CONTRACT LAW: OFFER AND ACCEPTANCE

Erin posted on Facebook: ‘For sale: vintage Morris Minor, 1970s. Condition is excellent, 60,000 miles on the clock. All offers considered. Price: £55,000.’ She also provided her postal address, an email, and a mobile number. Danny saw the post on Facebook and was interested in Erin’s car. He posted a letter to Erin on 18th September, saying that he would be interested in purchasing the car for £ 55,000. On 19^th September, Frank also saw the post. He immediately emailed Erin asking if it had been sold and if not offering £ 45,000. On 20^th September, Erin replied, stating that she would be willing to let Frank have the car for £ 50,000 (offer). Frank did not think that he would be able to raise the additional £5,000 quickly enough, so he sent a further email on 20^th September asking if he could pay £45,000 today and then pay the further £5,000 next month (request for information to amend the terms – counter offer/ glean information).

On 21^st September, Joe texted Erin at 10 am to ask about the car. Erin replied, stating that she wanted at least £50,000 for it and was open for offers. At 1 pm Frank received confirmation from the national lottery that he had won £5,000. He immediately sent Erin an email telling her to ignore the last email and that he wanted to accept the price of £50,000. Later, at 4.30 pm on 21^st September, Joe responded to Erin’s message agreeing to the price of £55,000.

Danny’s letter reached the post 22^nd September for Erin. My advice to Erin is that she has not made any valid agreement to sell the car since she has not accepted any offer made by the people offering to purchase her car.

In the contract law, an agreement is analyzed in line with the classical approach, looking out for the components of an offer, acceptance, consideration, and legal intention to contract.[1] The Facebook post by Erin can be considered an advertisement and thus invitation to treat rather than an offer. Professor Treitel contends that an offer is “an expression of willingness to contract on certain terms, made with an intention that it will become binding as soon as it is accepted by the person whom it is addressed.”[2] Although the Facebook post appears as an offer to an agreement on given conditions, to become binding between parties when it is accepted, it is not addressed to a specific person. If the post would be regarded as an offer, the outcome could be irrational[3]. That is because a contract will be considered made each time someone requested for the car. That could result in problems since there is only one car. For example, in the case of Partridge v Crittenden (1968) 1 WLR 1204, the respondent was accused of the crime of offering live wild bird for sale[4], defiant to the section 6(1) Protection of Birds Act 1954.[5] The court found that he was not culpable of the stated offense since the commercial was deemed as an invitation to treat. An offer would come after someone offered to buy a bird at the stated price. In Erin’s case, the Facebook post is an invitation to a treat and in which people are expected to make their offer to buy the car at the stated price of £55,000.

Danny made an offer expressing his interest in purchasing the car through a letter posted on 18^th September, and received on 22^nd September. He expresses his willingness to contract on Erin’s stated terms intending that Erin will accept his offer to have an agreement. The rule is that for an agreement to be effective, acceptance has to be communicated.[6] Since Erin has not communicated, he has not accepted Danny’s offer. Consequently, there is no agreement to sell the car to Danny. Frank also made an offer following Erin’s advertisement for her car. In his email, Frank makes an offer to purchase the car for £45,000 if it is not yet sold. Since the car is not yet sold, his offer is valid. However, Erin makes a counter-offer since she changes the terms of the offer when she states she is willing to let Frank have it for £50,000. Erin’s reply does not constitute acceptance to Frank’s offer since it is not unqualified, which means that it does not correspond exactly to the terms of the offer made by Frank.

Frank sent another email on 20^th September asking Erin if he could pay £45,000 and pay the balance of £5,000 the subsequent month. This email can be considered as a request for information to gather information, and it can also be interpreted as an amendment of the terms upon which Erin had made the offer.[7] In this case, the email content comes out as an amendment to the terms upon which Erin’s offer had been made since it implies Frank cannot accept the offer unless he is allowed to pay £45,000 and later £5,000. However, if Frank’s email on 20^th September could be considered as a request to seek information, then it can be considered as an acceptance of Erin’s offer to purchase the car for £50,000[8]. Erin states the price as £50,000 but does not specify it should be paid in cash. Therefore, Frank’s email was to find out if he can purchase it by paying in installments. Nonetheless, his email introduces new terms not included in Erin’s offer amounting to a counter-offer. Frank’s email can only be regarded as acceptance of Erin’s offer if he agrees to purchase the car at the stated price without any additional condition. According to the law, an offer has to be acceptable in its original format.

