COMMERCIAL LAW 1COMMERCIAL LAW 12011/2012 ACADEMIC YEAR 2011/2012 ACADEMIC YEAR

LECTURE 1LECTURE 1UGBS, UGBS,

2323RDRD AUG 2011 AUG 2011

Rowland Atta-Kesson Esq.Rowland Atta-Kesson Esq.

OUTLINEOUTLINE• DEFINITION OF CONTRACTSDEFINITION OF CONTRACTS– Ascertaining agreementAscertaining agreement– Bargain Bargain

• CLASSIFICATION OF CONTRACTSCLASSIFICATION OF CONTRACTS– Voidable, void and unenforceable Voidable, void and unenforceable – Executed and executory Executed and executory – Specialty and simple Specialty and simple

• FORMATION OF CONTRACT FORMATION OF CONTRACT – OfferOffer– Acceptance Acceptance

DEFINITITION OF DEFINITITION OF CONTRACTCONTRACT• TreitelTreitel (1995) (1995)

The Law of The Law of ContractContract

• Contract is:Contract is:– An An agreementagreement giving rise giving rise

to obligations which are to obligations which are enforced or recognized enforced or recognized by law.by law.• The factor which The factor which

distinguishes contractual distinguishes contractual from other legal from other legal obligations is that they are obligations is that they are based on the agreement of based on the agreement of the contracting parties. the contracting parties.

• Anson, Anson, Principles of the Principles of the Law of ContractLaw of Contract

• Contract is:Contract is:– A legally binding A legally binding

agreementagreement made btn 2 made btn 2 or more persons, by or more persons, by which rights are acquired which rights are acquired by one or more to acts or by one or more to acts or forbearances on the part forbearances on the part of the other or others of the other or others

• What is common to the 2 What is common to the 2 definitions?definitions?–The answer is The answer is AGREEMENT AGREEMENT

• Now, the question is;Now, the question is;–At what point does At what point does agreement actually agreement actually materializes? materializes? •This answer = This answer = objectiveobjective ≠ ≠ subjective subjective

ASCERTAINING ASCERTAINING AGREEMENTAGREEMENT

• What is the objective test?What is the objective test?–THE LEONIDAS D, per Lord Goff THE LEONIDAS D, per Lord Goff • ““if one party if one party O O so acts that his so acts that his conduct, objectively considered, conduct, objectively considered, constitutes an offer, and the other constitutes an offer, and the other party party AA, believing that the conduct of , believing that the conduct of O O represents his actual intention, represents his actual intention, accepts accepts OO’s offer, then a contract will ’s offer, then a contract will come into existence, and on those come into existence, and on those facts it will make no difference if facts it will make no difference if OO did not in fact intend to make an did not in fact intend to make an offer…”offer…”

• THE LEONIDAS D case teaches us THE LEONIDAS D case teaches us that agreement is not a mental that agreement is not a mental state but an act and can therefore state but an act and can therefore be inferred from conduct. be inferred from conduct.

• The objective test =The objective test =• parties are not judged by what they parties are not judged by what they

actually had in mind actually had in mind • but by objective meanings of their but by objective meanings of their

wordswords and and conduct. conduct. • The subjective test=The subjective test=• Ascertaining the intentions of Ascertaining the intentions of

the .parties from their the .parties from their actual state actual state of mind. of mind.

• But should we insist on the But should we insist on the objective test where A knows of objective test where A knows of O’s intention or where A would O’s intention or where A would suffer hardship? suffer hardship? – The answer is NO. The answer is NO.

• where A knows that O’s actual state of where A knows that O’s actual state of mind was not in accordance with the mind was not in accordance with the objective appearance created by O’s objective appearance created by O’s conduct, the objective test will not apply. conduct, the objective test will not apply.

• Moreover the objective test will not apply Moreover the objective test will not apply when the results would be to cause when the results would be to cause hardship to the other party. hardship to the other party. – E.g. where the apparent acceptance of party is E.g. where the apparent acceptance of party is

based on mistake which has been induced by based on mistake which has been induced by the negligent acts of the other. the negligent acts of the other. » The case in support of this principle is The case in support of this principle is

GOLDEN BEAR GOLDEN BEAR

HOW THE OBJECTIVE HOW THE OBJECTIVE TEST APPLIESTEST APPLIES

• In applying the objective test the In applying the objective test the court considers what the parties court considers what the parties said or did and said or did and

• how it would have been how it would have been understood by a understood by a reasonable reasonable objective bystander objective bystander and and

• impute that intention to the impute that intention to the parties rather than seeking to parties rather than seeking to establish what is the actual state establish what is the actual state of mind of the parties. of mind of the parties.

• In SMITH v. HUGHES, Blackburn In SMITH v. HUGHES, Blackburn J. stated that; J. stated that; – ““if whatever a man’s if whatever a man’s real intention real intention

may be, he so may be, he so conductsconducts himself that himself that a a reasonable man reasonable man would believe would believe that he was assenting to the terms that he was assenting to the terms proposed by the other party, and proposed by the other party, and that other party upon that belief that other party upon that belief enters into a contract with him, the enters into a contract with him, the man thus conducting would be man thus conducting would be equally be bound as if he intended equally be bound as if he intended to agree to the other party’s to agree to the other party’s terms”. terms”.

• In SMITH v. HUGHES, In SMITH v. HUGHES, • the defendant, a racehorse owner, wished to the defendant, a racehorse owner, wished to

purchase a quantity of oats. purchase a quantity of oats. • A sample of the oats was inspected and the A sample of the oats was inspected and the

defendant agreed to purchase the whole defendant agreed to purchase the whole amount. amount.

• When the oats were delivered it was discovered When the oats were delivered it was discovered they were ‘green’, that is, that season’s oats. they were ‘green’, that is, that season’s oats.

• The defendant refused to pay for them, saying The defendant refused to pay for them, saying he thought he was buying ‘old’ or the last he thought he was buying ‘old’ or the last season’s oats. season’s oats.

• When sued for the price the defendant argued When sued for the price the defendant argued that the contract was void for mistake. that the contract was void for mistake.

• The court held that on an objective test basis The court held that on an objective test basis there was a valid contract. there was a valid contract.

