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Published: Fri, 02 Feb 2018

Whether a valid offer has been communicated

The first issue to consider is whether a valid offer has been communicated from Amelia to Zac. Though it is Zac who specifies the amount of £100, Amelia shows her ‘willingness to contract on these terms without further negotiation,’ constituting a valid offer, (Poole, 2010, p.33) by replying ‘fine.’ Amelia’s offer is a unilateral one, as it contains a clear, prescribed act (Carlill v Carbolic Smoke Ball Co.), to find Fido, for which she will pay £100. These terms are sufficiently clear and certain as to constitute an offer (Storer v Manchester City Council). A binding contract requires a valid acceptance, which in the case of a unilateral offer is the full execution of the prescribed act (Daulia Ltd. v Four Milibank Nominees Ltd.). By successfully finding Fido, Zac communicates his acceptance of Amelia’s offer. This is also valid acceptance of Gertrude’s unilateral offer to pay Zac £150 if he finds Fido. This is because performance of act which one has already agreed to carry out for third party can also constitute to valuable consideration in a separate agreement with another party (Scotson v Pegg). By refusing to pay Zac, both Amelia and Gertrude are liable to pay damages to Zac for breach of contract.

The next issue is whether Amelia’s notice is an offer or an invitation to treat. The notice is akin to an advertisement. The general rule for advertisements is that they are regarded not as offers, but invitations to treat, inviting further negotiations (Partridge v Crittenden). Despite Amelia detailing that she wants ‘acceptances,’ her notice is nevertheless incapable of being construed as an offer, as it is insufficiently clear and certain (Gibson v Manchester City Council). She does not specify an exact price, stating that she wants ‘in the region’ of £1500. Her description of Fido may also be too vague to constitute an offer, lacking detail of the puppy’s age or colour, for instance.

The first potential offer Amelia receives is via Bertie’s phone call on Tuesday afternoon. Bertie’s statement must be sufficiently clear and certain to be a valid offer (Storer v MCC), criteria which he fulfils by detailing an exact price: ‘£1300 for Fido.’ Amelia’s reply to this is a counter-offer, rather than a request for further information, as she does not use tentative language (Stevenson Jaques & Co v McLean), but states unequivocally that she will ‘take £1400.’ It is debateable whether Amelia has effectively prescribed a mode of acceptance by stating that Bertie must confirm the price ‘by letter’ as she needs the ‘response in writing.’ Where there is a prescribed mode of acceptance, ‘but not in terms insisting that only…that mode…[is] binding,’ (Manchester Diocesan Council for Education v Commercial & General Investments Ltd. per Buckley J), another equally advantageous mode will suffice. By specifying that she needs Bertie’s response ‘in writing for [her] records,’ Amelia appears to exclude acceptance by telephone or in person. However, it is unclear whether acceptance by text would be sufficient, as it is a written form of communication and thus may be considered equally advantageous (Tinn v Hoffmann & Co).

On Wednesday morning, Amelia posts a letter of revocation to Bertie, which gets lost in the post. Revocation must be communicated to the offeree in order to be effective (Byrne & Co. v Leon Van Tienhoven & Co.). Amelia’s offer is thus still valid. Bertie’s text on Wednesday afternoon, stating that he will ‘pay £1400 for Fido,’ is an instantaneous mode of communication, the general rule for which is that actual communication is required (Entores Ltd v Miles Far East Corp.). However, since Bertie’s text is delivered to Amelia’s phone, he has no reason to believe that his message has not been received. It is through no fault of his that Amelia is not able to read the message. Lord Denning outlines in Entores that where the offeree ‘reasonably believes that his message has been received…the offeror is clearly bound.’ Amelia has seen that she has a text from Bertie, yet does not endeavour to have him repeat his message. It is thus likely that she will be ‘estopped from saying that [she] did not receive the message of acceptance’ (Entores, per Lord Denning).

