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Contract Law Lecture - Formation of Contract - Offer and Acceptance

Author: Dr Robert N Moles

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In General

Offer and acceptance are a means of analysing the process of negotiation to decide whether and when a contract has been made and what therefore constitute its terms. An example of its use to determine if there is a contract is provided by the court in
Gibson v Manchester City Council - CA [1978] 1 WLR 520, Court Of Appeal
and of determining when it was made and what its terms were in
MacRobertson Miller Airline Services v Commissioner of State Taxation (WA)(1975) both of which are discussed below.

The standard or traditional approach to contract law states that all contracts require there to be an offer and an acceptance. Given that the courts will go on to state that the details of the bargain and the adequacy of consideration are not for them to assess, or determine, this amounts to a formalistic, or due process view of contract law.

The idea of agreement was the vehicle which the courts used to invoke the idea of individualistic consenting. It was said that there should be a "meeting of minds" or a consensus ad idem in order to establish a contract. However, we should not imagine that the courts would concern themselves with what the parties actually think. In most circumstances, the court, through the use of the reasonableness test, would decide what it would have been reasonable for the parties to have thought. Oliver Wendell Holmes once said:

the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs - not on the parties having meant the same thing, but on their having said the same thing.

In Tamplin v James the judge said:

If a person will not take reasonable care to ascertain what that person is contracting about, that person must take the consequences.

Accordingly, where a party's conduct is such that a reasonable person would believe that there is an unambiguous assent to the terms as proposed, that party is then prevented (estopped) from asserting their true intention, assuming it to be otherwise, and is bound by the contract as if they had intended to agree. See Denning in
Solle v Butcher [1950]1 KB 671

In Gibson v Manchester City Council it was said that offer and acceptance as such were not that important. This is sometimes referred to as the "global approach" because there were so many papers and conversations passing back and forth that it was impossible to break the interactions down into discrete acts of "offer" and "acceptances". So, in this case, in the British Court of Appeal, Lord Denning said that the analysis of the relationship in terms of offer and acceptance was not so important. But the House of Lords disagreed with him when the matter was appealed.

Examples of the use of offer and acceptance in deciding when a contract was made - and what its terms were at the moment of making it - were considered by the Australian High Court in MacRobertson. In this case, the court found it difficult to determine just how offer and acceptance applied to a fairly common event like buying an airline ticket. As Stephen J said, "the doctrine of offer and acceptance encounters difficulties when applied to everyday contractual situations".

In more recent cases, where the question of mistake (and thus agreement) has arisen, the courts have tended to emphasise the unconscionable nature of allowing a party to benefit from another's mistake. Whilst we deal with mistake later, Atiyah deals with it as part of offer and acceptance.

In Cundy v Lindsay (1878), the plaintiff had supplied goods to a rogue, believing him to be a reputable firm, as he had claimed to be. The rogue had disposed of the goods to the defendant. The plaintiff was never paid. Which of the two innocent parties could claim ownership of the goods?

It was held that the plaintiff had no knowledge of the rogue and intended to be dealing with the reputable firm. There was therefore no consensus, no meetings of mind which could lead to any agreement or contract whatever. It followed then that the property remained with the plaintiff. We will look at this case again, when we come to "mistake"

[As this is one of the first cases you will have looked at, it is well to remind yourselves of the importance of assessing the significance of cases. We know that this depends on what was said, by whom it was said, the level of the court and when it was said. So when referring to cases, include a note, where appropriate, relating to these factors i.e. date, jurisdiction, level, etc]

This case can be seen as a good example of the "will theory" in the 19th C - the contract is to reflect the will or intentions of the contracting parties. A modern case along the same lines is:

Bell v Lever Bros [1932] - the majority of the court thought that there was an intention to contract. Lord Atkin said that it is of paramount importance that contracts should be observed, and that if the parties honestly comply with the essentials of the formation of contracts, that is agree in the same terms on the same subject matter, they are bound, and must rely on the stipulation of the contract for protection from the effect of facts unknown to them.