• On a finding of fact the seller had not On a finding of fact the seller had not misrepresented the oats as being old nor was misrepresented the oats as being old nor was there any suggestion that there was a term of there any suggestion that there was a term of the contract to this effect. the contract to this effect. The purchaser could The purchaser could not establish mistake on the basis of the fact not establish mistake on the basis of the fact that he had been careless and as a result misled that he had been careless and as a result misled himself as to the nature of the oatshimself as to the nature of the oats

• SCRIVEN BROS & CO. v. HINDLEY & CO. SCRIVEN BROS & CO. v. HINDLEY & CO. • the defendants wanted to buy hemp, sold by plaintiffs at the defendants wanted to buy hemp, sold by plaintiffs at

auction sale. auction sale. • 2 lots were put up 4 sale from the same ship;2 lots were put up 4 sale from the same ship;

• One lot = hemp and another = tow, One lot = hemp and another = tow, • Identification marks on the bales were precisely the same. Identification marks on the bales were precisely the same. • Closer examination could revealed the distinction, Closer examination could revealed the distinction,

• the defendants, inspected 1the defendants, inspected 1stst lot and saw hemp, lot and saw hemp, • They mistakenly thought the 2They mistakenly thought the 2ndnd lot = also hemp. lot = also hemp. • The auction catalogue itself did not reveal the distinction and The auction catalogue itself did not reveal the distinction and

so the defendants paid a high price for 2so the defendants paid a high price for 2ndnd lot , which they lot , which they thought was hemp. thought was hemp.

• They would have paid a lower price for it, if they had knew it They would have paid a lower price for it, if they had knew it was tow was tow

• At the time of the sale, the auctioneer realized that the At the time of the sale, the auctioneer realized that the defendants had made a mistake, about the market value of defendants had made a mistake, about the market value of the tow rather than as to the nature of the lot per se. the tow rather than as to the nature of the lot per se.

• The defendants refused to pay, alleging mutual mistake. The defendants refused to pay, alleging mutual mistake. • On applying the objective test the court found that one could On applying the objective test the court found that one could

not state with any degree of certainty which commodity not state with any degree of certainty which commodity formed the basis of the contract since it was clear that a formed the basis of the contract since it was clear that a reasonable person would have been misled as the nature of reasonable person would have been misled as the nature of each lot. each lot.

• The contract was thus held to be void for mistake.The contract was thus held to be void for mistake.

–Advantages of the objective testAdvantages of the objective test

• It is impossible to ascertain the It is impossible to ascertain the actual state of mind of the actual state of mind of the parties. parties.

• For instance in 1714 Friar C.J. For instance in 1714 Friar C.J. said that even the devil does said that even the devil does not know what is in the mind of not know what is in the mind of a person.a person.

• It ensures certainty of It ensures certainty of contractual transactions. SMITH contractual transactions. SMITH v. HUGHESv. HUGHES

–Applicable Situation 1 Applicable Situation 1

• If a reasonable observer of the If a reasonable observer of the promisor’s conduct would have promisor’s conduct would have supposed that the promisee supposed that the promisee did suppose that the promisor did suppose that the promisor was making a particular was making a particular promise, then the promisor promise, then the promisor would be bound by that would be bound by that promise even if it turns out promise even if it turns out that he intended something that he intended something else. else. TAMPLIN v. JAMES, TAMPLIN v. JAMES,

• Applicable Situation 2 Applicable Situation 2 • If words used are capable of two If words used are capable of two

different but equally reasonable different but equally reasonable interpretations and the parties interpretations and the parties equally misunderstood each other equally misunderstood each other with neither party intending to with neither party intending to mislead the other, the court would mislead the other, the court would hold that there is no contract hold that there is no contract because there is no correspondence because there is no correspondence of offer and acceptance. RAFFLES v. of offer and acceptance. RAFFLES v. WICHELHAUSWICHELHAUS

• There is yet no contract even if the There is yet no contract even if the ambiguity was caused by one of the ambiguity was caused by one of the parties. FALCK v. WILLIAMS. parties. FALCK v. WILLIAMS.

• Applicable Situation 3 Applicable Situation 3

• Where one party is misled by the Where one party is misled by the conduct of the other into conduct of the other into misunderstanding the nature of misunderstanding the nature of the offer, the party whose the offer, the party whose conduct misled the other cannot conduct misled the other cannot enforce the contract in the sense enforce the contract in the sense in which he intended it. SCRIVEN in which he intended it. SCRIVEN BROS & CO. v. HINDLEY & CO.BROS & CO. v. HINDLEY & CO.

• Applicable Situation 4Applicable Situation 4

• Where the offeree knows that the Where the offeree knows that the offer as stated does not contain the offer as stated does not contain the real intention of the offeror but seeks real intention of the offeror but seeks to take advantage of the error, the to take advantage of the error, the law will not allow the offeree to law will not allow the offeree to enforce the contract in that mistaken enforce the contract in that mistaken sense. HARTOG v. COLIN AND SHIELDSsense. HARTOG v. COLIN AND SHIELDS

• Note: by the objective test Note: by the objective test • the courts are not concerned about one the courts are not concerned about one

party’s unilateral undisclosed and private party’s unilateral undisclosed and private misconceptions about the quality of the misconceptions about the quality of the subject matter of the contract as long as subject matter of the contract as long as such misconception was not caused by the such misconception was not caused by the other party’s words or conduct. other party’s words or conduct. SMITH v. SMITH v. HUGHESHUGHES

• Applicable Situation 5Applicable Situation 5

• Where the parties are agreed on Where the parties are agreed on the same terms with respect to the same terms with respect to the same subject matter, they the same subject matter, they would be bound by the contract would be bound by the contract they have made even if theythey have made even if they harbouredharboured in their minds some in their minds some mistaken acceptance about the mistaken acceptance about the quality of the subject matter. quality of the subject matter. FREDERICK E. ROSE (LONDON) FREDERICK E. ROSE (LONDON) LTD v. WILLIAM H PIM JNR & CO., LTD v. WILLIAM H PIM JNR & CO., LTD. LTD.

BARGAINBARGAIN• From the definitions, we ALSO see that;From the definitions, we ALSO see that;

– there must be an there must be an agreement agreement , and , and – there must also be the presence of a there must also be the presence of a bargainbargain

• If not, any promise could give rise to a If not, any promise could give rise to a binding obligation. binding obligation.

• But a promise is not binding unless it is But a promise is not binding unless it is either made either made – under under sealseal (specialty contract) or (specialty contract) or – supported by supported by considerationconsideration. (simple . (simple

contract)contract)• Anson’s definition, indicates that there Anson’s definition, indicates that there

must be a degree of must be a degree of quid pro quo quid pro quo to to establish the contractestablish the contract

• This means each party must ‘buy’ the This means each party must ‘buy’ the promise of the other party promise of the other party

• To illustrate this point, let’s take To illustrate this point, let’s take the ff e.g.the ff e.g.– ““I promise to give you GH¢500 if you I promise to give you GH¢500 if you

promise to give me your car”. promise to give me your car”.

