Contract law with regards to advertisements

Robbie444

Hi, I was wondering if somebody could please help me with a querry with regards to contract law (for study puposes only)? My question is, does an advertisement stating a car for sale for x amount or nearest offer amount to an offer, or is it invitation to treat? In this case, if somebody replies with an offer and the offeror replies requesting a specific payment method of this amount eg, Cheque, does this constitute a binding contract for the person to buy the car? I have been trying to read up on this but it is making my head spin becasue some sources state that an advert can be an offer if it shows intention to form a legal contract. In the above case it seems that there was no actual acceptance by the offeror as he just requested a form of payment. Could somebody please advise, would be much appreciated.
Thanks

mandz

I have to admit I'm a bit rusty on my contract law but I think such an advert would be regarded as an invitation to treat where an offer can be made which can be accepted by the person placing the advert. If a person replies requesting payment to be made in a particular manner I think this can be seen as an intention of accepting the offer to purchase the car.

So now you have the basis of a binding contract:

Offer - the offer to purchase the car is communicated to X by Y
Acceptance - communicated to Y by X
Consideration - Payment of the car by cheque etc. Method of consideration may be requested in a particular manner if I remember correctly. I would regard the request to be expressing an intention to create legal relations.

As I say I am rusty and haven't studied contract in a while but I think this is correct and is open to correction if necessary. I hope its been of use to you.

Robbie444

mandz wrote: »

I have to admit I'm a bit rusty on my contract law but I think such an advert would be regarded as an invitation to treat where an offer can be made which can be accepted by the person placing the advert. If a person replies requesting payment to be made in a particular manner I think this can be seen as an intention of accepting the offer to purchase the car.

So now you have the basis of a binding contract:

Offer - the offer to purchase the car is communicated to X by Y
Acceptance - communicated to Y by X
Consideration - Payment of the car by cheque etc. Method of consideration may be requested in a particular manner if I remember correctly. I would regard the request to be expressing an intention to create legal relations.

As I say I am rusty and haven't studied contract in a while but I think this is correct and is open to correction if necessary. I hope its been of use to you.

Many thanks, I appreciate it!

Robbie444

Just one more thing if anybody would be so kind as to answer. When the seller replied to the offeror's bid requesting that he pay this amount by cheque, does this actually amount to valid acceptance? While it is clear that by requesting a certain payment type he was willing to accept the offer and create legal relations, I am just a bit unsure if this is actually valid acceptance. After all couldn't the offeree just refuse his request for a cheque and then no contract would take place? Wow, I'm confused!

MrPudding

Robbie444 wrote: »

Hi, I was wondering if somebody could please help me with a querry with regards to contract law (for study puposes only)? My question is, does an advertisement stating a car for sale for x amount or nearest offer amount to an offer, or is it invitation to treat?

I am fairly new to this myself, so I probably going to get this very wrong, but what the hey.

I would say that an advertisement of this kind can only be an invitation to treat. The seller has only one car and the ad will, presumably, be seen by more than one person any of which would decide to buy the car.

Robbie444 wrote: »

In this case, if somebody replies with an offer and the offeror replies requesting a specific payment method of this amount eg, Cheque, does this constitute a binding contract for the person to buy the car? I have been trying to read up on this but it is making my head spin becasue some sources state that an advert can be an offer if it shows intention to form a legal contract. In the above case it seems that there was no actual acceptance by the offeror as he just requested a form of payment. Could somebody please advise, would be much appreciated.
Thanks

I would agree with you that there has not been an actual acceptance. More of a “if you pay by this method, I will accept you offer,” or “here is my counter offer, you pay the amount you have suggested and you pay it by cheque.”

For me the question is, does adding a specific requirement for payment method constitute a counter offer? Obviously as you have stated the offeree simply has to say paying by cheque is not acceptable and there will be no doubt that there is no contract.

MrP

Tom Young

Lads - Engage the brains please.

Offer + Acceptance = Agreeement; Agreement + Consideration = Legally Enforceable Contract.

The OP query is slightly different to what I am going to deal with - Cheques.