A contrasting case is New Zealand Shipping Co. Ltd. v Satterthwaite & Co Ltd (The Eurymedon) [1975] - contract without formalities - see below

In books on contract law (Cheshire and Fifoot, for example) you will see that to talk of consenting minds and the like is " to mislead by adopting an alien approach to the problem of agreement. "The issue is more to ensure that as far as experience permits, the expectations of honest people (not necessarily the contracting parties) are not disappointed." They mean by this that the language of offer, acceptance and agreement, suggests to the uninitiated that the courts are looking to what the parties actually agreed. This is not the case. By the use of the reasonableness test, they move from considering the actual expectations of the parties, to considering what reasonable people, in the position of those parties, would have agreed to.

Standard Forms

We still speak of "agreement" despite the contracting which takes place, and which looks nothing like it i.e. the move towards more standardised forms of contract - or even just the standard printed terms and conditions which are issued on all sorts of forms, dockets, tickets etc. The railways were probably the earliest manifestation of this, but now it applies to all areas of business. In its more extreme form it results in what we call a contrat d'adhesion - this time we have borrowed from the French. Here, the terms are fixed by one party in advance, and whilst being open to acceptance by anyone, the terms and conditions are to be accepted en bloc. They are not open to discussion and amendment on an individual basis. This hardly looks like the degree of consent and independent judgment which "agreement" would seem to suggest. "Well organised business has sometimes used it to deny all but the shadow of contractual power to the citizen." Cheshire and Fifoot.

This is not to suggest that there is anything sinister in the use of standard forms - Architects, Lawyers, Builders use them when they may not have the resources to have contractual documents drafted for each individual occasion. Nevertheless, they do seem to rule out individual negotiation at the consumer end, and this is why Cheshire and Fifoot speak of "the phenomena of agreement" rather than actual agreements, to make it clear that we are not dealing with inward mental assent, but with its outward and visible signs.

Essentials of a binding contract?

Offer and Acceptance - are the standard categories which we utilise to indicate whether there is agreement. This form of analysis, directing our attention to the aspect of agreement - when could it be said to have come about, and what were the terms.

New Zealand Shipping Co. Ltd. v Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154 Privy Council - strains to maintain technicalities of offer

Also called - The Eurymedon - cases involving ships are often named after the ship involved.

Lord Wilberforce, in discussing whether a Stevedore was covered by an exemption clause (in a Bill of Lading – a special type of shipping contract) said, whether the contract involves an auction, a supermarket, or some other situation, English law, having committed itself to a technical scheme, often in application takes a practical approach and so forces the facts uneasily into the categories of offer acceptance and consideration.

See also The Hon Sir A Mason and S Gageler "The Contract" in P Finn Essays in Contract - where it was said that sometimes we seek to bludgeon the unwilling facts of cases to fit within the traditional framework.

An Offer - Intention to Create Legal Relations

This question is linked to the issue of whether there was an intention to create legal relations. There is no satisfactory definition of an offer beyond identifying it by reference to the fact that it can be converted into a contract by an act of acceptance. Whether it can be accepted depends upon the objective intention of the party making the statement which is alleged to be an offer.

Making an offer exposes one to the imposition of legal liability by another. In deciding whether statements amount to an offer, the courts are said to use an objective test. Therefore under the objective test an apparent intention to be bound will suffice if 2 conditions are satisfied:

1. the conduct of the alleged offeror must be such as to induce a "reasonable person" to believe that he / she is making the alleged offer.

2. the alleged offeree must actually hold that belief – i.e. believe that the offeror is making a genuine offer, as opposed, for example, to playing a game. .

Harvey v Facey (1893) Privy Council - Mere statement of price is not enough: Plaintiff telegraphed Defendant - "will you sell us Bumper Hall Pen?” (Apparently a piece of ground, not a writing instrument). “Telegraph lowest cash price". Defendant replied "Lowest price £900". Plaintiff then said, "we agree to buy at £900 - send deeds." It was held that there was no contract. A mere statement of price is not enough to constitute an offer. The statement of price was merely the provision of information.

