Law of Contract Example considering invitation to treat, offer and acceptance, intoxication of alcohol and revocation of an online purchase.
by emmaduncan07gmailcom (student)
BS2153 Law of Contract
Assessment Component 1
Student Matriculation No.: 1508147
Course/Year of Study: Law and Management Stage 2
Word count*: 1698
The issues that are to be analysed within this problem are, invitation to treat, offer and acceptance, intoxication of alcohol and revocation.
An offer is a proposal from one party with the intention to be legally bound in such definite terms that, if it is accepted, a legally binding contract will be formed. An offer is the key ingredient to any analysis of contract formation. Without an offer, there will never be a contract. There are often many different communications at the negotiation stage between the parties. The courts are asked to look at these objectively to find the point in time when an offer has been made to somebody. However, there are many communications that do not reach the stage of that offer. To constitute an offer we require the subject matter, the price and who the parties are, just to name a few. However, there are many things that are being said that do not quite reach that standard and which the law labels an invitation to treat. The purpose of an invitation to treat is to invite others to make an offer which can then be accepted by the person who made the invitation.
As a general rule, an advertisement is only an invitation to treat even if it calls itself an offer and quotes a price. There are certain situations that are held to be invitations to treat rather than offers. These being; goods in shop windows, goods on display in self-service stores, offers to the public at large or advertisements and quotations. For example, the case of Harvey v Facey was where it was objectively viewed that the communication of ‘I accept’ actually constituted to an offer. However, since the other party did not reply to that statement, the ‘offer’ stood unaccepted, and therefore there was no contract between the parties.
The advertisement of the double-decker bus on the ‘garthdon-jumbles.eu’ website was purely an invitation to treat. The advertisement provided the style, condition and the price of the bus but nothing more that would convert it into an offer. An invitation to treat cannot be accepted in the contract law sense and lead to a contract. Only a response to an invitation to treat is an offer, which in turn, can then be accepted by the person who stated the invitation to treat.
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At this stage within the case neither an offer or an acceptance has been made and therefore, no contract has been formed.
The next issue within this case is at what point an offer and acceptance was made between the parties.
For a valid contract or agreement to be formed there must be an offer, an acceptance which meets the offer and an intention to be legally bound. The Lord Prosser stated within the case of Dawson International plc v Coats Paton plc that a ‘statement by one party that he will do some particular thing will normally be construed as obligatory, or as an offer rather than as a mere statement of intention, if the words and deeds of the other party indicate that the statement was so understood’. The Lord Prosser later goes on to say that on viewing the particular facts it ‘can be said to reveal consensus and an intention to conclude a contract’.
It has been said that an offer is nothing until it is communicated to the offeree. Just like an acceptance, which generally becomes legally effective only once it has been communicated to the offeror. Modes of communication of acceptance are treated by law as instantaneous and become legally effective on receipt by the party who made the offer in the first place. An example that illustrates which parties carry out the offer and acceptance of an advertisement can be seen in the case of Partridge v Crittenden. This case involved an advertisement in a newspaper offering birds for sale. There was a question of who makes the offer and who makes the acceptance within this case. The courts held that the party who wants to buy the particular thing in the advert is who makes the offer and the seller is the party who accepts the offer. Therefore, allowing the seller to be in control.
In the case at hand Ben had unknowingly followed the order process of purchasing a product online. During a previous purchase Ben had saved his personal and payment details in order to speed up the process the next time he was purchasing from the website. He then, unbeknown to him, placed the double-decker bus in his shopping basket instead of simply adding it to his own personal wish list, before proceeding to the checkout. This process is said to replicate the same process of purchasing products within a shop. And so, in this case Ben would have in fact made an offer to buy as he replied to the invitation to treat on the website. Thus, establishing the first criteria needed to form a valid contract. The seller’s response via text confirming his acceptance of Ben’s offer forms the second essential criteria of a contract. Lastly, intention to be legally bound could be said to have occurred when Ben confirmed that he accepted the website and seller’s Terms & Conditions.
In conclusion, taking an objective view to these facts it would be apparent that the criteria for a valid contract to be formed has been met. However, because Ben was heavily intoxicated with alcohol at the time of the purchase, the circumstances and validity of the contract may change.
This issue within the case is whether intoxication of alcohol can affect the validity of a contract.
