Essay
Offer or invitation to treat
The distinction between an offer and an invitation to treat is easy to state and hard to apply. Discuss, with the cases on councils, shops, advertisements and auctions.
issue
When has a person shown a willingness to be bound as soon as the other accepts, and when are they only inviting offers?
rule
An offer is an expression of willingness to contract on terms that are fixed or can be fixed, made with the intention that it will become binding on acceptance. An invitation to treat invites the other party to make that offer. The test is objective. Everyday transactions have settled rules. A shop display and an ordinary advertisement are invitations to treat. A reward, or an advertisement that shows a serious intention to be bound and leaves nothing to negotiate, can be an offer. At auction the bid is the offer, unless the sale is without reserve, in which case the auctioneer has a collateral contract with the highest bona fide bidder.
application
Gibson shows how little is needed to keep a letter on the invitation side of the line. 'May be prepared to sell' was not an offer, and the House of Lords refused to abandon the analysis of offer and acceptance. Boots and Fisher v Bell fix the shop cases: the customer offers, the shop accepts or refuses. Harris v Nickerson and Partridge v Crittenden do the same for ordinary advertisements. Carlill is not a rival rule. The deposit and the wording showed the company meant to pay anyone who performed the condition, so the advertisement was an offer to the world. Warlow v Harrison and Barry v Heathcote Ball show the auctioneer's separate promise where there is no reserve. Spencer v Harding and the Blackpool case do the same work for tenders: the request is an invitation, but it can contain a promise that a tender lodged in time will be considered.
conclusion
The distinction is one of intention, read objectively. The hard cases are hard because the words are ambiguous, not because the rule is uncertain. Where the setting is a shop, an ordinary advert or an ordinary tender, the courts have already chosen. Where the maker has shown they will be bound as soon as the other side acts, Carlill shows that even an advertisement can be an offer.
Problem
Part payment of a debt
D owes C Le 10,000, due today. C agrees in writing to take Le 6,000 in full satisfaction. D pays the Le 6,000. C now sues for the balance. D says he paid because C threatened to break a separate supply contract if he did not. Advise D.
issue
Does part payment discharge the debt, and if not, can D rely on estoppel or economic duress?
rule
Foakes v Beer: payment of a smaller sum does not discharge a larger debt already due. Fresh consideration, such as payment early or payment of something different, or payment by a third party, is required. Promissory estoppel can stop C going back on a promise to accept less where D has relied on it, but it is a shield. Economic duress makes a contract voidable where illegitimate pressure left no practical choice. A threat to break a contract can be that pressure. The victim must not affirm.
application
The written promise to take Le 6,000 does not, by itself, kill the balance. Nothing extra was given. If D arranged his affairs on the faith of the promise, High Trees may stop C claiming the war-years equivalent, the period of reliance, but it will not give D a claim of his own. The threat to break the supply contract is a better point. If it was illegitimate and D had no practical alternative, the promise D gave under that pressure is voidable. D should say so promptly. If D paid and then treated the compromise as binding for a long time, Pao On and The Atlantic Baron suggest the duress claim will fail for affirmation.
conclusion
C can sue for the balance on Foakes v Beer unless D can show either reliance sufficient for estoppel or a prompt election to avoid a promise extracted by economic duress. The writing does not supply the missing consideration.
Essay
Illegality and the Sierra Leone illustrations
Explain the general rule that no action arises from an illegal contract, and the exceptions. Use the Sierra Leone cases.
issue
When will a court refuse to enforce a contract, or to restore what was paid under it, because the contract is illegal?
rule
Ex turpi causa non oritur actio. No action lies on an illegal contract, and money paid or property transferred under it is not usually recoverable. A contract illegal as formed is void from the start. A statute passed for the protection of the public, as distinct from a revenue penalty, makes a contract to evade it illegal. The illegal part is not severed if it taints the whole. Exceptions exist where the parties are not equally at fault, where the claimant was deceived, where there is genuine repentance before the illegal purpose is substantially performed, where only one party knew of the illegal purpose, and where the claim does not rely on the illegal contract.
application
Beckley v Evans applies the public-protection test to section 7 of the Road Traffic Act. An agreement not to report an accident, in return for payment of repairs, was illegal, and the party could not fall back on the original claim. Habib v Attorney-General is the licensing case. A dealer who handed diamonds to an unlicensed person to sell them could not ask the court to return the stones. Napier shows the tainting rule in a revenue fraud: the salary claim fell with the false expenses. Pearce v Brooks is knowledge of an immoral purpose. Hughes is the exception for a person tricked into the illegal policy. Bowmakers is the exception for a claim in conversion that does not need the illegal hire-purchase contract. Bigos refuses repentance that is only disappointment.
conclusion
The court will not help a party to an illegal contract unless the claimant is the person the statute protects, was deceived, truly withdrew in time, was ignorant of the purpose, or can sue without leaning on the contract. Beckley and Habib show that Sierra Leone courts apply that rule to local statutes, not only to the English illustrations.
Problem
Term or representation
During negotiations for a horse, the seller tells the buyer, who is about to examine it, 'You need not look. It is perfectly sound. If anything were wrong I would tell you.' The buyer buys without an examination. The horse is unsound. The seller says the words were only an inducement, not a term. Advise the buyer.
issue
Were the seller's words a term of the contract?
rule
The test is objective. A statement is a term if a reasonable person would have understood it as a contractual promise. A statement that the speaker knows is decisive for the other party, or that is made to stop that party making their own check, is readily held to be a warranty. Breach of a warranty gives damages. If the statement is also false and induced the contract, misrepresentation may give rescission as well.
application
The facts track Schawel v Reade. The seller stopped the examination and took responsibility for soundness. A reasonable buyer would treat that as a promise, not as a puff. Bannerman v White points the same way: where the seller knows the answer is the condition on which the buyer will contract, the answer is a term. The buyer can claim damages for breach. If the words were false, rescission for misrepresentation is a second route, subject to the bars of affirmation, delay and inability to restore.
conclusion
The buyer should treat the statement as a warranty and claim damages. The seller's attempt to call it a mere inducement fails on Schawel v Reade.
