THE CONCEPT OF OFFER IN CONTRACT LAW

In understanding the concept of offer better, the following outline would follow:

• What is an offer?
• Instances of offer
• Invitation to treat
• Instances of invitation to treat

WHAT IS AN OFFER?

An offer can be simply defined as the act of presenting something for acceptance. This was buttressed in the case of Alfotrin vs Attorney General of the Federation where the federal govt of Nigeria employed the services of a company to supply cement. The foreign company then employed the services of the appellant to transfer it from Spain to Nigeria. On getting to Nigeria the port was jam packed. The federal government then requested that the appellant should redirect to a port in Ghana. Subsequently, the appellant requested for demurrage costs. The respondent denied liability. The Supreme Court decided that the action of the respondent in requesting for redirection was the offer while the redirection of the appellant was the acceptance. Thus it was held that there was a valid contract.

INVITATION TO TREAT

For an offer to be valid it must be definite and final. If it is just preliminary to an offer it is regarded as incapable of acceptance. This is usually called an invitation to treat. An invitation to treat is when a free agent makes it known to parties who might be interested that he is ready to enter into a contract. It is referred to as a solicitation for one or more offers.

In the case of Berliet Nigeria Ltd vs Francis the appellant sent a notice to the respondent (who was a worker in the appellant company) that following company policy, workers were entitled to buy shares in the company. The respondent applied for shares and was given a receipt. The company later didn’t award the shares to him. He sued and was successful in the high court. On appeal, the court of appeal held the first act of notifying the defendant was an invitation treat. Thus, the subsequent application for shares was an offer which could be accepted or rejected by the appellant.

INSTANCES OF INVITATION TO TREAT

Auctions: An auctioneer’s request for bids is not an offer but an invitation to treat. The subsequent bids are the offers which are accepted upon the banging of the gavel; Payne vs Cave, 58(2) SOGA.

Display of Good: The display of good in a market is not an offer but an invitation to treat. For example, in a market goods are displayed for interested sellers. The sellers would then make offers to the seller, which the seller could accept or reject. In the case of Pharmaceutical Society Of Great Britain vs Boot cash Chemist, it was decided that goods displayed in a chemist store are invitation to treat. The offer comes into play when the buyer takes tshe goods to the cashier which could then be accepted or rejected by the cashier.

Invitation to Tender: Inflation for tenders from interested parties is the invitation to treat. The tenders that are submitted are the offers of which the most preferred would be chosen.

Application for Bank loan: A person who makes application for a bank loan is inviting offer from the bank. The bank would reply by offering terms for the loan which could be accepted or rejected by the applicant.

TERMINATION OF OFFER

In discussing termination of offer, the following outline shall be employed:

• Termination by revocation
• Termination by lapse of time
• Termination by death
• Termination by rejection
• Termination by counter-offer

TERMINATION BY REVOCATION

Revocation of an offer occurs when the offeror rescinds the offer before it is accepted by the offeree. Thus, an offer can be revoked by the offeror even if he has already promised to keep the offer open. This would however apply if no consideration is furnished for the fulfilment of the promise by the offeror.

In the case of Mountford vs Scott, the defendant granted the plaintiff an option to pay for the purchase of a property withing a period of 1 month. Also, a consideration of 1 pound was paid in order for the offer to be kept open. Subsequently, the defendant purported to revoke the offer, it was held that since he has received consideration for keeping the offer open, he had to keep it open.

However, it is open to contention if the rule of revocation of offer can be applied in the case of a unilateral offer. It is reasoned that it would create injustice if the rule is strictly followed. For example, can A who offered a reward for the finding of his dog revoke the offer when he sees B coming along with the dog? There are four groups of opinion on this issue and they are:

Revocation is possible if performance is incomplete.

There is implied collateral in a unilateral offer that the offer can’t be revoked once acceptance has already started: that the offeree is entitled to a quantum meirut to reward him for his trouble if the offer is revoked when he has already started performance. That once performance starts, it can’t be revoked but the performance has to be completed before the offeree would be considered entitled to the reward.

The view in the fourth position was the one applied by the court in the case of Errington vs Errington. In this case, a father promised his daughter and her husband that they would be granted ownership of a house upon his death if they can repay the mortgage he borrowed on it. His daughter and her had already commenced the repayment of the debt when his wife, who was his legal heir revoked the offer. It was held that the offer can’t be revoked once acceptance is already proved to have already started before revocation.

TERMINATION BY LAPSE OF TIME

An offer can be terminated if it is not accepted within the period provided by the offeror. In a situation in which no time has been stipulated, the offer would be considered revoked after a reasonable period has elapsed. The calculation of the reasonable period depends on the individual circumstance of the case.

In the case of Ramsgate Victoria Hotel vs Montifiore it was held that the period of time from June to November is reasonable for an offer to lapse in the case of purchase of shares.

TERMINATION BY DEATH

An offer can be terminated by either the death of the offeror or the offeree. Where an offeree has notice of the offeror’s death, the offer is automatically revoked. However, if the offer was accepted before knowledge of the death of the offeror, the revocation would be dependent on the nature of the contract. If the contract is one that can be performed even if the offeror is dead, the contract would still subsist.

In the case of Bradbury vs Morgan, the court held that a contract of guarantee still subsisted in spite of the death of the guarantor. This is due to the fact that it can still be carried out after the death of the guarantor. With regards to the death of an offeree, an offer would lapse if the offeree dies before he accepts the offer. In the case of Kennedy vs Thomas, it was held that a contract for annuities no longer subsisted because the offeree died before accepting it.

TERMINATION BY REJECTION

An offer would be considered terminated if it is rejected by the offeree. However, if an offeree changes his mind after rejecting the offer, he can validly accept it. But this would only be applicable if the acceptance gets to the offeror before the rejection.

TERMINATION BY COUNTER-OFFER

A counter offer as previously highlighted occurs when an additional term is added to the initial offer. The additional term cancels the initial offer and it becomes a new offer that could either be accepted or rejected by the former offeror. In the case of General George Innih vs Ferado Agro Consortiums Ltd, it was said by the court that even the addition of a request for extra time serves as counter offer which nullifies the initial offer.

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