• NOW let’s sum up on this point. NOW let’s sum up on this point. – In In simple contracts, simple contracts, one must establish one must establish

the existence of a the existence of a BARGAIN BARGAIN – A bare promise such as “I promise to A bare promise such as “I promise to

give you GH¢500” is not enforceable, give you GH¢500” is not enforceable, being simply a bare promise or being simply a bare promise or nudum nudum pactum.pactum.

– Another factor is INTENTION to enter Another factor is INTENTION to enter into legal relationship into legal relationship

CLASSIFICATION OF KCLASSIFICATION OF K• Void, Voidable and Unenforceable Void, Voidable and Unenforceable

ContractsContracts• A A voidvoid contract contract

– has no binding effect at all and in reality has no binding effect at all and in reality the expression is a contradiction terms. the expression is a contradiction terms.

• A A voidablevoidable contract contract – is binding but one party has the right, at is binding but one party has the right, at

his option, to set it aside. his option, to set it aside. • An An unenforceableunenforceable contract contract

– is valid in all respects except that it cannot is valid in all respects except that it cannot be enforced in a court of law by one or be enforced in a court of law by one or both of the parties should the other refuse both of the parties should the other refuse to carry out his obligations under it. to carry out his obligations under it. • E.g. contracts of guarantee are unenforceable E.g. contracts of guarantee are unenforceable

unless evidenced in writing.unless evidenced in writing.

• Executed and Executory contractsExecuted and Executory contracts– A contract is said to be A contract is said to be executedexecuted

• when one or both of the parties have done when one or both of the parties have done all that the contract requires. all that the contract requires.

– A contract is said to be A contract is said to be executoryexecutory • when the obligations of one or both of the when the obligations of one or both of the

parties remain to be carried out. parties remain to be carried out. – For example, if A and B agree to exchange A’s For example, if A and B agree to exchange A’s

Mercedes Benz for B’s BMW and do it Mercedes Benz for B’s BMW and do it immediately, the immediately, the possession possession of the goods and of the goods and the the rightright to the goods are transferred to the goods are transferred togethertogether and the contract is and the contract is executed. executed.

– If they agree to exchange the following week the If they agree to exchange the following week the rightright to the goods is transferred but not the to the goods is transferred but not the possession possession and the contract is and the contract is executoryexecutory. .

– Thus an Thus an executed executed contract conveys a contract conveys a chose in possessionchose in possession, while an executory , while an executory contract conveys a contract conveys a chose in actionchose in action..

• Specialty contractsSpecialty contracts– Specialty contracts are also called deeds.Specialty contracts are also called deeds.

–A deed has certain characteristics A deed has certain characteristics which distinguish it from a simple which distinguish it from a simple contract:contract:• (a) Merger. (a) Merger.

– If a simple contract is afterwards embodied in a deed If a simple contract is afterwards embodied in a deed made between the same parties, the simple contract made between the same parties, the simple contract merges into, or is swallowed up by the deed, for the deed merges into, or is swallowed up by the deed, for the deed is the superior document. is the superior document.

– The deed is then the only contract between the parties. The deed is then the only contract between the parties. – But if the deed is only intended to cover part of the terms But if the deed is only intended to cover part of the terms

of the previous simple contract, there is no merger of that of the previous simple contract, there is no merger of that part of the simple contract not covered by the deed.part of the simple contract not covered by the deed.

• (b) Limitation of Actions. (b) Limitation of Actions. – The right of action under a specialty contract is barred The right of action under a specialty contract is barred

unless it is brought within 12 years from the date when unless it is brought within 12 years from the date when the cause of action arises on it, i.e. when the deed could the cause of action arises on it, i.e. when the deed could first have been sued upon, which is in general when one first have been sued upon, which is in general when one party failed to carry out a duty under it. party failed to carry out a duty under it.

• (c) Consideration is not essential to (c) Consideration is not essential to support a deed, support a deed, – though specific performance, which requires a though specific performance, which requires a

party in default to actually carry out the contract party in default to actually carry out the contract as distinct from paying damages, will not be as distinct from paying damages, will not be granted if the promise is gratuitous. granted if the promise is gratuitous.

– Simple contracts must be supported by Simple contracts must be supported by consideration.consideration.

• (d)Estoppel. (d)Estoppel. – Statements made in a deed tend to be conclusive Statements made in a deed tend to be conclusive

against the party making them, and although he against the party making them, and although he might be able to prove there were not very true, might be able to prove there were not very true, the rule of evidence called ‘estoppel’ will prevent the rule of evidence called ‘estoppel’ will prevent him from doing this by excluding the very him from doing this by excluding the very evidence which would be needed. evidence which would be needed.

– In modern law, however, a deed does not operate In modern law, however, a deed does not operate as estoppel where one of the parties wishes to as estoppel where one of the parties wishes to bring evidence to show fraud, duress, mistake, bring evidence to show fraud, duress, mistake, lack of capacity or illegality.lack of capacity or illegality.

– E.g. of specialty contracts = a lease of E.g. of specialty contracts = a lease of more than three years, more than three years, • Section 2 of the Conveyancing Decree, 1973 (NRCD Section 2 of the Conveyancing Decree, 1973 (NRCD

175) gets rid of the requirement for sealing where a 175) gets rid of the requirement for sealing where a deed is entered into by an individual. deed is entered into by an individual.

• The signature of the individual making the deed must The signature of the individual making the deed must be witnessed and attested. be witnessed and attested.

• The attestation consists of a statement that the deed The attestation consists of a statement that the deed has been signed in the presence of a witness. has been signed in the presence of a witness.

• The section also provides that it must be clear on the The section also provides that it must be clear on the surface that is intended to be a deed or conveyance. surface that is intended to be a deed or conveyance.

– For companies, For companies, • Under sections 140 and 144(1)(b) of the Under sections 140 and 144(1)(b) of the

Companies Code, 1963 (Act 179): a company may Companies Code, 1963 (Act 179): a company may continue to execute documents by putting its continue to execute documents by putting its common seal on them, common seal on them,

• sealing is not required where a person, duly sealing is not required where a person, duly authorized, signs a conveyance on behalf of a authorized, signs a conveyance on behalf of a company registered under Act 179 (see also company registered under Act 179 (see also section 2 of the Contracts Act, 1960 (Act 25))section 2 of the Contracts Act, 1960 (Act 25))

• Simple contracts Simple contracts ≡ ≡ parol contracts. parol contracts. – Simple contracts ≤ Simple contracts ≤

• contracts not by deed, and for their contracts not by deed, and for their enforcement they require consideration. enforcement they require consideration.

– Simple contracts may be made Simple contracts may be made • orally or orally or • in writing, or in writing, or • inferred from the conduct of the parties; inferred from the conduct of the parties;

– but no but no simple contractsimple contract can exist can exist which does not arise from a valid offer which does not arise from a valid offer and a valid acceptance supported by and a valid acceptance supported by consideration. consideration.