A cheque is a form of consideration. It falls under the Bills of Exchange Act 1882. Same are an exception to the rule that the consideration must move from the promisee which is provided for in Section 27(2) of that Act.

Where value has at any time been given for a bill the holder is deemed to be a holder for the value as regards the acceptor and all parties to the bill who become parties prior to such time.

Shield Life v Ulster Bank [1993] IR 225.

A negotiable instrument is similar to cash in the sense that that property in it is acquired by one who takes bona fide and for value. In order for an instrument to be negotiable:

1. it must be one which is transferrable by delivery by virtue either of statute or the customary law of merchants; and

2. it must be in such a state that nothing more than its delivery is required to transfer the right which it contains to a transferee.

The 1882 Act covers Cheques, Promissory notes and bills of exchange.

Past Consideration:

An exception to the rule that past consideration is not sufficient is S 27(1) of the Bills of Exchange Act 1882, which provides that valuable consideration for a bill of exchange or promissory note may be provided by:

1. Any consideration sufficient to support a simple contract.

2. Any antecedent debt or liability. Such a debt of liability is deemed valuable consideration whether the bills is payable on demand or at a future time.

Leading case: Flanagan v National Bank[1939] IR 352.

dermot_sheehan

Also the basic cases, carbolic smoke ball company and boots pharmacy.

In short an advertisement can in certain situations be treated as an offer but is generally treated as an invitation to treat. Whether it is regarded as an offer is fact dependent and courts would look to such issues as the detail of the offer, whether it prescribes modes of acceptance, etc, etc.

MrMicra

Robbie444 wrote: »

I have been trying to read up on this but it is making my head spin becasue some sources state that an advert can be an offer if it shows intention to form a legal contract.

Is the advertisement clear, specific and capable of acceptance in these circumstances an advertisement can be an offer to the world at large. Carbolic Smoke Ball for example a fund of 1000 pounds was claimed to be maintained by the company to pay people who got flu while using the device. They were to be paid 100 and this was described in the add as a reward (just googled that never read the text of the add before).


Just got this from Google as well on wikipedia they quote Lord Justice Linley he says it better than I could.

LordJusticeLinley wrote:

Then it is contended that it is not binding. In the first place, it is said that it is not made with anybody in particular. Now that point is common to the words of this advertisement and to the words of all other advertisements offering rewards. They are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. In point of law this advertisement is an offer to pay 100ℓ. to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer. That rests upon a string of authorities, the earliest of which is Williams v Carwardine,[4] which has been followed by many other decisions upon advertisements offering rewards.

Take a look at Lefkowitz and Great Minneapolis Surplus Store as well.
http://www.4lawschool.com/contracts/lef.htm

Also have a look at Billings v Arnotts (not online I googled it) and Kennedy v London Express (might be online but there are 5 million entries for those words)

Robbie444

Newspaper advert “Opel astra for sale in excellent condition. Cost €8,000 or the nearest offer. If you are interested in purchasing this car please contact John via post”.
On the 1st of October Mary writes to John and offers to buy the car for €7,000 and requests that John contact her immediately if he is interested. John writes back the same day and requests that Mary pay the money in cash.
After further consideration Mary decides not to buy the car. She phones John on the 2nd of October and leaves a message on his answering machine. John is out of the country on business and does not receive the message that day. However, on the 2nd of October a friend of John's meets Mary and tells her that she is delighted that she is buying John's car. On the 4th of October John receives Mary's message and Mary receives John's letter. Mary continues to refuse to buy the car. John intends to sue her for breach of contract.


So basically I am trying to figure out if there was all the elements of a valid contract. Is it not true that Mary never actually accepted John's request to pat cash and would this not yield the contract invalid?

MrMicra

The key sentence is 'writes back and requests payment in cash'.

MrPudding

Tom Young wrote: »

Lads - Engage the brains please.

Offer + Acceptance = Agreeement; Agreement + Consideration = Legally Enforceable Contract.

The OP query is slightly different to what I am going to deal with - Cheques.

I get this, but there was no cheque. The seller requested payment by cheque, effectively accepting the offer, but what is the offeree was unable or unwilling to pay by cheque?

gabhain7 wrote: »

Also the basic cases, carbolic smoke ball company and boots pharmacy.

