An offer is different from an invitation to treat, it carries an element risk since once the offer is being made and accepted by the other party, it will be illegal for the offeror to break the contract.
In the case of Harris v Nickerson (1873) [LR 8 QB 286], the judge has distinguished between an offer and an invitation to treat. The claimant could not recover from the auctioneer since there was no offer made- the furniture was not put up for sale, also the advertisement was just an invitation to treat. Since there is a gray area of understanding between an offer and invitation to treat, the court may make different interpretations in different situations.
An acceptance of an offer means unconditional agreement to all the terms of the offer, therefore any negotiations from the offeree needs to be done before hand. It can be made by words or conduct, but in some situations an offeree may accept an offer by taking action instead. The court will only interpret conduct as indicating acceptance if the offeree’s act is likely to be an acceptance to the offer. Once an offer has been accepted, a contract is existed and both parties are legally bound.
On the other hand, the case William v Carwardine (1833) [5 C & P 566] illustrated that as long as the acceptor knows that the offer exists, it is not important of his/her motive for the acceptance of the contract. The contract is still valid.
An acceptance of an offer of a bilateral contract is only effective when it is received, therefore the acceptor must communicate to the offeror to accomplish the agreement. From the case of Entores Ltd v Miles Far East Corporation (1955) [2 QB 327] (Court of Appeal), Entores Ltd (the claimants), it shows that a contract made by instantaneous communication is complete only when the acceptance is received by the offeror. It is not desirable to use instantaneous communications when making a contract since confusion and misunderstanding is easily made. Acceptance should made it clear to the offeror in order to make the contract valid.
In principle, there is no legal commitment made until a contract has been accepted by the acceptance of an offer, therefore, both parties are allow to change their minds of the transaction. The case of Offord v Davies (1862) has illustrated this concept. When an offer is accepted by letter or telex, the postal rule has to be considered. It has an idea that the acceptance is valid once it has been properly post by letter or telex to the offeror. In the case of Adams v Lindsell (1818) [1 B & Ald 681], it shows that as long as the letter of acceptance is being post properly, it is a valid contract. The offeror has to bear the burden since it has made mistake at the first place.
The above case is only a special condition, in normal situations offeror cannot wait for the offeree indefinitely if the offeree does not reply. Acceptance is assumed to be made fairly promptly or not at all. The offer can be revoked by the offeror as they do not receive the reply from the other party. In the case of Ramsgate Victoria Hotel v Montefiore (1866), the defendant refused to fulfill the agreement since the acceptance has been delayed for five months, the court supported his argument and stated that the contract has been failed, it is being known as ‘lapse of time’.
When the offeree responses with some alterations to the terms of the offer, or rejects the original offer, it is being considered as a counter-offer. In the case of Hyde v Wrench (1840) [3 Beav 334], it illustrates the defendant did not break the contract since the claimant has rejected the offer at the first place, therefore the acceptance is not validate.
In conclusion, offer and acceptance are equally important for a successful business transaction. The offeror should carefully consider the terms of the offer since once it has been accepted by the other party, it cannot be changed. The offeree also should think clearly and read the terms and conditions of the offer carefully before accepting it. Both parties shoud make sure they know about the contract laws to prevent from breaking the rules.
Bibliography
-
K. Smith & D. Keenam, (2006), Law for Business, (13th edition), FT/ Pearson Education Ltd
-
Ewan Maclntyre (2008), Business Law, (4th edition), FT/Pearson Education Ltd
