Chapter 2 Outline answers to end-of-chapter questions

Agreement Part I: Offer

1. What is the basis for the general rules making adverts and displays in a shop invitations to treat, and do those rules continue to be suitable in the modern day?

Your introduction should explain the context of the rules i.e. that proposals for a sale are either offers or invitations to treat. Define these terms before briefly explaining how the status of the proposal has an impact on when a contract is formed, and that contract formation is based on an objective assessment of the parties’ intentions. Also address your approach - that you will explain the general rules relating to adverts and displays before considering their suitability today.

Explain the general rule on displays in a shop. This requires reference to the traditional case law such as Timothy v Simpson (1834) and Fisher v Bell [1961]. Refere to the rule from the cases and its reasoning, as well as the point from Professor Winfield on compulsory sales. The point to make is that in determining the apparent (objective) intention of the parties, the courts have based the status of the proposal on the need to protect the seller from those risks.

Use Pharmaceutical Society of Great Britain v Boots [1953] to explain the position in modern self-serve shops, again, with reference to the reasoning and crucially, the uncertainties about precisely when the contract is formed. This involves questions about supermarket sales and the point in time a contract is made either at the till or using a self-serve checkout. The uncertain position was even acknowledged by Lindsay J in Debenhams Retail plc v The Commissioners of Customs & Excise [2005].

Now turn to the position in relation to adverts with reference to the traditional cases on the general rule (Partridge v Crittenden [1968] based on the reasoning of Grainger v Gough [1896]). This supports the risk of limited stock to inform the apparent intentions of the parties. Address the other practical reasons that could be used to support the rule. Carlill v Carbolic Smoke Ball co [1893] provides an example of an advert as an offer because it showed a clear intention to be an offer. The position is different with online displays and adverts because the terms will state when the contract is formed and such terms reflect the intention of the parties.

Provide a conclusion that reflects on the rules in the current context of sales. Does the uncertainty with the contract formation in a shop cause a problem? Would displays as offers improve the position anyway? Consider the same points in relation to adverts. If all adverts and displays were offers with terms implied to protect sellers and buyers, would it simply cause further uncertainty?

2. Getz 1 Ltd attend an auction advertised as ‘without reserve’ to buy some of the famous early computers on display. When the bidding starts for an Apple III (1980) computer, Getz 1 Ltd’s bid of £4000 is the highest. However, the auctioneer decides that the price is too low and withdraws the item. Does Getz 1 Ltd have a contract and are they entitled to the Apple III?

Your introduction should identify that the question is concerned with the narrow issue of contract formation at an auction without a minimum price. It is useful to mention that contracts are formed based on an objective assessment of the parties’ intentions. Also refer to your approach - that it is necessary to explain the principles from the relevant cases and apply them to the scenario.

Begin the main body with the general rule on contract formation at an ordinary auction - that the bids are offers that the auctioneer can accept or reject (Payne v Cave (1789)). However, with an auction without reserve like the one attended by Getz 1, the position is different. Explain that difference using the key case of Barry v Davies [2000]. Detail the reasoning based on the obiter from Warlow v Harrison (1859) and precisely how a contract is formed. This requires the reference to the unilateral contract between the auctioneer and the bidder and the obligation under that contract.

Apply the principles confirmed in Barry v Davies to the facts in the question based on the assumption that there are no terms dictating the contract formation. Conclude that the auctioneer is in breach of the collateral contract and should then be liable to Getz 1.

3. ‘The way contracts are formed using the competitive tendering is fair and reflects the reasonable expectations of the parties.’


For your introduction simply state your approach – that the law relating to the formation of contracts using the tendering process will be explained before turning to determine whether it is fair and consistent with the expectations of the parties.

Briefly explain the tendering process and its general purpose because that provides the basis for the parties’ expectations.

Now turn the key case law with ordinary circumstances where the party requesting tenders does not commit itself to the most competitive tender. Contrast that with Harvela v Royal Trust of Canada [1986] which applies when the party requesting tenders commits to contract with the most competitive tender. Explain the facts, decision and reasoning. From this you can show an understanding of the way the contract was formed with reference to the unilateral contracts and subsequent bilateral contract that should have been entered. The point about referential bids should also be explained along with the basis of the decision on their use.

Next, explain the facts, decision and reasoning of Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990]. This case be used to highlight the merits of the mechanism of contract formation from Harvela.

Finally conclude by explaining how the default rules from the cases reflect the parties’ expectations and how they are fair. A key point here is that the way the contracts are formed might appear to be complicated and unexpected but the effect is one that reflects the intended purpose and values of the competitive tendering process.

4. XS Pizza Ltd emails everyone on its mailing list offering a free pizza to anyone that wears its promotional T shirt in public for the entire day (9am to 9pm). Tosi queues to collect her T shirt at 9am. She wears it all day, takes photos and returns to XS Pizza at 9pm. She is told that the offer was withdrawn on its Facebook page at 1pm. Is Tosi entitled to the free pizza?

Your introduction should address the relevant legal issues raised by the scenario - the law relating to offers for a unilateral contract and the relevant rules on revocation. The question is whether Tosi has a contract with XS Pizza. That depends on whether there was an offer that was accepted based on an objective approach to the parties’ intentions. Address the issues in turn.

The starting point is the status of the email. Was it an offer or merely an invitation to treat? Define the terms and their practical significance in the formation of contracts i.e. if it was an offer then acceptance would have resulted in a contract for the free pizza. This takes you to the general on adverts from Partridge v Crittenden [1968] which is based on apparent intentions. Likewise, if there appears to be a clear intention for such a proposal to be an offer then it will be one. The key case on this is Carlill v Carbolic Smoke Ball Co [1893]. Explain the case and the reasoning underpinning the decision. The same approach was adopted in Bowerman v ABTA [1996].

Apply the principles to the email from XS Pizza. Explain that it is likely to be enough for an offer to enter a unilateral contract with anyone on the list that performs the condition of acceptance based on the intention shown.

The next issue is about the attempt to revoke the offer. The general rule on the requirements for revocation are from Byrne v Van Tienhoven (1880), i.e. revocation must be communicated before acceptance. However, the application of these requirements is different when dealing with offers for a unilateral contract and you should take them in turn.

The communication requirement for the revocation of such an offer was addressed in Shuey v US (1875). Explain the requirement of using the same or equivalent method and the reasoning.

Next turn to the application of the rule. Here the offer was emailed, but revocation was communicated on Facebook. Question whether these are equivalent. Remember, in Shuey the method was acceptable because it was assumed that the reasonable member of the public would know that revocation could be made in such a way. Question whether same could apply here. Here, there is a strong argument in favour of the communication being insufficient.

The next issue is about the timing. Explain the rule from Denning LJ in Errington v Errington [1952] (approved by Longmore LJ in Soulsbury v Soulsbury [2007]) and the approach of Goff LJ in Daulia v Four Millbank Nominees [1978] and apply it to the facts.

Tosi would argue that she commenced her performance of the act of acceptance the moment she was given the t-shirt to wear. Such an act would have the objective appearance of commencing performance. On that basis, there is a good argument to suggest that the offer was irrevocable from that point.

Conclude by referring to the potential consequences. It is likely that the offer was not revoked and since Tosi completed the required act of acceptance, she would be contractually entitled to the pizza.