Offer Is a Definite Promise Made by the offeror to the offeree with the Intention to Be Bound by Such Promise Without Further Negotiation

Question 1

In determining whether an agreement has been formed, the offer and acceptance is a useful tool. “Offer is a definite promise made by the offeror to the offeree with the intention to be bound by such promise without further negotiation”^[1]. “Acceptance is the unconditionally accepts the offer by offeree”^[2]. This case involved the principle of offer and acceptance and there are three parties involved which are Mandy, Tom and Peter. Therefore, we need to determine whether there is contract between them or not.

In the situation between Mandy and Tom, Tom is the offeror and Mandy is the offeree. On 1 Jan 2003 (Wednesday), Mandy post an advertisement on newspaper is an invitation to treat to the public; she is invite the other party to make an offer to her.^[3] Tom (offeror) saw the advertisement and make an offer to Mandy (offeree) by sending a letter saying that the flat’s rent is $7000 and include a photo. So Tom has intention to be bound by such promise without further negotiation. However, Mandy phoned to Tom on 3 Jan to reject his offer as the rent was so high, the rejection of an offer by Mandy kills the offer. The offer come to an end and can no longer be accepted by the offeree.^[4] This is not a counter offer from Mandy since Mandy haven’t introduces any variation to the term of the offer.^[5] Therefore, Tom agrees to reduce the rent to $6500, this is a new offer from Tom to Mandy. On 4 Jan 2003 (Saturday), Mandy posted a letter of acceptance to Tom. If it is reasonable to use post to give acceptance, postal rule can apply. According to the “postal rule”, “the acceptance is complete (or take effect) when the letter of acceptance is posted ^[6], the offeror is bound by the acceptance even through the letter of acceptance is delay or lost.”^[7] However, as the letter of acceptance is address incorrectly (assume misdirection is due to the fault of offeree herself), so postal rule can’t apply in this case. This is because “although the offeror takes the risk of an accident in the post resulting in loss or delay of a duly addressed and sufficiently stamped letter, the offeror does not take the risk of the offeree’s negligence”.^[8] Therefore, an acceptance of Mandy is only effective when it has been communicated to Tom on 10 Jan 2003 (Friday) 2:00 P.M.^[9], which the written notice of acceptance is left at his address at 10 Jan 2003 2:00 P.M. within the normal business hour. So there is no contract between Mandy and Tom until the notice of acceptance is left at his address on 10 Jan 2003 2:00 P.M. and Mandy’s acceptance has no legal effect until 10 Jan 2:00 P.M.^[10]