Type: Coursework | Subject: Law | Level: Undergraduate | Word Count: ~2200 words
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Read the scenario below and, using appropriate authority, advise the parties as to whether legally binding contracts have been formed. Structure your answer using the IRAC method and support your analysis with relevant case law and academic commentary (2,200 words).
This coursework addresses two connected scenarios concerning the formation of a binding contract, arising from the affairs of Priya, a sole trader who runs a vintage bicycle restoration business in Leeds. In the first scenario, Priya advertises a restored bicycle in a local newspaper and Ahmed purports to accept by email, while Priya subsequently sells the bicycle to a walk-in customer, Grace. In the second scenario, Priya publishes a reward offer for the return of her lost dog, Biscuit, on a community social media page, later attempts to withdraw the offer, and Tariq — who had already begun searching in reliance on the original post — returns the dog and claims the reward. Both scenarios turn on the correct classification of the parties’ communications as either an offer or an invitation to treat, and on the rules governing acceptance, silence and revocation. This answer applies the IRAC framework, setting out the relevant rules on formation before applying them to advise Priya of her potential liability to Ahmed and to Tariq respectively.
A binding contract requires, at minimum, an offer, an acceptance, consideration and an intention to create legal relations (Poole, 2022; McKendrick, 2020). An offer is a clear and unequivocal statement of terms that the offeror is willing to be bound by upon acceptance, whereas an invitation to treat (ITT) is merely an invitation for the other party to make an offer (Chen-Wishart, 2022). The courts have consistently classified advertisements, shop displays and price lists as invitations to treat rather than offers, on the basis that a business must retain the freedom to decline to deal with a particular customer, for example where stock is unavailable (Partridge v Crittenden [1968] 1 WLR 1204; Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401). In Partridge, an advertisement offering wild birds for sale was held to be an ITT, the court reasoning that a seller of a limited stock cannot sensibly be taken to intend to be bound to sell to every reader who responds, since this could expose the advertiser to liability for breach of contract with more buyers than goods available (Partridge v Crittenden [1968]).
This general presumption can, however, be displaced by clear wording indicating an intention to be bound. In Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, an advertisement promising a £100 reward to any user of a product who contracted influenza was held to be a genuine unilateral offer to the world, because the company had deposited a specific sum with its bankers as evidence of sincerity, which negated any suggestion the advertisement was mere sales puff. The Court of Appeal held that an offer capable of acceptance by conduct, made to an indeterminate class of persons, ripens into a binding contract with any person who performs the stipulated act (Carlill v Carbolic Smoke Ball Co [1893]). The critical question in each case is therefore whether, viewed objectively, a reasonable person in the position of the offeree would understand the advertiser to have manifested a present intention to be bound (Storer v Manchester City Council [1974] 1 WLR 1403; Macmillan and Stone, 2012), or whether words such as ‘first come, first served’ operate merely to describe the practical mechanism by which the seller will choose among competing responses to an invitation, without converting the advertisement itself into an offer (Furmston, 2017).
Acceptance must be an unqualified and unequivocal expression of assent to all the terms of the offer, communicated to the offeror (Peel, 2020). As a general rule, acceptance is not effective until it is actually communicated to, and received by, the offeror; the offeree bears the risk that their acceptance never reaches its recipient (Entores Ltd v Miles Far East Corp [1955] 2 QB 327). Lord Denning MR explained in Entores that where communication is instantaneous, such as by telex, or by analogy email or text message, the contract is made at the place and the moment the acceptance is received by the offeror, not when it is sent (Entores v Miles Far East Corp [1955]). This is subject to the historic exception of the postal rule, under which acceptance sent by post is complete and binding the moment the letter is posted, even if it is delayed or lost in transit (Adams v Lindsell (1818) 1 B & Ald 681); however, the postal rule has not been extended to instantaneous electronic communications and its scope is now confined to genuinely analogous postal-style delay (Gardner, 1992).
