The Rules of Offer and Acceptance
The main issue is whether binding agreements had been made in relation to the following instances: –
- The statement made by Wayne that he would refer and mention the cookbook of Rey.
- The statement made by Wayne that he would provide Rey with half amount of the prize money.
- The prize that has been mentioned in the Baking Blind Magazine.
In the case cited as RTS Flexible Systems Limited v Molkerei Alois Müller GmbH [2010] UKSC 14, it had been said that an agreement shall come into existence when a particular offer is forwarded and such offer is accepted in an unequivocal manner. Similarly, in the case cited as R v Clarke [1927] HCA 47, it was specified that the determination as to whether an agreement exists or not, shall be made through the evaluation of the rules relating to offer and acceptance. It was specified that when a clear indication and willingness by a specific party to be bound and obligated on certain terms (which is offer) is mirrored by a clear acceptance, then, an agreement can be said to have been formed. In the case quoted as Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61, it was deliberated that any specific offer indicates a particular intent by the concerned offeror to be obligated and bound (in the absence of further negotiation or discussion), upon acceptance of the specific terms that have been forwarded. In the case known as Taylor v Johnson [1983] HCA 5, it was stated that any acceptance of a specific offer ensuing in an obligatory and a binding contract should take place along with the knowledge of the specific offer as well as an intent to accept such offer.
It should be noted that an ‘offer’ is certainly distinguished from an ‘invitation to offer’ or ‘invitation to treat’. In the case cited as Partridge v Crittenden [1968] 1 WLR 1204, it had been stated that an advertisement shall be considered to be an ‘invitation to treat’ and not an ‘offer’. It was further specified that in an ‘invitation to treat’, the service or product and the price of the service or product is informed by the seller to a large number of individuals (or organizations), and these individuals (or organizations) are actually invited in order to make their offer regarding the product. If the particular seller (being the offeree) wishes to accept any such offer (from a concerned offeror), then a binding agreement is created amidst the parties. However, in the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, it had been said that an advertisement (which may contain specific terms of receiving a reward) shall be considered to be a binding and obligatory unilateral offer (that might be accepted by any individual performing the specified terms) if it can be reasonable believed that the advertisement could be interpreted as a promise.
The case of Woolworths Ltd v Kelly (1991) 22 NSWLR 189 can be said to be an important case in connection to the given scenario. In this particular case, it was said that consideration is a very important element in relation to any binding agreement, in the absence of which no contract can be established. It was specified in this case that any promise shall be enforceable as contract only when such promise is actually endorsed by a consideration. Furthermore, in the case of Director of Public Prosecutions for Victoria v Le [2007] HCA 52, it was ruled that consideration could be anything from currency or money to a particular promise of undertaking or not undertaking any specific act. In the case of Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20, it had been mentioned that consideration shall mean that a specific promise has been given in exchange for a specific promise that has been received.
Offer vs. Invitation to Treat
The case of Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8 can be said to be a pertinent case in relation to the given instance. In this case, it had been stated that in any particular contract, the element of intention is very important, in the absence of which there cannot be any contract or binding agreement. In any contract, the parties should create a particular intent to form legal relationships and be legally bound by the contract.
In the case of Sadler v George Reynolds [2005] EWHC 309 (QB), it was specified that in case of ‘domestic contracts’ or ‘social arrangements’, the subject matter must be considered instead of the relation amidst the parties. It was suggested that where an oral agreement had been made amidst two friends, the oral agreement could be encompassed somewhere amid a social exchange and a clearly commercial transaction (and not a pure social transaction), and hence, in such regard, the onus shall upon one of the two friends to prove and demonstrate that an intention for establishing legal relations was present.
In the given scenario, Wayne initially made a promise to Rey to mention Rey’s cookbook twice every week in exchange of Rey’s promise to teach him how to bake cake. Afterwards, Wayne again made a promise to Rey to share the half amount of the cash prize with him if Wayne is able to win the competition. An advertisement was given in Baking Blind Magazine regarding the winner being able to meet with Hesta Bluefield, however, when Wayne wished to confirm that after winning the competition, he was told that the advertisement was merely a promotional stunt.
Wayne’s statements of (i) mentioning Rey’s cookbook and (ii) providing Rey with half prize money
Applying RTS Flexible Systems Limited v Molkerei Alois Müller GmbH [2010] UKSC 14 and R v Clarke [1927] HCA 47 in connection to Wayne’s statement about Rey’s cookbook, there would be a binding agreement because a particular offer has been forwarded and such offer has been accepted in an unequivocal manner. Applying Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61, the initial offer by Rey indicated his particular intent to be obligated and bound, upon acceptance of the specific terms by Wayne. Applying Taylor v Johnson [1983] HCA 5, the final acceptance by Rey of the counter offer of Wayne ensued in an obligatory and a binding contract and it has taken place along with Rey’s knowledge of the counter offer as well as Rey’s intent to accept such counter offer.
Applying Sadler v George Reynolds [2005] EWHC 309 (QB) in connection to Wayne’s statements about providing Rey with half prize money, it can be said that in the case of this oral agreement amidst two friends (Wayne and Rey), the oral agreement could be encompassed somewhere amid a social exchange and a clearly commercial transaction (and not a pure social transaction), and hence, in such regard, the onus shall upon Rey to prove and demonstrate that an intention for establishing legal relations was present in Wayne. The act of Wayne was merely a friendly gesture. Therefore, no legal intent existed on part of Wayne.
Applying Woolworths Ltd v Kelly (1991) 22 NSWLR 189 in case of statements about Rey’s cookbook, consideration was present on the part of Wayne as well as on the part of Rey. Wayne agreed to promote Rey’s cookbook and Rey agreed to teach Wayne to bake cakes. However, no such consideration or promise existed on part of Rey regarding statements about giving the half prize money. Applying Director of Public Prosecutions for Victoria v Le [2007] HCA 52, the considerations amidst Rey and Wayne existed in forms of promises. Applying Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20, Wayne gave a promise in exchange for a receiving Rey’s promise.
Applying Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8, the element of intention was present in Wayne and Rey in case of Wayne’s statement about promoting Rey’s cookbook.
Applying Partridge v Crittenden [1968] 1 WLR 1204, the advertisement by Baking Blind magazine shall be considered to be an ‘invitation to treat’ and not an ‘offer’. However, applying the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, it should be said that the advertisement by Baking Blind magazine (which contained specific terms of receiving a reward) shall be considered to be a binding and obligatory unilateral offer (that might be accepted by any individual performing the specified terms) because it can be reasonable believed that the advertisement could be interpreted as a promise. Hence, when Wayne performed the terms, he accepted their offer.
Conclusion
In the conclusion, it can be said that: –
- The statement made by Wayne that he would refer and mention the cookbook of Rey, shall be considered to be a binding agreement.
- The statement made by Wayne that he would provide Rey with half amount of the prize money, shall not be considered to be a binding agreement, it was merely a friendly gesture.
- The prize that has been mentioned in the Baking Blind Magazine shall encompass a binding agreement amid Wayne and the magazine.
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20.
Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61.
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1.
Director of Public Prosecutions for Victoria v Le [2007] HCA 52.
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8.
Partridge v Crittenden [1968] 1 WLR 1204.
R v Clarke [1927] HCA 47.
RTS Flexible Systems Limited v Molkerei Alois Müller GmbH [2010] UKSC 14.
Sadler v George Reynolds [2005] EWHC 309 (QB).
Taylor v Johnson [1983] HCA 5.
Woolworths Ltd v Kelly (1991) 22 NSWLR 189.
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