The issue in the scenario is whether Anna had built a contract with Bella, Carol and Dora based on the Anna’s advisement in the window of newsagent and Bella, Carol and Dora’s different ways of offering to buy the club. It is referred to formation and obligations of contracts. To establish a binding obligation in contract, key component parts of a contract which are offer, acceptance, consideration, intention to build legal relationship and capacity must be proved valid. For those five elements, the principles and rules will be analysed firstly, and application related to issues will be dealt with in terms of Anna, Bella, Carol and Dora respectively in turn. Ultimately, their contractual relationship with Anna will be concluded.
In the current situation, we are investigating whether Anna’s card in the window is an invitation to treat or an offer. An invitation to treat is only an expression to attract a party to enter into negotiations while an offer is a statement promised by one party to enter into a contract on a particular set of terms1. According to a general rule, an advertisement of goods for sale is not regarded as an offer, Partridge V. Crittenden2. Its intention does not intend to be bound by any acceptance without further negotiation; otherwise, Anna would be bound to provide everyone who received the club. Although it has an ‘offer’ in the content, the statement is still seemed as an invitation to treat3, Spencer V. Harding4. Moreover, the advertisement is not clear enough to be an offer as the price is at ‘£300 or nearest offer’, which is not a fixed price and thus need further negotiation. Therefore, Anna is under no obligation to sell the club.
However, the advertisement can also be held to be an offer, forming a unilateral contract. A unilateral contract agrees to be bound if an offeree performs some acts rather than promise to perform5, which means that if an offeree does one thing, the offeror will then promise to do another. In this case, anyone who is among Bella, Carol and Dora can provide the best offer, Anna would promise to sell the club to her.
Anna & Bella
In the situation of Bella, the most important issue to handle whether there is an agreement consisting of an offer and an acceptance. An offer has been defined previously. To reach an agreement, an acceptance which is an expression of agreement to the terms proposed by the offeror must come into existence. The acceptance must be expressed with certainty and leave no room for doubt as to the fact of acceptance and must respond to the terms of the offer6. In this case, Bella made an offer when she telephoned Anna to buy the club with £300, as Bella had an intention for to be bound to buy the club with £300. There is no need of further negotiation. For Anna’s acceptance, ‘making a note for her call’, is not absolute and may still need further bargain. In the precedent of Rees V. Warwick7, ‘your order is receiving our attention’ cannot be the acceptance, similar as Anna’s, is not an acceptance. As the agreement is incomplete, Anna and Bella did not enter a contract.
Another issue between Anna and Bella is whether the revocation of the offer is effective. An offer can be revoked before acceptance8, which is one way of termination of an offer and an offer is irrevocable after acceptance, according to Great Northern Railway Co. V. Witham9. In the circumstance of Bella, her revocation did not reach to Anna until Anna accepted the offer, which indicates that the revocation is invalid. Although Bella posted the letter of revocation before the date of acceptance, the postal rule, which holds that the acceptance of an offer by post is effective as soon as the letter is posted10, can only be applied to the acceptance but the revocation, illustrated by Byrne & Co V. Leon Van Tienhoven & Co11. Therefore, when Anna agreed to sell the club to Bella, the contract was built because Anna accepted the offer before