Unit 4
Offer and Acceptance
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Explain where the terms “offer” and
“acceptance” are derived from.
Discuss the term “offer” with specific
reference to the following:
- Elements of a valid offer.
- Legal consequences of an offer.
- Lapse of an offer.
Discuss the term “acceptance” with specific
reference to the case of Steyn v LSA Motors.
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Hutchison et al Chapter 2 pp. 48-62.
Crawley v Rex.
Bloom v American Swiss Watch Co.
Steyn v LSA Motors.
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“Offer”: Invitation to consent to the creation
of obligations between 2 or more parties.
“Acceptance”: Affirmative response to the
above.
Contract: The formation of a common
intention by the contractants through an
exchange of declarations.
Outward declarations are necessary for an
agreement to have legal relevance.
Offer and acceptance declarations indicate
the presence of consensus.
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Offer and acceptance declarations may also
be indicative of where and when a contract
generated legal consequences.
The time and place of the contract are
determined by the rules of offer and
acceptance.
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1. ELEMENTS OF A VALID OFFER:
Offer: Expression of will.
Made with the intention of creating an
obligationary relationship on certain or
ascertainable terms with another.
Declaration must be brought to the attention
of the addressee,
To allow him/her to create a contract,
By accepting same offer.
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Offer does not require a specific addressee to
be valid.
Example: Reward offered to broad public.
Some types of auction involve an offer made
to a specific class of persons.
Offer can be made expressly or tacitly.
Formalities may prescribe the way of
acceptance.
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Warrenton Municipality-case: Offer made
contrary to public policy will be ineffective.
To constitute an offer, a declaration of
intention must set out the essential and
material terms of the envisaged contract.
Often, advertisements and tenders do not
comply with the abovementioned
requirements.
Crawley v Rex.
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Even if declaration sets out the detail of a
proposed relationship with sufficient certainty, it
will only constitute a valid offer if…
it was made with the intention that the offeree
shall have the power to create a contract…
by accepting it.
Intention is derived from declaration and
surrounding circumstances.
All elements must be present to create an
obligation.
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Is declaration an offer or merely an invitation
to negotiate?
Depends on whether elements are present,
not classification of that declaration.
The legal effect of declarations by way of
advertisements, catalogues, circulars and
display of goods depends on the intention
with which offer is made, its content and its
form.
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Christie:
“What distinguishes a true offer from any
other proposal or statement is the express or
implied intention to be bound by the
offeree’s acceptance.”
Should the abovementioned intention be
lacking, the offeror lacks the necessary
animus contrahendi.
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The following will not constitute a valid offer:
Offer made
Offer made
Offer made
made;
Offer made
story;
Offer made
Offer made
in jest;
in anger;
as illustration of how an offer is
unintentionally while telling a
in a vague impersonal manner;
as compliment.
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Liability ex contractu is based on the
agreement of the parties.
An agreement cannot be created unilaterally.
Offer in itself does not create rights and
obligations between offeror and offeree.
Offer does give rise to the expectation of a
future right: offeree has the caacity to create
a contract by accepting offer.
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Legal consequences of an offer has limited
commercial relevance.
Offer can be revoked, because it does not
create obligation.
Because it doesn’t form part of the estate of
either the offeror or offeree, an offer lapses
at the death of either.
Offer cannot be ceded.
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3. Lapse of an offer:
Oos-Vrystaat Kaap Bedryf Bpk v Van
Aswegen:
Offer may be revoked by offeror:
Reason: Has no obligationary effect.
Revocation remains possible up until the
moment of conclusion of the contract.
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Argument has been raised that the right to
revoke offer lapses when offeree commences
his/her acceptance.
Revocation is effective when offeree receives
notice of such revocation.
An offeror who neglects to communicate the
revocation of his offer to the offeree, may be
held liable on subjective grounds.
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Because offer is not an asset/liability in the
estate of the either the offeror or offeree, it
automatically lapses at the death of either.
Offer lapses if not accepted by offeree.
Counter-offer is seen as a rejection.
An inquiry by the offeree merely to clarify
aspects of offer does NOT constitute a
counter-offer.
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Where offer stipulates a period for
acceptance, it lapses if not accepted within
that period.
Otherwise: lapses if not accepted within
reasonable time.
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Acceptance is also a declaration of will:
Lowe v Commission for Gender Equality.
Where an offer envisages a unilateral contract
involving duties for the offeror only, a tacit
acceptance would suffice.
A mere enquiry whether offeror would be
willing to change certain elements of the
offer, does not effect the validity of the
acceptance, provided it is not a PREREQUISITE
for acceptance.
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Christie:
An unaccepted offer cannot create a contract.
Reason:
“Since it emanates from the offeror alone, and
the necessary agreement cannot be held to
exist without some evidence of the state of
mind of the offeree.”
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Who has the power of acceptance?
Christie: “A simple contractual offer made to
a specific person can only be accepted by
that person.”
Acceptance by another person is ineffective
and does not create a contract.
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FACTS:
Mr Steyn was an amateur golfer.
Participated in golf day.
On one green a motor vehicle was parked
nest to a banner that read:
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Hole in One Sponsored by LSA Motors.
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Mr Steyn hit a hole-in-one on that particular
hole.
When he wanted to claim his prize, he was
informed that the prize could only be won by
professional golfers.
The “offer” made by LSA Motors was only
made to a specific group of people.
Mr Steyn must have been aware of the
regulation that an amateur player was not
allowed to win prize money to the value of
more than R600.
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DECISION:
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Mr Steyn is not entitled to the prize.
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RATIO DECIDENDI:
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Mr Steyn did not have the power/capacity to
create a binding obligation by accepting the
offer, because the offer was not directed at
him.
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Chitty:
If a method of acceptance is as advantageous
to the offeror as the method ofacceptance
prescribed by the latter, will suffice,
unless he has made it clear that only his
prescribed method will be accepted.
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There is a limitation to an offeror’s liberty to
indicate the mode of acceptance:
He cannot force a contract on the offeree by
saying that he will take the offeree’s silence
as acceptance.
If, however, there was a “duty to speak” on
the offeree, his/her silence may well be
viewed as an acceptance.