Advertisements, Shop Displays etc

A brochure or advertisement is an attempt to solicit offers, but does not constitute an offer in itself. If it were otherwise, the commercial consequences would be difficult to tolerate. Displaying goods in a shop amounts to an "invitation to treat".

Pharmaceutical Society v Boots Chemists (1953) English Court of Appeal - shop sign "invitation to treat"

In a self-service shop, is the sale completed at the shelf when the goods are selected, or at the cash desk? The judge in this case said that the usual view has been that customers (say in a bookshop) select the item they wish to purchase, and then take it to the assistant, who accepts it and completes the contract. I cannot see, he says, that this situation is any different. The plaintiff contends that the defendant has offered to sell the goods by displaying them on the shelves, and that the plaintiff accepts the offer by taking them from the shelf. If this is correct, then a person who takes something from the shelves cannot then replace the item if they see something which they would prefer more. It seems clear that the sale takes place at the cash register.

A retailer who displays goods for the purposes of sale is not making an offer of sale.

We should always be aware of how these actions occur. In this case it would have been an offence under the Poisons Act if the sale had been completed at the shelf rather than at the cash desk, as it would have then lacked the supervision of a qualified pharmacist.

However as Greig and Davis put it, the argument about not being able to return selected items is hardly persuasive. Even if the display of goods were considered as an offer, the normal rule that acceptance must be communicated to the offeror would still apply because the customer by picking up the goods has not informed the offeror of his / her acceptance. The customer would have to make his / her way to the checkout to communicate the acceptance to the cashier. Therefore the sale would still have taken place under the supervision of a registered pharmacist as required by the legislation.

Alternatively, it could be argued that the selection of goods is an "act" in response to the offer which completes a unilateral contract as in Carlill which follows.

Fisher v Bell - (1961) Lord Parker (LCJ) display of knife in shop window, not "offer"

Display of an article, with a price on it in a shop window, is in no sense an offer for sale. Here, Lord Parker treated the matter as beyond dispute.

Lefkowitz v Great Minneapolis Surplus Store (1957) USA: This may be different if we have something is "clear, definite, explicit" and which leaves nothing open for negotiation then it constitutes an offer.

The same principle is usually applicable to price lists and other circulars sent to prospective customers, or advertisements in newspapers, the argument being that an advertiser does not intend to be bound by an offer in case they are flooded with acceptances which could not all be met.

If there is some additional evidence of an intention to be bound by an advertisement, the situation would be different.

Carlill v Carbolic Smokeball Co (1893) Court of Appeal - Offer can be made to the world at large

The manufacturers of an influenza remedy in their advertisements said that if anyone used their remedy and then caught flu they would be entitled to £100. When a claim was made they said that there was no contract. It was held that an offer made to the world at large, can become a contract with those who fulfil the condition.

Lindley LJ suggested that if the company has been so unwary as to expose themselves to a great many actions, then so much the worse for them.

Nowadays we see similar advertisements for anti-theft devices for cars - if the car is stolen, then, it is said in the advertisement, certain benefits will be paid to the owner. What is the status of such an offer - is it effective in contract?

The offer is the stage at which the offeror is ready to be bound. This is different from a tentative stage of sounding the other party out.

Nagle v Feilden and Others: If an offer is subject to conditions, they must be brought to the attention of the other party before the contract is concluded.

Thornton v Shoe Lane Parking (1971) 2 QB 163 Court of Appeal Signs and Tickets

This case concerned a car park with an automatic ticket machine. At what stage is the contract formed? If the plaintiff is injured in the car park, can the defendant rely on a clause excluding or limiting liability which is contained, or referred to, in the ticket? A notice outside the park said all cars were parked at the owner's risk - the ticket itself said "subject to conditions" displayed in a notice on a pillar in the car park.

