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OFFER -Law of Contract

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...   Grand Master - ,  1:45 pm On 10 Oct 2017

An offer is a proposition to contract on certain terms which once accepted creates a binding legal obligation.
Treitel on Contracts defines an offer as "an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed".

The person who makes an offer is called the offeror and the person to whom it is addressed is called the offeree.

There are basically 2 types of offers, these are:
1. Unilateral offer, and
2. bilateral offer

A Unilateral offer is an offer that can only be accepted by performance. Until performance is complete there is no contract. see Carlill v. Carbolic Smoke Ball co. (1893) 1 QB 256. Thus if A offers to pay $2000 to anyone who finds and returns his Armani Gold Wristwatch and B finds and returns it, A will be bound by his promise.

B need not communicate his intention to accept A's offer as communication of acceptance is not required for unilateral offers.

The rule is that A may revoke his offer at anytime before performance is completed.

Thus if A promises to pay $50 to anyone who can dive into an ocean from a 3-storey building and B decides to do it and he dives but before he lands into the water, A screams that he revokes his offer then B is not entitled to any payment.

This however seems to be the old law, in ERRINGTON v. ERRINGTON a father promised his daughter and her husband that they would be granted ownership of a house upon his death if they can repay the mortgage he borrowed on it. His daughter had already commenced the repayment of the debt when his wife, who was his legal heir revoked the offer. The court held that a unilateral offer cannot be revoked once performance has started.

This is an offer addressed to a particular person or group of persons. For instance, A offers to sell his car to B for $20 dollars.

B must communicate his intention to accept the offer to A, or no contract is formed.This is one of the key differences with unilateral offers. Communication of acceptance is mandatory for bilateral contracts.

Also, B must accept the offer as it as communicated to him, thus he can not vary vary the terms. If he varies the term, he would be deemed to be making a counter offer which destroys the original offer. Thus if A offers to sell his car to B for $20, but B states that he can only pay $10, B would be deemed to be making a counter offer and by so doing rejecting the original offer; the law will not allow him to turn around and accept an offer he has rejected.

Certain Elements of an offer:
1. An offer must be unequivocal, unambiguous and direct. Thus if A has 5 different cars, and he says to B 'I want to sell you my car for $20' the offer must fail for lack of clarity, as it can not be said precisely which car A intends to sell.
2. An offer can be made to a person, group of persons, it the whole world (see Carlill v. Carbolic Smoke ball Company)
3. A person cannot accept an offer he his ignorant of; the principle is 'consensus ad idem' which means there must be meeting of minds. Thus if B finds A's Armani Gold Wristwatch and returns it because he is a good Samaritan, unaware of A's promise to pay $2, 000 to anyone who finds and returns his watch, he cannot claim the price, since he was not aware of it.

An offer must be distinguished from an invitation to treat. An invitation to treat is simply an invitation to enter into negotiations with a view of creating an offer.

Examples of Invitation to Treat
1. Display of goods in a store by a seller is not an offer but an invitation to treat, it is buyer who make the offer. See Pharmaceutical Society of GB v Boots Cash Chemists Ltd [1953]
2. Advertisement. See Partridge v Crittenden [1968]
4. Setting a bid price by an Auctioneer is not a offer but an invitation to treat, it is the bidder that makes the offer which is accepted by the dropping of the hammer of the auctioneer. See Payne v. Cave

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