– when these elements exist, the when these elements exist, the contract is valid in the absence of contract is valid in the absence of some defect such as lack of capacity some defect such as lack of capacity of one of the parties, lack of reality of of one of the parties, lack of reality of consent, or illegality or impossibility consent, or illegality or impossibility of performance.of performance.

FORMATION OF FORMATION OF CONTRACTCONTRACT

• Classical approach to formation of K:Classical approach to formation of K:– OFFER OFFER + + ACCEPTANCEACCEPTANCE = = AGREEMENTAGREEMENT

• In other words, the essential validity of In other words, the essential validity of contract = ff:contract = ff:1.1.There must be an There must be an offeroffer and and acceptanceacceptance, which in , which in

effect is theeffect is the agreement agreement. . 2.2.There must be an There must be an intention to create legal intention to create legal

relationsrelations3.3.There is a requirement of There is a requirement of written formalities written formalities in in

some casessome cases4.4.There must be There must be considerationconsideration (unless the (unless the

agreement is by deed)agreement is by deed)5.5.The parties must have The parties must have capacitycapacity to contract to contract6.6.There must be genuineness of consent by the There must be genuineness of consent by the

parities to the terms of the contractparities to the terms of the contract7.7.The contract must not be The contract must not be contrary to public policycontrary to public policy

• In the absence of one or more of these In the absence of one or more of these essentials, the contract may be essentials, the contract may be voidvoid, , voidablevoidable, or , or unenforceableunenforceable

OFFER • An offer is a statement or conduct An offer is a statement or conduct

indicating willingness to contract indicating willingness to contract on terms stated or on terms on terms stated or on terms which can reasonably be inferred which can reasonably be inferred from conduct. from conduct.

• An offer can be made to a An offer can be made to a particular individual or to a group particular individual or to a group or a class of persons or to the or a class of persons or to the world at large. CARLILL v. world at large. CARLILL v. CARBOLIC SMOKE BALL COCARBOLIC SMOKE BALL CO

• In CARLILL v. CARBOLIC SMOKE BALL CO In CARLILL v. CARBOLIC SMOKE BALL CO Bowen L.J. stated:Bowen L.J. stated:– ““Although the offer is made to the world, Although the offer is made to the world,

the contract is made with that limited the contract is made with that limited portion of the public who come forward and portion of the public who come forward and perform the condition on the faith of the perform the condition on the faith of the advertisementadvertisement””

• Also in CARLILL, the defendants Also in CARLILL, the defendants contended that the plaintiff had not contended that the plaintiff had not accepted their offer and therefore there accepted their offer and therefore there was no was no consensus ad idem consensus ad idem and thus no and thus no agreement. agreement.

• This defence, which was rejected, This defence, which was rejected, exposes the fact that offers may arise in exposes the fact that offers may arise in two forms, either two forms, either bilateralbilateral or or unilateralunilateral..

• A bilateral offer arises A bilateral offer arises –where one party promises to do where one party promises to do

something for a promise made by something for a promise made by the offeree. the offeree.

–Both parties are agreeing to do Both parties are agreeing to do something in return for some something in return for some reciprocal promise from the other. reciprocal promise from the other. • An example of such offer would be if An example of such offer would be if A promises to sell his car in return A promises to sell his car in return for B promising to pay him GHfor B promising to pay him GH¢50,000.00. ¢50,000.00.

–The vast majority of offers are of The vast majority of offers are of this type.this type.

• A unilateral offer occurs A unilateral offer occurs – where one party, where one party, the offerorthe offeror, ,

promises to pay for the act of promises to pay for the act of another, that is, a conditional another, that is, a conditional promise. promise.

– The acceptance of the offer takes The acceptance of the offer takes place when place when the offeree the offeree performs the performs the in act in question. in act in question.

– The offer here is said to be unilateral The offer here is said to be unilateral because only one party is making a because only one party is making a promise. promise.

– The facts of the CARLILL case provide The facts of the CARLILL case provide an obvious example of such an offer.an obvious example of such an offer.

• When does the general offer take When does the general offer take effect to create a power of effect to create a power of acceptance?acceptance?– It must be communicated to the offeree. It must be communicated to the offeree.

• Generally speaking the performance of an act Generally speaking the performance of an act in ignorance of the general offer normally in ignorance of the general offer normally does not constitute an acceptance does not constitute an acceptance

– BUT in GIBBONS v. PROCTOR BUT in GIBBONS v. PROCTOR • a policeman was held entitled to recover a a policeman was held entitled to recover a

reward offered by handbills, for information reward offered by handbills, for information given to the superintendent of information given to the superintendent of information which led to arrest and conviction, although which led to arrest and conviction, although the policeman did not know of the handbills the policeman did not know of the handbills before he sent the information by his agents, before he sent the information by his agents, or before the handbills reached the or before the handbills reached the superintendent. superintendent.

• Once a person knows of a general Once a person knows of a general offer, even if in performing the offer, even if in performing the specific act, he had other motive specific act, he had other motive apart from the offer, his performance apart from the offer, his performance will amount to an acceptance of the will amount to an acceptance of the offer. WILLIAMS v. CARWARDINEoffer. WILLIAMS v. CARWARDINE

• Cross-offers will not create a binding Cross-offers will not create a binding contract when persons make identical contract when persons make identical offers to each other simultaneously offers to each other simultaneously neither party knowing of the other’s neither party knowing of the other’s offer at the time of making his own. offer at the time of making his own. TINN v. HOFFMANTINN v. HOFFMAN

OFFER v INVITE TO OFFER v INVITE TO TREATTREAT

• Elements of offerElements of offer– willingness to contract andwillingness to contract and– made with definite intention to make a made with definite intention to make a

contract binding when accepted. contract binding when accepted. • In this regard, the law distinguishes In this regard, the law distinguishes

between between contractual offer contractual offer and and invitation invitation to treatto treat. .

• Contractual offers are converted as soon Contractual offers are converted as soon as are accepted. as are accepted.

• An invitation to treat is a statement of An invitation to treat is a statement of intention which is only meant to solicit or intention which is only meant to solicit or attract offers from other people and is not attract offers from other people and is not intended to result in any immediate intended to result in any immediate binding obligations.binding obligations.

• Distinction between offer & Distinction between offer & invite to treat = based on invite to treat = based on convenience or expedience for convenience or expedience for the ff commercial practices;the ff commercial practices;– (a) tender notices, (a) tender notices, – (b) display of goods in a shop (b) display of goods in a shop

window with prices attached, window with prices attached, – (c) advertisements of goods for (c) advertisements of goods for

sale, sale, – (d) circulation of catalogue or price (d) circulation of catalogue or price

list and list and – (e) auction notices.(e) auction notices.

