Learning Objectives: Students will - a) learn the basics about 'offer' b) be able to differentiate between offer and invitation to treat c) be acquainted with precedents which led to established rules of law regarding the status of offer and invitation to treat under Common Law

1. Preeti Kana Sikder
Lecturer
Department of Law & Justice
Jahangirnagar University

2. Contents of Current Chapter
 Rules of law relating to offer
 Elements of Offer
 Distinction between offer and invitation to treat
 Identifying offers in everyday transactions
 Termination of offer
 Rules of law relating to Acceptance
 Elements of Acceptance
 Communication of Acceptance
 Prescribed Method of Acceptance

3. What is an ‘offer’?
An expression of willingness to contract on
specified terms, made with the intention that it is
to become binding as soon as it is accepted by
the person to whom it is addressed.

4. Has an agreement been
reached?
Under the objective test of agreement, an
apparent intention to be bound may suffice,
even though in fact he has no such intention.

5. Manchester City Council: the local government authority
for Manchester, a city and metropolitan borough in
Greater Manchester, England

6. Gibson v Manchester City Council
(1978)
 Defendant prepared a brochure explaining how a
council tenant could purchase his council house.
 Mr. Gibson completed the form contained in the
brochure and sent it to the council together with a
request that he be told the purchase price of the
house.
 Treasurer of the council wrote to inform him that the
‘council may be prepared to sell the house’ to him at
a stated price and that if he wished to make a ‘formal
application’ to purchase the house he should
complete a further form.

7. Gibson v Manchester City
Council (1978)
 Mr. Gibson completed the form, but he left the
purchase price blank because he wished to know
whether the council would repair the path to his
house or whether he could deduct the cost from
the purchase price.
 The Council replied that the price had been fixed
according to the condition of the property, and so
allowance had been made in the price for the
condition of the path

8. Gibson v Manchester City
Council (1978)
Mr. Gibson accepted this and
asked the council to continue
with his application.
Mr. Gibson carried out
maintenance to the house.

9. The party's platform emphasises
greater state intervention, social
justice and strengthening workers'
rights

10. Gibson v Manchester City
Council (1978)
Winning the local elections, labour
party promptly discontinued the policy
of selling off council houses, unless
there is already a legally binding
contract at force.
The Council refused to sell the house
to Mr. Gibson because they claimed
that no contract had been concluded
for the sale of the house.

11. The Decisions
 The Trial Judge and the
Court of Appeal held that
a contract had been
concluded.
 Lord Denning held that
there was an agreement
between the parties on all
material points, even
though precise formalities
had not been gone
through.
 House of Lords held that
no contract had been
concluded.
 The letter written by the
treasurer, which stated
that the council may be
prepared to sell, was not
an offer itself.
 It was simply an
expression of their
willingness to enter into
negotiations for the sale
of the house

12. A TEST OF INTENTION?
 While negotiating many preliminary communications
may pass between the contracting parties before a
definite offer is made.
 Whether a statement among such negotiations is an
offer depends primarily on the intention with which it
was made.
 A statement is not an offer if it in terms negatives the
maker’s intention to be bound on acceptance.

13. Offer
 A statement by one
party of a willingness to
enter into a contract on
stated terms, provided
that these terms are, in
turn, accepted by the
party or parties to whom
the offer is addressed
Invitation to
Treat
 An expression of
willingness to enter
into negotiations
which, it is hoped,
will lead to the
conclusion of a
contract at a later
date.

14. Manchester City Council: the local government authority
for Manchester, a city and metropolitan borough in
Greater Manchester, England

15. Storer v Manchester City
Council (1974)
 In 1970 the defendant city council, which was then
controlled by the Conservative Party adopted the
policy of selling council houses to sitting tenants.

16. The Conservative and Unionist
Party

17. Storer v Manchester City
Council (1974)
The council instructed the town clerk to
devise a simple form of agreement
enabling sales to take effect at the
earliest possible date with the object of
dispensing with legal formalities

18. Storer v Manchester City
Council (1974)
 The plaintiff applied to buy the council house which he
was renting, with a mortgage loan from the council.
 The application was approved by the city treasurer.
 the town clerk, in a letter dated 9 March 1971, wrote
to the plaintiff: ‘I understand you wish to purchase
your Council house and enclose the Agreement for
Sale. If you will sign the Agreement and return it to me
I will send you the Agreement signed on behalf of the
[council] in exchange.’

19. Storer v Manchester City
Council (1974)
 The plaintiff filled in the name of his solicitors and, on
20 March, he signed the agreement and returned it to
the council.
 Before the town clerk had signed the agreement
on behalf of the council and sent the council’s part of
the agreement to the plaintiff, there was an election
and the Labour Party gained control of the council.
 Under Labour control the council resolved to
discontinue selling council houses.

