Offer and Acceptance - Contract Law

The first element that must be looked into in order to advice the legal positions of Celia and her potential buyers is the character of the advertisement. It has to be distinguished between an advertisement which constitutes an offer or an invitation to treat.

An advertisement may be considered an offer if it is clear, precise, definite and leaves nothing open for negotiation. This was established by Leftkowitz v Great Minneapolis Surplus Store involving a case of the sale of two mink scarves and a stole. The phrase “ £10,000 for the lot, no offers” could be an element of an offer, indicating that price is not negotiable.

It can also be interpreted in such that the bags are sold in a lot therefore, a customer cannot request for a particular bag. As such, this arrangement satisfies the characteristics of an offer. That being said, a customer either accepts the offer or refrain from the entire transaction itself. However, the court should not disregard the possibility that the advertisement may only tantamount to an invitation to treat.

The precedent whereby advertisements are considered an invitation to treat was established following the case of Partridge v Crittenden. If Celia’s advertisement was an offer, she would be contractually obliged to sell her goods to every customer even if there is no continuity of stock. Hence, she is liable for breach of contract if there were more acceptances than she can satisfy as only 5 handbags are up for sale. Furthermore, the advertisement does not include further details on the bags and leaves room for negotiation. It states that it is suitable for all tastes and occasion.

However, Celia cannot assume her customer’s preferences in terms of colour, manufactured material, strap length and so on. It could be that the advertisement is merely an invitation to treat. Having said that, it is important to bear in mind the factors which sets an offer apart from invitation to treat. When an offer is accepted, a binding agreement immediately exists between an offeror and an offeree. Invitation to treat on the other hand is purely a negotiation to treat and offerors are not bound by legal laws if accepted.

Communication of acceptance has to be demonstrated when an offeree’s intention is to accept an offer. It can be in the form of writing, conduct (Carlill v Carbolic Smoke Ball Co.) or speech. It is of utmost importance to know that acceptance through silence is not permissible in forming a contract, as established by Felthouse v Bindley. Baljit had evidently showed her intentions in purchasing the goods through writing. She posted a letter of acceptance, complying with the stated price without negotiating for further discounts.

This could possibly mean that a binding agreement now exists. After all, the advertisement did state “£ 10, 000 for the lot, no offers.” However, not all forms of communication of acceptance could result in a legal binding agreement to exist. Suppose a counter-offer is introduced, the original offer is instantly terminated as established by Hyde v Wrench. In this case, the court should consider if Baljit’s enquiry could give rise to an issue of a counter-offer. However, It could be that the advertisement had inadequate details on methods of payment. Hence Baljit was merely clarifying terms. Clarification of terms on the other hand does not constitute a counter-offer. If so, it could be that Baljit’s acceptance was legit.

The element at which the court must now look at is the prescribed mode of acceptance. In legal terms, the mode of acceptance must be adhered to and acceptance is valid upon the stated mode. However, It is held that if the offeree does not adhere to the prescribed mode of acceptance, they cannot be liable for breach of contract unless it is stated that it is the one and only mode. That being, compulsory.

This was established by Yates Building v Pulleyn. Looking back at Celia’s case, the prescribed mode of acceptance was through email. However, attached under contact details included phone number and postal address, besides obviously, her email address. With this information, it is not logical to immediately terminate an offer if acceptance is not made through email.

Otherwise, why would Celia have posted her postal address? This gives an impression that acceptance through email is not compulsory. Baljit’s choice of acceptance was through post. In line with this, the postal rule states that acceptance by mail is valid on posting. So far as the postal address and postage is included, there is no reason for failure of acceptance. This was established by Adams v Lindsell. As the postal rule applies, Baljit’s acceptance can be deemed successful as her letter was still posted within the timeframe stipulated and can be qualified as a qualified customer.

The postal rule does not apply to emailing. The principle of this precedent was initiated from the case of Entores v Miles Far East Corporation. This is held that acceptance through instantaneous mode of communication is only effective once it has been received. It follows that Samantha has complied with the prescribed mode of acceptance. However, when the issue of emailing as a form of acceptance arises, it forms many complications. It is questionable if it can be deemed ‘instantaneous mode of acceptance’ as it may take hours to arrive depending on the route, server and internet provider.

Hence when dealing with a business, the seller should state details in terms of the estimated time the email should be received. Upon receiving, only then is the acceptance successful. It is only right that the court look into the specific details of the sent email. If evidence can be shown that the email was sent early in the morning or at least within working hours, Celia may be at fault for not checking her inbox earlier. In this case, the court may be in favour of Samantha.

Celia is only prepared to sell her goods to one customer and that may be Baljit. Having verified every case with legal terms, it could be that the goods are successfully sold to Baljit.