In short an advertisement can in certain situations be treated as an offer but is generally treated as an invitation to treat. Whether it is regarded as an offer is fact dependent and courts would look to such issues as the detail of the offer, whether it prescribes modes of acceptance, etc, etc.

The carbolic and boots cases are very different from an individual offering a single car for sale. Carbolic seems more of an example of a unilateral offer…?

MrP

Reloc8

Robbie444 wrote: »

Hi, I was wondering if somebody could please help me with a querry with regards to contract law (for study puposes only)? My question is, does an advertisement stating a car for sale for x amount or nearest offer amount to an offer, or is it invitation to treat? In this case, if somebody replies with an offer and the offeror replies requesting a specific payment method of this amount eg, Cheque, does this constitute a binding contract for the person to buy the car? I have been trying to read up on this but it is making my head spin becasue some sources state that an advert can be an offer if it shows intention to form a legal contract. In the above case it seems that there was no actual acceptance by the offeror as he just requested a form of payment. Could somebody please advise, would be much appreciated.
Thanks

I think you can make this a very net point.

Car advertised for sale at a price - this is most likely an invitation to treat.
Offer made to buy car - I presume at a stated price
Request made to pay by cheque - implicit in this is that the person selling the car accepted the stated price.

In those circumstances, and presuming what I have said is implicit is the case, there is a binding contract to sell the car. You say '...there was no actual acceptance by the offeror as he just requested a form of payment' but the point is that he must have requested a form of payment at an agreed price.

That is a contract and can be proven on oral evidence of the agreement, as it does not involve an interest in land.

A possible issue - did the person buying agree to pay by cheque ? If so the above applies. If not, the vendor would have to show that there was some particular importance to being paid by cheque which he insisted on - could be as simple as his evidence that 'I agreed the price but said only if it was paid by cheque and the purchasor agreed to pay by cheque'. In other words if the purchasor did not agree to pay by cheque the question is whether this requirement was a term of the contract or simply a mechanism by which the parties intended to do business, but not an essential requirement.

Further, did the purchasor in fact pay the amount agreed, on or before the agreed date ? If not, in the absence of the vendor agreeing to an extension of time to pay, the purchasor can not rely on the original agreement (it is usually considered that an agreement of this nature, the date for payment is a term of contract and failure to comply with it allows the vendor to walk away).


The other option is to squeeze your head around carbolic smoke balls but as I see it this is a very simple issue.

Reloc8

Robbie444 wrote: »

Newspaper advert “Opel astra for sale in excellent condition. Cost €8,000 or the nearest offer. If you are interested in purchasing this car please contact John via post”.
On the 1st of October Mary writes to John and offers to buy the car for €7,000 and requests that John contact her immediately if he is interested. John writes back the same day and requests that Mary pay the money in cash.
After further consideration Mary decides not to buy the car. She phones John on the 2nd of October and leaves a message on his answering machine. John is out of the country on business and does not receive the message that day. However, on the 2nd of October a friend of John's meets Mary and tells her that she is delighted that she is buying John's car. On the 4th of October John receives Mary's message and Mary receives John's letter. Mary continues to refuse to buy the car. John intends to sue her for breach of contract.


So basically I am trying to figure out if there was all the elements of a valid contract. Is it not true that Mary never actually accepted John's request to pat cash and would this not yield the contract invalid?

Aha...I had typed my answer above out before reading this.

In the situation you describe, Mary offered to buy the car for €7,000. John accepted. Mary changed her mind 'after further consideration' which seems unrelated to any question of paying cash (how was she intending to pay for the car ?). She did not stipulate in her offer that she would not pay cash, she did not request a particular method of payment etc. i.e. it is likely that the mechanism of payment was in fact unimportant to her, It is on balance likely that there is a contract enforceable against Mary.

The telephone calls are irrelevant - hers was basically a rescission of the contract, and it seems it was not accepted by John. As she has not in the above case articulated a valid reason to rescind, John is entitled to sue for Specific Performance of the contract (i.e. make Mary buy the car) or Damages calculated by reference to the difference between the price agreed with Mary and the price at which ultimately the car is sold at, if he should in fact resell it.

