STEP 2: AGREEMENT BETWEEN THE PARTIES
1 Is there agreement between the parties?
For the agreement to stand there must be a 'meeting of the parties' minds', and one must ask whether there has been a firm offer and acceptance of that offer in this light. Agreement may be established by conduct (Clarke v. Dunraven ).
2 Rules relating to offer
- An offer must be distinguished from an:
- Invitation to treat
This is an offer to consider offers. Look to the intention of the parties (Pharmaceutical Society of Great Britain v. Boots Cash Chemists  and Partridge v. Crittenden ).
-- Where there is a 'reserve price', the auctioneer calling for bids is not making an offer but is asking for offers from prospective purchasers.
-- If there is no 'reserve price' the auctioneer becomes the offeror and must sell the goods to the highest bidder.
Tenders are not normally offers unless the tender states its exact needs, as distinct from what it may only require.
- Requests for information
A request for information is not a firm promise and so is not an offer. At the same time, it should not be seen as a counter-offer as it is only an attempt to elicit information (Harvey v. Facey ).
- The offer must be communicated to the offeree.
- The offer may be directed to only one person, a group of people, or to the world at large (Carlill v. Carbolic Smoke Ball Co. ).
- To keep an offer open for a specified time (an option), it must be supported by consideration (Goldsborough Mort & Co. Ltd v. Quinn (1910)).
- Any terms contained in the offer must be brought to the notice of the offeree.
- Any and all conditions must be strictly followed.
To be effective, withdrawal by the offeror must be brought to the notice of the offeree before acceptance, although the offeree can learn of the withdrawal directly or indirectly (Dickinson v. Dodds (1876)).
- Rejection or counter-offer
Refusal by the offeree or a counter-offer by the offeree will terminate the offer (Hyde v. Wrench (1840)).
- Lapse of time
Non-acceptance within a reasonable time (question of fact) or a stipulated time, or death of either party before acceptance will terminate the offer.
- Lapse by death of either party
If the envisaged contract is of a personal nature, the offer will lapse on the death of either party (Carter v. Hyde (1923)).
- Lapse by failure of a condition
If the offer is subject to a condition and the condition is not fulfilled, the offer will lapse. In the case of a condition precedent, the specified condition must be satisfied before the agreement can ripen into a contract. In the case of a condition subsequent the parties have agreed that the contract will fail as the occurrence of a particular event terminates the contract.
4 Rules regarding acceptance
- It must be made in reliance of the offer R v. Clarke (1927)).
- It must be strictly in accordance with the terms of the offer.
- It must be communicated to the offeror, either by words or by conduct. Mental acceptance, unless communication has been waived by the offeror, is insufficient (Felthouse v. Bindley (1862)).
- It must be conveyed by someone with authority (Powell v. Lee (1908)).
- Cross-offers do not give rise to an agreement (Tinn v. Hoffman & Co. (1873)).
- Only the person to whom an offer has been made may accept.
- It must be absolute and unqualified (Masters v. Cameron (1954)), or it may amount to a counter-offer.
- If the offer requires acceptance in a special way, no other mode of acceptance will suffice.
- Where the communication of acceptance is instantaneous, the contract is effective when the acceptance is received (Entores Ltd v. Miles Far East Corp ) .
- Acceptance must be made within the time specified or a reasonable time.
- Acceptance, once given, cnnot be revoked unless they agree to release each other.
5 Contracts by post
The post office is the agent of the offeror, whether by implication or expressly:
- effective when received by the offeree;
- revocation of the offer is only effective when received by the offeree;
- acceptance is effective on posting by the offeree (Adams v. Lindsell (1818) and Byrne & Co. v. Leon Van Tienhoven & Co. (1880)).