• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Contract Law - offer and acceptance.

Extracts from this document...


Contract Law- Offer and Acceptance Shabana Riaz Supervision Group 10 The given problem is concerned with whether or not an agreement has come into existence between Astonia PLC, and any of the three local companies, to sell them the widget machine. A contract is generally regarded as an agreement, which the courts will treat as binding, and where necessary, may enforce. One of the basic prerequisites for the existence of a contract is an offer and an acceptance of that offer, which together form the agreement. Most contracts are usually bilateral and an agreement comes into existence where one party makes an offer to be contractually bound by specified terms to another party who accepts the terms and communicates this to the offeror. It is the communication of the acceptance that makes the agreement binding. A contract can also be unilateral, here one party makes a conditional offer to another in return for performing or refraining from a particular act. The agreement becomes binding where the offeree performs the required act. One of the first issues raised is to establish whether the letters sent by Astonia PLC to the local companies are to be regarded as being an offer or an invitation to treat? ...read more.


The submission by Optimus PLC of �2500 or �100 more than the best offer under �3500, raises the issue as to whether a tenderer can make a 'referential' bid and whether such a bid be valid? By offering to pay �100 in excess of the best offer up to �3500 Optimus PLC are making what has become known as a referential bid, that is a bid which aims to 'top up' the best tender by a specified amount. The House of Lords, in the case of Harvela Investments Ltd v. Royal Trust of Canada 1985 (facts stated above), challenged the validity of such a bid, House of Lords held that they did not consider referential bids valid in such transaction. Lord Diplock in trying to justify the House of Lords decision gave the analysis that the purpose of sale by bidding was to provoke the best price from tenderors irrespective of what other tenderors would be prepared to pay, and stated referential bids worked against this. He went on to say that such bids would cause practical problems too, he stated if only some parties who were invited to make a tender made referential bids, then those parties who did not would not have a valid opportunity to have their bids considered. ...read more.


Wrench 1840, the submission of �300 tender is not binding as it is not the highest submitted tender, even though this was a mistake the responsibility to communicate acceptance correctly, falls on the person making the acceptance (Henkel v. Pape 1870). It would also be advisable to Astonia that no binding agreement exists between Astonia and Optimus as the referential bid was invalid, as held in the case of Harvela Investments, this leaves a tender of �2500, which again is not binding as it was not acceptance through submission of the highest bid. It would be advisable to Astonia PLC that an agreement exists between themselves and Mintex PLC, as the invitation to tender would be considered an offer, as they have undertaken to sell the widget machine to the highest bid which is a unilateral contract which has been accepted by Mintex through submission of the highest tender. If we consider the submission of the tender by Mintex PLC in respect of The Brimmes 1975, the acceptance or tender would have been submitted at 6 p.m. on the 9th September, irrespective of whether it had been read by Astonia PLC, the Fault Suggestion by Denning LJ, would mean that Astonia would be culpable for the lack of communication of the tender, and the acceptance through submission of the highest bid would be binding. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Law of Contract section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Law of Contract essays

  1. Marked by a teacher

    Contract Law - Acceptance.

    4 star(s)

    The 'battle of the forms' occurs when one party sends a form stating that the contract is on their standard terms of business, and the other party responds by returning their own form and stating that the contract is on their terms.

  2. Marked by a teacher

    Contract Law - Offer And Acceptance

    3 star(s)

    Test * Offer is an express of willingness to be bound by specific terms, made with intention that it is shall become binding as soon as it is accepted by person to whom it is addressed1 * Cannot be vague2 * Must be communicated * It may be in writing,

  1. Four ways in which a contract may be discharged.

    further performance > they are released from their obligations under the contract. > The party in breach is released from future obligations and is liable to pay damages. If the innocent party affirms: > the contract remains in force and each party is bound to continue with the performance of their obligations.


    Advice Alan. SUGGESTED ANSWER: In determining if it is reasonable to infer the existence of an agreement between Alan, Bob & Cerdic the language of offer and acceptance must be employed. The surrounding circumstances must be examine to ascertain if there is a firm offer followed by a final and unqualified acceptance of that offer.

  1. What is the importance of implied terms to the contract of employment

    6 Luxor (Eastbourne) Ltd v Cooper [1941] A.C. 108 7 Mackinnon L.J. in Southern Foundries Ltd v Shirlaw [1940] A.C. 701, Altuntas v Safestore Trading Ltd [2003] EWHC 49 8 Lister v Romford Ice and Cold Storage Co Ltd [1957] A.C. 555; Reid v Rush & Tompkins Group [1990] 1 W.L.R.

  2. Contract law - Advise Sarah - The first thing to ascertain is whether the ...

    person would think that the offeror was serious about carrying out his promise, it was held that Mrs Carlill was entitled to her �100. In this case therefore, as in Carlill, the advertisement can be seen as a unilateral offer, or one that is open to 'all the world' to accept.

  1. Invitation To Treat

    The fundamental feature of an offer is that it expresses a definite willingness to be bound by a contract on the part of the person making the offer. The offer sets out the terms upon which the offeror is willing to enter into contractual relations with the offeree.

  2. Dealing with problems of offer and acceptance.

    Grainger & Son v Gough (1896)5 . In effect, adverts would be offers to the entire world, as established in the case of Carlii v The Carbolic Smokeball Co. Ltd (1893)6, which would lead to potentially unlimited contractual liability. It is submitted in the age of the Internet, such an interpretation is even more important.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work