Offer & Acceptance
I. Offer
Each contract requires an offer and acceptance of that offer.
"... to constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. A mere statement of a person's intention, or a declaration of his willingness to enter into negotiations is not an offer and cannot be accepted so as to form a valid contract" (Acme Grain Co. v. Wenaus, 1917).
An offer must be a clear, unequivocal and direct approach to another party to contract. For this reason, advertisements, catalogues or store flyers are not offers. Nor is a "for sale" sign on a used car. The law calls these "invitations to treat"; essentially invitations to the general public to make an offer on a particular item. But, even here, there have been exceptions. For example, in a 1856 case, an advertisement of train rates was held to be a valid offer. Much depends on the wording of the "invitation".
An offer, once made, can be revoked before acceptance unless it is under seal. An offer can also expire if a deadline for acceptance passes. If there is no specified deadline, then the offer expires in a "reasonable time", depending on the subject-matter of the contract. For perishable goods such as food, a "reasonable time" would likely be a matter of days. The "reasonable time" would be longer where the subject matter of the contract is a building.
1. Blair v. Western Mutual Benefit Association (1972)
A corporate resolution is not an offer unless efforts are made to communicate it.
2. Canadian Dyers Association v. Burton (1920)
price quotes are not offers
A contract requires an offer and an acceptance. Are price quotations offers? Each case should be decided on the facts. The question is one of intention. "We quote you" has been held not to be an offer but "shall be happy to have an order from you to which we will give prompt attention" was held to be an offer. "In each case of this type, it is a question to be determined upon the language used, and in light of the circumstances in which it is used, whether what is said by the vendor is a mere quotation of price or in truth an offer to sell."
3. Pharmaceuticals Society of Great Britain v. Boots Cash Chemists (1953)
"In the case of an ordinary shop, although goods are displayed and it is intended that customers should go ahead and choose what they want, the contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. Then the contract is completed."
4. R. v. Dawood (1976)
cashier completes contract
A woman falsified a price tag on an article and then paid for it. "When the appellant took the jumper and blouse to the checkout counter ... she was representing to the cashier that both articles had been displayed for sale at this price, although she knew such was false. The cashier had authority to accept such offer which she did by accepting the cash proffered. At that point a contract of sale had been made; true, it was a voidable contract as having been induced by fraud. The cashier had a general authority to accept such offer and to sell the goods on behalf of her employer."
5. Goldthorpe v. Logan (1943)
careful what you promise
A woman answers an ad guaranteeing removal of facial hair. Treatment fails. Was there a contract? The judge thought so. The ad was the offer. Relying on the Carbolic Smoke Ball case (see below under Acceptance), the judge added: "if the vendor's self-confidence persuaded her into an ... extravagant promise, she cannot now escape a complaint from a credulous and distressed person to whom she gave assurance of future excellence and relief from her burden. The weak unfortunate person, however gullible, can be sure that the courts ... will not permit anyone to escape the responsibility arising from an enforceable contract."
6. Harvela Investments Ltd. v. Royal Trust Co. of Canada (1986)
In a fixed bidding sale where the vendor states that they will accept "the highest offer", they are so bound. In this case, the bids were to be called "offers" but the court overlooked this nomenclature: "the mere use by the vendors of the words "offer" (in "would accept the highest offer") was not sufficient."... The task of the court is to construe the invitation and to ascertain whether the provisions of the invitation, read as a whole, create a fixed bidding sale."