Ask yourself if John accepted the €7,000, asked for payment in cash, Mary refused and offered a cheque and John refused to accept payment would Mary have a good case against him to make him accept the cheque ? I would say yes.

What might be worth looking at is whether John's acceptance said 'I accept provided you pay cash' or similar words. This would indicate that perhaps not everything was agreed between them and no enforceable contract was concluded.

MrMicra

the examiner wants Robbie to look at the following areas.

Offer v Invitation to treat
Offers to the world at large
Does John make an offer or an invitation to treat
Partridge v Crittenden
Pimm Brothers
Lefkowitz
Tully
Carbolic Smoke Ball
Spencer v Harding

If an offer than Mary accepts it and the introduction of additional terms by John is not a revocation.
If not an offer than obviousy not accepted.


Acceptance, Offer and Counteroffer
If an invitation to treat does Mary make an offer? If an offer does Mary Accept or make a counteroffer

Does John introduce a new term and thus a counteroffer and therefore not accept

Postal Rule
Dooley v Egan
Revocation

The last 2 are red herrings (I suggest) but they are there for Robbie to get marks out of.

Robbie you should go to your tutor and explain that you are having trouble with problem questions. Do a few for practise (I know that this sounds mad) but the thing is that if you are doing an exam and you are confident on problem questions then you will finish the paper guaranteed. The marks are easier to get when you get the hang of it.

Reloc8

Woops - yet again I didn't really grasp that this was an academic issue hence urging to ignore that legalese mumbo jumbo.

Robbie444

I really appreciate all the help with this problem, thanks guys. Yes it has been stated that marks will be awarded for addressing all relevant 'laws regarding to this' type statements and applying to this situation. No further information is provided outside of the text a few posts ago so that's why it is a little ambiguous (well for me anyway). I think I have to address laws relating postage of acceptance 'postal rule', method of payment (cash), invitation to treat V Offer, all supported with case law examples, and determine whether John is liable to sue Mary in damages for breach of contract.

Reloc8

Robbie444 wrote: »

determine whether John is liable to sue Mary in damages for breach of contract.

Quick tip - when answering problem questions like this you would say 'whether Mary is liable to be sued successfully by john' or 'whether John can successfully sue mary' in formulating your advice. Minor style point.

Tom Young

It will all become clear once the lectures on terms, conditions and warranties conclude. I personally love it year on year once we get to Estoppel. Fun times.

MrMicra

do you lecture in contract?

Robbie444

Hi, just wondering if somebody has any suggestions on how to tackle this part of a question relating to the same topic of contracts & advertisement.

'The following week, Mary sees another add in the paper, this time for a moped. The add states “moped for sale - €700 for an immediate sale”. Mary contact’s John via e-mail and offer’s €700. John telephone’s Mary back and tells her that he is looking for €800. Mary tells him that she is entitled to buy the car for €700'
Advise.

From this I gather that this is another invitation to treat and not an offer so Mary has no entitlements to buy the car off John for €700. Am I way off here and is there more that needs to be addressed here?
Thanks

MrMicra

I take it that your tutor does not want a one word answer he wants an essay of 800-1200 words!

What makes an advertisement an offer to the world at large as opposed to an invitation to treat?

Robbie444

Yes, this seems to be the question asked here. I am struggling to find anything that discusses any circumstances where by an advertisement can be an offer rather than an invitation to treat. In this ad the seller uses the phrase 'immediate sale' which would imply his intent to enter a binding contract of sale if acceptance is communicated? I am assuming his response to the buyer is a counteroffer and renders the original offer void. So, the part that I am confused about is whether the seller has any rights to buy the car for the initially stated price?

Robbie444

MrMicra wrote: »

What makes an advertisement an offer to the world at large as opposed to an invitation to treat?

Is this actually possible?

dermot_sheehan

Yep,

Carbolic smokeball was such an ad

MrMicra

Robbie444 wrote: »

Is this actually possible?

Read the cases outlined above, it is a bit irritating for those of us who help you if you don't!

What made the advertisement in Carbolic Smoke Ball an offer?