BetterLawNotes-5 (2)

CONTRACT LAW

A standing offer may be thought of as an on-going offer, that is, one which is capable of being accepted from time to time and/or on more than one occasion. Whether a purported ‘acceptance’ amounts to an acceptance in the legal sense will depend upon the wording of the particular standing offer.

GNR v Witham (1873) LR 9 CP 16

The claimants advertised for tenders to supply iron, in such quantities as they might order, for a 12–month period. The defendants submitted a tender undertaking to supply the claimants at specified prices and the claimants accepted the tender. The claimants subsequently submitted an order within the 12-month period which the defendants refused to fulfil. The defendants argued that the agreement was not binding: as the claimants had not undertaken to order any iron from the defendants, the defendants’ promise to supply was not supported by consideration. The Court of Common Pleas held that the defendants were obliged to fulfil the order. Keating J stated that by giving an order the claimants provided consideration for the defendants’ promise.

‘If I say to another, “If you will go to York, I will give you 100l,” that is in a certain sense a unilateral contract. He has not promised to go to York. But, if he goes, it cannot be doubted that he will be entitled to receive the 100l. His going to York at my request is a sufficient consideration for my promise.’ (Brett J at 19).

What if the defendants had told the claimants before the order was placed that further orders would not be fulfilled? The point came before the court in Offord v Davies.

Offord v Davies (1862) 12 CB NS 748

D offered O that if O would discount bills for T, D would guarantee payment of the bills up to £600 for a year. O discounted several bills which were duly paid by T. But before the end of the 12-month period D told O that it would no longer guarantee payment of the bills. O continued to discount the bills, some of which were not paid by T. O sued D under the guarantee. The Court of Common Pleas held that D was not bound to guarantee the payments.

‘This promise by itself creates no obligation. It is in effect conditioned to be binding if the plaintiff acts upon it, either to the benefit of the defendants, or to the detriment of himself. But, until the condition has been at least in part fulfilled, the defendants have the power of revoking it.’ (Erle CJ at 757).

In GNR v Witham the Court of Common Pleas expressly left open the question as to whether the defendants would have been bound if before receiving the order the defendants had notified the claimants that they would not perform the agreement.

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