Communication of an offer

An offer needs to be communicated to the other party before it can be accepted.

The  offer needs to be communicated to the other party so that its acceptance may constitiute a contract.

An offer must  be communicated to the person to whom the offer is made (the offeree) if the offer is to be effective. If an offer is sent in the post it will have no effect until it reaches the offeree - that is to say when it is communicated not when the offer letter is posted. In Adams v Lindsell (1818) a letter with the offer of the sale of some wool was misdirected by the defendants and consequently it was not received by the plaintiffs until late on Friday 5th September. That same evening the plaintiffs wrote an answer agreeing to accept the wool on the terms proposed.  In turn this answer was not received by the defendants until Tuesday 9th September. By this time the defendants, not having received an answer by the 7th September as expected, sold the wool in question to another person.  In this case the letter of acceptance of the offer of the sale of the wool was found to have been accepted at once and a contract formed even though the wool itself had been sold betwen when the offer was made and accepted.

 

 

In Taylor v Laird (1856) the captain of a ship resigned during a voyage. The former captain provided navigation services for the remainder of the voyage even though this had not been requested by the owner of the ship. The former captain later claimed in the courts for proper remuneration for his services from the owner. The captain had not communicated his offer to provide such services. As such the owner did not have the opportunity to refuse or accept the offer as he had no knowledge of its existence. There was no binding contract.

 

 

It has long been held that an offer can be made to an individual or to the whole world provided that the party purporting to accept the offer had proper notice of the offer.

 

The issue is no better illustrated than in the famous case of Carlill v Carbolic Smoke Ball Co (1893). The defendant company, Carbolic Smoke Ball Co. (D) manufactured and sold a product known as 'The Carbolic Smoke Ball'. The company placed advertisements in various newspapers.

 

After seeing the advertisement a Mrs Carlill, the claimant, purchased a ball and used it as directed but despite this Mrs Carlill contracted influenza and made a claim for the reward. The defendant company refused to pay and Carlill sued for damages arising from breach of contract. Judgement for £100 was entered for the claimant but the company appealed.

 

On appeal the court held that it was possible for the person making the offer to elect to not require notice of acceptance and that performance was sufficient acceptance if this was what was required in an advertisement. Ordinarily the rule is that there can be no contract unless the acceptance is communicated but in Carlill the court indicated that performance can amount to acceptance.

 

As part of its considerations the court considered whether there was a promise or whether the advertisement was a mere 'puff'. The court were persuaded by the fact that the company had deposited funds with its bank to meet claims for rewards so as to enable them to treat the reward as being capable of acceptance as part of a contract. Despite the other arguments of the Smoke Ball company there was no doubt that Mrs Carlill was aware of the assertions made by company which were held to amount to a unilateral offer.


 

There must be clarity about the terms proposed. The words need to be clear so that the parties are sure of what they are contracting about (Guthing v Lynn (1831)). If the words are vague this will prevent a binding agreement from being formed.


This brings us to the matter of communication. Does the withdrawal or revocation of an offer have to be communicated? The straightforward answer to this is yes it must be communicated to the offeree. Not for the first time we must remind ourselves that the courts have developed these rules as a result of analysing the nature of the processes behind 'offer' and 'acceptance'. The courts also recognise that commercial interests are at stake and that business transactions need the certainty of enforceability.


The case of Byrne v Tienhoven (1880) demonstrates this very well. In this case Van Tienhoven & Co posted a letter from their office in Cardiff. The letter was sent to Byrne & Co in New York and contained an offer to sell some tinplates. Byrne and Co got the letter and they telegraphed their acceptance on the same day. What they did not know was that Tienhoven had sent another letter withdrawing their offer. The court held that the withdrawal of the offer was not effective until it was communicated. In this case it was too late as the offer had been accepted in the meantime.


The revocation of the offer must be effective but it need not be communicated by the offeror personally, it is sufficient if it is done through a reliable third party (Dickinson v Dodds (1876)).

Outline the law relating to the communication and revocation of offers.

Explain and illustrate the rules regarding communication of the acceptance of an offer.

Aqa law for a2 [paperback] jacqueline martin

Contract law (paperback) (second ed)


 

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