Scenario 1
Issue 1: Whether Mika’s communication on Tuesday amounted to valid acceptance of Lina’s offer.
#### Law
For a binding contract to be formed, there must be a valid offer and a corresponding acceptance. An offer is an expression of willingness to be bound on specific terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. Acceptance must be a final and unqualified expression of assent to the terms of an offer; it must be a ‘mirror image’ of the offer.
If an offeree’s response changes the terms of the original offer, it is not an acceptance. Instead, it is considered a counter-offer. The legal effect of a counter-offer is to destroy the original offer, meaning it can no longer be accepted. The case of Hyde v Wrench (1840) is the leading authority for this principle. In that case, an offer to sell a farm for £1,000 was met with a response offering to pay £950. The court held that this was a counter-offer which terminated the original offer, so the offeree could not later accept the £1,000 price.
Following a counter-offer, the original offeror can either reject the counter-offer, accept it, or make a new offer to the original offeree. If a new offer is made, the roles are reversed, and the original offeree now has the power to accept or reject this new offer.
Furthermore, an offeror may prescribe a particular method for communicating acceptance. If the offeror makes it clear that only that method is acceptable, then any other method will be invalid. However, if the offeror does not insist on a sole method, then any other method that is no less advantageous to the offeror will suffice to form a contract (Manchester Diocesan Council for Education v Commercial & General Investments Ltd [1970]).
#### Application
In this scenario, Lina’s initial Facebook post stating she is selling the trailer for $45,000 and the offer is open until Friday appears to be a unilateral offer, similar to the one in Carlill v Carbolic Smoke Ball Co [1893], because it is made to the world at large and prescribes an act (confirmation and payment) for acceptance.
However, Mika did not accept this offer. His message on Monday, “I will pay $40,000 for the trailer,” was not an acceptance because it did not mirror the terms of Lina's offer. By proposing a different price, Mika made a counter-offer. Applying the principle from Hyde v Wrench, Mika’s counter-offer terminated Lina’s original offer from the Facebook post. This means Mika could no longer accept the original offer.
Lina’s reply, “I cannot accept $40,000. The price is $45,000,” served two functions. First, it was a clear rejection of Mika’s counter-offer. Second, by restating the price, it constituted a new offer made directly to Mika. The terms of this new offer were simple: the trailer for $45,000.
On Tuesday morning, Mika sent the message: “Okay, I accept your $45,000 price. I will pay the deposit tomorrow.” This communication is a clear and unqualified acceptance of the essential term of Lina's new offer—the price. It is a 'mirror image' of her offer.
The remaining issue is the effect of Mika's promise to pay the deposit the next day. Lina’s original offer required acceptance and payment of a deposit. However, her new, specific offer to Mika only stated, "The price is $45,000." It did not restate the condition that the deposit must be paid at the exact moment of acceptance. Therefore, Mika's clear acceptance of the price created a binding bilateral contract. His statement about paying the deposit tomorrow is best understood not as a condition of his acceptance, but as confirmation of his intention to perform a term of the now-formed contract. Lina’s argument that no contract was formed because the deposit was not paid at that moment is unlikely to succeed, as this specific mode of acceptance was not clearly stipulated in her new offer to Mika.
#### Conclusion
Mika’s communication on Tuesday amounted to a valid acceptance of Lina’s new offer. The counter-offer and new offer sequence replaced the original terms on the Facebook post. A binding contract for the sale of the trailer for $45,000 was formed on Tuesday morning when Mika communicated his acceptance to Lina.
Issue 2: Whether Lina was entitled to revoke her offer before Friday and, if so, whether her attempted revocation was effective before a contract was formed.
#### Law
The general rule of contract law is that an offeror is free to withdraw or revoke their offer at any time before it has been accepted by the offeree (Payne v Cave (1789)). For a revocation to be effective, it must be communicated to the offeree. This means the offeree must be made aware of the withdrawal before they accept the offer. The case of Byrne v Van Tienhoven (1880) established that a revocation is only effective upon receipt by the offeree, not upon posting.
A promise by an offeror to keep an offer open for a specified period of time is known as a ‘firm offer’. English law holds that such a promise is not legally binding unless the offeree has provided consideration for it. Without consideration, there is no separate contract (an 'option contract') to keep the offer open. The offeror can therefore still revoke the offer before the time limit expires, provided the offer has not yet been accepted. This principle was confirmed in Routledge v Grant (1828), where the defendant offered to buy the claimant’s house and gave him six weeks to accept, but then withdrew the offer before the six weeks were up. The court held that he was entitled to do so.
Once an offer has been validly accepted, a binding contract is formed, and it is too late for the offeror to revoke the offer.
#### Application
In her Facebook advertisement, Lina stated that the offer was “open until Friday.” This was a promise to keep the offer open for a set period. However, Mika did not provide any consideration (such as a payment) for this promise. Applying the rule from Routledge v Grant, Lina’s promise was not legally binding. Therefore, in principle, Lina was entitled to revoke her offer at any time before it was validly accepted, despite her statement that it would remain open until Friday. Mika’s later statement, “You cannot withdraw it because you said the offer was open until Friday,” is therefore legally incorrect on this point.
However, the effectiveness of a revocation depends entirely on its timing in relation to acceptance. As established in the analysis of Issue 1, a binding contract was formed on Tuesday morning when Mika sent his message accepting Lina’s offer of $45,000. Lina’s attempt to revoke the offer came on Wednesday morning, when she messaged Mika stating, “I have decided to sell the trailer to someone else. My earlier offer is withdrawn.”
This attempted revocation occurred after a valid acceptance had already taken place. According to the principle in Payne v Cave, an offer cannot be withdrawn once it has been accepted. The contract between Lina and Mika was concluded on Tuesday. Therefore, Lina’s communication on Wednesday was not a revocation of an offer, but an attempted breach of an existing contract.
#### Conclusion
Although Lina was not bound by her promise to keep the offer open until Friday, her attempted revocation on Wednesday morning was ineffective. This is because it was communicated to Mika after he had already validly accepted her offer on Tuesday, at which point a binding contract came into existence. Lina is therefore contractually bound to sell the trailer to Mika for $45,000.
References
- Byrne & Co v Leon Van Tienhoven & Co (1880) 5 CPD 344.
- Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
- Hyde v Wrench (1840) 3 Beav 334.
- Manchester Diocesan Council for Education v Commercial & General Investments Ltd [1970] 1 WLR 241.
- Payne v Cave (1789) 3 Term Rep 148.
- Routledge v Grant (1828) 4 Bing 653.