Erskine says ‘Persons while in a state of absolute drunkenness and consequently deprived of the exercise of reason, cannot oblige themselves, but a lesser degree of drunkenness which only darkens reason, has not the effect of annulling the contract’. From this statement, it is understood that the level of intoxication must be to a point where the accused is unaware of the legal consequences of entering into that contract. If this level of intoxication can be proven, it will establish that the contract violates one of the contract law basics, specifically that the parties to the contract must genuinely assent to enter the contract. Although, it can be extremely difficult to prove the level of intoxication of the accused after the event has taken place. However, if the courts have ruled that a contract is voidable due to the contracted party’s intoxication then the intoxicated individual has the right to disaffirm the contract, or say that it never existed. A similar scenario to the case in question is presented in the case of Pollock v Burns. This case involved the purchase of a pair of cobs and a brown horse which was bought on credit. However, at the time of the purchase Mr Pollock was in a state of intoxication and was not conscious of what he was doing. The Lord Justice Clerk Moncrieff stated that ‘where the plea of intoxication is taken by the person who says he was intoxicated and incapable when he did the act which he wishes to repudiate, he is bound, the moment his sober senses return and he knows what he has done, to take his ground at once. That is essential’.
Analysing the case in question it is evident that Ben became heavily intoxicated at the time he made the purchase of the double-decker bus. Ben was unaware of his actions during this time and he certainly wasn’t aware of the legal consequences of entering into the contract. To prove his level of intoxication Ben would have to go through with a medical examination. This would then prove that during the time of the purchase, Ben had no intention to be legally bound by the contract. Referring to the Lord Justice Clerk’s statement, Ben took his ground at once by replying to the email straight away explaining how the purchase was a mistake.
On considering these facts, the likely outcome would be that the court would rule the contract as voidable and therefore releasing Ben from any of the contractual arrangements.
The final issue within this case is whether Ben is able to revoke his offer that he made to the seller.
The general rule is that an offer can be revoked at any time before the offer has been accepted. The party who wishes to revoke their offer must do so by taking reasonable steps to bring the revocation to the offeree’s notice. The revocation of the offer only becomes effective when it reaches the offeree. Communication of the revocation is substantial and this can be seen in the case of Burnley v Alford. This case involved a group of solicitors who went on a shooting weekend. Whilst they were out of the office, they had ignored all of their business communications. The court held that the letters they failed to open but had received was sufficient communication for the purposes of contract formation. The courts came to this conclusion because it is expected that communications are to be looked at. Another example of this can be seen in the case of McMillan v Caldwell. It was held within this case that a formal written offer to purchase or sell heritable property could be withdrawn verbally, even if error was not an issue, as long as notice of withdrawal was communicated to the other party before an acceptance of the offer had been sent.
Looking at the facts of the case in question it is apparent that Ben was too late in revoking his offer as it had already been accepted by the seller. This would suggest that a valid contract was created between the parties.
On taking an objective approach to the facts of this case the contract would stand. However, for Ben to be released from the contractual agreement he could go down the path of intoxication of alcohol. As a result of his excessive consumption of alcohol it would be said that he had lost his ability to contract as he was deprived of his exercise of reason. Where capacity is lost for these reasons, any purported contract is null.
Erskine J, An Institute of the Law of Scotland (Volume 2, Edinburgh, 1828)
MacQueen HL & Thomson J, Contract Law in Scotland (3rd edn, Bloomsbury Professional Limited, 2012)
Table of Cases
Burnley v Alford 1919 2 SLT 123
Carlill v The Carbolic Smokeball Co Ltd  1 QB 256
Dawson International plc v Coats Paton plc 1993 SLT 80
Harvey v Facey  AC 522
McMillan v Caldwell 1991 SLT 325
Partridge v Crittenden  1 WLR 1204; 2 All ER 421
Pollock v Burns (1875) 2 R 497
 Hector L MacQueen & Joe Thomson, Contract Law in Scotland (3rd edn, Bloomsbury Professional Limited 2012) 46
 Hector L MacQueen & Joe Thomson, Contract Law in Scotland (3rd edn, Bloomsbury Professional Limited 2012) 46
  AC 522
 1993 SLT 80
 1993 SLT 80 at 95
 Hector L MacQueen & Joe Thomson, Contract Law in Scotland (3rd edn, Bloomsbury Professional Limited 2012) 49
 1968 1 WLR 1204; 2 All ER 421
 John Erskine, An Introduction of the Law of Scotland (Volume 2, Edinburgh, 1828) 593
 (1875) 2 R 497
 Ibid 9
 1919 2 SLT 123
 1991 SLT 325
 1991 SLT 325 at 329
 Hector L MacQueen & Joe Thomson, Contract Law in Scotland (3rd edn, Bloomsbury Professional Limited 2012) 155