BetterLawNotes-5 (2)

CONTRACT LAW

Here, it is particularly helpful to have in mind the distinction made in paragraph [x] above between bilateral and unilateral contracts. Generally, advertisements intended to lead to bilateral contracts will be regarded as invitations to treat and not offers.

Grainger v Gough [1896] AC 325

Grainger, a London wine merchant, acted as an agent for Roederer, a wine merchant in France, for the sale of Roederer’s wines in the UK. Grainger distributed Roederer’s price lists to potential customers in the UK and forwarded resulting orders to Roederer. Grainger received commission from Roederer for sales made. It was held in the House of Lords that the distribution by Grainger of these price lists did not amount to an offer to sell the wines.  

 

‘The transmission of such a price-list does not amount to an offer to supply an unlimited quantity of the wine described at the price named, so that as soon as an order is given there is a binding contract to supply that quantity. If it were so, the merchant might find himself involved in any number of contractual obligations to supply wine of a particular description which he would be quite unable to carry out, his stock of wine of that description being necessarily limited.’ (Lord Herschell at 334). 

The principle from the Grainger case was applied in Partridge v Crittenden.

Partridge v Crittenden [1968] 1 WLR 1204

Partridge placed an advertisement in an issue of a magazine, Cage and Aviary Birds, containing the words ‘bramblefinch cocks, bramblefinch hens . . . 25s each’. Partridge was initially convicted under s 6(1) of the Protection of Wild Birds Act 1954 which made it an offence to offer for sale certain wild birds. Partridge’s conviction was quashed on appeal. The Divisional Court held that the placing of the advertisement was an invitation to treat and not an offer to sell. 

The cases considered so far have involved bilateral contracts, ie, each party is promising to do (or not do) something. Where the advertisement is intended to lead to a unilateral contract, the advertisement will generally be construed as an offer, rather than as an invitation to treat.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

The Carbolic Smoke Ball Company placed an advertisement in various newspapers stating that they would pay a reward of £100 to anyone who caught influenza after using one of their medicinal smoke balls as directed three times daily for two weeks. After reading the advertisement, Mrs Carlill bought a smoke ball from a chemist. Having used it as directed three times a day for nearly two months, she caught influenza and claimed the £100. The Court of Appeal held that Mrs Carlill was contractually entitled to the £100. 

‘It is not a contract made with all the world . . . It is an offer made to all the world; and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition?  It is an offer to become liable to any one who, before it is retracted, performs the condition, and, although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement.’ (Bowen LJ at 268). 

Bowerman v ABTA [1995] NLJ 1815

A notice had been displayed in a tour operator’s office stating that in the event of the operator’s financial failure, ABTA would refund the customer with the cost of the holiday. A majority of the Court of Appeal held that the notice constituted an offer.

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