Agreement

Anne Street, Contract law

VIDEO TRANSCRIPT
We're going to look first at the basics of agreement. It's objectively determined. It's not what
people think they're doing, it's what the courts can assess that they are doing. Smith v. Hughes.
You must make agreement and the courts will assess whether objectively you have come to that
agreement. Smith v. Hughes case about buying oats, thinking old or new. One of the things about
learning cases, you don't need to know all of the facts. You need to know what we call the material
facts. What facts lead to a legal point that you need to discuss?
It doesn't matter here that he's buying oats, the issue was that there was a miscommunication
between the two, whether they were new or they were old. It doesn't matter what they're buying,
it's the issue is that there had been no meeting of the minds potentially. As with rules in law, no
rules are absolute. Well, perhaps when you get to land law and you say, "Is this a deed?" You can
tell black or white, yes or no, it isn't, but generally, we have rules and then we have exceptions to
the rules. Sometimes the courts will look at the intention of the parties as understood by the
parties.
The first thing we need to do in finding agreement is to identify the offer. If there's a exam
question and we're going to look our exam question. An offer is a statement of willingness to
contract on certain terms discussed in many cases defined by title. So when you're using academic
authority, it is acceptable to use academic writers. Not me, I'm not important enough. Like
Kendrick probably, that would be okay but definitely academics like Treitel, Pollack. They are well
respected academic sources, but you should be learning the cases.
Every year I will mark papers that have no law. About that I mean not that they don't perhaps
understand that they're looking for in an agreement, but there's no cases to illustrate what they
mean. That is not a legal answer. You're not going to pass. You need to support your arguments
with the cases. Finding an agreement. It's not when you just say that I would sell it. It's not a
statement of intention. That is not an offer because once you make an offer, you have an
obligation as the offeror, that there's a chance that somebody would accept it. You're entering into
legal negotiations. Saying what your intention would be. Here, it was an advert that they were
intending to sell equipment. That's not the same as saying, "I am going to sell," it was the intention
to do it. Read very carefully the wording in problem questions, what are people trying to do? Harris
v. Nickerson.

It's not either just a supply of information. Said question here, how much would you sell it? "If I was
selling it I would sell it for this." That is not the same as, "I am willing to sell it for this." It's a
statement that if I was going to sell it, that would be the price I would pay. Auctions and tenders. If
you attend an auction, the auctioneer will call out prices. He's not offering to sell. The offers come
from the floor. He is saying, "This is how much I would like to sell it for. You now make an offer to
me."

Student 1: I have a question. If I make the offer-- or as soon as I make the offer the contract is
formed there?
Yes. As soon as you make the offer there's a contract formed not as soon as I accept it. So if you
make the offer

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Student 1: I have to be the highest bidder.
Yes. If you've watched auctions on telly or you've been to auctions, you'll make an offer. I'll ask if
someone's got a higher because I want the higher bid. If nobody makes a higher bid, Payne v.
Cave. That's my acceptance, the hammer's gone down. Now again, that's not an absolute because
there can be if you've-- Well, people on eBay, you know that there can be reserve prices. If your
offer hasn't met the reserve, then I will not sell it to you. It would just be 'no sale' because I'm not
making the offer, I can choose to reject your offer as well. The offer comes from the floor and the
auctioneer then will accept it.

Student 1: If I make the highest bid and you accept it as the auctioneer, is there any exception that
I can say no I don't want it?
No. Once you've made the offer and I've accepted, the same as all contracts, once there's that
crystallization of acceptance, that's it.

Student 1: That's an order.