Lord Denning MR [His judgment in this case has had a wide influence, his style of writing and speaking are rather different from that of many other judges] The earlier cases saw the issue of a ticket as an offer - but those cases were based on the theory - or "fiction" was the word he used - that the customer, at the time of being offered the ticket could return it if it contained unacceptable terms. This could not be done where the ticket is produced by a machine. Also, the terms of any contract must be brought to the attention of the offeree at the time of contracting - thus notices should be placed at, or in front of, the entrance to the car park.

Trade Practices Act 1974 (Cth) Australia

We should bear in mind the possibility that statements, whether part of an offer or not, may give rise to enforceable rights under the Trade Practices Act 1974 (Cth) if they prove to be false or misleading. The TPA 1975 Div 2A Part 5 also provides that there will be a contract between consumer and manufacturer. The provisions of the TPA are duplicated in the Fair Trading Acts of the States so as to apply to individuals.

Contractual Intention Negatived - Conditional offers

Where one might expect a contractual intention, this may be negatived expressly. If the parties to a transaction reach a stage where acceptance of an offer is made, "subject to solicitor's approval of contract", as often appears with negotiations for the purchase of real estate, what is the legal effect?

The term "subject to contract" has been considered by courts on numerous occasions and it was examined by the High Court in

Masters v Cameron (1954) 91 CLR 353, High Court an agreement to complete a contract

An agreement to purchase property was subject to:

the preparation of a formal contract of sale which shall be acceptable by Cameron's solicitors on the above terms and conditions....

The sale fell through. Was there a contract? If there was then the prospective vendor could retain the deposit. If not, it would have to be given back. The High Court said that there was not a contract, and Masters recovered the deposit. The reason was that the agreement was not in its final form - it had to be acceptable to C's solicitors. Presumably the solicitors could have altered it quite substantially, by deleting adding or modifying terms. Whether they did so or not, was immaterial. The agreement gave them that power and so was not final.

The existence of a subjective intention may well be relevant to the determination of the question of intention, but it should not be determinative of it.

Air Great Lakes Pty Ltd v Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Court of Appeal, Supreme Court NSW - subjective intention relevant

Easter Holdings - purchaser
Air Great Lakes - airline operator
Greenway - aircraft owners

Purchaser to acquire from airline operator Goodwill - $60,000
Purchaser to acquire from airline operator aircraft owners the plane - $140,000

The agreement was subject to issuing of appropriate licences and government approvals. $50,000 was to be paid on settlement of the proposed agreement and the remainder to be the subject of a further agreement.

Did the parties arrive at a consensus? If we look at the document alone, it is by no means clear. But if we go to the extrinsic evidence, and discussions relating to those documents, it becomes clear that the parties did actually (subjectively) intend a binding contract.

It is generally agreed that intention is important and there is some discussion in the books as to whether that intention is to be actual or subjective. But questions in that form are apt to mislead. It is more helpful to ask if subjective intention forms a part in determining the existence of a contract, and if so what part.

The proper view is that the existence of a contract is a consequence which the law imposes upon, or sees as a result of what the parties have said and done. Actual subjective intention is a factor which the law takes into account, but it is not (or not always) the determining factor.

So, intention to contract is relevant to but not determinative of the existence of a contract. It may limit what otherwise might appear to be an exchange of congruent promises. It does not follow that an intention to contract will always result in a contract. Apart from intention, there may be other elements which are missing

On the other hand, if what the parties did looked too informal, or if it would be inferred that they did not intent to contract, then evidence should be admitted to establish that the inference is incorrect.

As Corbin on Contracts said, "the intention to contract, is a jural act separate and distinct from the terms of their bargain".