• TendersTenders: : –a notice which is stated that a notice which is stated that

goods are sold by tender and goods are sold by tender and inviting people to submit tender inviting people to submit tender for their purchase is an for their purchase is an invitation to treat and not an invitation to treat and not an offer which is accepted when the offer which is accepted when the person submits the highest person submits the highest tender. The tender which tender. The tender which constitutes the offer may or may constitutes the offer may or may not be accepted by the seller. not be accepted by the seller. SPENCER v. HARDINGSPENCER v. HARDING

• Exhibition of goods for Exhibition of goods for salesale: : –A display of goods in a shop A display of goods in a shop with prices marked is not with prices marked is not an offer. It is merely an an offer. It is merely an invitation to treat and it is invitation to treat and it is for the customer to offer to for the customer to offer to buy the goods which offer buy the goods which offer the shopkeeper may or may the shopkeeper may or may not accept. FISHER v. BELLnot accept. FISHER v. BELL

• Self-serviceSelf-service; ; –A display of goods with A display of goods with prices marked on the shelf prices marked on the shelf of a self-service shop is also of a self-service shop is also in law an invitation to treat in law an invitation to treat and not an offer at those and not an offer at those prices. PHARMACEUTICAL prices. PHARMACEUTICAL SOCIETY OF GREAT BRITAIN SOCIETY OF GREAT BRITAIN v. BOOTS CASH CHEMISTS v. BOOTS CASH CHEMISTS (SOUTHERN) LTD(SOUTHERN) LTD

• AdvertisementsAdvertisements; ; – generally advertisements in generally advertisements in

newspapers etc declaring the newspapers etc declaring the availability of goods for sale are availability of goods for sale are deemed in law an invitation to treat deemed in law an invitation to treat and not contractual offer. and not contractual offer. PARTRIDGE v. CRITTENDENPARTRIDGE v. CRITTENDEN

• Circulation of cataloguesCirculation of catalogues: : – The same conclusion was reached in the The same conclusion was reached in the

case of GRAINGER & SON v. GOUGH where case of GRAINGER & SON v. GOUGH where a price list was circulated by a wine a price list was circulated by a wine merchant, though notice declaring that merchant, though notice declaring that deck-chairs were for hire was held in deck-chairs were for hire was held in CHAPELTON v. BARRY as amounting to an CHAPELTON v. BARRY as amounting to an offer.offer.

• Auction salesAuction sales::– An auction notice advertising sale is An auction notice advertising sale is

merely a statement of an intention to merely a statement of an intention to treat and in the absence of fraud an treat and in the absence of fraud an intending purchaser has no right to sue if intending purchaser has no right to sue if the auction is cancelled or the items the auction is cancelled or the items withdrawn. HARRIS v. NICKERSONwithdrawn. HARRIS v. NICKERSON

– Where the goods are sold in lots, each lot Where the goods are sold in lots, each lot put up at the auction sale constitute the put up at the auction sale constitute the subject matter of a separate contract of subject matter of a separate contract of sale. The authority for this is Section 4(1)sale. The authority for this is Section 4(1)(a) of the SALE OF GOODS ACT, 1962 (ACT (a) of the SALE OF GOODS ACT, 1962 (ACT 137)137)

– The auctioneer by putting up the goods The auctioneer by putting up the goods and inviting bids makes an invitation to and inviting bids makes an invitation to treat and not an offer. At the auction treat and not an offer. At the auction sale each bid submitted constitute an sale each bid submitted constitute an offer which the auctioneer may or may offer which the auctioneer may or may not accept. The authority for this point not accept. The authority for this point is PAYNE v. CAVEis PAYNE v. CAVE

– The contract of sale is complete when The contract of sale is complete when the auctioneer announces his the auctioneer announces his acceptance by the fall of the hammer or acceptance by the fall of the hammer or in any other customary manner. Section in any other customary manner. Section 4(1)(b) of ACT 1374(1)(b) of ACT 137

– At any time before the auctioneer At any time before the auctioneer announces his acceptance, the bidder is announces his acceptance, the bidder is entitled to withdraw or revoke his bid. entitled to withdraw or revoke his bid. Section 4(1)(c) of ACT 137Section 4(1)(c) of ACT 137

• There are two kinds of auction sale; There are two kinds of auction sale; • (i) auction sale subject to reserve price and (i) auction sale subject to reserve price and • (ii) auction sale without a reserve price(ii) auction sale without a reserve price

• Auction sale with reserved price; Auction sale with reserved price; • the vendor/seller or his agent is allowed to bid the vendor/seller or his agent is allowed to bid

once only and openly at the beginning of the once only and openly at the beginning of the auction before any other bid is made. Section auction before any other bid is made. Section 4(1)(f) of ACT 137.4(1)(f) of ACT 137.

• It has been held in MCMANUS v. FORTESCUE It has been held in MCMANUS v. FORTESCUE that the auctioneer in an action sale subject to that the auctioneer in an action sale subject to a reserve price is not bound to sell the goods a reserve price is not bound to sell the goods to the highest ‘to the highest ‘bona fide’ bona fide’ bidder if his bid is bidder if his bid is below the notified reserved price and this is so below the notified reserved price and this is so even if the auctioneer accidentally knocks even if the auctioneer accidentally knocks down the goods to him. down the goods to him.

• Section 17(7) of the AUCTION SALES LAW, 1989 Section 17(7) of the AUCTION SALES LAW, 1989 (PNDCL230) is the Ghanaian authority on this (PNDCL230) is the Ghanaian authority on this point.point.

–Auction sale without a reserve price Auction sale without a reserve price • Where there is no minimum price the Where there is no minimum price the law presumes that the seller is prepared law presumes that the seller is prepared to sell the goods to the person who to sell the goods to the person who submits the highest bid no matter what submits the highest bid no matter what that price may be. that price may be. • The general principle is that the highest The general principle is that the highest ‘bona fide’ bidder is entitled to buy the ‘bona fide’ bidder is entitled to buy the goods at the price bid even if the goods at the price bid even if the auctioneer refuses to accept his bid or auctioneer refuses to accept his bid or complete sale. Section 4(1)(d) of ACT complete sale. Section 4(1)(d) of ACT 137. 137. • Neither the seller nor his agent can bid Neither the seller nor his agent can bid at the auction sale. WARLOW v. at the auction sale. WARLOW v. HARRISONHARRISON

COMMUNICATION OF COMMUNICATION OF OFFEROFFER

• Offer cannot take effect until it as Offer cannot take effect until it as been received by the offeree TAYLOR been received by the offeree TAYLOR v LAIRDv LAIRD

• The timing of the communication of The timing of the communication of the offer can be of importance when the offer can be of importance when determining the time within which it determining the time within which it can be accepted by the offeree. can be accepted by the offeree.

