The matters which areapplicable in this scenario are (ITT) invitation to treat, counter-offer andthe promise to keep an offer open and revocation and whether a contract hasbeen made between Zantek Airways ("Zantek Airways") and Pinto Aviation LTD("Francesco"). First, has an offer been made?An offer in contract law is a specific and definite proposition in exchange forthe performance of another party. There are different ways of which a contractcan be frustrated or revoked or even terminated.
There are also certainconditions in a contract which needs to be respected. An offer in a contractcan also be counter-offered which is a negotiation between the two partieswhich is beneficial. An offer may be also being defined as a clear statement ofthe terms between the offeror and offeree, due to the fact that the offeree iswilling accept the offer. If the offer lacks any contractual significance, thisconstitutes an invitation to treat. An invitation to treat (ITT) is where aperson invites customers to make an offer to buy, which may be accepted orrejected.
For example, a sign in a shop window advertising chocolate bars is a(ITT). Here Zantek Airways advertised an airbus for sale for a price of 12.6million. Advertisements will generatecustomers as it is an of invitation to treat.
Customers will look atadvertisement when in the market to buy a product and advertisements is one wayof approaching a sale. In Partridge v Crittenden where an ad was placed in Cageand Aviary Birds which stated, "Bramble finch cocks and hens, 25s each" theCourt held that advertisements were merely invitations to treat and not offerto sell. In the case of Fisher v Bell the plaintiff's conviction was cancelledas goods on display in shops are not 'offers' but an invitation to treat. Nevertheless,although most advertisements will be treated as invitation to treat, there aresituations where an advertisement can be construed as an offer. For example, inCarlill v Carbolic Smoke Ball Co. Ltd the advertisement was specific anddefinite (£100reward will be paid to anyone contracting influenza) and demonstrated the requisiteintent to be bound (£1000has been deposited with Alliance Bank… showing our sincerity in this matter).
TheCourt held that acceptance consists of performing the requested act andnotification of acceptance is not necessary. Zantek Airways placed anadvertisement for the sale of an Airbus 456. The advertisement states adefinite price of £12.6mand it is unlikely that a buyer would come forward without an internalinspection of the Airbus and test-drive, and an advertisement is normallyconsidered to be a means of generating interest rather than the final stagebefore a contract is concluded.
Consequently, as thecontractual status of the advertisement is debatable, the answer below willassume that either proposition is valid.Francesco from Pinto AviationLTD is clearly making an offer to Zantek Airways to pay £120,000 if Zantek Airwayspromises not to sell the aircraft to another buyer for the next 5 days. Thesenow becomes the terms of the contract and given that it is accepted by ZantekAirways, it will become binding. When an offer is accepted, it is essentialthat the offeree accept the exact terms of the offer.
If, in doing so, theofferee introduces a new term, he is making a counter-offer, the effect ofwhich is to destroy the original offer. In the case of Hyde v Wrench where thedefendant offered to sell his farm for £1000to which the plaintiff agreed to buy but for £900and readily later accepted the offer of £1000,the Court held that there was no contract as a counter-offer had been madewhich destroyed the original offer so it could no longer be accepted. Byintroducing this new price, Francesco's response maybe classified as acounter-offer. If so, the counter-offer destroys Zantek Airways original offer.
Francesco's response wouldclearly constitute a counter-offer as a lower price was offered. On this basis,Francesco's subsequent request for Zantek Airways not to sell it to anotherbuyer for the next 5 days would either be a counter-offer, in which no contractcomes to existence yet, or an acceptance of that counter-offer. Zantek airwaysagreed to the counter-offer and promised not to sell it to another buyer forthe next 5 days. This was agreed over the telephone on 8 September 2017. Whilst,it could be argued that there is a strong presumption that accepting 'subjectto contract' creates no contractual liability (Branca v Cobarro 1947 KB 854) thepurported acceptance containing the new terms was accepted and thereforeresulted in a contract being formed.
(Hyde v Wrench).Secondly, if an offer has beenmade, has the offeree unequivocally accepted this offer? An acceptance can begiven orally or in writing. In the case of Felthouse v Bindley, it wasestablished that the offeree's silence or failure to act cannot constitute avalid acceptance. The offeree's acceptance of the offer must be communicated tothe offeror and offeror would need to accept this counter-offer before anycontract comes into existence.