Yes. Obviously, if you make the offer and I say "Oh, I'm just about--" because usually, they say, "I'm
just about to accept that offer," you can say, "No, I've changed my mind," because you can revoke
an offer any time before it's been accepted but when that hammer goes down-
I've never been to an auction I'm only saying what I've seen on telly, but usually they'll say, "Well,
I'm going to sell to you. It's going, it's going." Before I say "Gone," you can say, "No, I've changed my
mind" because you can revoke it anytime before acceptance, but once I say now it's yours, "Gone,"
that's it. It's a crystallized moment.
Now, there's an interesting side to auctions and tenders that you might have seen in cases like
Blackpool v. Fylde Aero Club, and in this case, Barry v. Davies. If I am the auctioneer and I place an
advertisement saying, "I am going to sell these goods without reserve on Saturday, the 2nd of
November," and you come to the auction and you make the highest bid, as the auctioneer, I have
entered into a unilateral contract to the people who have attended and have made the highest bid
because I said If you come I will sell to the highest bidder. If I refuse to sell to the highest bidder,
Barry v. Davis, then you have a contract with the auctioneer.

The auctioneer-- Let's say you're buying a vase and I don't accept your highest bid and it was
without reserve, you don't get the vase because I am acting as the agent of the seller of the vase,
but you will sue me as the auctioneer for the cost of buying a vase of that kind because I said I will
sell these lots on this day if you are the highest bidder and you have turned up, you performed
what you needed to do, you were the highest bidder. If I then don't follow through your
acceptance, is turning up in the highest bidder, then at that point, I'm now going to breach my
contract and I owe you damages.
You won't get the vase, because the vase belongs to the person who's selling it, but you will get
the price of finding a vase like that. Does that make sense?

Student 1: Yes, it does.

Yes, so there's two contracts. It's a unilateral contract made without reserve, Barry v. Davis, you
won't get what you're bidding for but you'll get the money because I promised I would sell it to
you. Then classic one, displays of goods. Fisher v. Bell, a case on statutory interpretation. What
does it mean to offer for sale? Very technical decision. Display of goods is not an offer for sale.
Fisher v. Bell. No, it's an advertisement, generally, an offer to sell even if you say, "I am offering for
sale," your language is irrelevant.

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Objectively assessed what have you actually done. Now there’s a logic to this. The logic is if my
display of goods or my advertisement is an offer and I only have a limited number of those items,
then if I may get an offer, unless I have got five items and six people turn up, I can’t sell six of them
because I don’t have them. It would immediately put me in breach of contract with one of those
people. The logic is that when you come into the shop or you respond to my advertisement, you
make the offer. Then I can choose to accept it or not. It’s a practical solution.
Now there’s comments in the Fisher v. Bell, Partridge v. Crittenden. It's the same judge, it's Parker
in both of those cases. This may be different if I was able to manufacture. If I was a manufacturer of
let’s say dolls, then I could probably say that it’s possible for it to be an offer. The general
presumption would be that there’s an invitation to treat. I’m inviting people to come in and make
and offer. It’s an invitation to treat really in all of those. In all of those, you're saying, "Let’s start
negotiations." It is just a start of negotiations. I could say, "My intention is to sell, but you make me
a good enough offer, then I will." It’s important to identify what those initial transactions are. We’re
going to see that in our problem question.
All of those are merely invitations to treat. Remember when you’re writing your answers that is a
legal term. Tell me, the examiner, that you know what that means. Don’t just assume. Obviously, I
do know what it means because otherwise, I wouldn’t be here, but tell me that you know because I
need to know that you know these definitions. There are cases that you can use to illustrate what
you mean. Some cases set the rule. They are the ratio. For example, these cases, the ratio of these
cases is the display of goods, auctions, etc, they are merely invitations to treat. They are cases that
establish the rule. Two cases that I’ve always referred to. Gibson v. Manchester City Council. Storer
v. Manchester City Council.
These cases illustrate how the courts apply these rules. It’s not that they established the rules, they
are cases which illustrate how the courts will apply the facts to these rules. In lots of answers, I get
lots of detail about what happened in, well, in all of these cases. I know Partridge v. Crittenden
were selling bramble finches, five-shillings I think. Well, most of you perhaps can’t remember what
a shilling is. You’re talking about money you don’t even know. I don’t need to know it's a bramble
finch. It’s not important. You only need to remember key facts. It was an advertisement, and
although it was very clear and precise, it was merely an invitation to treat because of the logic.
You can use cases, Storer or Gibson, to illustrate how they apply to your facts. "This is like Storer
because--?" Or, "This like Gibson because--?" You don’t need to tell me all of the facts of these
cases. It eats into your time. You’re going to be time-pressured. You’ve got the three hours to
answer four questions. It's a lot to do. Do not waste time on telling me things that are not going to
get you credit. You can use facts to say, "I’m going to distinguish Storer from this case. I’m going to
distinguish Gibson." You can use facts in that way but don’t just tell me everything that happened.