20. The party's platform emphasises
greater state intervention, social
justice and strengthening workers'
rights

21. Guesses on the decision?

22. Storer v Manchester City
Council (1974)
It was held that a binding contract for the sale
of the house had been concluded by offer and
acceptance when the plaintiff accepted the offer
to sell contained in the letter of 9 March by
signing the agreement for sale and returning it
to the council.
So, the negotiation had advanced beyond the
stage reached in Gibson but had not resulted in
an exchange of contracts.

23. Storer v Manchester City
Council (1974)
 It was the council’s intention (having regard to their
instructions to devise a simple form of agreement
and to the terms of the actual agreement sent to the
plaintiff and the accompanying letter of 9 March) that
the council would become contractually bound when
the plaintiff had signed the agreement and returned
it.
 The letter of 9 March signed by the town clerk
constituted a sufficient note or memorandum of the
agreement.

24. Observation
In both of these cases it has been
proved that judges can and do differ
in the results which they reach in
interpretive exercise of determining an
offer.
It has also been proved that such
interpretation must ultimately rest
on its own facts.

25. The distinction between offer
and invitation to treat is
primarily one of ‘intention, that
is, did the maker of the
statement intend to be bound
by an immediate acceptance, or
did he only intend his statement
to be a part of the continuing
negotiation process?

26. Prima Facie Rules of Law
(rules accepted as correct until
proved otherwise)
There are certain stereotyped situations in
which the distinction between offer and
invitation to treat is determined by rules of law.

27. Prima Facie Rules of Law
(rules accepted as correct until
proved otherwise)
It may be possible to displace these rules by evidence of
contrary intention, but in absence of such evidence they
will determine the distinction between offer and invitation
to treat, without reference to the intention within

28. Most Commonly Encountered
Examples of such rules
Shop Display
Advertisements of unilateral contracts
Advertisements of bilateral contracts
Auction Sales
Timetables and Passenger tickets
Tenders
Sales of shares

29. Who makes the offer in Shops?

30. Who makes the offer in Shops?

31. Three Approaches: Who makes
the offer in Shops?
 The shopkeeper makes an offer by displaying
the goods which are accepted when the
goods are picked up by customer
 Display of goods is an offer which is
accepted when the purchaser takes the
goods to cash desk
 Display of goods constitutes an invitation to
treat. Offer is made by the customer when he
presents the goods at the cash desk. The
offer may be accepted or not.

32. Fisher v Bell (1961)
Display of goods in a shop window is an
invitation to treat
The defendant had a flick knife displayed in his
shop window with a price tag on it. Statute
made it a criminal offence to 'offer' such flick
knives for sale. His conviction was quashed as
goods on display in shops are not 'offers' in the
technical sense but an invitation to treat.

33. Pharmaceutical society of GB v
Boots Cash Chemists (1953)
Sale took place at the cash desk as the display of the goods
was simply an invitation to treat

34. Lefkowitz v Great Minneapolis
Surplus Stores (1957)
The defendants
placed two
advertisements in
a newspaper.

35. Lefkowitz v Great Minneapolis
Surplus Stores (1957)
First Ad read:
“Saturday 9 am sharp; 3
Brand New Fur Coats, worth
100 Dollars; First Come,
First Served, 1Dollar each.”
Second Ad read:
“Saturday 9 am…1
Black Lapin
Stole…worth 139.50
Dollars…1.00 Dollar;
First Come, First
Come, First Served.”

36. Lefkowitz v Great
Minneapolis Surplus Stores
(1957)
Advertisement was an offer as it mentioned definite
conditions and no house rule was mentioned

37. Chapelton v Barry Urban
District council (1940)
 Chapelton approached a pile of chairs owned by
Barry Urban District Council.
 A notice adjacent to the chairs detailed the cost of
hire and advised customers to obtain tickets.
 It also declared that the tickets shall be retained for
inspection.
 Chapelton purchased tickets and placed them in
his pocket. When Chapelton sat down on the deck
chair, the canvas broke down and he became
injured.

38. Should the District Council be
held liable for putting up
defective chair on the pile?

39. On one side of the tickets, the
council purported to exclude
liability for any accident caused
by hiring the chairs.
Chapelton v Barry Urban District
council (1940)

40. Chapelton v Barry Urban
District council (1940)
 In lower court, BUDC was
effectively excluded of any
liability put forward.
 They claimed Chapelton had
notice of the terms as those
were printed on the ticket.
 The adjacent notice was an
invitation to treat while the
ticket was the written contract
itself, detailing the terms by
which the .
 In appeal, it was decided
that the ticket should be
regarded as a receipt
provided after the
formation of the contract
and not a written
contract.

