Distinction between invitation to treat and offer. Response to invitation to treat does not result in a contract at that point.

Offer to sell for £1,000. Response offering £950 was counter-offer which destroyed original offer. Original offer was thus no longer available to be accepted.

Effect of counter-offer—not acceptance and destroys the original offer.

Seller offered to sell machine tool on terms including price variation clause. Buyers placed order on their own terms (no price variation) and sellers completed tear-off slip at bottom of this order stating that they accepted the order on terms in the order. Each considered the contract had been made on its terms. CA held there was a contract on buyers’ terms since (majority applying Hyde v Wrench) the buyers’ order was a counter-offer which had been expressly accepted by sellers when they returned the tear-off slip.

Battle of forms—counter-offer analysis is applied. The battle was won by last shot since this had been expressly accepted. The last shot often wins through acceptance by conduct of the last form, e.g. taking delivery of the goods.

D applied for shares in P company which allotted the shares and sent a postal acceptance, but it never arrived. Held: D had become a shareholder. The letter was effective on posting (postal rule of acceptance), and it was irrelevant that the letter of acceptance did not arrive.

Postal rule: where the acceptance is posted but is never received. Remember that the postal rule can be ousted by requiring actual communication of the acceptance (Holwell Securities Ltd v Hughes).

English company received telex offer from Dutch company. English company sent a response (a counter-offer). This counter-offer was accepted by the Dutch company. Where was the contract made? CA held it was where the acceptance was received, and that was in England because the acceptance had been sent by the Dutch to the English company.

Actual communication (receipt) principle applied to telex communications, so the communication took effect when received. Denning LJ analysed the position where problems existed in the communication process, e.g. telephone line goes dead or message is drowned out by aircraft overhead.

On 1 October Ds in Cardiff made offer in letter to Ps in New York. Ps received this on 11 October and immediately sent telegram accepting (postal rule applies). On 8 October, however, Ds had sent a revocation of their offer. This arrived 20 October. Held: there was a binding contract on 11 October when acceptance was dispatched since the revocation needed to be communicated to be effective.

Postal rule does not apply to the revocation of offer. Revocation is not effective until received, whereas a postal acceptance sent after dispatch of revocation but before its arrival would result in an immediately binding contract.

Ds advertised that they would pay £100 to any person contracting influenza after using their smoke ball three times daily for two weeks. CA held the advertisement was a unilateral offer of reward which was intended to be legally binding. This offer was accepted by anyone who performed the requested act. Since P had used the smoke ball as directed and had caught influenza, she was entitled to £100.

Most famous example of a unilateral contract (promise in exchange for an act). Unilateral advertisement is an offer. Acceptance was the performance of the requested act so that there was no requirement to communicate the fact that an offeree is attempting to perform.

Father promised son and daughter-in-law that if they paid all of the mortgage instalments on the house where they lived, he would transfer the house to them. CA held that the father’s promise was unilateral (promise in exchange for an act) and, once they had started to pay the instalments, they had a contractual right to remain in possession and seek to complete the act.

It is not possible to revoke a unilateral offer once the offeree has commenced performance of the requested act.

Commission was payable to an agent on completion of the sale of cinemas, and there was no implied promise by the vendors not to revoke that promise before completion occurred.

The terms of a unilateral offer may contemplate that the offeror is to remain free to revoke the offer at any time before complete performance of the requested act.