• BUT if the offer specifies some date BUT if the offer specifies some date by which the offer must be accepted by which the offer must be accepted and that date has passed when the and that date has passed when the offer is received, the offeree is not offer is received, the offeree is not able to accept the offer.able to accept the offer.

• Similarly, it may be that there has Similarly, it may be that there has been a very long delay in the been a very long delay in the transmission of the offer to the transmission of the offer to the offerree, and in these offerree, and in these circumstances it may well be the circumstances it may well be the case, depending on the subject case, depending on the subject matter of the offer, that the offer matter of the offer, that the offer has in fact lapsed, rendering it has in fact lapsed, rendering it incapable of acceptanceincapable of acceptance

• The problem here is where the The problem here is where the delay in the transmission of the delay in the transmission of the offer is the fault of the offeror offer is the fault of the offeror himself. ADAMS v LINDSELL himself. ADAMS v LINDSELL

OFFER V REQUEST 4 OFFER V REQUEST 4 INFOINFO• HARVEY v. FACEY applt telegram read HARVEY v. FACEY applt telegram read

“will you sell us Bumper Hall Pen? “will you sell us Bumper Hall Pen? Telegraph lowest cash price” respt Telegraph lowest cash price” respt reply read “lowest price for Bumper reply read “lowest price for Bumper Hall pen, Hall pen, ££900.” The applt then 900.” The applt then telgraphed, “we agree to buy Bumper telgraphed, “we agree to buy Bumper Hall Pen for Hall Pen for ££900 asked by you. Please 900 asked by you. Please send us your title deeds in order that send us your title deeds in order that we may get early possession”we may get early possession”

• HELD; respt’s reply was not offer to HELD; respt’s reply was not offer to sell but simply a statement as to the sell but simply a statement as to the minimum price required should he minimum price required should he decide to sell. decide to sell.

COMMUNICATION OF COMMUNICATION OF OFFEROFFER• Offer takes effect only when it has been received by Offer takes effect only when it has been received by

offeree TAYLOR v LAIRDofferee TAYLOR v LAIRD

• Timing of the communication of the offer can be Timing of the communication of the offer can be very important when determining the time within very important when determining the time within which the offeree has to accept which the offeree has to accept

• TAYLOR v LAIRD establishes the principle that TAYLOR v LAIRD establishes the principle that acceptance can only take place when the offer has acceptance can only take place when the offer has been received; however, if the offer specifies some been received; however, if the offer specifies some date by which the offer must be accepted and that date by which the offer must be accepted and that date has passed when the offer is received, then the date has passed when the offer is received, then the offeree is to able to accept the offer. offeree is to able to accept the offer.

• Similarly, it may be that there has been a very long Similarly, it may be that there has been a very long delay in the transmission of the offer to the delay in the transmission of the offer to the offeree, , and in these circumstances it may well be offeree, , and in these circumstances it may well be the case, depending on the subject matter of the the case, depending on the subject matter of the offer, that the offer has in fact lapsed, rendering it offer, that the offer has in fact lapsed, rendering it incapable of acceptance. incapable of acceptance.

• But in ADAMS v LINDSELL But in ADAMS v LINDSELL • Dffs offered to sell wool to the pffs. Dffs offered to sell wool to the pffs. • The dffs’ letter of offer was wrongly The dffs’ letter of offer was wrongly

addressed so that it reaced the pffs 2 addressed so that it reaced the pffs 2 days later thatn the dffs could, in nor days later thatn the dffs could, in nor circumstnace, have expected it to circumstnace, have expected it to arrive.arrive.

• Pff on receiving the letter Pff on receiving the letter immediately accepted the offer and it immediately accepted the offer and it was held that they were entitled to was held that they were entitled to do so, creating a binding contrat, do so, creating a binding contrat, despited the fact that the deffs had despited the fact that the deffs had considered the offer lapses by the considered the offer lapses by the delay and sold the wool to a third delay and sold the wool to a third party.party.

ACCEPTANCEACCEPTANCE• Treitel (1995) defines acceptance asTreitel (1995) defines acceptance as– ‘‘a final unqualified expression of assent to a final unqualified expression of assent to

all the terms of an offer’all the terms of an offer’• The objective test applies The objective test applies • 2 principles evolve from the definition2 principles evolve from the definition– 11stst , expression of intention to assent to , expression of intention to assent to

the offer must be in response to the offer the offer must be in response to the offer and match the terms of the offer precisely. and match the terms of the offer precisely. • The acceptance must be unequivocal and The acceptance must be unequivocal and

unconditional unconditional – 22nd,nd, mere acknowledgement of the offer is mere acknowledgement of the offer is

insufficient, there must be a insufficient, there must be a communication of the acceptance to the communication of the acceptance to the offerorofferor

• In certain cases, there may be In certain cases, there may be cross-offers e.g. when 2 identical cross-offers e.g. when 2 identical offers cross in the post; X offers to offers cross in the post; X offers to buy Y’s car from him for GhC5000, buy Y’s car from him for GhC5000, while at the same time Y offers to while at the same time Y offers to sell his car to X for GhC5000.sell his car to X for GhC5000.

• In such a case, no contract exists, In such a case, no contract exists, although the parties may be in although the parties may be in some subjective agreement, there some subjective agreement, there must be an objective outward must be an objective outward indication of the agreement TINN v indication of the agreement TINN v HOFFMAN HOFFMAN

THE MODE OF THE MODE OF ACCEPTANCEACCEPTANCE• Acceptance of the offer may be communicated Acceptance of the offer may be communicated

either orally or in writing or inferred from either orally or in writing or inferred from conductconduct– Generally speaking the first two methods of Generally speaking the first two methods of

accepting an offer present little difficulty; but accepting an offer present little difficulty; but difficulty arises where one attempts to infer difficulty arises where one attempts to infer acceptance by conduct as to the nature and precise acceptance by conduct as to the nature and precise moment of the inferred conduct. moment of the inferred conduct.

• The main difficulty concerning inferring The main difficulty concerning inferring acceptance from conduct usually arises where acceptance from conduct usually arises where there have been protracted negotiations there have been protracted negotiations between the parties BROGDEN v between the parties BROGDEN v METROPOLITAN RAILWAY CO METROPOLITAN RAILWAY CO

• The act of acceptance must be completely The act of acceptance must be completely performed for it to be valid, e.g. using smoke performed for it to be valid, e.g. using smoke ball in particular manner and not just mere use ball in particular manner and not just mere use

• Very often, an offer may prescribe a particular Very often, an offer may prescribe a particular mode of acceptance, in such a case conduct mode of acceptance, in such a case conduct cannot amount to acceptance until the mode cannot amount to acceptance until the mode stipulated is complied with. stipulated is complied with.

