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Contract Law Offers
Lesson Aims
By the end of this lesson, you will be better able to:
- understand what constitutes an offer under UK law;
- apply law to legal questions;
- compare English law with that in your own country.
Overview
For a contract to exist there must be an offer which another party accepts and which is intended to bind the parties. In this lesson we look at offers.
1. Reading
Read the notes below about what constitutes an offer under UK law.
What constitutes an offer?
An offer is a proposal to make a binding agreement on specified terms. The person who makes an offer is called the offeror, and it is made to the offeree.
A binding agreement means that once agreed, the parties must do what they have agreed to. They cannot simply change their mind.
By specified terms, we mean that the offer must make clear what the parties will exchange. For example, saying “I offer to sell you my car” would not be a valid offer as I haven’t stated an amount.
Invitations to treat
An invitation to treat is not an offer, but a statement that invites offers. The previous example that “I offer to sell you my car” may be treated as an invitation to treat, as this simply invites negotiations. Advertisements are usually considered to be invitations to treat, as are catalogues and price lists.
This may seem like a semantic difference at first glance, but the legal implication is that if advertisements or catalogues were offers, businesses would always be bound by them.
In the case of Partridge v Crittenden [1968] 1 WLR 1204, the defendant advertised wild birds for sale for 25 shillings*. The Protection of Birds Act 1954 made it a crime to ‘offer for sale’ wild birds. However, the court held that the advertisement was an invitation to treat, not an offer.
*a shilling is an old unit of currency in the UK
Unilateral offers
Advertisements can be treated as offers if they make a unilateral offer. In this case one party promises to do something (usually pay money), if the other does (or doesn’t do) something. The offeree does not have to accept the offer, they simply have to perform the condition. For example, if I put a poster up offering to pay £25 if anyone finds my lost dog, this is a unilateral offer. You don’t need to promise to find my lost dog in order to collect the reward.
The case of Carlill v Carbolic Smoke Ball Company Ltd [1893]1 QB 256 illustrates this point. In this case the defendant advertised a reward to anyone who used their medicine in a certain way but still got sick from a cold or flu. The claimant used the medicine as instructed and still caught flu. The defendants claimed that the advertisement was ‘mere puff’* and that they did not make an offer to a particular person. The courts held that this was a unilateral offer which therefore did not need the defendant to communicate acceptance before claiming.
*mere puff means an advertising statement that should not be taken seriously, for example “Red Bull gives you wings”
Goods on display
The fact that goods are on display in a shop window or on shelves also does not constitute an offer. An offer is made when the goods are presented at the counter for purchase.
In Fisher v Bell [1961] 1 QB 304 a shopkeeper was prosecuted under the Offensive Weapons Act 1959 for offering flick knives for sale. The shopkeeper had displayed one such knife in his window. The court held that this was an invitation to treat, not an offer.
Auctions and invitations to tender
At an auction goods are sold as ‘lots’. When an item is to be sold it is presented to the room, and the auctioneer requests bids. This is an invitation to treat, with each bid representing an offer. This is unless there is no reserve price (a minimum price that must be met). If there is no reserve, the request for bids is an offer to sell for the highest price.
Invitations to tender (a business procedure to invite offers) are similar to auctions in that they are treated as invitations to treat unless they state that they will accept the most favourable offer. The party inviting tenders are bound to consider all validly made tenders.
Mere statement of price
A party stating their minimum price is not an offer but an invitation to treat.
In Harvey v Facey [1893] AC 552 the claimant requested the defendant’s minimum price for a property. The defendant responded that his minimum price was £900. The claimant then attempt to accept this price and claimed that there was therefore an agreement. The court held that this mere statement of price was not an offer.
Communication
An offer can only be valid if it is communicated to the offeree. A unilateral offer can be made to the world and can be accepted by anyone who performs the conditions and had notice of the offer.