7. R. v. Ron Engineering & Construction (Eastern) Ltd. (1981)
tender contract A
In this case, a tender required a deposit of $100,000 which, the tender document stipulated, would be forfeited if the tender was withdrawn. The contractor, after submitting both tender and deposit, then tried to change his tender but was denied. The contract went to another company and the deposit was not returned. The Supreme Court said that there was a preliminary, initial and "unilateral contract" which the court called "contract A" (which creates no obligation on any party until a bid is made); and the main contract, which the court called "contract B." Contracts A provide that the person issuing the tender can select one of the tenderers and enter into contract B with the tenderer so selected. Upon the person doing so, the tenderers, other than the one so selected, would be discharged from any obligation under contract A. The tenderer selected, however, would then be required to enter into contract B with the person issuing the tender (the process has been compared to a leaseholder exercising an option to purchase). Contract B, however, does not come into force until executed by both parties. In this case, under the terms of contract A, the deposit was not refundable. The court said that the person that issues a call for tender creates an "offer to contract" which, once a bid is submitted both in conformity with, and in response to, the invitation to tender, is binding and is irrevocable if the tender conditions says that the bids are irrevocable. This case has had a profound effect on the tendering process in Canada.
8. R. v. Canamerican Auto Lease & Rental Ltd. (1987)
This case followed the "contract A, contract B" analysis in the Ron Engineering case (see above). In an "invitation to treat" situation, the court held that a contract "A" (using the words of the Ron Engineering case) was formed when the bid was submitted, binding on the person issuing the tender.
9. Blackpool and Fylde Aero Club Ltd. v. Blackpool Borough Council (1990)
This British case also found that an invitation to tender can constitute an offer to bid which, if complied with, can create a contract. The obligation of the invitor (the person issuing the tender) is to consider each bid received.
10. Williams v. Carwardine (1833)
A reward was posted for information leading to the arrest of a murder suspect. An eyewitness who believed she was dying, and aware of the reward but not for that reason, gave evidence which led to the arrest. When the eyewitness recovered she tried to collect the reward. The court found that she was so entitled even though "the plaintiff was not induced by the reward."
11. R. v. Clarke (1927)
The Crown proclaimed a reward for information leading to the arrest of a murder suspect. One of the gang leaders, Clarke, turned informant fearful that he might be falsely accused of the murder and testified against the murderers. A month later, Clarke tried his luck and attempted to claim the reward. The court held that the informant, Clarke "did not intend to accept the offer of the Crown ... did not act on the faith of, in reliance upon, the proclamation."
12., Byrne v. Van Tienhoven (1880)
revoking an offer
On October 1, an offer to sell was mailed. It was received on October 11 and was accepted by telegram sent on October 11, confirmed by letter mailed October 15. But on October 8, a letter was sent by the offeror revoking the offer (the offeror received the letter of acceptance on October 20). The court decided that the revocation was inoperative; that the postal rule was "inapplicable to the case of the withdrawal of an offer. The court said that "an offer can be withdrawn before it is accepted and it is immaterial whether the offer is expressed to be open for acceptance for a given time or not." But a withdrawal has no effect until it is communicated to the person to whom the offer has been sent. "A state of mind not notified cannot be regarded in dealings between man and man; and that an uncommunicated revocation is for all practical purposes and in point of law no revocation at all."
13. Dickinson v. Dodds (1876)
Once a person is informed that the thing that was offered to him was sold to another person, there is an implied communication of the revocation of the offer and it is too late for acceptance.
14. Errington v. Errington (1952)
The father paid the down payment of a house and then told his son and daughter-in-law that they could live in it, to pay the monthly mortgage and that it would be transferred to them upon the father's retirement. When the father died, before the mortgage was paid, the court decided that the occupants did not have a contractual obligation to pay the mortgage but that as long as they did so regularly (based on the deceased's promise to them) and once the mortgage was paid, they would own the house.
15. Daulia v. Four Millbank Nominees (1978)
offeror can't thwart condition
Potential purchasers were told that if they could produce a bank draft for certain amount of money "by 10 am the following day", they could buy the property. When the plaintiffs tried to hand over the draft before 10 am the next day, the defendants refused to accept it or complete the deal. The court ruled that there was an "implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer."
16. Re Reitzel and Rej-Cap Manufacturing Ltd. (1985)
An offer was given for a house which included an obligation for the vendor to insure it. When the house burnt to the ground, the offer was immediately accepted, ostensibly so the purchaser could benefit from the new construction at the price given to him based on the pre-fire building. The court held that the destruction of the building substantially altered the state of the goods, thereby voiding the offer and no longer open to acceptance.