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The purpose of this lecture is twofold: first, to make you aware of how an offer may be brought to an end, that is, terminated, under 4 headings: i. Revocation of offer ii. Lapse of time iii. Death iv. Failure of an offer-related condition. . and second, to introduce you to the key cases concerning Intention to Create Legal Relations.
Revocation of an offer Here we consider when and how an offer can be revoked. Three cases of interest are: • Byrne v Van Tienhoven 1880 • Dickinson v Dodds 1876 • Cartwright v Hoogstoel 1911
Revocation of offer and unilateral contracts When is it too late to revoke an offer when one is looking at a unilateral contact? Interesting cases are: • Errington v Errington 1952 and obiter in • Daulia Ltd v Four Millbank Nominees Ltd 1978
In the Errington case, the father bought a house with a mortgage and let his son and daughter in law live in it with the promise that if they paid off all the mortgage payments the house would be theirs. When the father died, the house was left to the widow who sought possession of the house. In the court case that followed, it had to be determined whether the widow could evict them because they were just tenants at will, or whether they had a contractual licence to occupy the house.
In the Daulia case, Goff L J stated obiter: ‘Whilst I think the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer. ’
Termination of offer by lapse of time If an offer is open for a specific length of time, acceptance will not be valid after the date has passed. If no time is specified then the offer will normally only be held to be open for a reasonable amount of time. A case in point is Ramsgate Victoria Hotel Co v Montefiore 1866.
The death of the offeror may not revoke an offer. If the contract can be performed by the deceased’s estate, then death may not revoke it. But, if the contract can only be performed by the deceased personally, then death obviously revokes the contract. If the offeree dies before acceptance, then usually there is no contract unless the offeree’s estate can perform the contract.
Intention to Create Legal Relations How do the courts determine which agreements demonstrating offer and acceptance are actually ‘enforceable’ in the courts? The two tests of enforceability are Intention to Create Legal Relations (ITCLR) and Consideration. Here we deal with ITCLR.
When ITCLR is looked at, it usually done so under 2 headings: 1. with regard to COMMERCIAL AGREEMENTS i. The usual presumption ii. Can an advertisement provide evidence of ITCLR? iii. Rebutting the presumption of ITCLR in the commercial setting iv. Where the words purporting to rebut the presumption are ambiguous 2. with regard to SOCIAL/DOMESTIC AGREEMENTS.
The ‘usual’ presumption In commercial agreements there is a presumption that in dealings between business people both sides intended their agreement to create legal relations - they intended that should things go wrong, the problem could be taken to court.
Can an advertisement provide evidence of ITCLR? Two of the leading cases here already familiar to us from an earlier lecture: • Carlill v Carbolic Smoke Ball Co 1893 and • Bowerman v ABTA Ltd 1996.
What happened in the Bowerman v ABTA case At first instance the plaintiffs lost – the trial judge correctly took the approach of reading the notice as ‘the public’ would understand it. However, even doing this, he found that there was no contract because there was: no offer no intention to create legal relations the terms in the notice were too vague to amount to a legally enforceable promise – there was thus uncertainty of terms • However, in the Court of Appeal, the plaintiffs were successful, per Lord Justices Waite and Hobhouse – with Lord Hirst dissenting.
The dissenting judgment of Hirst LJ only looked at the WORDS IN THE DOCUMENT not at the document as a whole as per the majority and concluded that they were too vague to amount to a promise.
Esso Petroleum Ltd v Commissioners of Customs and Excise 1976 The Customs & Excise could only recover purchase tax if the coins were ‘produced in quantity for general sale’ under s 2(1) of the Purchase Tax Act 1963, per Schedule 1. Were the coins ‘sold’ at the garages? Part of the argument in the House of Lords was that the coins could only be ‘for sale’ if there was an ITCLR. Was there?
Rebutting ITCLR in the commercial setting In the Bowerman v ABTA 1996 case Hobhouse LJ said that ABTA could have avoided ITCLR by expressly saying so in the advert. This is what was done in Jones v Vernons Pools Ltd 1939 and in Rose & Frank v Crompton 1923.
Where the words purporting to rebut the presumption are ambiguous Two important cases are: • Edwards v Skyways Ltd 1964 and • Kleinwort Benson Ltd v Malaysian Mining Corporaton Bhd 1989
Edwards v Skyways Ltd 1964 In this case Skyways refused to match the lump sum pension payment they had promised saying that although there was consideration for the promise, there was no ITCLR due to the phrase ‘ex gratia’. Was this what the court found?
Kleinwort Benson Ltd v Malaysian Mining Corporaton Bhd 1989 In the various meetings between Bankers and the Corporation it was made clear that it was the Corporation’s POLICY ‘not’ to ‘guarantee’ the borrowings of their subsidiary companies. A ‘letter of comfort’ was eventually provided by the Corporation to Bankers rather than a guarantee. It read: ‘It is our policy to ensure that the business of MMC Metals Ltd is at all times in a position to meet it’s liabilities to you under the above agreement’. Did this demonstrate the ITCLR or not?
Edmonds v Lawson 2000 Was the pupillage of a pupil barrister a contract of employment for the purposes of the National Minimum Wage Act 1998?
ITCLR in Domestic/Social agreements Here we can consider some of the key cases: • Balfour v Balfour 1919 • Merritt v Merritt 1970 • Jones v Padavatton 1969