I talked about a unilateral offer. I talked about it in relation to auctions. Can also be displays of
goods or it can be adverts. Remember that an offer is an intention to be bound on certain terms. If
the terms are uncertain then you can’t accept it. If you don’t know how much something costs, I’d
suggest that’s not an offer because how much have you got to pay for it? Key terms that are
missing would suggest that this is an invitation to treat. Again, you can see my language here is I’m
not guaranteeing because lawyers never guarantee. Because if we guarantee something and it
doesn’t happen, we may get sued. I’m suggesting that if the price is missing, you haven’t got an
offer. I’m suggesting that if key terms are missing, you merely have an invitation to treat.

Sometimes advertisements, auction, catalogs, displays of goods can be sufficiently certain to turn
that general rule into an offer. We’ve got the classic case of Carlill. Carlill v. Carbolic Smoke Ball. The
case that everybody will remember. There was an advertisement that if you bought these smoke

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balls and you use the smoke balls and you caught the flu then you would be given £100. They
were so confident that they put £1,000 in the bank because they didn’t think anybody would ever
catch the flu. Putting the £1,000 in the bank showed both an intention to create legal relations and
an intention that this advertisement should taken seriously. It was an intention the court found to
make an offer. They took it perhaps over and above the general adverts at the time.
Adverts at this time-- There were adverts in the 19th century that would stop people getting
divorced. People were selling things and they obviously weren't going to work. The argument was
that Mrs. Carlill bought the smoke balls, used the smoke balls, caught the flu. She wanted her £100.
Smoke Ball company said, "Well, this is just an advert. It didn’t really mean that we would give you
£100." The court said, "Well, why did you put £1,000 in? You must have intended this to be taken
more seriously." It was sufficiently precise and certain. She had to buy the ball, use the ball, catch
the flu. That’s how she accepted.
Remember I said the logic behind displays of goods and adverts is that you might run out of stock.
That logic doesn’t apply here because if she went to the pharmacy to buy the balls and there were
no balls to buy, she couldn’t accept. If she went to the pharmacy but there are balls, that’s her first
step in acceptance. Then she used the ball, that’s the next step of acceptance. Then she caught the
flu. That was her final act of acceptance.
The court here found that this advertisement was an offer. An offer made to the world or to a
group of people. Unlike bilateral, it’s between me and you, it’s between the offeror and a class of
people. Maybe a big class, maybe to the whole of UK or it could be to this group. It doesn’t have to
be to the whole world. It’s if you do this, then I would do that. The classic example I usually give is a
reward. If you return my dog, I will give you £20.
Once you’ve established that there is an offer, it must then be communicated. The offer must be
communicated, Taylor v. Laird, because it’s a meeting of minds. You cannot accept an offer that
you are unaware of. R v. Clarke. Now there’s an unusual case to go with this authority, so general
rule is that you can’t accept it if you don’t know. In Gibbons v. Proctor, information was given that
would lead to the arrest of a person and then a potential reward. When the information was given
originally, police officer wasn't aware that there was a reward. But the information had to reach the
Chief Constable. By the time it reached the Chief Constable, he was aware. That he became aware
of the unilateral offer before performance was complete.
A few years ago, there was an exam paper-- slightly more than a few years ago, it all blends into
one-- but somebody was running a marathon. They didn't know that if you run a marathon-- I
think he was dressed as a chicken. They were dressed as a chicken. They didn't know that there
was a reward for that. But halfway around, somebody informed them that there was a reward.
That's Gibbons v. Proctor because by the time they finished the marathon they were aware now
that running the marathon dressed as a chicken, that was going to get them a reward. They set off
not knowing but they found out halfway through.

