INTRODUCTION TO COMMERCIAL LAW

(LAWS1IC)
2024
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19
LECTURER: MR H OOSTHUIZEN
 OVERVIEW – SECTION A
INTRODUCTION TO COMMERCIAL LAW

SECTION A

INTRODUCTION TO LAW AND

PRINCIPLES OF CONTRACT
LEGAL SYSTEMS

Relevance of Law Definition & Formalities (2 Essential Elements

of 2) Void & Voidable
Fundamental Concepts
Lawfulness & Contractual
Sources & Categories of Law Serious intention (2 of 2) Capacity (3 of 3)

Decolonization of Law Agreement, Consensus

TODAY
Offer & Acceptance (3 of 3) Certainty
Court Structure
Breach &
Possibility of Performance Remedies
Litigation & Law Professionals
 LECTURE 19: AGREEMENT, OFFER &
ACCEPTANCE (3 OF 3)

In this lecture:
• Rules of Offer and Acceptance
• Offer
• Acceptance
RULES OF OFFER AND ACCEPTANCE

• For agreement to arise, consensus ad idem is required, that is: an offer

must be made, and the offer must be accepted.

• The law lays down very specific rules for making an offer and accepting the
offer.
 TO WHOM AN OFFER CAN BE MADE

• An offer may be made to a defined person, a group of persons, or the

whole world.

• Only the person to whom the offer is made may accept it.

• Offers to the world, e.g. offers of reward.

• Offers of reward are generally interpreted as being limited by implication
to the first person to carry out the required act.
 OFFER MUST BE COMMUNICATED

• The offer must be communicated to the offeree before it can be

accepted.

• A person who did not know of a reward and who performs the required act
cannot later claim the reward.

• See the Bloom Case below.

CASE: Bloom v American Swiss Watch
• Facts: There was a robbery, and American Swiss Watch Co. put up an
advert offering a reward for any information leading to the arrest of culprits.
• Bloom independently provided the required information, but unaware of the
offer. As a result of information, robbers were arrested. Then, after Bloom
had given the information, he became aware of the offer and claimed the
reward.
• Court Held:
• No contract – Bloom’s giving of information had not amounted to
acceptance as he was ignorant of the rewards offered
• You can’t accept something you don’t know about.
• The case confirmed that you must have acceptance in order to create a
valid contract.
 OFFER MUST BE SERIOUS
• The offer must have seriously been intended to create legal relations
between the parties. (see also lecture 13)
• Offers made as a joke or social arrangements are not binding.
• There is also a distinction between a firm offer and a mere invitation to do
business.
• In a modern society it is sometimes difficult to determine when an offer is
made and when it is accepted.
• For example, in a self-service shop the offer takes place when the customer tenders
the purchase price to the cashier, who may then accept the offer. The fact that the
shops goods are displayed on the shelves does not amount to an offer by the shop.
• A request for tenders is generally not an offer, but an invitation to submit a
tender.
• Tender submissions are deemed to be offers, and will be treated accordingly.
 ACCEPTANCE MUST BE ABSOLUTE
• The acceptance of the offer must be absolute (unconditional),
unambiguous, and correspond with the terms of the offer.

• An acceptance subject to conditions is not regarded as an acceptance of

the offer. It constitutes a rejection of the original offer and is considered a
counteroffer that the original offeror may accept or reject.

• Once a counteroffer is made the original offer is rejected, and subsequently

lapses.

• A mere request for information or a suggestion as to modification of terms

does not amount to a rejection of the original offer
OFFER & ACCEPTANCE MUST RESULT
IN CERTAINTY
• The offer and the acceptance must result in certain and definite terms.
• If definite terms do not result, the agreement will be void because of
vagueness.
• The courts will try to read in as much as is reasonable in the circumstances,
to keep the contract ‘alive’.
• Some terms may be read into the contract, that is, their meaning is implied
by law, circumstances, or trade usage. For a trade usage to be valid, it
must be generally well known, definite, reasonable, legal, and not
specifically excluded by the terms of the contract.
OFFER ONLY ACCEPTED BY INTENDED
OFFEREE
• Only the person to whom the offer is made may accept it.
• Usually only the person who the offeror intended to accept.
• Even though an offer may be addressed to a particular person, it may have
been intended for somebody else.
• E.g. An estate agent offers property for sale. A member of the public
makes an offer to the estate agent. The offer is intended for owner, not
the estate agent.
• The mere fact that it makes no material difference whether the offeree or
another person accepts, has no influence on acceptance. There will be no
contract if the person who accepted was not the intended person.

• Note: An offer can not be ceded, but an option can.

 ACCEPTANCE MUST BE
COMMUNICATED TO OFFEROR
• Acceptance must be communicated to the offeror:
• Generally the offeree must notify the offeror by words or conduct of his or
her acceptance.
• Mere mental agreement is not enough to form a contract.
• The offeror may expressly or tacitly do away with the need for
communication of acceptance, for example where goods are ordered at a
named price. Here acceptance is constituted by the delivery of the goods to
the offeror.
• An offer of reward is normally accepted simply by carrying out the required
act.
 ACCEPTANCE MUST BE MADE IN
MANNER PRESCRIBED BY OFFEROR
• Acceptance must be made in the manner prescribed by the offeror:

• If the offeree sets out how the contract must be concluded (and he is
entitled to do this), the stipulations (in terms of manner and time) must be
adhered to in order to create a contract.
• E.g, acceptance must be conveyed before noon on the 25th of
December, by way of an email to my wife’s email address:
[email protected].
 SILENCE CAN NOT AMOUNT TO
ACCEPTANCE
• Silence does not amount to acceptance:

• There are many possible inferences, however, silence on its own can never
amount to an unequivocal acceptance.

• A duty to speak, however, may arise from the course of previous dealings
between the parties.
OFFER MUST BE ACCEPTED WHILST IT
IS OPEN TO ACCEPTANCE
• An offer comes to an end on rejection, revocation, or lapse:
• Rejection:
• The intended offeree communicates to the offeror that he or she is declining the offer.
• Revocation:
• An offer exists until it is manifestly the intention of the offeror not to make the contract
proposed.
• No particular formula is needed – it is enough that the offeror has made it clear that he
no longer wants to enter into a contract.
• This intention to revoke must be communicated to the offeree.
OFFER MUST BE ACCEPTED WHILST IT
IS OPEN TO ACCEPTANCE (cont)
• Lapse:

• The offer will lapse if it is rejected.

• A counter-offer causes an offer to lapse.
• This is where the offer is accepted on different terms, and amounts to a rejection of
initial offer (effectually a re-offer by offeree).
• A mere inquiry about the terms does not constitute a counter-offer.
• An offeror may resuscitate his offer by re-offering after a counter-offer.
• An offer may also lapse by effluxion of time.
• An offer will lapse if not accepted within the stipulated period of time. An
acceptance of an offer after the specified time is considered to be a counter-offer,
which the original offeror may chose to accept or reject.
• An offer will lapse after a reasonable time where there is no stipulated time period
(what constitutes a reasonable time will depend on the surrounding circumstances
of each case).
END OF LECTURE 19