Offer in Contract Law

Note on Offer in Contract Law by Legum

Offer and acceptance represent a crucial element of a valid contract. Courts usually look for an offer and an acceptance to determine if the parties have reached an agreement. Offer and acceptance can be by words, by conduct, a mixture of words and conduct amongst others.

An offer:

An offer is a proposal from one person to the other by which the one making the offer, known as the offeror or promisor, wish to be bound by the terms of the contract upon the acceptance by the party or parties to which the offer was made. An offer can also be defined as a promise to do something or refrain from doing something in exchange for something else.

For a promise to constitute an offer, it is essential that it has some sort of finality and clarity regarding its terms. Thus, statements such as “I may offer you $100 if you do X” do not constitute an offer. In the case involving Antwi v. N.T.H.C, the justices of the Supreme Court advanced that “the offer has to be definite and final and must not leave significant terms open for further negotiation” and that “if a communication during negotiations is not the final expression of an alleged offeror’s willingness to be bound, it may be interpreted as an invitation to the other party to use it as a basis for formulating a proposal emanating from him or her that is definite enough to qualify as an offer.” Similarly in the case of Gibson vrs Manchester City Counsel, the use of words such as “may” contributed to the ruling that no offer existed.

A General offer:

Whilst an offer may be made to specific parties, an offer can also be made to a group of persons or even to whole world. It is usually required that an offeror of a general offer indicates what is required of the offeree in exchange for the promise made in the general offer. For example, an offeror of a general offer has to state clearly what another party has to do in order to claim some form of consideration (e.g a reward) from the offeror.

This type of offer usually gives rise to a unilateral contract, thus a contract in which one party makes promises and the other does not have to make promises. In a unilateral contract, acceptance is usually demonstrated by performance. In the case of Carlill v Carbolic Smoke Ball, Carbolic Smoke Ball made a general offer which stated that anyone who used their smoke ball but still got influenza, was entitled to a reward. The proposition from the company constituted a valid offer as it stated the terms clearly amongst others.

General offers sometimes give rise to an occasion where an entity/person performs the terms contained in the offer without even knowing of the existence of the offer. In these circumstances, the general rule is that performance by someone who has no knowledge of the offer does not form a binding contract. This was the principle in Broadnax v. Ledbetter. The case of Gibeons versus Proctor also had an interrogation of this principle