Notes
- ↑ [2000] 1 WLR 1962
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Payne v Cave (1789) 3 TR 148 is an old English contract law case, which stands for the proposition that an auctioneer's request for bids is not an offer but an invitation to treat. The bidders make the offers which can be accepted by the auctioneer.
Mr Cave had made the highest bid for a good in an auction. But then, Mr Cave changed his mind and he withdrew his bid before the auctioneer brought down his hammer.
It was held that Mr. Cave, the defendant, was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer. Note: The common law rule laid down in this case has now been codified in many countries in variations of the Sale of Goods Act, e.g. UK 1979 s57(2).
The court held that Mr Cave was entitled to withdraw his offer at any time before the auctioneer accepted it. The auctioneer's request for bids was an invitation to treat, and each bid constituted an offer which could be withdrawn at any time until it's accepted, and finally, the fall of the auctioneer's hammer constituted acceptance of the highest bid.
Barry v Davies [1] qualified Payne by ruling that if the auction is advertised as being "without a reserve price", then the auctioneer is bound to sell to the highest bona fide bidder (and not the seller himself, as attempted in Warlow v Harrison ). Also, the Sale of Goods Act 1979, s 57 states that if an auction is held without any reserve, then the auctioneer must accept the highest bid (this was subsequently applied in Barry v Davies).
In opening a contract class at Harvard in the autumn of 1870, Professor Christopher Columbus Langdell, instead of the traditional didactic approach of lecturing a hall of students, pointed to a student and asked, “Mr Fox, will you state the facts of Payne v Cave?”, then, “Mr Rawle will you give the plaintiff’s argument?” He replied to answers, in Socratic style, with “could you suggest a reason?”. This became known as the case method of legal study, that is followed around most of the common law world today.
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An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory.
A Dutch auction is one of several similar types of auctions for buying or selling goods. Most commonly, it means an auction in which the auctioneer begins with a high asking price in the case of selling, and lowers it until some participant accepts the price, or it reaches a predetermined reserve price. This type of price auction is most commonly used for goods that are required to be sold quickly such as flowers, fresh produce, or tobacco. A Dutch auction has also been called a clock auction or open-outcry descending-price auction. This type of auction shows the advantage of speed since a sale never requires more than one bid. It is strategically similar to a first-price sealed-bid auction.
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 is an English contract law decision by the Court of Appeal, which held an advertisement containing certain terms to get a reward constituted a binding unilateral offer that could be accepted by anyone who performed its terms. It is notable for its curious subject matter and how the influential judges developed the law in inventive ways. Carlill is frequently discussed as an introductory contract case, and may often be the first legal case a law student studies in the law of contract.
Offer and acceptance are generally recognised as essential requirements for the formation of a contract, and analysis of their operation is a traditional approach in contract law. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been modified by developments in the law of estoppel, misleading conduct, misrepresentation, unjust enrichment, and power of acceptance.
A collateral contract is usually a single term contract, made in consideration of the party for whose benefit the contract operates agreeing to enter into the principal or main contract, which sets out additional terms relating to the same subject matter as the main contract. For example, a collateral contract is formed when one party pays the other party a certain sum for entry into another contract. A collateral contract may be between one of the parties and a third party.
Felthouse v Bindley [1862] EWHC CP J35, is the leading English contract law case on the rule that one cannot impose an obligation on another to reject one's offer. This is sometimes misleadingly expressed as a rule that "silence cannot amount to acceptance".
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6 is a famous English contract law decision on the nature of an offer. The Court held that the display of a product in a store with a price attached is not sufficient to be considered an offer, but rather is an invitation to treat.
Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1977] EWCA Civ 9 is a leading English contract law case. It concerns the problem found among some large businesses, with each side attempting to get their preferred standard form agreements to be the basis for a contract.
Spencer v Harding (1870) LR 5 CP 561 is an English contract law case concerning the requirements of offer and acceptance in the formation of a contract. The case established that an offer inviting tenders to be submitted for the purchase of stock did not amount to an offer capable of acceptance to sell that stock, but rather amounted to an invitation to treat.
Fisher v Bell [1961] 1 QB 394 is an English contract law case concerning the requirements of offer and acceptance in the formation of a contract. The case established that, where goods are displayed in a shop, such display is treated as an invitation to treat by the seller, and not an offer. The offer is instead made when the customer presents the item to the cashier together with payment. Acceptance occurs at the point the cashier takes payment.
Harris v Nickerson (1873) LR 8 QB 286 is an English law case concerning the requirements of offer and acceptance in the formation of a contract. The case established that an advertisement that goods will be put up for auction does not constitute an offer to any person that the goods will actually be put up, and that the advertiser is therefore free to withdraw the goods from the auction at any time prior to the auction. All three judges concurred but issued separate judgments.
Bidding is an offer to set a price tag by an individual or business for a product or service or a demand that something be done. Bidding is used to determine the cost or value of something.
Thornton v Shoe Lane Parking Ltd[1970] EWCA Civ 2 is a leading English contract law case. It gives a good example of the rule that a clause cannot be incorporated after a contract has been concluded, without reasonable notice before. Also, it was held that an automatic ticket machine was an offer, rather than an invitation to treat.
In English contract law, an agreement establishes the first stage in the existence of a contract. The three main elements of contractual formation are whether there is (1) offer and acceptance (agreement) (2) consideration (3) an intention to be legally bound.
An invitation to treat is a concept within contract law which comes from the Latin phrase invitatio ad offerendum, meaning "inviting an offer". According to Professor Andrew Burrows, an invitation to treat is:
"...an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed."
Daulia Ltd v Four Millbank Nominees Ltd [1977] is an English contract law case, concerning unilateral contracts, and when embarking on the performance of an act for which an offer is open, at what point the offer may be withdrawn. In particular, Goff LJ observed that there would be a duty to not prevent full performance of terms in a unilateral offer, once performance had begun.
Lefkowitz v. Great Minneapolis Surplus Store, Inc 86 NW 2d 689 is an American contract law case. It concerns the distinction between an offer and an invitation to offer. The case held that a clear, definite, explicit and non-negotiable advertisement constitutes an offer, acceptance of which creates a binding contract. Furthermore, it held that an advertisement which did not clarify the terms of its bargains, such as with fine print, could not then be modified with arbitrary house rules.
Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] EWCA Civ 13 is a leading English contract law case on the issue of offer and acceptance in relation to Call for bids. In it the Court of Appeal of England and Wales decided that tenders and requests for tenders are accompanied by a collateral contract implying that the requestor will give due consideration to any timely bid.
Barry v Davies [2000] EWCA Civ 235, [2000] 1 WLR 1962 is an English contract law case which established and confirmed that auction goods being sold without a reserve must be sold to a genuine highest bidder. The principle is subject to exceptions based on illegality, such as illicit goods, a seller without the right to sell the goods, or a buyer without the money or right to buy the goods.
Dickinson v Dodds (1876) 2 Ch D 463 is an English contract law case, heard by the Court of Appeal, Chancery Division, that held that notification by a third party of an offer's withdrawal is effective just like a withdrawal by the person who made an offer. The significance of this case to many students of Contract Law is that a promise to keep an offer open is itself a contract which must have some consideration.