Area means they are inviting contractors to submit

Area of Law

·        
Based on the facts stated,
the area of law in this part of the coursework is related to Contractual
Obligation related to offer and acceptance.

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Legal Issues/Questions

·        
Does
Will have a contract with BIMSoft?

·        
If
so, on what terms?

·        
Does
Will have a contract with AutoBIM?

·        
If
so, on what terms?

·        
Will approached Sean to quote
for BIM Generation and Management software. Is this an invitation for tendering? Does a tender consider to be an offer or an invitation to treat?

·        
Sean offered 10,500 pounds for
the software covering installation costs and staff training. Is he bound by his
offer if Will accept? Can he revoke his offer?
When he can revoke his offer?

·        
After Will accepted Sean’s
offer, he asked whether the cost could include o-n site training for newly
hired staff within six months of the contract starting date, is this a counter
offer or an inquiry?

·        
Unsure of his decision,
Will telephoned BIMSoft to revoke his acceptance, can he?

·        
Sean is not aware of Will’s
acceptance to his offer, does that mean that Will can withdraw his offer?

·        
Related to AutoBIM
advertisement, does an advertisement consider as an offer or an invitation to
treat?

·        
After Will accepted
AutoBIM’s advertisement, and placed an order, he discovered that the actual
cost will exceed 12,000 pound, he withdraw his offer, Can he revoke the offer?

 

Relevant legal principles

For Tendering:

When a party ‘the offeree’ is asking for tenders from
prospective contractors ‘the offeror’, this means they are inviting contractors
to submit quotations for the required task. The invitation might be directed to
specific parties or could be for the whole world to participate. Such request
will amount to an invitation to treat and the offeree is willing to accept or
reject any of them1.
The offeree may specify certain criteria related to how he will award the
tender. He might award the tender at the lowest price, at the highest price or
at the most economical price. In doing so, the position will be different
because it will be regarded as an offer in a unilateral contract2.
Whom received the invitation is not obliged to reply, but, if he do so, he has
to abide those criteria and insist to have a contract if he won the tender3.
This indicates the importance of declaring the terms on which the offeror will
make the tender and how the successful tender is going to be chosen. The
wording of the tender might also be a crucial factor specifying acceptance of
any bid4.

For Sean’s offer:

An offer is defined as when a
party intends to submit an offer that is capable of being accepted by another.
An invitation to treat is an invitation to the
offeror to make an offer, which the offeree is capable of accepting or
rejecting. In order to distinguish between an offer and an invitation to treat,
the facts have to be clearly considered. Sometimes the parties might have
reached an agreement on the principles of their contract, but the language they
have used might be seen from the court is more into an invitation to treat
rather than an offer5.
Meanwhile, in Storer v Manchester City Council6,
where similar facts to Gibson v Manchester City Council existed, a contract was
held to be formed. The situation also draws attention to the difference between
a bilateral contract and a unilateral one. In a unilateral
contract there is only one obligation. The offeree can activate the
contract while the offeror cannot, also, there is no obligation from the
offeree to perform7. Moreover,
the offer cannot be kept open indefinitely, only
for a reasonable time8.
It should be noted that a party who decide to revoke
their offer must communicate the revocation properly to be effective9.

For counter-offer:

A counter-offer exists when
the offeree changes the terms of the offer and return it back to the offeror
for acceptance10. An inquiry is different, when the offeree is asking
for additional information or the inclusion of additional terms, he is asking
more inquiries about the offer and he is not reverting it back. He is checking
whether the offeror is willing to negotiate11.
However, it is difficult to assess whether an inquiry is a counter-offer and,
as a consequence, is a rejection, it depends on each scenario and situation. If
the offeree is willing to accept the offer, acceptance must be exactly the same
as the offer12.
However, if the acceptance is almost the same as the offer, but not exactly,
new issues would appear. That is known as ‘battle of the forms’13.

