This is supported in the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 265; where it was ruled that acceptance is deemed when one party, the offeree, fulfils all parts of the offer put forward by the offerer. The Carbolic Smoke Ball company made an advertisement claming that they would pay £100 to anyone who contracted the flu virus within one year of using their patent medicine. When Carhill used the medicine she later contracted the virus and Carbolic argued that there needed to be a formal acceptance of the offer before they became liable. The court found for Carlill, against Carbolic, on the grounds that agreement to the offer was signalled by acceptance of its terms. Carlill need not have communicated this formally.
In the case of Anna v Ben; where Ben invoiced Anna £500 for consultancy fees; it is important to look at Anna’s intention. When she asked Ben to ‘run some checks’ on the Erawax Company’s wax toxicity levels she didn’t realise she was entering an agreement where she would become legally bound in a contract. Neither did she express any acceptance to such an agreement. In such a case it is left in the hands of the defendant to prove that the parties did not intend to create legal relations.
This was considered and outlined by Mance LJ in the case of Baird Textile Holdings Ltd v Marks and Spencer plc (2001) EWCA Civ 274; (2002) 1 all ER (comm.) 737, when he stated (under paragraphs 59-61) that;
“An intention to create legal relations is normally presumed in the case of express or apparent agreement satisfying the first requirement (an agreement on essentials with sufficient certainty to be enforceable)…if the parties did or would have acted as they did without any such contract, there is no necessity to imply a contract. It is merely putting the same point another way to say that no intention to make any contract will be inferred.”
This then leaves Anna without any legal liability, as she acted by asking Ben to do some checks out of contract and never intended to place herself in a contract from her actions. This can also be supported under the Principles of European Contract Law, under article 2:101, which provides that; a contract is concluded if a) the parties intend to be legally bound and b) they reach a sufficient agreement without any further requirements. Again this departs Anna from any legal liability as she didn’t intend to be legally bound, and had not reached any agreement with Ben.
In the case of Anna v Signjörseen of Reykjavik; were Signjörseen told Anna a lodge originally offered for March 2004 was now unavailable until January 2005 and she would have to pay her transportations costs, which in the original offer was to be covered for her; it is necessary to consider the estoppels of the case. In legal terms, an estoppel is an impediment or bar to a right of actions arising from a man’s own acts, for example when a person creates a deed that legally enforces that he cannot change that deed in the future. The case of Combe v Combe (1951) 2 KB 215, illustrated that a legal estoppel is invoked by litigants who are unable to establish that the promise upon which they base their claim, or defence, is supported by consideration. This comes into play in the instant case as Signjörseen promised to provide Anna with a lodge at a set date, thus creating a contract and placing himself under legal relations to do so. By Signjörseen changing the details of the offer he is in breach of his own contract, thus giving rise to estoppels.
In the case of Anna v Preston Premier Properties (PPP), PPP had agreed to accept a 25% reduction on the rent of Anna’s work premises until ‘things picked up again’; upon asking her to return to initial rent payments in March 2004 they also asked Anna to pay the outstanding balance for the October 2003 – February 2004 period. In any contract law case, the time a person becomes bound under contract is when acceptance has been communicated.
In the instant case, the offer was a uni-lateral offer; therefore acceptance is communicated via full performance of the requested act; the requested act to be fulfilled is the payment of the 25% reduced rental payments, to be returned to normal when ‘things picked up again’. This had been performed by Anna and accepted by PPP.
Nevertheless since Anna had not yet returned to initial payments the contract was only partly performed. This doesn’t allow for PPP to revoke the offer and ask for Anna to repay the outstanding balance, as an offer cannot be revoked if performance of the consideration of that contract has already taken place. This principle is developed in the case of Errington v Errington (1952) 1 KB 290, where the judge ruled that as the contract was a uni-lateral contract and the payments were part of the consideration of the contract, it could not be revoked. Subsequently the offer was valid until all actions of the contract were complete, when the house ownership would be passed to the appellants.
In the case of Anna v Fast-Track; where Anna gave them 50,000 limited addition candles in lieu of three months payments and fast track accepted; Fast-Track failed to make any profit off the 50,000 candles and now claim Anna owes them the three months payments. Just like in the case of Anna v PPP, Fast-Track accepted Anna’s offer and so became bound under that contract. The principles of Errington v Errington (1952) do not apply here as Anna had already returned to the original payments to Fast-Track, so the contract had already been completed.
When Fast-Track accepted Anna’s offer they also accepted all of the terms of her offer, so becoming bound under a contract. As the case of Neale v Merrit [1930] WN 189 which demonstrates acceptance of an offer made in support of the creation of a contract must be made on the terms of the offer. Merrit offered to sell some land to Neale for £280. Neale replied by post enclosing an initial payment for £80 and a promise to pay the rest in monthly instalments. Merrit rejected this payment, claiming that he wanted the full amount or nothing. Neale tried to enforce the agreement, but the court held it void, because Neale had not accepted the offer on the terms expressed. Thus, these principles show that Fast-Track had placed them selves under contract as they accepted Anna’s offer in consideration to all its terms.
In the case of Anna v Wicks Leasing; where Wicks contacted Anna and exchanged her £100,000 pa imaging machinery for a £50,000 pa machine on the agreement that her missed October 2003 payment would be forgone and Wicks could lease the machine to another company for £130,000. This failed and now Wicks are asking Anna to take delivery of the original machine, return the new machine and pay the October 2003 payment. When Wicks contacted Anna and put forward the new offer they had come to an agreement with Anna with full intention on both parts to create legal relations.
The principles of Carlill v Carbolic Smoke Ball Co [1893} apply here, as the case demonstrates that acceptance is confirmed when all acts of the agreement are performed. Acceptance was communicated when Anna took deliverance of the £50,000 pa machine and Wicks returned the original £100,000 pa machine, and consideration of terms had been placed from both contractors.
In order for a contract to be valid the parties involved in the offer must have reached an agreement, with full intention on both parts to create legal relations, giving rise to obligations that are enforceable by law. Anna, through her candle manufacturing business, has entered a number of contractual situations. In all her contracts it can be proven that an agreement has been reached between the two parties, in a form that is recognised as valid by the law. There has always been a valid intention, on both sides, to become legally bound by there actions. And an acceptance has been communicated between Anna and the second party.
It is not always as easy to outline a contract in the terms of ‘offer and acceptance’. As outlined above in the case of Gibson v Manchester City Council, [1978], per Lord Denning MR.
By giving Anna the proper legal advice, using relevant case law, her legal position on all six contracts become clear and less void. All of Anna’s problems, which arouse in February 2004 can be cleared using the main principles of defining a legally binding contract; that is agreement, intention and acceptance. Using these principles any breach of contract made by any of Anna’s contacts has be identified and can be rectified.
Word Count; 1963
