Advertisement to sell his car

Gary had an old car in good condition and wanted to sell it for HK $30000. He put an advertisement outside the garage of his house and a pedestrian, Tommy, saw the sign and asked Gary that he would pay HK $25000 to buy the car. However, Gary refused him. After that, another pedestrian, Henry, caught sight of the sign and asked Gary again that he would pay HK $28000 for the car. Gary accepted the deals and allowed Henry to drive the car away. When Gary got back his home, he received a letter which sent by Tommy and the letter was about Tommy agreed to buy the car for HK $30000. However, Gary had sold the car to Henry and therefore Tommy decided to sue Gary for breach of contract.

A legally binding contract was formed when the essential elements are present. They are offer, acceptance, consideration, intention to form a contract and capacity. If any one of the elements is missing, no legally binding contract will be formed.

In this case, Gary was the car owner and he was able to make an advertisement to sell his car. Hence, Gary must be an adult to drive a car and he must have the contractual capacity. To make the purchase decision and to sue the others, Tommy must not be mentally disabled. Therefore, Tommy must have the contractual capacity as well.

An offer is an expression of willingness by a person to contract on certain terms. An offer must be clear and capable of acceptance by another person. It is also an act (spoken words or writing or an electronic transmission or a mixture of two or more these) by which the person making the offer (called ‘’the offeror’’) confers on the person to whom the offer is made (called ‘’the offeree’’) the power to make a legally binding agreement between the two of them by doing a further act amounting to acceptance. (Arjunan & Majid, 2009)

However, it is important to distinguish the difference between an offer and an invitation to treat. There are three very general rules on how to discern the difference between them.

Firstly, a statement such as a display or other general advertisement is usually an invitation to treat because it is made to a very large group of people. Secondly, a statement to a specific person usually constitutes an offer. Finally, it is unimportant what words are used. It does not mean that it is an offer in legal terms if a person said that he is offering items for sale: Partridge v Crittenden [1986] 1 ALL ER 421.

In Partridge’s case, Partridge was charged with offering for sale a brambling, contrary to the provision of the Protection of Birds Act 1954 (U.K.). He had placed an advertisement in a periodical called Cage and Aviary Birds which read in part: “Bramblefinch hens, 25s each." Mr. Thompson then read the advertisement and sent Partridge 25s for a hen and Partridge filled his order. And Partridge sued.

It was held that Partridge was not guilty because the advertisement was not an “offer of sale" but an invitation to treat. Therefore, the offence charged, “offering for sale", had not been committed.

Similarly, in Gary’s case, he was also placing an advertisement (which was a sign) outside the garage of his house. The sign read: “Car for sale in good condition for HK$30,000" was just inviting potential offeror to make the purchase offer. Therefore, Gary’s sign outside the garage of his house should be treated as invitation to treat, but not as an offer.

If it was an invitation to treat, Gary, the person who issued the invitation was not an offeror; Tommy, the responding party, was the offeror. The party which originally issued the invitation to treat is thus the offeree and thus has the right to accept or reject the offer: Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401; [1952] 2 All ER 456 (P v. B)

In P v. B’s case, the defendant ran a self-service chemist shop with a pharmacist supervising the sale of drugs at the cashier’s desk. Two customers selected some drugs from a shelf, put them into a basket and took them to the cashier’s desk. It was held that putting up goods on the shelves of a self-service shop was an invitation to treat, the customers’ action was only to make an offer. Therefore, contract was not completed and B had the right to accept or reject the offer from P.

As proved above, Gary was to make an invitation to treat rather than offering to sale. Hence, Tommy was the one who offered to purchase the car and Gary had the right to accept or reject. In turn, Gary rejected Tommy’s offer and therefore no contract was formed. The contract was only formed between Henry and Gary. It was because Henry offered to buy the car from Gary at a price of HK$28,000 and Gary accepted the offer from Henry. Thus, it would not be feasible for Tommy to sue Gary breach of contract.

Therefore, it was an acceptance problems to considerate whether Gary accept Tommy’s offer or Henry’s offer.

A rule regarding the acceptance of an offer is that to be a valid acceptance, that is, acceptance cannot be deemed or assumed and must be communicated to the offeror. Also, the offeree must agree to all the terms of the offer. (Arjunan & Majid, 2009)

Although the sale advertisement outside Gary’s house could be determined as an offer, Tommy still could not sue Gary for the breach of contract for the following reasons.

Acceptance is different from counter-offer. First, there must be an offer (if treated Gary’s advertisement as an offer), and if acceptance not on same terms as offer it will not be an acceptance at all, but a counter-offer is made whenever an offeree attempts to introduce a new term into the bargain. Finally, the effect in law of a counter-offer is to destroy the original offer and substitute a new offer in its place: Hyde v Wrench (1840) 49 ER 132.

In Wrench’s case, the defendant offered to sell his farm for 1000 pounds. The plaintiff replied, offering 950 pounds but the defendant refused. The plaintiff then agreed to pay the originally asked 1000 pounds. The defendant refused to go through with the sale. The plaintiff sued.

The court held that there was no contract between the plaintiff and the defendant and so, the defendant was not obliged to sell the farm to the plaintiff. Firstly, the plaintiff had made a counter-offer which effectively rejected the defendant’s original offer, which ceased to exist at that point. Consequently, when the plaintiff agreed to pay 1000 pounds instead, his acceptance was still not an acceptance of the defendant’s now defunct offer to sell but a fresh offer to buy. As that offer never accepted, there was no valid contract.

In Tommy’s case, Tommy offered to buy Gary’s car at HK$25,000, which was a price different from the original offer of HK$30,000 stated by Gary. Hence, the original offer had been destroyed and a counter-offer applied. Although Tommy agreed to pay HK$30,000, the original price, for the car, the defendant’s offer was no longer treated as an offer to sell. Therefore, Gary did not have obligation to sell the car to Tommy as there was no acceptance, offer and contract between them.

In no matter which condition, no contract was formed between Tommy and Gary. Hence, Tommy will be advised that he has a slightly case against Gary and not suggested to sue Gary.