Termination
Offers are terminated in a number of ways. If the offer is accepted a contract is formed. An offer could also be rejected.
If a counter offer is made, this destroys the previous offer. Offers can also be made by revocation, the lapse of time, failing to comply with a condition precedent or death of the offeror or offeree.
| Revocation | An offer can be withdrawn before it is accepted. This must be communicated to the offeree. For unilateral offers, the offeror must take reasonable steps to notify anyone who is likely to accept. However, a unilateral offer cannot be withdrawn if an offeree has started performance of a condition. |
| Lapse of time | An offer may state that it terminates after a particular date (e.g. 15/04/2021) or after a fixed period (e.g. 7 days). If no date is given, it will lapse after a reasonable time has passed. |
| Failure to comply with a condition precedent | An offer may terminate if parties had agreed to meet conditions and failed to do so. For example, if one party offered to hire a car but the car was damaged before acceptance, the offer can no longer be accepted. |
| Death of offeror | The death of an offeror may bind their personal representatives if the contract was not for the offeror’s personal services and the offeree is unaware of their death. |
| Death of offeree | If the offeree dies before acceptance, the offer lapses and their personal representatives will not be able to accept the offer. |
2. Questions
Offer or invitation to treat?
Are these offers or invitations to treat? (Read the notes again if you are unsure then check your answers)
- A shop has a suit on display in their window.
- An auctioneer starts the bidding for a £5,000 vase. There is no reserve price.
- I tell you that I have an iPhone you can buy from me.
- A perfume company advertises that their fragrance will make you feel like a millionaire.
- A mobile phone manufacturer offers a reward on TV to anyone who finds a cheaper phone with a higher resolution camera.
- Your friend tells you they are selling a Gibson guitar. They tell you they would be willing to sell it for £300.
- Invitation to treat
- Offer – as there is no reserve price. If there was, it would be an invitation to treat.
- Invitation to treat – this lacks specified terms.
- The claim is mere puff, but the advertisement is an invitation to treat.
- This is a unilateral offer.
- This is a statement of price and therefore is an invitation to treat.
Was the offer terminated?
Read these scenarios. Can the offer be accepted, or it has it been terminated?
- On 8th April, the offeror makes an offer to sell his house. On 11th April he writes a letter to the offeree to withdraw his offer. The offeree accepts the offer on 12th April, but receives the withdrawal of the offer on 15th April.
- The offeror offered to provide work for a company. Two days later, the offeror died.
- An offer was made to hire a wedding venue. The next day the venue suffered fire damage making the venue unusable.
- A businessman offered to sell his business for a very good price. The offeree died before accepting. Her personal representatives would like to take advantage of this offer.
- 3 months ago, the offeror offered to sell his car for £1000. The offeree didn’t have the money at the time, but now wishes to accept this offer.
- A company offers a car to anyone who can walk from Land’s End to John O’Groats (a walk of around 1,300km). After seeing this offer, one person is 100km into the walk when the company withdraw the offer.
- The offer was not revoked as withdrawal had not been notified by the time of acceptance.
- The offeror’s personal representatives are not bound as it concerns the offeror’s personal services.
- The offer cannot be accepted as this amounts to a failure to comply with a condition precedent.
- The offeror is not bound to sell the business to the personal representatives.
- This is probably a reasonable time for the offer to have lapsed.
- As the person has begun performance, the offer can not be withdrawn.
In your country
Are the rules concerning offers the same in your country?
Would any of the situations in the exercises above be decided differently in your country?
What are the equivalent terms in your language for:
- an offer
- an invitation to treat
- a unilateral offer
- revocation of an offer
Language Practice
Use the games below to practise the vocabulary used in this lesson.
Don’t Miss A Thing!
Disclaimer
The above information is based on the UK legal system. It is intended for law professionals and students whose first language is not English to improve their legal English ability. It should not be construed or relied upon as legal advice.
Photo by Artem Beliaikin from Pexels
