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Formation Of Contracts Notes

Irish BCL Notes > Irish Contract Law Notes

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"an expression of willingness to contract on specified terms, made with the intention that it shall become binding as soon as it is accepted by the person[s] to whom it is addressed" which "may be addressed either to an individual, or to a group of persons, or the world at large; and it may be made expressly or by conduct" Carlill v Carbolic Smoke Ball Co. (CA 1893)


* The defendants advertised their product and promised to pay PS100 to anyone who got the flu after using the product according to their instructions.

* The plaintiffs followed the instructions and caught the flu. Issue

* Offer - Advertisement Judgment

* Lindley LJ

* The language of the advertisement clearly states the promise of PS100.

* It could not have been taken as a jumped up claim designed merely to sell the product.

* The statement that PS1000 had been lodged in a bank for the purpose of paying put the lie to that claim - it indicates that the manufacturer is being sincere in his claim.

* The fact that the advertisement is an offer to no one in particular does not mean it does not constitute an offer.

* Bowen LJ

* The defendants' contention that the terms of the advertisement are too vague to constitute an offer does not stand.

* If it is read as the ordinary person would understand it they would take it to meant that a PS100 reward would be given to anyone who used the ball as directed following the promulgation of the advertisement and still caught flu.

* The advertisment cannot be read as being mere puff.

* The statement about PS1000 lodged in the bank endeavoured to convince people that it wasn't.

* The claim that the ad was a contract with the entire world is untenable.

* The ad was an offer to all the world, with the objective intention to enter into a binding contract should it be accepted.

* AL Smith LJ

* The objective meaning of the advertisement was that if a member of the public used the smoke ball according to instructions and still contracted influenza, the Carbolic Smoke Ball Co. would give them PS100, and that PS1000 security to back up this claim had been placed in a bank.

* This could not be understood to be a mere expression of confidence on the part of the seller.

* It was a valid offer. Kennedy v London Express Newspapers (IFS SC 1931) Facts

* The defendants were publishers of a newspaper who were running an insurance



scheme, whereby registered readers would get free accident insurance. This offer and its conditions were promulgated in an advertisement The plaintiff's wife was a registered reader and suffered an accident but a dispute arose between the parties on the claiming of insurance.


* Offer - Advertisement Judgment

* Kennedy CJ

* The advertisement was an offer, as this was assented to by the defendants.

* Fitzgibbon J (concurred)

* Murnaghan J (concurred) Leonard v Pepsico (SDNY 1999) Facts

* The defendants ran a promotional campaign whereby consumers of their product could exchange pepsi points for promotional merchandise.

* They ran an ad which featured a Harrier Jet with the words 7,000,000 pepsi points displayed under it.

* The plaintiff accumulated 7 million points and then sued for breach of contact when the defendants failed to deliver the jet. Issue

* Offer - Advertisement Judgment (USDJ Wood)

* For an ad to constitute an offer, it must be framed in the language of commitment or involve an invitation to take action without further communication - the advertisement must be specific and leave nothing further open for negotiation.

* The presumption is that an advertisement merely constitutes an invitation to treat, in this case the presumption was not upset.

* The ad in this case reserved the details of the offer to the catalogue.

* The catalogue did not have any limitation such as first come first served that would bind it to providing the products were certain conditions to be met.

* In evaluating the commercial as an offer, the court must disregard subjective intentions and focus on the objective meaning of the advertisement.

* The reasonable person would understand that ads like this make exaggerated claims in order to drum up the excitement surrounding their offers. Minister for Industry and Commerce v Pim Brothers (HC 1966) Facts

* The defendants had a sign attached to goods in their shop which stated the price of the goods if they were bought outright and if they were bought on a hire purchase.

* The way in which a hire purchase or credit-sale agreement was offered was subject to certain statutory restrictions, which the plaintiff alleged were broken in this case. Issue

* Offer - Goods on Display

Judgment (Davitt P)


The advertisment was merely a statement of the price and an indication of credit options.