For communication of acceptance:

When the offeree accepts an offer, he should communicate his
acceptance to the offeror14.
Courts have identified rules to determine if a certain acceptance has been
communicated properly. Communication of acceptance in unilateral contracts are
not required15. For
time of acceptance, many possibilities are applicable, it could be effect upon
reading by the offeror, or reading by an employee working in the addressed
place, or when it is received on the offeror’s fax machine, or in a reasonable
time allowing the offeror to read the acceptance16.

For Advertisement:

Generally, an advertisement will not be considered as an
offer because the intention of the person who put the advertisement will not be
easy to expect. By using an approach based on ‘promisor objectivity’17,
the result will be that the advertisement is an invitation to treat18.
However, if the advertisement wave the need of notifying the offeror of the
acceptance, it will be a form of a unilateral contract19.

Application

For Tendering:

Will is inviting Sean to submit a quotation for BIM
Generation and Management software, which is an invitation to treat. There is
neither an obligation for Sean to accept nor to reject. On the other hand, Will
is the one who has the final say whether to accept or decline an offer from
Sean, if it was made20.

For Sean’s offer:

If ND accepted BIMSoft offer of 10,500 pound for the
installation of the BIM software, the two strings representing the parties’
obligations have resulted to a bilateral contract. BIMSoft will install the
software if ND is willing to pay 10,500 pound. While in a unilateral contract,
the situation is different, only one part has an obligation21.

BIMSoft is willing to keep their offer available for a week.
In general, the offeror can specify a milestone for his offer validity and
ignore any trials from the offeree to accept the offer after the milestone is
lapsed. That was clearly illustrated in the case of Ramsgate Victoria Hotel Co
v Montefiore22,
where the defendant asked to buy shares in June but were only accepted in
November. He refused to pay as a result of the delay. The court held that the
offer had lapsed. Alternatively, not all offers has a lapsed time preventing
acceptance of such offers years later. Meanwhile, Buckley LJ23
thought that it was not easy to imply a reasonable time limit on behalf of the
offerror. Such assessment might be in the future when an offer had been made.

However, if ND decided to accept the offer, it cannot be
revoked. The offeror should notify the offeree of his offer withdrawal before
the offeree accept the offer. Upon doing so, he will be able to revoke his
offer, but if he failed to do so and the offeree accepted his offer, he won’t
be able to revoke it. Revocation of an offer will not be used in case of the
postal rule24.
The communication of withdrawing an offer does not have to be communicated
directly from the offeror, any reliable person can do so. In Dickinson v Dodds25,
Dodds offered a property to Dickinson, the offer was known to remain until 12th
of June. Dickinson knew later from an acquaintance that Dodds had withdrawn his
offer and was negotiating with another party. Dickinson sent an acceptance
before the deadline, but the property was already sold. He tried unsuccessfully
to sue for revocation and breach of the contract. The courts are not willing to
accept any claim for withdrawal of an offer up to acceptance26.
Moreover, if the offer is for a large number of people, it will be difficult to
communicate rejection to all of them27.Strong
J said in the (US) Supreme Court, the offeree ‘should have known that it could
be revoked in the manner in which it was made’. Meanwhile, in a unilateral
contract, acceptance happens through performance of an act. It might be seen
that, an agreement in a unilateral contract is enforceable once related
conditions is fulfilled28.

For counter-offer:

For asking whether the cost could also include on-site training
for any new staff ND will recruit within six months of the commencement of the
contract, the difference between a counter offer and an inquiry has to be
highlighted. In Hyde v Wrench29, Wrench offered to
sell his farm for 1000 pound to Hyde, Hyde offered 950 pound and Wrench
rejected the offer. Hyde then, tried to accept Wrench’s original offer. Lord
Langdale MR stated that when Hyde made his own offer ‘he thereby rejected the
previous offer made by the defendant’. Wrench’s offer was destroyed by Hyde’s
counter-offer and Hyde, after rejecting the original offer, could not accept an
offer he previously rejected. It should be clearly understood that only the
last offer would survive and the earlier ones are destroyed by whether
rejection or counter-offer. This rule is intended to prevent who makes a
counter-offer from having advantage of both scenarios30.
On the contrary, Lush J rejected the claims In Stevenson, Jaques & Co v McLean31 that the case was
similar to Hyde32. He
held that the telegram form was an inquiry and not a counter-offer. He
explained that the claimant was asking about the time limits the defendant
would accept. He highlighted that the difference between an inquiry which results
in a counter-offer and another one which does not, is difficult. The courts may
deal with each scenario differently. They will interpret communications for the
best way to implement justice33.

