The rules of offer and acceptance are rigorously applied as shown by their application in everyday transactions which are difficult to fit within the offer and acceptance framework. Examples of transactions which give rise to difficulty are boarding a bus and buying goods in a supermarket. The courts established in Fisher v Bell and Pharmaceutical Society of Great Britain v Boots Cash Chemists that display of goods constitutes an invitation to treat so the offer is made by the customer when he presents the goods at the cash desk, where the offer may be accepted by shopkeeper, even though this does not appear to be the case in actual life. Regarding boarding a bus, Lord Greene in Wilkie v London Passenger Transport Board stated that the offer was made by the bus company and that it was accepted when a passenger ‘puts himself either on the platform or inside the bus’. This argument leads to difficulties as a person can stand on the platform or inside the bus and then change their mind about taking the bus, and also any exclusionary clauses must be clearly stated at this time, as stated in Thorton v Shoe Lane Parking. However, the judgments of these unclear transactions show the courts’ desire to rigorously apply the rules of offer and acceptance.
However, there are examples of the courts not applying the established rules of offer and acceptance. The principal English authority on the general rule that acceptance of an offer will not be implied from mere silence is Felthouse v Bindley. However in the case of Vitol SA v Norelf Ltd Lord Steyn recognised that this is not an absolute rule as ‘our law does in exceptional case recognise acceptance of an offer by silence’. If the letter of acceptance is lost in the post, and therefore has not been communicated, a contract has been concluded nevertheless because the acceptance takes effect when it is posted and not when it reaches the offeror; this was held to be the case in Household Fire Insurance v Grant . In unilateral contracts acceptance can be made by performing the requested act without need to give advance notification of acceptance, as in reward cases and Carlill v Carbolic Smoke Ball, where it was held that the advertisement was an offer to the whole world and that it was accepted by those who performed the condition ‘on the faith of the advertisement’, so no acceptance was communicated.
The rules of offer and acceptance are not always applied by courts; Lord Denning tried to challenge the traditional approach. The traditional formula of offer and acceptance was challenged in the case of Butler Machine Tool Co Ltd v Ex-Cell-O Corporation Ltd where Lord Denning rejected the traditional mirror image approach to contractual formation, holding it to be ‘out of date’. He stated that a ‘better way is to look at all the documents passing between the parties and glean from them, or from the conduct of the parties, whether they have reached agreement on all material points.’ He also held that, even where the terms used by the parties were mutually contradictory, it was possible for a court to ‘scrap’ the terms replace them by a ‘reasonable implication’. He maintained this view in Gibson v Manchester City Council in the Court of Appeal where he held that a contract had been concluded because there was agreement between the parties on all material points, even though there was not a clear offer and acceptance; ‘to my mind it is a mistake to think that all contracts can be analysed into the form of offer and acceptance’. These cases show that judges can and do differ in the results which they reach in the interpretative exercise of identifying when preliminary negotiations end and a definite offer is made, so the established rules are not always rigorously applied.
In conclusion, courts do rigorously apply the established rules of offer and acceptance to a great extent. Although there is flexibility in unilateral contracts and there have been judgments which have implied an acceptance from silence these are very much exceptional cases. Attempts by Lord Denning to reform the approach to the rules of offer and acceptance to include the whole negotiation are notable, but were ultimately unsuccessful. Judges are keen to apply the traditional rules, as shown by their application in everyday transactions in which the rules of offer and acceptance are not immediately clear. Although there have been exceptions, the established rules of offer and acceptance governing the formation of contracts are rigorously applied by the courts in the vast majority of cases.