Equally significant is the rule that silence cannot, as a matter of law, constitute acceptance, because an offeror cannot unilaterally impose a positive contractual obligation on an offeree merely by stipulating that their failure to respond will be treated as agreement. In Felthouse v Bindley (1862) 11 CB (NS) 869, an uncle wrote to his nephew offering to buy a horse, adding that if he heard nothing further he would consider the horse his; the nephew did not reply but instructed an auctioneer not to sell the horse. It was held that no contract existed because the nephew’s silence, however consistent with an intention to accept, could not amount to a valid acceptance communicated to the offeror (Felthouse v Bindley (1862)). This principle protects offerees from having contractual obligations thrust upon them by an offeror’s own drafting, and remains good law, subject only to limited exceptions where the offeree’s own conduct, rather than mere silence, evinces acceptance (Brogden v Metropolitan Railway Co (1877) 2 App Cas 666).
An offer may generally be revoked by the offeror at any time before it is accepted, even where the offeror has promised to keep the offer open for a fixed period, provided no separate consideration has been given for that promise (Routledge v Grant (1828) 4 Bing 653). Revocation is not effective, however, until it is actually communicated to, and received by, the offeree; an offeror cannot revoke simply by changing their mind privately (Byrne & Co v Van Tienhoven & Co (1880) 5 CPD 344). Communication of revocation need not come from the offeror personally, and may be effective if it comes from a reliable third party and the offeree learns of it before purporting to accept (Dickinson v Dodds (1876) 2 Ch D 463).
Special difficulty arises with unilateral offers — offers accepted by the performance of an act rather than by a return promise, of which Carlill is the paradigm example. Because the offeree in a unilateral contract cannot usually signal acceptance until the act is complete, a strict application of the ordinary revocation rule would allow an offeror to revoke at any point up until the very moment of completion, even after the offeree has substantially performed in reliance on the offer, which the courts have regarded as unjust (Stone and Devenney, 2019). In Errington v Errington and Woods [1952] 1 KB 290, a father promised his son and daughter-in-law that a house would become theirs once they had paid off the outstanding mortgage instalments. The Court of Appeal held that once the couple began performance by making the payments, the father could not unilaterally revoke the offer, because a unilateral offer of this kind carries an implied ancillary obligation not to revoke once performance has genuinely begun, even though the offeree remains free to abandon performance and is not bound to complete it (Errington v Errington and Woods [1952]). This approach has been treated as good law in subsequent authority, including the Court of Appeal’s application of unilateral contract principles in Soulsbury v Soulsbury [2008] EWCA Civ 969, and represents the modern position balancing offeror freedom with reasonable offeree reliance (Chen-Wishart, 2022).
Applying these principles to the first scenario, the newspaper advertisement for the bicycle is properly classified as an invitation to treat rather than an offer. Consistent with Partridge v Crittenden [1968], Priya, as a small trader with a single item of limited stock, cannot sensibly be taken to have intended to bind herself to sell the bicycle to every reader who responded; a contrary finding would expose her to potential liability to multiple buyers for a single item she does not have the means to supply. The phrase ‘first come, first served’ does not, on the facts, displace this presumption. Unlike the reward advertisement in Carlill, where the deposit of money with a bank evidenced a serious intention to be bound to the whole world, Priya’s advertisement contains no comparable indication of a present intention to contract with the first respondent; the phrase more plausibly describes the practical basis on which she will decide whom to sell to once she does receive an offer she wishes to accept, rather than converting the advertisement itself into a standing offer (Storer v Manchester City Council [1974]).
On this analysis, it is Ahmed’s email — ‘I’ll take the Raleigh for £450 — can I collect Saturday?’ — that constitutes the offer, made in response to Priya’s invitation to treat. For a contract to arise, that offer required unequivocal acceptance communicated to Ahmed by Priya. On the facts, Priya did not reply to the email at all; she simply did not open it until Tuesday evening, by which time she had already sold the bicycle to Grace. Applying Felthouse v Bindley (1862), mere silence or inaction on Priya’s part cannot amount to acceptance, however inconvenient this may be for Ahmed. Priya was under no obligation to review her email promptly, still less to treat her failure to respond as binding her to a sale; had the roles been reversed and Priya sought to enforce a contract against Ahmed based on his silence alone, the same rule would defeat her claim. It follows that no contract was ever formed between Priya and Ahmed, and Priya remained entirely free to sell the bicycle to Grace, a walk-in customer whose in-person offer to buy at the advertised price Priya did unequivocally accept by taking payment and completing the sale. Ahmed therefore has no contractual claim against Priya, however commercially disappointing the outcome may be for him.