Your general rule is, when you start you've accepted, what you didn't know is that by the time that
I finish my acceptance,-- If Mrs. Carlill had bought the smoke balls not aware of the advert and had
started using it and then seen the advert, then she would have been aware of it by the time she
caught the flu. It's that principle.
Does it not matter that it wasn't communicated to them as a bilateral? If it's a bilateral then I must
communicate to the offeree. But of a unilateral, you're putting it out there to the world, and
therefore it can be communicated through any of those means, as long as I become aware of it.
You're not restricted by the means of communication now.

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What will happen very often in an exam question is that there is that ping pong, backwards and
forwards. You make an offer, there's a counteroffer, which might be countered. It'll go backwards
and forwards with people like the Battle of the forms Butler v. Ex-Cell-O. You have to identify
where the final offer comes, who is making the final offer. It may be that I say, "I want to sell you
my car for £500." You say, "I'll pay you £400." Now, I really want the £500 so I made an offer.
You made a counteroffer, I've now made a counteroffer. You say, "Well I've only paid £450." You've
now come to offer it back to me. Identify where the final offer comes from. Because that was
important, because it's the person who makes the offer that will be bound, and the person who is
the offeree, they then can accept. It's the acceptance of an offer that is usually more complicated.
Identify where the offer comes from.
Then acceptance of the offer. Again, objectively assessed by words or conduct. "Yes, I accept," or
you turn up and you'll perform. Generally, silence, Felthouse v. Bindley, generally, silence is not an
acceptance. However, when you're reading the study guide, you've got a reselect move suggested
sometimes it might be okay for there to be silence. Where the offeree has said, "Well, if you don't
hear from me by this date, assume that I've accepted." The argument is if the offeree is willing for
the person to whom the offer is made, if the person to whom the offer is made is willing for silence
to be accepted, it's every logic to say, "Well then that's what you've agreed." The freedom of
contract. If that's what you've agreed that silence will work.
Really on the facts of Felthouse v. Bindley the argument would be, "Well, if that's what the uncle
said that's what the uncle meant." Your general rule is that silence is not enough. However, there
can be situations where if the offeree has agreed that "Should you not hear from me by five o'clock
assume that I'm buying it." There's every reason to give effect to their intention. Then the effect of
a counteroffer. A counteroffer extinguishes the original offer. Like my example about the car, I'll
sell it to you for £500. You'd only pay £400. At that point, my offer has ended.

Student 1: Even if you step to the £500?

It's just that two statements, "I'll sell it to you for £500." "I'll pay £400." I say no, I've rejected. You
can't then say, "Okay, I'll pay you £500" because my original offer has now ended. If you say, "Okay,
I'll pay you £500," you're now making the offer to me. You offered £400, I rejected it. You're now
offering £500, and I'm free to reject that or not. The original offer comes to an end. Even if you say,
"Okay, I'll pay you what you originally wanted." I'm free to reject that because you are still now the
offeror. Does that makes sense?

Student 1: Yes, it does.

Distinguish between the counteroffer or requesting information, where you're just clarifying the
terms of the offer. Stevenson v. McLean.

Student 2: Can I ask you a question about Gibson in relation to conduct in a quest for information.
Gibson was upheld by the Court of Appeal. It seemed as if Manchester Council, by giving up
maintenance on Mr. Gibson's property, was indicating that they no longer owned it. Mr. Gibson,
who then funded the repairs on his estate home, did, by his conduct, indicate ownership. The
question that he asked of the city council was simply, "Does this include a discount for
maintenance?" That was simply a request for information, not a new offer. Gibson has, of course,
was overruled by the House of Lords, but to me, it looks like a political decision rather than a legal
one.