Since the email amends the terms of Erin’s offer, it is considered as a counter-offer. In law, that arises where the offeree replies to an offer and alters its terms. That implies a rejection by Frank of Erin’s offer and can constitute a fresh offer.[9] Consequently, when Frank later sends another email asking her to ignore the content of the last email and that he was ready to accept the price of £50,000, his acceptance is not valid. A good illustration of a counter-offer is evident in Hyde v Wrench,[10] where the respondent offered his farm for sale at £1,000. The plaintiff offered to purchase it at £950. However, after a few days, he agreed to pay the stated value of £1,000. The respondent declined to sell his farm to him, and the claimant complained for lack of specific performance. It was decided that there was no valid agreement between them. The £950 offer was regarded as a counter-offer that ruined the initial offer. Therefore, the original offer of £1,000 was no longer open for acceptance by the plaintiff. Similarly, Frank’s offer of paying £45,000 and £5,000 later was a counter-offer that rendered the original offer by Erin null. It was thus no longer open for acceptance by Frank. Frank cannot claim to have accepted an offer that no longer existed by the time of his acceptance.

Erin has no binding agreement with Joe. When Joe asked about the car on 21^st September, Erin responded, stating that she wanted at least £50,000 for it and was open for offers. Erin’s response to Joe cannot be considered an offer to an agreement, but it is an invitation to a treat. Based on the law of contract, an offer has to be capable of acceptance in its original format.[11] In this case, Erin stated that she wanted at least £50,000 for it and was open for offers. It thus means that Erin is open to any amendments. Therefore, Erin’s response to Joe does not amount to an offer but a response to a request for information that is the minimum price she needed if she was to sell her car to Joe.[12] An example to illustrate this is the case of Harvey v Facey (1893) AC 552.

[13] In the case, a telegram was sent to the respondent stating, “Will you sell us Bumper hall Pen? Telegraph lowest price.” The respondent had responded that “Lowest price for Bumper Hall Pen, £900.”[14] The plaintiff responded, stating, “We agree to buy Bumper Hall Pen for £900 asked by you.” Since the plaintiff did not receive a response, he accused the respondent of breaching the contract. The court said that the statement, “Lowest price for Bumper Hall Pen, £900,” was a mere reply to question about the minimum price that the defendant needed if he chose to sell.[15] The last telegram was believed to be an offer that was never accepted. The facts of the case are similar to those of Joe’s case. Therefore, Joe’s reply to Erin’s text agreeing to buy the car for £55,000 was an offer that she can accept or decline. There is thus no binding agreement between Joe and Erin.

Erin has not entered into any agreement to sell her car. Although she has received several offers and negotiated with different people, she needs to accept one of the offers to enter a legal agreement. She can only accept Danny’s or Joe’s offer since Frank’s offer is not valid. Frank canceled his offer when he accepted an offer that was already invalid.

Bibliography

Elliott C; Quinn F, Contract Law, (Pearson 2019).

Marson J, and Katy F, Business law, (Oxford University Press, 2020)

McKendrick E, Contract law, (Oxford University Press, 2020).

North Carolina Real Estate Commission. Questions and answers on offer and acceptance. (North Carolina Real Estate Commission, 2017).

Peel E and Guenter T, The law of contract (London Sweet & Maxwell 2020).

Schulze R, “Formation of contract”. International Sales Law: Contract, Principles & Practice., 203(2016).

Slorach S and Jason E, Business law, (Oxford University Press, 2020).

Stone R and Devenney J, The modern law of contract. (Abingdon publishers 2020).

Harvey V. Facey (62 L. J. P. C. 127) [1893] AC 552

Hyde v Wrench [1840] BEAV 334

Partridge v Crittenden (1204) [1968] 1 WLR 1204

Protection of Birds Act 1954

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[1] Edwin Peel and Treite Guenter, The law of contract (London Sweet & Maxwell 2020).

[2] Richard Stone and James Devenney, The modern law of contract. (Abingdon publishers 2020).

[3] North Carolina Real Estate Commission. Questions and answers on offer and acceptance. (North Carolina Real Estate Commission, 2017).

[4] [1968] 1 WLR 1204

[5] Protection of Birds Act 1954, s. 1

[6] Richard Stone and James Devenney, The modern law of contract. (Abingdon publishers 2020).

[7] Ewan McKendrick, Contract law, (Oxford University Press, 2020).

[8] James Marson and Ferris Katy, Business law, (Oxford University Press, 2020)

[9] Catherine Elliott and Frances Elliott, Contract Law, (Pearson 2019).

[10] [1840] BEAV 334

[11] Reiner Schulze, “Formation of contract”. International Sales Law: Contract, Principles & Practice., 203(2016).

[12] Scott Slorach and Ellis Jason, Business law, (Oxford University Press, 2020).

[13] [1893] AC 552

[14] Ibid.

[15] Ewan McKendrick, Contract law. (Oxford University Press, 2020).