An example of how confusing a simple ticket case can be:

MacRobertson Miller Airline Services - airline ticket

The case arose to see if the airline ticket was a concluded agreement which would be subject to stamp duty. The court said that there are many common situations where the standard analysis in terms of offer and acceptance breaks down. Here the court had to look at the purchase of an airline ticket in terms of offer and acceptance. The 3 High Court judges (Barwick, Stevens, Jacobs) each expressed a different view of the matter. Because obligations were excluded until the person turned up at the aircraft, some judges took the view that issuing a ticket amounted to issuing an offer, but was not itself the completion of a contract.

A similar diversity can be found in contracts of carriage:

Denton (1856) the offer is constituted by the announcement in a timetable - and accepted by the purchase of a ticket

Wilkie (1974) - the provision of buses constitutes an offer which is accepted by getting on the bus.

The Eagle (1977) A passenger making a booking makes an offer.
MacRobertson - the ticket is itself an offer.

Contractual intention may be negatived by inference from the circumstances, for example, that the statement was made as an announcement of government policy and not as a legal obligation.

Australian Woollen Mills Pty Ltd v Commonwealth (1954) CLR 424 High Court - promise of subsidy

The Commonwealth Government had announced that a subsidy would be paid to all manufacturers who purchased wool at auction for the purpose of local manufacture. Prior to the 2nd World War the Government had implemented a similar assistance scheme which was discontinued during the war years. The Government policy was to keep down the price of woollen goods to the consumer. After the 1946 announcement, the plaintiff company purchased wool for local manufacture and was accordingly, paid the subsidy until 1948 when the subsidy was withdrawn. A dispute arose as to whether the Government's promise of a subsidy constituted an offer which upon acceptance gave rise to a contract between the parties.

The High Court dealt with the case on the basis of whether the purchase of the wool by the purchaser constituted the necessary consideration to render the Commonwealth's promise enforceable or whether the purchasers simply satisfied the condition upon which the commonwealth had promised a gratuitous and discretionary payment.

The court held that the scheme fell into the latter category. It held that the announcement by the Government would only constitute an offer if it contained expressly or impliedly, a request by the Government that a person to whom the announcement was addressed should do the act designated.

NB: The use of the word "offer" is not conclusive.

Auctions and Tenders

There is no doubt that in an auction, it is the bidders who make offers and the auctioneer who is free to accept one of those offers.

An auction is where property of some sort is put up for sale and people then make successive bids, and the highest bidder usually becomes the purchaser. But how is this situation analysed in terms of the law of contract? It could be said that the auctioneer's request for bids is an offer, and that each successive bid is a conditional acceptance - ie a completion of a contract, subject to there being no further higher bids. Alternatively, it could be said that it is the bidder who makes the offer, and that the acceptance is then provided by the auctioneer, who signifies acceptance of the highest bid in the traditional manner of banging the hammer, or by some similar gesture.

Payne v Cave (1789) 100 ER 502 bidder offers, auctioneer accepts

In this case it was decided that it was the latter view which prevailed - that the auctioneer is free to accept or reject any bid as it is the bid which is the offer -

The Sale of Goods Acts - (1895 - 1923) a separate Act for each State, but the provisions are similar - provide that a sale by auction is complete when the auctioneer announces that fact by the fall of the hammer, or in another customary manner. Until that time, any bid may be retracted.

In what circumstances may the auctioneer's discretion be fettered? Freedom of contract suggests that the parties can make any arrangement they wish. If an auctioneer announces that an auction is to be without reserve, is there an obligation to sell to the highest bidder?

AGC v McWhirter (1977) Sup Ct NSW auction "without reserve"

There was a representation that the auction would be "without reserve". It was argued here that the correct view is that the bidder makes the offer. The court took the view that the ratio of Payne is that the bidder is no more than an offeror - no contract exists until the bid is accepted. Does "without reserve" constitute an undertaking to sell to the highest bidder? The court looked at cases either way, but decided that Payne was still the ruling principle (a "without reserve" case). The judge said, "An auction remains in my view an invitation to treat." In this case, Holland J also discussed the earlier cases of Warlow and Ulbrick and the following notes are taken from his discussion of them in the AGC case.