Okay, Gibson, being a political decision, that if you know the politics of selling social housing, it
may be, but the argument was that although they had acted what could have appeared
objectively to be dealing as if there had been an acceptance, they looked very much at the words.

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The parole law is if you've condensed your contract to writing, we don't look externally at your
conduct, we look only at the writing. It may be a political decision, but that was the decision of the
court, based on the wording.

Request for information. "Can I pay you in installments?" You're not saying I won't pay you, you're
just clarifying what the offer is. It's not an acceptance either, but what it means is that that original
offer is still there. "Will you take it in installments?" "No, I won't." "Okay. I'll accept your offer." I
might get a counteroffer which kills the original offer. This one stays alive. Does that make sense?
Then communication. There's usually something about this in the exam papers, not always,
obviously. The general rule is that the communication must reach the offeror, Entores.

Case names. Some case names are extremely long. If they are commonly shortened in textbooks
and in the study guide, then you can shorten them. Entores, High Trees, cases like that are
generally just referred to by a single name. But cases like Felthouse and Bindley is Felthouse v.
Bindley. Smith v. Hughes is Smith v. Hughes. Don't make a unilateral decision to just shorten
names, especially if it's Smith, because it is the most common name in this country. I won't know
which Smith you mean. If it's Smith v. Hughes, it's Smith v. Hughes. If it's long cases like Manchester
Diocesan is a quite long name Entores, lots of shipping cases, they go by the name of the ship, you
could then use that shortened version. You don't have to keep widening it out in full.
The general rule is that it must reach the offeror because it's an agreement, it's a meeting of minds.
You can prescribe a mode of communication. You could say, "You have to accept by writing. You
have to accept by email. I'll only accept this if you turn up in a horse and cart. If that's what I've
said, that's what I mean. In Manchester Diocesan, if this is the only method, then I must make it
clear that it's the only method, but if I give a method that you've used and much more effective.
If I've said, I'd like it by letter, but you meet me in the street, that's a much more effective means of
communication. I can't then say, "No, it has to be in writing," unless, of course, I've said I will only
accept posted acceptances. If I've insisted on a method of communication then that's how I want
it. Students where I teach it at SOAS they can submit their work, but it has to be in a prescribed
form. It's very clear that's the only method that we will accept. It has to be in that format. It has to
be in that type of file. Nothing else would do. Otherwise, I could argue, "Well, I handed it to you in
person." That's not acceptable. It must be by that means.
I've said it must reach the offeror. There are situations where the courts may, if you like, construct
communication. They will look at when you should have received it. In a commercial context, if I
send you a message or I leave a message on your answering machine or I send you an email, and
for some reason we still use faxes in our problem questions, you send you a fax, at the start of
business, I expect that communication to have reached you, and I am entitled to believe that
communication has reached you. That's how you run an effective business, you check your
communications.
If you make an offer, there's an obligation, and if you've made an offer, there's a risk it's going to be
accepted. Therefore I have to take that seriously. The Brimnes in a commercial context then it
would be during normal office hours. That obviously will depend. Normal office hours for some
businesses maybe eight in the morning till six at night. The schools, I think it's nine to seven at
SOAS. It will depend, some businesses work on a Saturday. That's the context. You can't say, "As a
business, well, I just don't check my emails." Well, you should. If it's a commercial agreement, you
should. That rule probably doesn't apply in domestic situations. If it's two consumers that are in
this negotiation, and you leave a message on their voicemail or you send an email, it's when it
actually reaches them, we go back to the general rule.

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For a unilateral offer, it's complete performance. For Mrs. Carlill, it was when she caught the flu. She
started to perform when she bought the balls, she caught the flu, that's when she had complete
performance.

