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ELEMENTS OF CONTRACT - OFFER AND ACCEPTANCE. QUESTION: Bob owns a stamp shop in Muncaster High Street. On Monday he places an item in the advertisement column of the Muncaster Evening Gazette. 'Utopian Penny Red Stamp, one for only, �750 or nearest offer'. Late that day, Alan, a stamp collector, telephones Bob and says 'The Utopian Red for sale, I'll take it for �700'. And Bob replies, 'I cannot accept less than �725 but I will not sell it to anyone else before Saturday. Let me have a reply by Friday if you want it'. 'That is kind of you. Remind me to buy you a drink when I see you'. On Wednesday Alan telephones Bob and leaves a message on his answering machine stating 'I accept your offer'. Unfortunately Bob's infant son later presses a button on the machine which erases the message before Bob listen to it. Later that day Bob sells the stamp to Cerdic for �750. ...read more.


By looking into the language of the advertisement which �750 or nearest offer, one could safely concluded that the advertisement by Bob would to an invitation to treat. An invitation to treat is a preliminary stage of an agreement, where one party seek to ascertain if the other is willing to enter into legally binding contract; Fisher v Bell. When later that day Alan a stamp collected telephoned Bob and said that he would take it for �700. This would amount to an offer. An offer is a final and unqualified assent to all the terms of the offer as per Carlill v Carbolic Smoke Ball. As on the facts Alan's statement was certain and shows his willingness to be bound immediately. Subsequent when Bob replied by saying that he would not accept anything less than �725. Even though the replied by Bob couched like an acceptance but it is not. This would amount to a counter offer, because he have introduce new terms to the original offer. ...read more.


Cerdic's aged mother who came to know from Cerdic's 9 year old son that the father have acquired the stamp from the High Street Dealer. Since this is question of fact and it is up to the courts to verify the effectiveness of the third revocation i.e. whether Alan can rely on third party revocation. If this is possible than Alan's act of posting the letter to Bob would have no effect because the revocation has taken place earlier. On the other hand if the third party revocation is not reasonable in circumstances then when Alan post a letter to Bob confirming the message there would be an acceptance by applying the postal rule i.e. the effectiveness of the acceptance is when the letter is posted and not when it was received. Since the revocation by Bob in writing required actual communication which is by Friday but the acceptance of Alan has taken place earlier as such one could safely conclude there is an agreement between Alan and Bob if the third party revocation is not reasonable. ...read more.

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