Warlow v Harrison (1859) 120 ER 925 - without reserve - sold to vendor (as discussed in AGC): Property was advertised for sale at public auction "without reserve". The Plaintiff, when in the position of being the highest bidder, had been overbid by the vendor, and the property had been knocked down to the vendor. The plaintiff sued the auctioneer, arguing that being the highest bona fide bidder, there was a contract which the auctioneer, as his agent was bound to complete.

The court said that this reasoning was wholly at variance with Payne v Cave (1789) which had been thought to be good law for some 70 years. It was decided there that a bid at auction was not a conditional acceptance, but was instead a mere offer. The auctioneer is agent of the vendor, and the assent of both parties is necessary to a contract, and this is signified by the fall of the hammer - until then either party may retract. If the vendor and the bidder are free until this stage, the auctioneer cannot possibly be previously bound.

However, there was some disagreement when the case went up on appeal. Three judges took the view that an auctioneer who put property up for sale "without reserve" contracted with the highest bona fide bidder. That the "without reserve" holding out by the auctioneer gave rise to a collateral contract. There was no suggestion that such a bidder contracted with the vendor. Holland J in AGC said that despite this, Warlow leaves the law where it was decided by Payne.

Ulbrick v Laidlaw [1924] VLR 247- dispute - obligation to re-auction (as discussed in AGC): The conditions of an auction specified that the highest bidder would be the purchaser and that if there was any dispute between two or more bidders, the lot or lots would be put up again and resold. There was some dispute as to who was the highest bidder for a lot but the auctioneer refused to put the goods up for resale. "Applying the principle of Warlow, we think a contractual obligation arose on the part of the auctioneer towards any bona fide disputant of the class just defined". In AGC it was said that if such an action were possible, then it would be an anomaly in the law of auctions - Payne being a "without reserve" case. An auction remains in my opinion an invitation to treat. The fact that there is a reserve price indicates to bidders whether an offer at a lower level will be considered. "Without reserve" indicates that the highest bid is an offer which is liable to be accepted, but that the vendor remains free to withdraw the property from sale or to accept any bid.

Harris v Nickerson (1873) advertisement of auction

An advertisement to hold an auction is not an "offer" to hold it but a mere declaration of intention

Tenders / Standing offers

Some of the recent cases here indicate that the law on tenders may be diverging from that on auctions.

Under this arrangement, the seller or buyer invites bids to be made - usually to be submitted in writing by a specified time. The main difference between this situation and an auction, is that the person submitting the tender, does so in ignorance of the bids being put in by others.

Tenders may be of 2 different types:

1. A specific purchase – a govt dept wants to purchase 3 new computers - invites tenders in accordance with specification - the advertisement may be seen as invitation to treat, the tender is then an offer which the dept may accept or not.

2. Requirement contracts - the govt dept wants someone to tender for the supply of PCs "as required". The tenderer puts in a price per unit. If dept says OK, what have they done? Do they actually have any commitment to place an order? May it order from other suppliers? So what we may have here is not the completion of a contract, but the putting in place of a "standing offer".

If an advertisement asks for tenders, that advertisement may be seen as an invitation to treat. Where a tender is submitted on an "as required" basis - it may be seen as an offer to supply at set price. The Government Dept may say that you, the supplier, have a contract - but actually there is no contract in law, because there is no legally binding commitment on either side. When the dept places an order for a specified number of PCs - it amounts to the acceptance of standing offer contained in the tender, and may amount to the completion of a contract at that stage.

Great Northern Railway Company v Witham (1873) LR 9 CP 16

In this case Brett J speaks of the "acceptance" of a tender. This is not "acceptance" in the sense used in this area of contract law. In this case GNR had been given a standing offer, and W was given an order to deliver. It was held that the failure to do so was in breach of contract as his standing offer had not been withdrawn. There is a clear acceptance here of the idea of a "unilateral contract" which has since become well accepted (See Wilberforce in New Zealand Shipping)

The submission of a tender may well give rise to legally enforceable obligations. A promise to accept the highest bid may be binding, and there may be an obligation to properly consider any tenders which have been submitted.

