persons involve in the contract become legally obliged to proceed.