* It was too vague to make a contract to be accepted on its own terms and nothing more. Pharmaceutical Society of Great Britain v Boots (CA 1953)


* The sale of certain drugs could only be sold under the supervision of a registered pharmacist.

* The defendants allowed customers to take such drugs from the shelves to the checkout where they would be attended on by a registered pharmacist. issue

* Offer - Goods on Display Judgment

* Somervell LJ

* In an ordinary shop the contract is not completed until the shopkeeper or cashier accepts the customer's offer to buy the products.

* Were the display to be the offer and the placing of the product in the basket the acceptance, then the customer would not have the power to change the product once he had taken it off the shelf.

* Birkett LJ

* The customer makes the offer to buy and the the cashier or shopkeeper accepts that offer.

* Romer LJ

* It is not the case that the customer has accepted an offer upon taking the item off the shelf. Boyers v Duke (KB 1905) Facts

* The plaintiffs got a quotation from the defendants for canvas, then requested a quantity of canvas based on the quotation price.

* The defendants made an error in the quotation and the plaintiffs sued for breach of contract when they failed to deliver at the rate stated in the quotation. Issue

* Offer - Quotation Judgment

* Lord O'Brien LCJ

* The plaintiff's order was an offer, not an acceptance.

* The plaintiffs gave references in the order - if they were accepting a binding contract this would be superfluous

* Gibson J

* The plaintiffs letter has the character of an order based on a quotation rather than an acceptance of the quotation.

* If the defendants found that the references were not to their satisfaction, they could have declined to accept.


Madden J

* Quotations are given in response to numerous enquiries every day - they do not have the character of offers that can be accepted by anyone Dooley v Egan (HC 1938)


* The defendants enquired of the plaintiffs whether they would be able to supply certain medical equipment.

* The plaintiffs responded with a quotation that was for immediate acceptance only and subject to change without notice. Issue

* Whether this constituted an offer. Judgment (Meredith J)


The sentence 'all quotations are for immediate acceptance only' must be taken to mean that the quotation is an offer if accepted immediately, and otherwise it became subject to contingencies and lose the character of an offer. Billings v Arnotts (HC 1945)


* The defendants put up a notice promising half wages to any employee who joined the defence forces.

* The plaintiff informed the defendants that he intended to avail of the offer, whereupon he was told that he could not as the department in which he worked could not spare him.

* He joined anyway and was not paid. Issue

* Offer - Notice Judgment (Maguire J)




The notice was unconditional with no reservation to allow a refusal to deny its offer to any employee.

* It is not an invitation to treat. Acceptance was performed when the plaintiff joined the Defence Forces. The defendants are liable. Wilson v Belfast Corporation (SI CA 1921)


* The defendants passed a resolution to pay half wages to any of their employees who joined the armed forces and this resolution was printed without their permission.

* A later resolution was passed restricting this offer to employees in their service on 5th August 1914.

* The plaintiff joined the Corporation after this and later joined the army. Issue

* Offer - Unauthorised Offers

Judgment (O'Connor LJ)

* The first resolution was not an offer.

* There was no authoritative promulgation of the resolution, indicating that it was never intended to be an offer. Tansey v College of Occupational Therapists (HC 1986) Facts

* The plaintiff was studying at a certain college to take the defendants' exams.

* The rules of the exams allowed the students only one automatic retake of the exams, which the plaintiff had been informed of although she had been given an old manual which stated the old rule i.e. 2 automatic retakes were allowed.

* She failed her exams on her first resitting and was a refused a second. Issue

* Offer - Communication Judgment (Murphy J)

* It is possible that an examining body might make an offer to the world at large, which could be accepted on its own terms.

* An offer and its acceptance must be communicated to the relevant parties to be valid.

* The plaintiff was not aware of such an offer made by the defendants before she began to study to take their exams.

* Even if she was, any offer made only included one retake of the exams.

* Neither is it vice-versa

* It cannot be that the plaintiff offered to study at the college and that the manual constituted an acceptance.

* An acceptance doesn't include terms. Methods of Acceptance Felthouse v Bindley (1862) Facts

* The plaintiff and his nephew were negotiating the purchase of a horse, there was a misunderstanding as to price.