Harvela Investments v Royal Trust Co [1985] 1 AC 207 House of Lords bid may not refer to other bids

One of the bidders said that they would pay $ x more than the highest bid from the other bidders. The court held that bids may not use other bids as the basis of calculation, and the House of Lords held that the contract should have been awarded to the highest fixed bid.

This case also suggests that a promise to accept the highest bid may be binding - on the basis that the promise is like that in Carlill which is accepted by the highest bidder. So an invitation to tender can be seen as an offer which is accepted by putting in the tender. This completes one contract - another contract may then arise if it is the most competitive bid and if it is in accordance with the specification

Blackpool & Fylde Aero Club v Blackpool Borough Council (1990) 1 WLR 1195 Court of Appeal obligation to consider tender

An invitation to tender can create contractual obligations

The Club submitted a tender close to the deadline, which was stamped in error as if it had been received the following day. When they complained that they had lost the contract because their tender had not received due consideration, they were told that there was no legal obligation on the Council at that stage.

The court took the view that had the Club asked if a conforming tender would be considered, the answer would be "of course". The law would be defective if it did not give effect to that. An implication was needed because there was no explicit statement on the point. The judge said, "I am pleased to see that the right legal answer accords with the merits".

Global Approach

Attempts have been made to escape the limitations of offer and acceptance, by looking to a more global approach. The idea is to see if "objectively" the courts should hold there to be a contract, without looking too closely into all the details of offer and acceptance - "in all the circumstances".

Gibson v Manchester City Council (1978) Court of Appeal global approach

Lord Denning stated that in his view: it is a mistake to think that all contracts can be analysed into the form of offer and acceptance. I know in some of the textbooks it has been the custom to do so, but as I understand the law, there is no need to look for strict offer and acceptance. You should look at the correspondence as a whole.

This approach was not accepted by the House of Lords. No contract, because it was the tenants application which was the offer which was never accepted by the Council.

If you should think that this idea must be a dead duck, because it has been rejected by the House of Lords, then you should not be so faint hearted. The Global approach was also found in

Butler Machine Tool v Ex-Cell-O Corp (1979) Court of Appeal

Lord Denning said that we could still look at it in terms of the traditional analysis, but he agreed with the trial judge that there was much in this approach which was out of date. The better approach was to look at all the forms, to glean from them the agreement. The global approach offers more flexibility and the opportunity of making sensible decisions then does the traditional rule-based approach in the end adopted by Denning.

Multi-partite transactions

If the court is sufficiently determined to see relationships in terms of offer and acceptance, it can find them anywhere - Cheshire and Fifoot point out that in these cases, the analysis is manipulated to the point of distortion.

Clarke v Dunraven [1897] AC 59 - "The Satanita" entrants in a yacht race

Entrants in a yacht race gave an undertaking to the yacht club that they would be bound by the rules of the club. It was held that they were therefore in a contractual relationship with each other. It may be said that this is an example of a case where the two parties to a contract assent to the terms put forward by a third party. The first competitor offers to all others who may enter to observe the rules if they will do so as well. The second competitor by entering accepts this offer and makes a similar offer to others and so on.

Shanklin Pier [1951] 2 KB 854 High Court (UK)

A (paint manufacturer) says my paint would be good for the pier
B - (pier owner) tells C (contractor) to use A's paint when doing the pier. The paint turned out to be unsuitable.
B successfully sued A for breach of the undertaking - why is this surprising - because B didn't buy anything from A. What consideration has B given to render the promise by A enforceable? B's entering into the contract with C which contains within it the condition that A's paint must be used.

This approach now has statutory authority in Australia

Trade Practices Act 1974 (Cth) Div 2A Part 5

A contractual relationship is deemed to exist between a manufacturer of goods and a consumer - the consumer may now sue the manufacturer directly for defects without having to sue the retailer.

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