For communication of acceptance:

In the issue of communication of acceptance, there are
several ways. In face to face communication, it is obvious that the offeror has
received the acceptance, but in some other instantaneous communication methods
problems might happen34. The
difference between instantaneous communication and non-instantaneous (the
postal rule) should be clear. The postal rule is effective upon submission of
the acceptance by the offeree35.
However the postal rule is limited, it cannot be assumed to apply whenever post
is used. It is not acceptable if it is inconvenient36,
or in revocation of offers37 and
even when acceptance never received38.

Denning LJ illustrated in Entores v Miles Far East Corp39
the usage of the telex machine. He said that if the line disconnected while the
acceptance was being communicated, there would be no contract because the
offeror did not know the content of the message. The offeree should resend the
acceptance when the line reconnected. While Lord Wilberforce explained in
Brinkibon Ltd v Stahag Stahl40
the difficulty of one rule governing all cases. They should be solved based on
the intentions of the parties, business practice and by judgement where risks
lie. Moreover, if the offeree was confident that the acceptance was properly
communicated to the offeror and it was the offeror mistake that the message did
not went through his machine because his own negligence, he would be estopped
from denying that acceptance was communicated. That was held effective in The
Brimnes41
where the communication was a notice of withdrawing a ship due to late payment.

Following the modern methods of communications, courts are
treating fax, similar to a telex, as a category of the instantaneous form of
communication42. The
court in Entores43
was concerned with the place where the contract was made not the time. The case
did not provide an answer to when a telexed acceptance takes effect. For sure,
the postal rule44
cannot be applied since it depends on the acceptor releasing his acceptance,
whereas Entores requires the arrival of the communicated acceptance to the
offeror. The same should apply on message left on a telephone answering
machine. The message should be treated as read once a reasonable time has
passed to allow the offeror to listen to it.

The law do not provide a clear answer in relation to when
acceptance takes effect, but if it is decided that timing is when the
acceptance is received on the offeror’s machine, rather than when it is
actually read, this may lead to the possibility of retraction as a result of
delay between acceptance and actual communication. If the offeree decides on
retraction of the offer, he should rely on a point of time where acceptance
must have not been communicated to the afferor and he is unware of the
acceptance. The offeree in the this scenario, is relying on that the offeror
cannot have triggered the acceptance and started performing based on it, so the
offeror can suffer no harm from the offeree’s retraction. However, the
acceptance was communicated to BIMSoft engineering team as a result of the
company having a system which triggers automatic messages upon placing the
order. As a result, the engineering team acknowledged placing an order from ND.
This will be interpreted as a proof that the acceptance was already
communicated to the executive party and Will cannot revoke his acceptance. As a
result, Will has concluded a contract with BIMSoft.

For advertisement:

 

In general, an advertisement will not be considered as an
offer, it is likely to be treated as an invitation to treat more than an offer.
In Partridge v Crittenden45 the
defendant advertised bramblefinches and was sued under the Protection of Birds
Act 1954 for selling a wild bird. The court held that the advertisement was
just an invitation to start negotiations with interested people and not an
offer. A similar situation was illustrated in Harris v Nickerson46. The
situation is similar relating to display of goods. In Pharmaceutical Society of
GB v Boots Cash Chemists Ltd47
where the plaintiff was suing for the reason that certain drugs should not be
sold except under the supervision of a registered pharmacist48,
Somervell LJ explained that the contract was completed when the drugs were
presented at the cashier where the pharmacist was present. Displaying the drugs
on shelves was only an invitation to treat. In Fisher v Bell49,
the claimant sued relying on The Offensive Weapons Act 1959 which prohibited
the sale of offensive weapons. The court held that displaying the flick knives
was not offering them for sale, it was an invitation to customers to make an
offer for buying50.

