Contract Law - Offer and Acceptance Revision Sheet and Key Cases

Introduction

Contract law is a foundational subject of legal studies, providing the framework for understanding how agreements are formed, enforced, and interpreted. There are five elements of a contract:

• Offer and acceptance

• Consideration

• Intention to create legal relations

• Certainty of terms

• Capacity

For any student studying contract law, mastering the key legal principles and cases is essential for academic success. This article serves as a no-nonsense guide to the key principles of offer and acceptance and provides a table of landmark cases that have shaped this area of English contract law. Familiarity with these key principles and cases will help equip students with the necessary tools to navigate the complexities of contract law and provide the foundations to succeed in their exams.

Revision Sheet

🔑 Core Principles

• Offer vs Invitation to Treat

• Acceptance must mirror the offer

• Acceptance must be communicated

• Timing of acceptance depends on method

• Silence is not acceptance

  
  

📌 Offer vs Invitation to Treat

Offer

An offer is:

A clear expression of willingness to contract on specified terms, made with the intention that it will become binding upon acceptance

The offer must:

• Be communicated: An offer must be communicated to the other party by words or by conduct.

  
  

• Contain complete and certain terms: An offer must contain enough detail about the terms of the proposed contract (which are sufficiently certain) to enable a contract to be formed if the other party accepts the offer.

  
  

• Show an intention to be bound: The communication must be such that a reasonable person receiving it would have understood that the offeror intended to be bound by the terms proposed.

You can read more about offers (and how to identify them) here.

Invitation to Treat

Offers should be distinguished from invitations to treat. A communication is not an offer if, objectively assessed, the person making it did not intend to be bound by the terms proposed. The common law has established that in certain situations a communication will normally not be treated as an offer but instead as an invitation to the other party to make an offer (or to negotiate).

The following are normally situations that are deemed invitations to treat:

• Advertisements: An advertiser is generally not making an offer of the goods advertised. Instead, a purchaser makes an offer to buy which a retailer can accept or reject (Patridge v Crittenden [1968]).

  
  

  However, an exception to that rule is where a unilateral offer is made (Carlill v Carbolic Smoke Ball Co [1893]). This is where the offeror makes an open promise (e.g. offers to pay a reward or provide a benefit in exchange for another party completing a specific action).

  
  

• The display of goods in a shop or online. A retailer displaying goods is generally not making an offer. Instead, the purchaser makes an offer to buy when they take the goods to the till or submit their order online and the retailer may accept by conduct (Fisher v Bell [1961]).

  
  

• Invitations to tender (sometimes known as 'requests for proposals'). In a procurement situation, the invitation to tender is generally not an offer. Instead, the tenderer is making the offer when they submit their tender (Harvela Investments v Royal Trust [1984]).

  
  

• Auctions. A request for bids at an auction is an invitation to treat. Each bid made by a bidder constitutes an offer, which may be withdrawn at any time before acceptance (Payne v Cave [1789]).

✅ Exam tip:

• The default position is that adverts, displays, and invitations to tender are not offers.

  
  

• The exception is that clear and unilateral promises in adverts may be offers.

📌 Acceptance Must Mirror the Offer

Acceptance is:

Final and unqualified assent to the terms an offer.

The acceptance must match the offer exactly. This is sometimes known as the 'mirror principle'.

Acceptance by Conduct

Sometimes conduct will indicate agreement and be treated as acceptance of an offer, for example, where a supplier simply delivers the goods ordered and requests payment (Brogden v Metropolitan Railway [1877]).

Attempting to Vary the Offer

A purported acceptance which tries to vary the terms of an offer or add new terms, is both:

• A rejection of the offer (destroying the original offer); and

  
  

• A counter-offer from the offeree that the original offeror can choose to accept (Hyde v Wrench [1840]).

Requests for Information

Counter-offers should be distinguished from mere requests for information. Simply asking for additional information will not amount to a counter-offer (Stevenson v McLean (1880)).

✅ Exam tip:

• Ask whether the response changes the terms:

  
  

  • Yes = counter-offer

    
    

  • No = valid acceptance

You can read more on counter-offers and requests for more information here.

📌 Acceptance Must be Communicated

The general rule is that an acceptance has no effect until it is communicated to (received by) the offeror; the contract is formed at this point in time.

Silence

Silence or unexpressed intention does not equal acceptance (Felthouse v Bindley [1862]). There are limited exceptions to this rule (such as the conduct of one party indicating acceptance rather than explicit verbal agreement). You can read more on this here.