* The plaintiff said he would buy the horse for a compromise price and assume if nothing more were said that the horse was sold to him.

* The defendant, an auctioneer in the nephew's employment accidentally sold the horse. Issue

* Acceptance - Silence Judgment

* Willes J

* There was no contract in the absence of a reply by the nephew.

* Without communication of acceptance there was no contract.

* Byles J (concurred)

* Keating J

* Had the dispute been between uncle and nephew the outcome may have

different. Statutory Provisions s. 47 Sale of Goods and Supply of Services Act, 1980

47.---(1) Where---
( a ) unsolicited goods are sent to a person with a view to his acquiring them and are received by him, and ( b ) the recipient has neither agreed to acquire nor agreed to return them, and either---
(i) during the period of six months following the date of receipt of the goods the sender did not take possession of them and the recipient did not unreasonably refuse to permit the sender to do so, or (ii) not less than 30 days before the expiration of that period the recipient gave notice to the sender and during the following 30 days the sender did not take possession of the goods and the recipient did not unreasonably refuse to permit the sender to do so, then the recipient may treat the goods as if they were an unconditional gift to him and any right of the sender to the goods shall be extinguished. Article 9 EC Distance Selling Directive Inertia selling Member States shall take the measures necessary to:
- prohibit the supply of goods or services to a consumer without their being ordered by the consumer beforehand, where such supply involves a demand for payment,
- exempt the consumer from the provision of any consideration in cases of unsolicited supply, the absence of a response not constituting consent. Brogden v Metropolitan Railway Company (HoL 1877) Facts

* The plaintiff had been selling coal to the defendants for a number of years and they decided to formulate a contract.

* The final draft was assented to by the plaintiff and he gave it to the defendants, who made no formal steps to accept it, although thereafter both parties conducted their business according to its terms.

* A dispute arose and the plaintiff denied that there was a contract in effect. Issue

* Acceptance - By Conduct Judgment

* Lord Cairns (concurring)

* The fact that the parties acted completely in accordance with the terms of the

contract until the dispute indicates that there was a consensus between them. The document sent by the plaintiff to the defendants was an offer and it was accepted by their conduct. Lord Hatherly (concurring)

* The agreement was completed when the the first coals at the price specified in the contract were ordered. Lord Shelborne (concurred) Lord Blackburn (concurring)

* If an offer specifies some method of accepting it, that must be performed before the agreement is formed.

* An offer cannot be accepted by a mere private act.

* However if a draft contract has been exchanged and both parties have agreed on it, action upon the draft will constitute acceptance, even in the absence of formal acceptance.

* It is doubtful however, whether the defendants have discharged the onus on them to establish that the contract exists. Lord Gordon (concurred) Wettern Electric v Welsh Development (Eng HC 1981)







* The plaintiff's were leasing a factory from the defendants which was too small for their business.

* The defendants agreed to extend the premises but there were foundational defects.

* The premises became unfit for purpose and the plaintiff's sued the defendants over an implied contractual term(this was a number of months after moving in and a few days after they had sent a letter of formal acceptance of the terms of occupancy.) Issue

* Acceptance - Conduct Judgment (Judge John Newey QC)

* The licence granted to the plaintiffs did not mandate occupancy as a form of acceptance.

* Thus the entry was an offer to take occupancy of the premises under the terms of the letter of June 25th and the defendants accepted that offer by permitting them to remain occupants.

* In the alternative, the plaintiff's went into occupation on the basis that terms would be agreed subsequently and their subsequent correspondence indicated that it would be on the terms of the letter of June 25th.

* The fitness of the premises was an implied term of the contract. Daulia v Four Millbanks Nominees (CA 1977) Facts

* The plaintiff's were buying property from the defendants and as such their transactions were governed by the Statute of Frauds.

* There was an agreement that contracts would be concluded if the plaintiffs appeared at the defendants' offices with draft contracts on the terms agreed and a deposit for the properties.

* The plaintiffs did this and the defendants refused to exchange contracts. Issue

* Whether this was a part perfomance of an offer.

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