Contract Law: Offer and Acceptance in Mr. Wilson's Case

EXECUTIVE SUMMARY
Contract law has a well-known principle: Contracts are legally binding when
the offer and acceptance are made in a legitimate manner. The offeror is the
party that makes the offer, while the offeree is the party that accepts it.
When the offeree accept an offer made by the offeror is considered legally
binding. In offer and acceptance cases, the parties frequently disagree about
whether there was ever a contract or when the contract was made. The
court's task is therefore to determine whether it was reasonable for one
party to believe that the other was entering into a binding agreement at a
particular point. So for this particular client which is Mr. Wilson, we will apply
the law to identify the legal nature of the various communications and then
determine whether or not the parties have created a legally binding contract.
Introduction
Contract law refers to a legal agreement or promise binding involved parties
during a certain bargain or subject. All parties that tend to enter into a
contract are expected to understand the legal laws governing the
agreement. There are five primary elements governing a contract namely:
“offer and acceptance, consent, intention, consideration and contractual
capacity.”1 The issue at hand is whether there is a valid contract between
Mavis and Polly regarding their initial agreement on buying the paintings of
Mr Wilson. This paper will firstly determine whether the advertisement of Mr
Wilson was an offer or an invitation to treat. Secondly whether Mavis has
made an offer to Mr Wilson. We will then examine if the response of Mr
Wilson is an acceptance or a counter offer. If there is acceptance we will
access whether the offeree has properly communicated the acceptance and
finally we will analyze if there was any attempt to revoke the offer.
An offer is defined by (McKendrick 2019),as a statement of willingness to be
bound on stated term. Where the offer is clear, definite, and explicit, and
leaves nothing open for negotiation, it constitutes an offer, acceptance of
which will complete the contract, cases Lefkowitz v Great Minneapolis
Surplus Store Inc. (1957) 2.

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1. Clarke, J (2010), Elements of a Contract
2. Lefkowitz v. Great Minn. Surplus Store, Inc. - 251 Minn. 188, 86 N.W.2d
689 (1957)
In this case it is necessary to consider if Barbara has made a contract with Alan for the sale of the
painting. What must be looked at is whether Alan’s letter, or fax to Barbara, is an offer or an
invitation to treat. If there was an offer, it will need to be considered whether there was an
effective acceptance, and this will require revocation, and the postal rule, to be looked at.
Task 1
1.1 Distinguish between an offer and an invitation to treat
We refer to an offer as a statement of one party's intention to enter into a contract with another
party, known as the offeree, on the terms and conditions specified by the offeror. An offer is
defined by (McKendrick 2019),as a statement of willingness to be bound on stated term. When
the offer is accepted, the two parties enter into a legally binding agreement known as a contract.
Essentially, the offeree must accept the offer in order for the parties to be bound by it ( both the
offeror and the offeree ). The first requirement for the formation of a valid contract is o erff .
An invitation to treat, on the other hand, is an advertisement, promotion, or display of items that
invites a third party to make an offer in connection with the subject of the advertisement,
promotion, or display, as opposed to an invitation to treat. In essence, an offer to treat suggests
that the sender is open to receiving suggestions from people who have seen the invitation and are
interested in it. According to (Turner, 2014) an invitation to treat is a statement of intent by the
offeror to be legally bound by the terms of the offer.
Section 2 of the Contracts Act4 defines an offer as the willingness to do or abstain from doing
anything signified by a person to another. A good way of looking
at the di erenceff between the two terms is that an o erff is a definite promise to be bound on
specific terms, whereas an invitation to treat is only an indication that someone is prepared to
receive o ers with a view to forming a binding contract. A person making an invitation to treatff
does not intend to be bound as soon as it is accepted.
The distinction between an o er and invitation to treat can be seen in the following cases:ff
In Gibson v Manchester City Council [1979] 1 WLR 294 the defendant city council sold council
houses to tenants who wanted to buy them. A letter from the Council stated that ‘The
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Corporation may be prepared to sell the house to you at...£2,180'. An application for a purchase
was submitted by the claimant council tenant after discussions. However, due to a shift in
political control, the Council ceased selling council houses to tenants. The court had to decide if
a sale contract had been concluded. However, the words ‘may be prepared to' in the letter were
‘fatal' because they simply spelt out the financial circumstances on which the council would be
prepared to discuss a sale and purchase in due course.
Crucially, the use of the word ‘o er’ by one party is not decisive.ff
Partridge v Crittenden [1968] 1 WLR 1204 An advert for the sale of birds - an invitation to treat
(rather than an offer) because the seller could not have intended to contract with the large
number of people who could theoretically accept.
We are instructed to offer [certain business stock] to the wholesale trade for sale by tender',
defendants stated in Spencer v Harding (1870) LR 5 CP 561. The ad specified where to view the
goods, when to open tenders, and that payment must be made in cash. No reserve was stated. The
claimant made the highest offer, but the defendant refused. This is because the highest bidder is
not required to sell unless the advertisement specifies otherwise.
In Carlill V Smoke Ball Co. Ltd 5, the promise to pay £100 to anyone who took the smoke ball
and got influenza amounted to an offer. In a similar vein, the court in Carlill v. Carbolic Smoke
Ball Co. case determined that the company's marketing constituted an offer made entirely by the
company. The court reached this conclusion because Carlill followed the instructions in the
advertising and contracted a cold as a prerequisite of earning 100 pounds. Carlill accepted the
offer since she acted in response to the advertisement, resulting in the formation of a legally
enforceable contract.
In addition, another concept to consider is an invitation to tender. These are generally considered
invitations to treat, and the offer is made when the tender is submitted. The organisation looking
for tenders are then free to accept or reject this. However, an exception to this is an offer to sell
to the highest bidder. However, an exception to this is an offer to sell to the highest bidder. For
example, in the case of Harvela Investments Ltd v Royal Trust of Canada.6
However, where the advertisement is for a unilateral contract – such as the o er of a rewardff for
lost property – the courts have held that the advertisement will generally amount to an o er.ff
Also, it is important note that there is di erence between aff mere boast or ‘pu ’ff (a promotional
statement or claim, often associated with advertising, such as ‘your wife will absolutely love this
necklace!’) and a promise which a reasonable man would take seriously. The leading case on the
di erence between a mere pu and an o er, and on unilateralff ff ff contracts is Carlill v Carbolic
Smoke Ball Company [1893] 1 QB 256
Over the years, the courts have developed a set of rules to be applied in specific situations to
determine whether an offer or an invitation to treat has been made. One such rule pertains to
advertisements which is apply in the case of Mavis V Mr Wilson. An advertisement is not an
offer, but rather an attempt to entice one to make one.
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