COUNTER-OFFERSCOUNTER-OFFERS• As defined, acceptance must be an As defined, acceptance must be an

unqualified expression of assent.unqualified expression of assent.• It follows that any attempt to It follows that any attempt to

introduce a new term amounts not introduce a new term amounts not to an acceptance of an offer, but in to an acceptance of an offer, but in fact itself becomes a counter-offer. fact itself becomes a counter-offer.

• The effect of a counter-offer is to The effect of a counter-offer is to destroy the original offer, that is, it destroy the original offer, that is, it operates as a rejection of the operates as a rejection of the original offer. HYDE v WRENCH original offer. HYDE v WRENCH

• In HYDE v WRENCH, the dff offered to In HYDE v WRENCH, the dff offered to sell his farm for £1000. The pff at first sell his farm for £1000. The pff at first made a counter-offer of £950, but 2 made a counter-offer of £950, but 2 days later agreed to pay £1000, days later agreed to pay £1000, attempting to accept the original attempting to accept the original offer. The dff refused to complete the offer. The dff refused to complete the the sale and the pff brought an action the sale and the pff brought an action against him for a decree of specific against him for a decree of specific performance. Held that no contract performance. Held that no contract existed since by his letter offering existed since by his letter offering £950 the pff had made a counter-£950 the pff had made a counter-offer, the effect of which was to reject offer, the effect of which was to reject and destroy the orginal offer, so that and destroy the orginal offer, so that the latter was therefore not available the latter was therefore not available for him to accept 2 days later. for him to accept 2 days later.

OTHER OTHER COMMUNICATIONSCOMMUNICATIONS

• CONDITIONAL ACCEPTANCECONDITIONAL ACCEPTANCE– A conditional acceptance is neither a full A conditional acceptance is neither a full

acceptance of the original offer nor a acceptance of the original offer nor a counter-offer. counter-offer.

– A party might wish to consult a third A party might wish to consult a third party for advice before entering into party for advice before entering into contract . E.g. purchase of house, there contract . E.g. purchase of house, there are many factors to be considered before are many factors to be considered before committing to formal agreement committing to formal agreement

– The result is that any agreement is The result is that any agreement is arrived at ‘subject to contract’. i.e. arrived at ‘subject to contract’. i.e. presumption that the parties do not presumption that the parties do not intend to enter into any legally binding intend to enter into any legally binding contract contract

• CLARIFYING THE TERMS OF THE OFFER CLARIFYING THE TERMS OF THE OFFER – In lengthy and complex contracts, In lengthy and complex contracts,

business people often have difficulty business people often have difficulty arriving at a finite and settled agreement. arriving at a finite and settled agreement.

– For this reason, there may be many For this reason, there may be many communications between the parties communications between the parties which are not intended to operate as which are not intended to operate as counter-offers but merely as attempts to counter-offers but merely as attempts to clarify the extent and terms of the offer, clarify the extent and terms of the offer, or to ascertain whether the offeror would or to ascertain whether the offeror would consider changing certain aspects of the consider changing certain aspects of the offer. offer.

– This is mere request for information and This is mere request for information and not counter-offer not counter-offer

• BATTLE OF THE FORMSBATTLE OF THE FORMS– Most companies make use of standard Most companies make use of standard

form of contract. form of contract. – This is more efficient and convenient that This is more efficient and convenient that

to have to discuss and negotiate each to have to discuss and negotiate each contract with a customer on an individual contract with a customer on an individual basisbasis

– It is not surprising therefore that that in It is not surprising therefore that that in the offer, acceptance and counter-offer the offer, acceptance and counter-offer situation conflicts are likely to result when situation conflicts are likely to result when companies attempts to impose on the companies attempts to impose on the other party their own standard conditions other party their own standard conditions of contracts. of contracts.

– The company which wins the battle of The company which wins the battle of forms is the person who last submit the forms is the person who last submit the counter-offer which is accepted by the counter-offer which is accepted by the other party.other party.

– This is the principle of ‘last shot’This is the principle of ‘last shot’

COMMUNICATION OF COMMUNICATION OF ACCEPTANCE ACCEPTANCE

• The general rule is that some objective The general rule is that some objective or external manifestation of the or external manifestation of the acceptance must be communication to acceptance must be communication to the offeror. HOLWELL SECURITIES LTD the offeror. HOLWELL SECURITIES LTD v HUGHES. v HUGHES.

• Also in POWEL v LEE, where dff Also in POWEL v LEE, where dff decided to appoint the pff as decided to appoint the pff as headmaster of a school, and where the headmaster of a school, and where the terms of the appointment were never terms of the appointment were never communicated to the pff. It was held communicated to the pff. It was held that no contract existed since the dff’s that no contract existed since the dff’s acceptance of plff’s offer of service acceptance of plff’s offer of service had not been communicated to him. had not been communicated to him.

• Acceptance must not only be Acceptance must not only be communicated, but it must be communicated, but it must be received by the Offeror. received by the Offeror. ENTORES v MILES FAR EAST ENTORES v MILES FAR EAST CORP where Lord Denning CORP where Lord Denning illustrated the principle; A illustrated the principle; A shouts an offer to B across a shouts an offer to B across a river and A does not hear the river and A does not hear the reply because of the noise of an reply because of the noise of an aircraft flying overhead. In such aircraft flying overhead. In such a case, there is no offer. a case, there is no offer.

EXCEPTION TO EXCEPTION TO ACCEPTANCE RULEACCEPTANCE RULE

• Effect of silence; Effect of silence; FELTHOUSE v FELTHOUSE v BINDLEY BINDLEY

• However, it is an over implication However, it is an over implication to say that silence can never to say that silence can never amount to acceptance since there amount to acceptance since there may well be ‘special circumstance’ may well be ‘special circumstance’ that will render silence as that will render silence as constituting acceptance; eg constituting acceptance; eg previous of course of dealing previous of course of dealing might give rise to thismight give rise to this

• Mailbox/postal rule; Mailbox/postal rule; the rule that the rule that acceptance must be acceptance must be communicated to the offeror is communicated to the offeror is overturned when acceptance is overturned when acceptance is sent via the post since here the sent via the post since here the rule is that acceptance takes rule is that acceptance takes place as soon as the letter is place as soon as the letter is validly posted. validly posted.