Meanwhile, if the advertisement is a form of a unilateral
contract, the situation will be different. In the landmark case of Carlill v
Carbolic Smoke Ball Co51
the company advertised a medicine and promised that any purchaser using it in a
correct way would not get influenza. The company stated also in their
advertisement that any customer using the product and still got flu would be
entitled to receive 100 pound. Mrs Carlill got flu after using the medicine
correctly and sued for the 100 pound. The company argued that the advertisement
was merely a ‘puff’ and should not be taken seriously, but the court decided
that the company was obliged by the offer to pay the amount.

It is very important to understand the difference between
offer and invitation to treat even though it is not easy to draw. AutoBIM
advertisement was nothing more than an invitation to treat. Based on that
advertisement, Will called and placed an order. While discussing the deal
further with a technical staff, Will discovered that his requirements
(‘state-of-the-art’ software, installation cost, appropriate staff training and
on–site training for any new staff ND will recruit within six months of the
commencement of the contract) would be more costly than his expectation of
getting the package for 9000 pound and it will exceed 12,000 pound. As a
result, he withdrew his offer. An invitation to treat is an invitation for the
other party to make an offer, which the offeror is having the final say of
accepting or rejecting. When Will made an offer with his requirements, AutoBIM
replied with a new price, which Will did not accept and withdraw his offer. As
a result, there is no contract between ND and AutoBIM.

 

Conclusion:

Will has concluded a contract with BIMSoft, but
he does not have a contract

1
Spencer v Harding 1870 LR 5 CP 561.

2 Carlill
v Carbolic Smoke Ball Co 1893 1 QB 256; Lefkowitz v Great Minneapolis Surplus
Stores 1957 86 NW 2d 689.

3
Harvela Investments v Royal Trust of Canada 1986 1 AC 207; 1985 2 All ER
966; 1985 Ch 103; 1985 1 All ER 261; Blackpool and Flyde Aero Club Ltd v
Blackpool Borough Council 1990 3 All ER 25

4
Warren v British Boxing Board of Control Unreported, 20 May 2014.

5 Gibson
v Manchester City Council 1979 1 All ER 972; 1979 1 WLR 294; Harvey v Facey
1893 AC 552.

6 1974
3 All ER 824; 1974 1 WLR 1403.

7 Carlill
v Carbolic Smoke Ball Co 1893 1 QB 256; Lefkowitz v Great Minneapolis Surplus
Stores 1957 86 NW 2d 689.

8
See, also, Manchester Diocesan Council for Education v Commercial and General
Investments Ltd 1969 3 All ER 1593; 1970 1 WLR 241.

9 Byrne
v van Tienhoven (1880) 5 CPD 344.

10 Hyde
v Wrench 1840 3 Beav 334.

11 Stevenson,
Jaques & Co v McLean 1880 5 QBD 346.

12 Hyde
v Wrench 1840 3 Beav 334; Stevenson, Jaques & Co v McLean 1880 5 QBD 346.

13 Butler
Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd. 1979 1 All ER 965; 1979
1 WLR; British Steel Corp v Cleveland Bridge and Engineering Co Ltd 1984 1
All ER 504; Trentham Ltd v Archital Luxfer 1993 1 Lloyd’s Rep 25; RTS
Flexible Systems Ltd v Molkerei Alois Muller 2010 SC 14; 2010 1 WLR 753;
Tekdata Interconnections Ltd v Amphenol 2009 EWCA Civ 1209; 2010 2 All ER
(Comm) 302.

14 Taylor
v Laird (1856) 25 LJ Ex 329; Guthing v Lynn (1831) 2 B & Ad 232.

15
Carlill v The Carbolic Smoke Ball Co. Ltd 1893 1 QB 256; Harvela Investments
Ltd v Royal Trust Co. of Canada

Ltd 1986 AC 207.