The second scenario is properly analysed as a unilateral contract on Carlill principles, rather than by reference to the ordinary bilateral offer-and-acceptance model. Priya’s Facebook post promising a £50 finder’s fee for the return of Biscuit was addressed to an indeterminate class of persons — anyone who might see the post and choose to search — and, as in Carlill, contained a specific and quantified promise of reward capable of being accepted by performance of the stipulated act, namely finding and returning the dog. There is no reason in principle why a social media post cannot constitute a valid unilateral offer; English law imposes no general requirement that a simple contract be made in any particular form or medium, and the validity of an offer turns on its content and the reasonable inferences to be drawn from it, not on the platform through which it is communicated (Furmston, 2017). Priya’s argument that a Facebook post is not a ‘legally recognised’ method of contracting is accordingly unfounded and would not assist her defence.
The more substantial issue concerns the timing of Priya’s purported revocation against Tariq’s performance. On the facts, Tariq began searching for Biscuit on 2 March, in evident reliance on the original 1 March post, and had therefore commenced performance of the stipulated act before Priya posted her withdrawal on 3 March. Applying Errington v Errington and Woods [1952], once an offeree has begun to perform the act required by a unilateral offer, the offeror comes under an implied obligation not to revoke the offer while performance continues, even though the offeree is not bound to finish what they started. On this authority, Priya’s attempted revocation on 3 March came too late to prevent Tariq’s continuing search from ripening into a binding acceptance once he found and returned the dog on 4 March.
Even if this ancillary-obligation analysis were rejected in favour of the stricter general rule that revocation is effective once communicated, Priya’s revocation would still fail on the facts, because it was never actually communicated to, and received by, Tariq before he completed performance. Byrne v Van Tienhoven (1880) establishes that a revocation has no legal effect until it comes to the actual notice of the offeree, and Dickinson v Dodds (1876) confirms that even indirect communication through a reliable source must genuinely reach the offeree; Tariq had not seen Priya’s withdrawal post at any point before returning the dog. On either analysis, therefore, Priya is likely to be found liable to pay Tariq the promised £50 finder’s fee, her subsequent attempt to withdraw the offer having come too late, whether measured from the commencement of Tariq’s performance or from the point at which he actually completed it.
The two scenarios illustrate a broader tension within the law of offer and acceptance between certainty and fairness. The invitation-to-treat presumption applied to Priya’s newspaper advertisement protects small traders from unintended multiple liability, but can produce outcomes that feel commercially harsh to a disappointed respondent such as Ahmed, who reasonably believed his prompt email would secure the bicycle (Adams and Brownsword, 1988). The strict communication requirement for acceptance, reinforced by Entores and Felthouse, similarly favours certainty over the practical reality of modern instantaneous messaging, where an offeree may reasonably expect a swift response and where the line between silence and implied acceptance by conduct can be genuinely difficult to draw in practice (Gardner, 1992), a rule that has attracted long-standing academic criticism for producing arbitrary results in commercial contexts (Miller, 1972). Conversely, the Errington exception to the ordinary revocation rule in the second scenario shows the courts departing from strict freedom-of-contract logic precisely where an offeree has reasonably relied on an offer to their detriment, reflecting a policy preference for protecting reliance once performance of a unilateral undertaking is genuinely under way (Stone and Devenney, 2019). Taken together, the two scenarios demonstrate that while the foundational rules of offer and acceptance remain formally settled, their application to informal, modern methods of communication such as email and social media continues to require careful, fact-sensitive judgement, and the outcome for Priya differs markedly between the two disputes despite both arising from broadly similar informal exchanges.
In summary, no binding contract arose between Priya and Ahmed. Priya’s newspaper advertisement was an invitation to treat, not an offer; Ahmed’s email was therefore an offer that Priya never accepted, and her silence cannot be treated as acceptance under Felthouse v Bindley. Priya was accordingly free to sell the bicycle to Grace. By contrast, Priya is likely liable to Tariq for the £50 finder’s fee. Her Facebook post was a valid unilateral offer to the world in the manner of Carlill, form and medium being irrelevant to validity, and her purported revocation came too late, whether assessed against Tariq’s commencement of performance under Errington or against the requirement in Byrne v Van Tienhoven that revocation be actually communicated before acceptance is complete.
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