Learning Outcome: After completion of this lesson students will - a) learn about the general principle relating to offer in case of advertisements of products and auctions placed in newspapers b) learn about exceptions to the prima facie rules of offer.

1. Offer &
Acceptance
Preeti Kana Sikder
Assistant Professor
Department of Law & Justice

2. Contents of Current Chapter
• Rules of law relating to offer
 Elements of Offer
 Distinction between offer and invitation to treat
 Identifying offers in everyday transactions
 Termination of offer
• Rules of law relating to Acceptance
 Elements of Acceptance
 Communication of Acceptance
 Prescribed Method of Acceptance
 Exceptions to the rule requiring communication of acceptance

3. Most Commonly Encountered
Examples
• Shop Display
• Advertisements of unilateral contracts
• Advertisements of bilateral contracts
• Auction Sales
• Tenders
• Timetables and Vending Machine

4. Advertisements

5. The general rule is that a
newspaper advertisement is
an invitation to treat rather
than an offer

7. 1. Patridge v Crittenden (1968)
• In Partridge v Crittenden [1968] 1 WLR 1204, the appellant
advertised Bramblefinch cocks and hens for sale at a stated
price. He was charged with the offence of ‘offering for sale’ wild
live birds contrary to the Protection of Birds Act 1954.
• It was held that the advertisement was an invitation to treat
and not an offer, and so the appellant was acquitted.
• Lord Parker CJ stated that there was ‘business sense’ in
treating such advertisements as invitations to treat because if
they were treated as offers the advertiser might find himself
contractually obliged to sell more goods than he in fact owned.

9. 2. Carlill v Carbolic Smoke Ball Co [1893]
• The defendants, who were the manufacturers of the carbolic smoke
ball, issued an advertisement in which they offered to pay £100 to
any person who caught influenza after having used one of their
smoke balls in the specified manner, and they deposited £1,000 in
the bank to show their good faith.
• The claimant caught influenza after using the smoke ball in the
specified manner. She sued for the £100. It was held that the
advertisement was not an invitation to treat but was an offer to the
whole world and that a contract was made with those persons who
performed the condition ‘on the faith of the advertisement’.

10. Categories of contracts
• Contract where one
party makes another
party an offer to
perform an act and
assent is promised by
performing the act is an
unilateral contract.
• Bilateral (or reciprocal) contracts
are those by which the parties
expressly enter into mutual
engagements, such as sale or
hire.
• A contract in which both the
contracting parties are bound to
fulfill obligations reciprocally
towards each other

11. 3. Bowerman v Association of British Travel Agents Ltd (1996)
• The claimant was to take part in a school skiing trip. The first
operator was a member of the defendant association, and
ceased trading through insolvency.
• The advert ‘ABTA arranges re-imbursement’ constituted a
unilateral offer to contract in this context. The notice would
be seen to create legal relations.
• The ABTA notice displayed in the travel agent’s offices
created a contract between ABTA and the client.

12. Auction
Sale

13. What is an Auction Sale?
• A public sale of land or goods, at public outcry, to
the highest bidder.
• At an auction, an auctioneer will invite bids on an
item (a lot), people will bid.
• The offer is made by the bidder which, in turn, is
accepted when the auctioneer strikes the table
with his hammer.
• With Reserve v Without Reserve

14. Auction Sales: When does Offer
Arise?
• An auctioneer, by inviting bids to be made, makes an
invitation to treat.
• The advertisement of an auction sale is generally
only an invitation to treat
• Offer is made by the bidder and accepted by the
auctioneer when he signifies his acceptance in the
customary manner.
• Before such acceptance the bidder may withdraw his
bid and the auctioneer may withdraw the goods.
• Collateral contract

15. 1. WARLOW V HARRISON (1859)
• A public auction of a horse, without reserve,
was advertised by the defendant, an
auctioneer.
• The plaintiff bid 60 guineas and the owner of
the horse bid 61 guineas. There were no
further bids and the defendant put down his
hammer on the bid for 61 guineas.
• The plaintiff claimed the horse should be his
as he was the highest bona fide bidder.

16. 1. WARLOW V HARRISON (1859)
• The advertisement, as it included the words without reserve,
was an offer to sell to the highest bona fide bidder. The
defendant was in breach of that promise.
• It was an offer of a unilateral contract as the defendant bound
himself to sell to the highest bidder.
• The plaintiff had performed the required act (made the highest
bid). However, because the hammer had not been put down
on the plaintiff's bid there was no acceptance of his offer.
Therefore, there was no contract for the sale.
• The plaintiff was only entitled to sue the defendant for the loss
of the opportunity to buy the horse.

17. 2. BARRY V DAVIES [2001]
• The defendant, the auctioneers, were instructed to sell two
machines used in the motor industry. The claimant was told the
sale would be without reserve.
• The claimant was the highest bidder, bidding £200 for each.
• The defendant refused the claimant's bid and withdrew the lots
from auction as the machines were worth £14000 each.
• The claimant sought damages for breach of contract.

18. Once the reserve price has been
reached, the auctioneer cannot withdraw the
lot from the sale without incurring a
liability for breach of a collateral contract to the
highest bidder at the point in time at
which the lot was withdrawn.

19. 2. BARRY V DAVIES [2001]
• The court followed that there was an offer by the defendant
because the auction was without reserve.
• The claimant had accepted such offer by making the highest
bid. Therefore, the defendant was in breach of contract.
• The claimant was awarded £27600 in damages. The cost of
buying the machines (£28000) minus his bid of £400, in order
to compensate him for his loss due to the breach of contract.

20. Barry and Warlow may be examples of
the courts reasoning backwards in that
they decide that in such a case the bidder
ought to have a remedy, and they then
accommodate that conclusion within the
offer and acceptance framework, even
though the fit is somewhat uneasy.

21. Tenders

22. Tenders
The process whereby governments and
financial institutions invite bids for large
projects that must be submitted within a finite
deadline

23. The general rule is that these
requests are an invitation to treat
and any submission of tenders are
offers. It is then up to the person
who requires the service to decide
whether to accept any of the offers.

24. Post-Class
Activity

25. Harvela
Investments Ltd v
Royal Trust Co of
Canada [1986]
Blackpool & Fylde
Aero Club Ltd V
Blackpool Council
[1990]

26. Thank You