Specifying Modes

If the offeror makes their chosen mode mandatory to the exclusion of other modes, then the offeree can only accept by that mode (Tinn v Hoffman [1873]).

However, if the offeror specifies a method of communication for acceptance but uses non-mandatory language, then any mode that is no less advantageous to the offeror will bind them (Manchester Diocesan v CGI [1970]).

You can find more information on modes of acceptance here.

✅ Exam tip:

• Always identify:

  
  

  • Who communicated acceptance?

    
    

  • Was it received/known?

📌 Timing of Acceptance Depends on Method

The timing of the acceptance can be crucial when determining whether a contract has been formed.

Acceptance effective when Communicated

Instantaneous communication is effective when received (e.g. phone, emails etc) (Thomas v BPE Solicitors [2010] and Entores v Miles Far East Co [1955]).

Acceptance by Post (Postal Rule)

If the offeror expressly or impliedly agrees to acceptance being sent by post, then the contract is formed when and where the acceptance is posted by the offeree (Adams v Lindsell [1818]). This is known as the 'postal rule'. You can find a detailed explanation of the postal rule here.

✅ Exam tip:

Method	When binding?
Post	On posting
Email / phone / telex	On receipt

📌 Silence of Acceptance is Not Acceptance

As mentioned above, silence cannot constitute acceptance. An offeror cannot impose a contract on the other party by saying that silence means acceptance (Felthouse v Bindley [1862]).

✅ Exam tip:

• Acceptance requires a positive act or clear communication.

🔑 5 Step Exam Checklist

1. Identify the offer

   If advert/display/vague statement = likely to be an invitation to treat

   If clear promise with definite terms = likely offer

   
   

2. Check the valid acceptance mode

   If terms changes at all = likely counter-offer

   If terms identical = likely valid acceptance

   If asking for information = likely original offer still valid

   
   

3. Confirm communication of acceptance

Must be clear words or conduct

Silence = no acceptance

4. Apply timing rules

   Post = when sent

   Email/phone = when received

   
   

5. Reject silence-based arguments

Ask whether someone is trying to rely on silence as acceptance.

If yes, automatically invalid.

Key Cases

Case Name	Facts	Legal Principle
Carlill v Carbolic Smoke Ball Company (1893)	Company advertised £100 reward for anyone who used the smoke ball and still contracted influenza. Mrs Carlill complied and claimed the reward.	An advertisement can be a binding unilateral offer where it is sufficiently certain and shows intention to be bound.
Fisher v Bell [1961]	Shopkeeper displayed a flick knife in a window; charged with offering it for sale.	Display of goods in a shop window is an invitation to treat, not an offer.
Hyde v Wrench (1840)	Buyer offered £950 for a farm after rejecting the original £1,000 offer. Seller refused.	A counter-offer destroys the original offer; it cannot later be accepted.
Stevenson v McLean (1880)	Buyer asked whether payment terms could be varied (not rejecting the offer).	A mere request for information does not amount to a counter-offer; the original offer remains open.
Entores v Miles Far East (1955)	Acceptance sent by telex; issue was when acceptance took effect.	For instantaneous communication, acceptance is effective when received by the offeror.
Adams v Lindsell (1818)	Acceptance sent by post but delayed; issue was timing of contract formation.	Established the postal rule: acceptance is effective on posting, not receipt.
Felthouse v Bindley (1862)	Uncle stated that silence would amount to acceptance; nephew did not respond.	Silence cannot constitute acceptance; acceptance must be communicated.
Tinn v Hoffman [1873]	Parties exchanged communications containing slightly different terms.	Acceptance must be unconditional and correspond exactly to the offer (mirror image rule); otherwise no contract.
Manchester Diocesan Council for Education v Commercial & General Investments [1970]	Acceptance method specified in offer was not followed, but an alternative method was used.	Acceptance can be valid if it is no less advantageous than the prescribed method unless the offer explicitly states a mandatory method.
Payne v Cave [1789]	Mr Cave made the highest bid at a public auction. However, before the auctioneer dropped his hammer to accept the bid, Cave withdrew his offer.	An offer can be revoked at any time before acceptance.

Offer and Acceptance Flowchart for Exams

Below is an offer and acceptance flowchart that can be used for your exams. The key point in exams is often determining the exact moment the contract was formed (if at all).