Another issue is whether Amelia has effectively ousted the postal rule, by stating that she needs to ‘receive [the] response.’ The general rule is that acceptance must be communicated to the offeror (Felthouse v Bindley). The exception to this is the postal rule, which states that acceptance by post is valid upon proper posting (Adams and Others v Lindsell and Another). To oust the postal rule, the offeror must stipulate that the acceptance is ‘only to bind if it reaches me,’ (Household Fire and Carriage Accident Insurance Company v Grant per Bramwell LJ), or use words to that effect, such as the phrase ‘by notice in writing,’ (Holwell Securites v Hughes). Amelia has not used such a phrase; thus it is unclear whether she has effectively ousted the postal rule. If Amelia has not done so, then Bertie may be held to have communicated a valid message of acceptance upon proper posting of his letter on Wednesday afternoon. However, there is a ‘well-publicised national postal strike,’ which delays the delivery of the letter ‘until Saturday morning.’ From previous case law, it appears that the postal rule still applies in instances where the delivery of the letter is delayed, or even lost, due to problems with the postal system (Household Fire Insurance v Grant).

The next issue is whether Victor’s question to Amelia on Tuesday afternoon amounts to an offer or a request for further information. Whilst the language that Victor uses is tentative ‘will you accept around £1400,’ he nevertheless specifies a price. Thus it is debateable whether this is sufficiently clear and certain to be construed as an offer (Storer v MCC). Amelia’s response that she will ‘accept £1450,’ amounts to a counter-offer, as it does not mirror Victor’s terms, and also constitutes a rejection of his offer (Hyde v Wrench). Victor’s query as to whether Amelia would be willing to keep the offer open until Sunday, if he gives her ‘old horse its…check-up for free,’ could constitute an offer of an option contract, if there is valid consideration (Dickinson v Dodds). Victor’s promise suffices as valuable consideration (Dunlop Pneumatic Tyre Co Ltd. v Selfridge & Co. Ltd.). However, a binding contract has not been concluded, as Amelia has not communicated her acceptance. Amelia thus is free to revoke her offer any time before acceptance (Payne v Cave), without being in breach of option contract.

On Friday morning, Lucy ‘tells Victor that Ethel has just bought’ Fido. This is a third-party communication of revocation, with Victor being informed that Amelia, has sold Fido to someone else, which is clear notice of revocation (Dickinson v Dodds). It has been suggested that third-party revocation runs ‘the risk’ of being from an ‘unreliable’ source (Poole, 2010, p.79). Lucy, as a child of twelve, is likely to be an unreliable source. Furthermore, the information which she conveys is incorrect, as no binding contract has been concluded between Ethel and Amelia (see below). Samantha’s phone call to Amelia, stating that ‘Victor will take Fido for £1450,’ is a third party communication of acceptance. A third party can validly conclude a binding contract on behalf of the offeree if they are authorised to do so by the offeree himself (Powell v Lee), which is the case here – Samantha conveys the message upon Victor’s direct request. There is thus a binding contract between Victor and Amelia.

Ethel’s email to Amelia, stating that ‘unless I hear anything from you…I will consider Fido mine for £1400,’ is not a valid message of acceptance. This is because acceptance must be communicated in response to an offer (Boulton v Jones and Another). Ethel’s message is invalid as she is not the offeree. If Ethel’s email is considered to be an offer, upon the premise that it contains a specific price and is clear and unequivocal (Storer v MCC), a binding contract has nevertheless not been concluded, as Amelia has not communicated her acceptance. Despite Ethel stating that she will consider Fido hers unless she hears anything from Amelia, silence is not valid acceptance (Felthouse v Bindley).

Regarding the sale of Fido, if Amelia is held to have successfully prescribed the method of communication (by letter only) and effectively ousted the postal rule, then there is no binding contract between her and Bertie. In this scenario, the letter which reaches Amelia on Saturday is not valid acceptance, as Amelia prescribes that she needs his acceptance ‘by Friday.’ Victor would thus be entitled to Fido. If Amelia has not effectively prescribed a mode of acceptance, nor ousted the postal rule, a binding contract would have been concluded by at the latest by Wednesday afternoon, when Bertie posted his letter. In this scenario, Bertie would be entitled to Fido and Victor would be entitled to damages from Amelia for breach of contract.

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