16 Tenax
Steamship Co v Owners of the Motor Vessel Brimnes 1975 QB 929; 1974 3 All
ER 88; Brinkibon Ltd v Stahag Stahl 1983 2 AC 34; 1982 1 All ER 293.

17 Smith
v Hughes 1871 LR 6 QB 597.

18 Partridge
v Crittenden 1968 1 WLR 1204; Harris v Nickerson 1873 LR 8 QB 286; Pharmaceutical
Society of GB v Boots Cash Chemists Ltd 1953 1 All ER 482; Fisher v Bell
1961 1 QB 394. See also Mella v Monahan 1961 Crim LR 175.

19 Carlill
v Carbolic Smoke Ball Co. Ltd 1893 1 QB 256; Lefkowitz v Great Minneapolis
Surplus Stores 1957 86 NW 2d 689.

20 Spencer
v Harding 1870 LR 5 CP 561.

21 Carlill
v Carbolic Smoke Ball Co. 1893 1 QB 256.

22
1866 LR 1 Ex 109.

23 Ramsgate
Victoria Hotel Co v Montefiore 1866 LR 1 Ex 109..

24 Henthorn
v Fraser 1892 2 Ch 27.

25 (1876)
2 Ch D 463.

26 Routledge
v Grant (1828) 4 Bing 653; 130 ER 920

27
The American case of Shuey v United States 1875 92 US 73

28 Errington
v Errington 1952 1 All ER 149; Daulia v Four Millbank Nominees Ltd. 1978 2
All ER 557; Williams v Carwardine (1833) 5 C & P 566. See also Luxor
(Eastbourne) Ltd v Cooper 1941 AC 108; 1941 1 All ER 33; 1939 4 All ER
411.

29 1840
3 Beav 334

30 Atiyah,
1995, p 76

31
1880 5 QBD 346

32 Hyde
v Wrench 1840 3 Beav 334

33 Brogden
v Metropolitan Railway (1877) 2 App Cas 666; Pars Technology Ltd v City Link
Transport Holdings

Ltd 1999 EWCA Civ 1822; Scammell v Dicker 2001 1
WLR 631; Pitchmastic plc v Birse Construction Ltd (2000) The Times, 21 June
(QBD). See also Rosario v Nadell Patisserie Ltd 2010 EWHC 1886.

34 Apple
Corps Ltd v Apple Computer, Inc 2004 EWHC 768; 2004 I L Pr 34; Conductive
Inkjet Technology Ltd v Uni-Pixel Displays Inc 2013 EWHC 2968 (ChD).

35 Adams
v Lindsell (1818) 1 B & Ald 681; 106 ER 250.

36
Holwell Securities Ltd v Hughes 1974 1 All ER 161; 1974 1 WLR 155

37 Henthorn
v Fraser 1892 2 Ch 27

38 Household
Fire and Carriage Accident Insurance Co v Grant 1879 LR 4 Ex D 216.

39 1955
2 QB 327; 1955 2 All ER 493.

40 1983
2 AC 34; 1982 1 All ER 293.

41 Tenax
Steamship Co v Owners of the Motor Vessel Brimnes 1975 QB 929; 1974 3 All
ER 88.

42
SC Zestafoni G Nikoladze Ferroalloy Plant v Ronly Holdings Ltd 2004 EWHC 245
(Comm).

43 Entores
v Miles Far East Corp 1955 2 QB 327; 1955 2 All ER 493.

44 Adams
v Lindsell (1818) 1 B & Ald 681; 106 ER 250.

45
1968 1 WLR 1204.

46 1873
LR 8 QB 286.

47
1953 1 All ER 482.

48
Pharmacy and Poisons Act 1933 s18.

49
1961 1 QB 394.

50 See
also Mella v Monahan 1961 Crim LR 175.

51 1893
1 QB 256.