41. Reasoning Backwards?

42. Two more categories of
contracts
 Contract where one party
makes another party an
offer to perform an act and
assent is promised by
performing the act is an
unilateral contract.
 Bilateral (or reciprocal)
contracts are those by
which the parties expressly
enter into mutual
engagements, such as
sale or hire.
 a contract in which both
the contracting parties are
bound to fulfill obligations
reciprocally towards each
other

43. Advertisements of
unilateral contracts
• Bowerman v Association of British
Travel Agents Ltd (1996)
• Carlil v Carbolic Smoke ball Co (1893)

45. Bowerman v Association of British
Travel Agents Ltd (1996)
• The claimant was to take part in a school skiing trip. The first
operator was a member of the defendant association, and
ceased trading through insolvency.
• The advert ‘ABTA arranges re-imbursement’ constituted a
unilateral offer to contract in this context. The notice would be
seen to create legal relations.
• The ABTA notice displayed in the travel agent’s offices
created a contract between ABTA and the client.

47. Advertisements of bilateral
contracts
Patridge v Crittenden (1968)

48. What is an Auction
Sale?
• A public sale of land or goods, at public outcry,
to the highest bidder.
• At an auction, an auctioneer will invite bids on
an item (a lot), people will bid and once the
bidding ceases the auctioneer brings down his
hammer and the highest bidder is sold the
item.
• With Reserve v Without Reserve

49. Auction Sales: When does
Offer Arise?
An auctioneer, by inviting bids to be
made, makes an invitation to treat.
Offer is made by the bidder and
accepted by the auctioneer when he
signifies his acceptance in the
customary manner.
Before such acceptance the bidder may
withdraw his bid and the auctioneer may
withdraw the goods.
Collateral contract

50. WARLOW V HARRISON
(1859)
 A public auction of a horse, without reserve, was
advertised by the defendant, an auctioneer.
 The plaintiff bid 60 guineas and the owner of the
horse bid 61 guineas. There were no further
bids and the defendant put down his hammer on
the bid for 61 guineas.
 The plaintiff claimed the horse should be his as
he was the highest bona fide bidder.

51. WARLOW V HARRISON
(1859)
 The advertisement , as it included the words
without reserve, was an offer to sell to the highest
bona fide bidder. The defendant was in breach of
that promise.
 It was an offer of a unilateral contract as the
defendant bound himself to sell to the highest
bidder.
 The plaintiff had performed the required act
(made the highest bid). However, because the
hammer had not been put down on the plaintiff's
bid there was no acceptance of his offer.
Therefore, there was no contract for the sale.

52. BARRY V DAVIES [2001]
 The defendant, the auctioneers, were instructed to
sell two machines used in the motor industry. The
claimant was told the sale would be without
reserve.
 The claimant was the highest bidder, bidding £200
for each.
 The defendant refused the claimant's bid and
withdrew the lots from auction as the machines
were worth £14000 each.
 The claimant sought damages for breach of
contract.

53. BARRY V DAVIES [2001]
 The court followed that there was an offer by the
defendant because the auction was without
reserve.
 The claimant had accepted such offer by making
the highest bid. Therefore, the defendant was in
breach of contract.
 The claimant was awarded £27600 in damages.
The cost of buying the machines (£28000) minus
his bid of £400, in order to compensate him for his
loss due to the breach of contract.

54. Tenders
The process whereby
governments and financial
institutions invite bids for large
projects that must be submitted
within a finite deadline

55. The general rule is that these
requests are an invitation to
treat and any submission of
tenders are offers. It is then up
to the person who requires the
service to decide whether to
accept any of the offers.

56. Spencer v Harding (1870)
 The circular read:
“28, King Street, Cheapside, May 17th, 1869. We are
instructed to offer to the wholesale trade for sale by tender
the stock in trade of Messrs. G. Eilbeck & Co., of No. 1,
Milk Street, amounting as per stock-book to 2503l. 13s. 1d.,
and which will be sold at a discount in one lot. Payment to be
made in cash. The stock may be viewed on the premises,
No. 1, Milk Street, up to Thursday, the 20th instant, on which
day, at 12 o'clock at noon precisely, the tenders will be
received and opened at our offices. Should you tender and
not attend the sale, please address to us sealed and
inclosed, 'Tender for Eilbeck's stock.' Stock-books may be
had at our offices on Tuesday morning. Honey, Humphreys,
& Co.”

57. Spencer v Harding (1870)
 The claimant made the highest bid and was
refused the final sale.
 The court held that the circular was a mere
proclamation that the defendant's were interested
in negotiating a price for the sale of the stocks
and to receive offers. Therefore, the plaintiff's
claim failed.
 Willes J noted that there was no unilateral
contract because there was no specific wording
such as and we undertake to sell to the highest
bidder to make the circular a binding offer.

58. A statement inviting tenders for
the supply of goods is not
normally an offer
But the position is different where the person who invites
the tenders states in the invitation that he binds himself to
accept the highest offer to buy.

59. BLACKPOOL & FYLDE AERO
CLUB LTD V BLACKPOOL
COUNCIL [1990]
IN NEXT CLASS

60. Thank You