• ADAMS v LINDSELL ADAMS v LINDSELL • The Dffs wrote to the Pffs on 2 Sept offering to The Dffs wrote to the Pffs on 2 Sept offering to

sell them some wool on certain terms and sell them some wool on certain terms and requested a reply “in course of post”.requested a reply “in course of post”.

• The letter containing the offer was wrongly The letter containing the offer was wrongly addressed and only received on 5 Sept.addressed and only received on 5 Sept.

• As a result the letter of acceptance was As a result the letter of acceptance was received on 9 Sept, 2 days later that it should received on 9 Sept, 2 days later that it should have been received from the Pffs. have been received from the Pffs.

• The question which arose was whether a The question which arose was whether a contract of sale had been entered into before 8 contract of sale had been entered into before 8 Sept when the wool was sold to the TP. Sept when the wool was sold to the TP.

• The Court held, however, that the offer had The Court held, however, that the offer had been accepted as soon as the letter of been accepted as soon as the letter of acceptance had been posted. The contract was acceptance had been posted. The contract was thus in existence before sale of the wool to the thus in existence before sale of the wool to the TP even though the letter of acceptance had not TP even though the letter of acceptance had not been received by the Dff, who was thus liable been received by the Dff, who was thus liable for breach of contract. for breach of contract.

• HOUSEHOLD FIRE AND CARRIAGE HOUSEHOLD FIRE AND CARRIAGE ACCIDENT INSURANCE CO v. GRANTACCIDENT INSURANCE CO v. GRANT

• The Dff applied for shares in the Pff’s The Dff applied for shares in the Pff’s company. company.

• The shares were allotted to him but the The shares were allotted to him but the letter of allotment was never received.letter of allotment was never received.

• The company then went into liquidation The company then went into liquidation and the liquidator claimed the balance of and the liquidator claimed the balance of the purchase monies from him. the purchase monies from him.

• The Dff disputed the fact that he was a The Dff disputed the fact that he was a shareholder on the basis that he had not shareholder on the basis that he had not received an acceptance, in the form of the received an acceptance, in the form of the letter of allotment, to his offer to purchase letter of allotment, to his offer to purchase the shares.the shares.

• It was held that the contract had been It was held that the contract had been entered when the letter of allottment had entered when the letter of allottment had been posted to him despite the fact that it been posted to him despite the fact that it had never arrived. had never arrived.

• Today, it is firmlly established in the Today, it is firmlly established in the BRINKIBON LTD v STAHAG STAHL BRINKIBON LTD v STAHAG STAHL that acceptance is effective when it that acceptance is effective when it is placed in the control of the Post is placed in the control of the Post Office, i.e. into a post box, or handed Office, i.e. into a post box, or handed to an offeicer of the post authorised to an offeicer of the post authorised to receive or collect letters.to receive or collect letters.

• A postman delivering letters is not A postman delivering letters is not so authorised and the handing of a so authorised and the handing of a letter of acceptance to such an letter of acceptance to such an individual would only take effect individual would only take effect when actually communicated to the when actually communicated to the offeror RE LONDON AND NORTHERN offeror RE LONDON AND NORTHERN BANKBANK

• In HENTHORN v FRASER, it was In HENTHORN v FRASER, it was stated that the postal rule only stated that the postal rule only applied where it was reasonable applied where it was reasonable for the offeree to use the post as for the offeree to use the post as a means of communication. a means of communication.

• Instantaneous forms of Instantaneous forms of communication communication The postal rule as an The postal rule as an exception to the general principle exception to the general principle requiring communication is confined requiring communication is confined to communications through the post, to communications through the post, telegrams and probably also telegrams and probably also telemessages. telemessages.

• Modern technology, however, provides Modern technology, however, provides other methods of communication other methods of communication which are instantaneous in their which are instantaneous in their operation to the extent that the operation to the extent that the parties are, as it were, in each others’ parties are, as it were, in each others’ presence. presence.

• ENTORES v MILES FAR EAST CORPORATIONENTORES v MILES FAR EAST CORPORATION• The Pffs were a company based in London who were The Pffs were a company based in London who were

dealing with the Dffs, an American company, with agents in dealing with the Dffs, an American company, with agents in Amsterdam. Amsterdam.

• Both parties possessed telex equipment.Both parties possessed telex equipment.• The Pff offered to buy goods from the Dffs’ agent using the The Pff offered to buy goods from the Dffs’ agent using the

equipment.equipment.• The agents accepted the offer by telexThe agents accepted the offer by telex• Subsequently a dispute arose between the partiesand the Subsequently a dispute arose between the partiesand the

Pffs wished to serve a writ on the Dffs alleging breach of Pffs wished to serve a writ on the Dffs alleging breach of contract.contract.

• This was only possible if the contract had in fact been This was only possible if the contract had in fact been made in England and it was this question that arose before made in England and it was this question that arose before the court.the court.

• The CA held that the parties were in the same position as The CA held that the parties were in the same position as they would have been if they had been in each other’s they would have been if they had been in each other’s presence.presence.

• The consequence of this was that the contract was entered The consequence of this was that the contract was entered into when the acceptance by the agents was received in into when the acceptance by the agents was received in London by the Pffs, not when the telex was sent in London by the Pffs, not when the telex was sent in Amsterdam, which would have meant that the contract Amsterdam, which would have meant that the contract would be subject to Dutch law. would be subject to Dutch law.

• Lord Denning confirmed, obiter, that the same principles Lord Denning confirmed, obiter, that the same principles also apply to acceptance by telephone. also apply to acceptance by telephone.

TUTORIAL 1 TUTORIAL 1 • What is meant by the statement What is meant by the statement

that “the test of agreement is that “the test of agreement is objective and not subjective”? objective and not subjective”? Illustrate its application in the Illustrate its application in the Law of Contract.Law of Contract.

TUTORIAL 2TUTORIAL 2• On 1On 1stst January, X wrote to Y offering to January, X wrote to Y offering to

sell to him a house for ¢1,000,000.00, sell to him a house for ¢1,000,000.00, the offer to remain open for a week. the offer to remain open for a week. On 3On 3rdrd January, Y posted a letter January, Y posted a letter stating, “I am still considering our stating, “I am still considering our offer but now I am only willing to pay ¢ offer but now I am only willing to pay ¢ 700.00”. later the same day, Y posted 700.00”. later the same day, Y posted a second letter stating “I have a second letter stating “I have reconsidered the matter, ¢1000,000.00 reconsidered the matter, ¢1000,000.00 is an excellent offer and I accept”. X is an excellent offer and I accept”. X received the first letter on 5received the first letter on 5thth January January and at once entered into a contract to and at once entered into a contract to sell the property to some one else. Y’s sell the property to some one else. Y’s second letter arrived on 6second letter arrived on 6thth January. January. Advise X. Advise X.