Zantek airways agreed to the counter-offer andpromised not to sell it to another buyer for the next 5 days. This was agreedover the telephone on 8 September 2017. Francesco would assume at this pointthat the offer had been accepted. On this basis, there is no information as towhether there was a chosen method of acceptance and as Zantak Airways agreed tonot sell it to another buyer for the next 5 days over the telephone and thereis evidence that Zantak Airways has communicated their acceptance it could beargued that this fulfils the intentions of the offeror and it becomes binding. Thirdly, has the acceptancebeen communicated effectively? Anacceptance must be communicated to the offeror and it is at the time that theacceptance is received that a contract is formed. In this scenario no mode ofcommunication has been prescribed by the offeror and the offeree has theflexibility to choose a mode of communication.
Francesco therefore used atelephone conversation as the mode of communication and a contract had beencompleted during a telephone conversation between both parties in whichFrancesco made the counter-offer and Zantek Airways had accepted. Fourthly, once the acceptanceis deemed to have been effective, is the offer still open in particular arevocation is effective at any time before the date of effective acceptance. Threedays after promising to accepting Francesco's offer Zantek Airways decided torevoke the offer as they no longer wished to sell the Airbus. The revocationmust be communicated to the offeree and the postal rule does not apply torevocation, which means a letter posted confirming revocation does not takeeffect until it is received by the offeree.
There is no evidence that Zantek'sAirways' revocation has been communicated with Francesco. In the case of Byrnev Van Tienhoven it was established that the letter of revocation wasineffective as it was received after the acceptance was complete. It will onlybe effective if it is communicated to the offeree personally or through a thirdparty source. In the case of Dickinson v Dodds (1876) where the offer wasexpresses to be open until a certain date and time such an offer may be revokedbefore the end of the time limit, unless it has already been accepted.
Therefore, is debatable whether the counter-offer had been accepted on the 8September 2017 or would have been accepted at the end of the 5 day period. Evenif the offeror promises to keep his offer open for a certain period, he isstill entitled to revoke his offer. In the case of Routledge v Grant the offeror promised to keep his offer openfor six weeks but revoked after three. it was established that the defendant couldwithdraw the offer at any time before the acceptance, even though the deadlinehad not yet expired.
In this scenario Zantek Airways promised not to sell toanother buyer for the next 5 days. "Apromise to keep an offer open will be binding if it can be enforced as aseparate contract". However, in this scenario it could be argued that noconsideration was given as the offeree had just offered a sum of £120,000 providing the Airbusis not sold within the next 5 days. Zantek's Airways promise to keep theiroffer open is not legally binding because it is unsupported by consideration.
If Francesco had provided any monetary value such as a deposit for the ZantekAirways to keep the offer open then Zantek Airways could not revoke the offer. Zantek airways withdraw their sale of the aircraft threedays after the official advertisement. ZA had claimed they now need theaircraft after putting it on sale. Like in the Payne v Cave (1789) case thedefendant had made the highest bid for the plaintiff's good at an auction saleand he then withdrew his sale before the hammer was thrown down. This thenresulted in that he could have withdrawn his offer any time before the hammerwent down and not after otherwise the auctioneer would of have accepted theoffer. Also, once Zantek airways had accepted the offer, which in this case wasthrough telephone communication the only way to withdraw the offer was througha mode of communication.
As there is no proof of revocation has beencommunicated between ZA and Pinto Aviation. In the Byrne v Tienhoven case itwas stated that revocation was ineffective because it was received after theacceptance was complete. Therefore, Zantek airways should have communicatedwith Pinto Aviation before withdrawing from the sale. The only way for Zantekairways withdrawal to be effective is to be communicated between the twoparties either personally or through third party. In conclusion, there is nofurther information to confirm the validity of the revocation as there isnothing to suggest that it was communicated to Zantek Airways by the end of the5 days period if we were to argue that acceptance would have only taken placewhen the 5 days period had expired. If we were to argue that acceptance tookplace on 8 September 2017 then it could be argued that Zantek Airways had avalid contract on the 8 September 2017 and therefore Zantek's Airways decisionnot to sell the Airbus anymore would not constitute as a revocation of hisoffer because it would have already been accepted on the 8 September 2017.
ZantekAirways had accepted Pinto Aviation's counter offer of £120,000 on not to sell theaircraft and this was agreed over communication over the phone. This then leadPinto Aviation to believe that they have a contract with Zantek airways overthe aircraft but Zantek airways had the right to withdraw from their sale threedays after because it was before the day of the agreement for the aircraft tobe sold. If Pinto Aviation had proposed a deposit of an amount then Zantekairways would not be eligible to withdraw from the sale because a contractwould have been accepted once the deposit has been confirmed.