Student 3: Is there is a rule that you can't withdraw an offer once someone has begun
performance?
Yes, I'm going to get to that. The biggest exception, the postal rules, Adams v. Lindsell. The postal
rules only apply if the post is an acceptable means of communication, Tinn v. Hoffman. If our
negotiations have been over the telephone or face to face, you can't then just decide to send me a
letter and say the postal rules apply because our negotiations have been face to face. If our
negotiations have been over the post, or perhaps I put my postal address there, it might suggest
that the address is there that I'm willing to use the post, it might suggest. Certainly if our
negotiations have happened by the postal system, then we are happy to accept the postal rules.
The postal rule is that the acceptance is binding the moment it is posted, not when it arrives.

The moment it is posted, that is your acceptance, even if it never arrives with the offeror, even if it
gets lost in the post.

Student 3: How do you prove that?

I swear on the Bible! And of course, I wouldn't lie. The question of evidence can be a different
issue, but you just have to accept-- Certainly in our problem question, just accept what's
happened, but if you're serious about it, you can get proof of postage. That would be a question of
evidence rather than the law. It's acceptance once it's posted, as long as it's properly addressed
and properly stamped. If you put it into the post and it's not got the stamp on it, postal rules don't
apply. If you hand it to the postman, it don't apply because the postman's job is to deliver post not
to collect post. You've got to put it into the post box. It must be acceptable, you must address it
and stamp it properly, and the offeror must have had excluded the postal rule.

Cases like Household Insurance v. Grant. Holwell Securities. You can say, "I need to hear. You must
let me know by five o'clock." By those words, I had excluded the postal rules because I've said, "I
need to know. You need to let me know." Not just legally accept, because that's a technical rule,
you must let me know. By those words, I've excluded the postal rule. It's a temptation when people
see letters in an exam question, they'll think, "Well, that is the postal rule." It's not necessarily
because you must prove it's acceptable to use it and it hasn't been excluded. It only applies to
acceptance. That's why it's important to know who's made the offer. The offer is not the postal
rule, it's the acceptance that is the postal rule.
Once you've found an acceptance, you then make sure, in answering your question, that it was
capable of acceptance and that the offer had not already come to an end. I can't accept an offer
that's already come to an end. It may lapse. It may just lapse for time. Ramsgate Hotel v.
Montefiore, offers remain open for a certain amount of time. Or sometimes in the exam questions
it will say, "I need your acceptance by five o'clock on Friday." My offer lapses then at five o'clock on
Friday. You can't accept it at two o'clock in the morning on Saturday because my offer came to an
end. It lapses when I say I need it here by a specific time.
There may be certain conditions, express conditions are inferred. In Financings v. Stimson it was
the purchase of a car. The implied condition is that when I go to pick up the car is in the same
condition as when I saw the car, and there'd been some damage to it in between, or then the offer
ended because the condition would be it must be in the same condition of which I made the offer.
Revocation. The example we had at the beginning. Anytime, Payne v. Cave, any time before
acceptance. With unilateral offers, which is the performance of a task, the argument you have in

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Errington v. Errington Woods is that if somebody has begun to perform and is willing to complete
performance, then you shouldn't be allowed to revoke your offer.
If Mrs. Carlill had bought the balls and started using them, at that point the argument would be
from Errington v. Errington Woods is that now Carbolic Smoke Ball can’t revoke their offer because
she has started to perform and she's willing, well not willing, she doesn't really want to get the flu,
obviously, but there was a possibility that she would get it. The communication must reach the
offeree. Again, it's your general rules of communication, it must actually reach the offeree. Where a
unilateral offer, you don't need to communicate that you're accepting, the performance is the
acceptance. The general rule again, Entores, the communication must reach the offeree.
One issue is if the post has been used to accept and you want to revoke before you receive the
letter. Can you, as a matter of English law? The answer is no, but there is the Scottish case of
Alexander v. Dunmore that suggests, well, if you hear that the offer's been revoked before the
letter, the speech. Then what's the harm? But that is a Scottish case. Remember, it's persuasive
only. You might want to put it into your answer. The rule will be if the acceptance has gone into
the post, that's it. The contract is crystallized. You can't now evoke it.

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