DR HAB. FRYDERYK ZOLL, PROFESSOR AT THE JAGIELLONIAN UNIVERSITY

Formation of Contract

FORMATION OF CONTRACT

1. The concept of the offerArt. II. 4:102 DCFR How intention is determinedThe intention of a party to enter into a binding

relationship or bring about some other legal effect is to be determined from the party’s statements or conduct as they were reasonably understood by the other party

FORMATION OF CONTRACT Art. II. – 4: 201 DCFR: Offer(1)A proposal amounts to an offer if:a) it is intended to result in a contract if the other

party accepts it; andb) it contains sufficiently definite terms to form a

contract(2) An offer may be made to one or more specific

persons or to the public(3) A proposal to supply goods or services at stated

prices made by a business in a public adevertismement or a catalogue, or by a display of goods, is treated, unless the circumstances indicate otherwise, as an offer to sell or supply at that price until the stock of goods, or the business’s capacity to supply the services, is exhausted

FORMATION OF CONTRACT Art. 14 CISG (1) A proposal for concluding a contract

addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicity fixes or makes provision for determining the quantity and the price.

(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to makes offeres, unless the contrary indicated by the person making the proposal

FORMATION OF CONTRACT

Court of Appeal Clifton v. Palumbo [1944] 2 A11 ER 497

(Beal/Hartkamp/Koetz/Tallon: Cases, Materials and Text on Contract Law, p. 179)

Clifton wrote to Palumbo without legal assistance: „I am prepared to offer you my estate for £ 600.000. I also agree that a reasonable and sufficient time shall be granted to you for the examination and consideration of all the data and details necessary for the preparation of the Schedule of Completion”

FORMATION OF CONTRACT

Lord Greene: „(…) Therefore words like „agree”, „offer”, „accept”, when used in relation to price are not to be read necessarily as intention to make, then and there, a contract or an offer as the case may be. Whether they do or do not must depend entirely on the construction of particular document”

FORMATION OF CONTRACT Court of AppealBigg v. Boyd-Gibbins Ltd. [1971] 2 A11 ER 183Beale and Others, Cases, p. 180

The Biggs wrote to Gibbins „As you are aware that I paid £ 25.000 for this property, your offer of £ 20.000 would appear to be at least a little optimistic. For a quick sale I would accept £ 26.000”. In reply Gibbins wrote „I accept your offer”. He asked the family Biggs to contact his solicitors. Mr Biggs responded: „I am putting the matter in the hands of my solicitors. My wife and I are both pleased that you are purchasing the property”

FORMATION OF CONTRACT

Judgment: Russel LJ: „…the defendants were correct in treating the first letter of 22 December 1969, as an offer to sell the property at £ 26.000 when they wrote „I accept your offer”. Further then that, it seems to me that the last letter of 13 January is a recognition, an affirmation indeed, that the parties have come to agreement on the sale of the property”.

FORMATION OF CONTRACT

Conclusions for the English Law (Beale and Others – Cases, p. 180 – 181)

- Question whether a statement constitutes an offer depends on the objectively ascertained intention of the party making the statement.

- The statement of a price by the seller is not decisive in determining whether he made an offer.

- The use of the word „offer” is not decisive for determining the nature of the statement

FORMATION OF CONTRACT

The French Law

Cass. Com. 6.03. 1990, Bull.civ. IV.74. JCP 1990.II.21583 – Beale and Others, Cases, p. 181

Facts (according to Beale and Others, Cases, p. 181):

Mr Borde ordered certain equipment from Messers Hugin Sweda for the purposes of his business; that company had stated, in the general conditions of sale featuring in its order forms, that its offer did not become definitive , and did not constitute a binding commitement, until they were approved by it, and, moreover that an order would not be regarded as definite until it had been accepted by the company. Before his order was accepted by Hugin Sweda, Mr Borde changed his mind and withdrew it.

FORMATION OF CONTRACT Judgment (Beale and Others, Cases, p. 181)

„Under Articles 1134 and 1583 of the Code Civil; whereas between traders, a proposal to enter into a contract constitutes an offer only if it states an intention on the part of the person making it to be bound by it in the event of its acceptance;

Whereas in dismissing Mr Borde’s claim for repayment of the sum paid by him on account, the cour d’appel held that the order form constituted a firm purchase on the terms proposed by the Hugin Sweda and the clause appearing in that form constituted a condition having suspensory effect which was intended solely for the benefit of the vendor and which do not entitle the purchaser to withdraw from a sale which had been defintely concluded by agreement between the parties as to the subject –matter and the price;

Whereas in so ruling , despite the fact that, by complying with the proposal contained in the order form Mr Borde had merely made an offer to purchase which he remained at liberty to withdraw until such time as the sale became definitive by acceptance on the part of the vendor, the cour d’appel infringed the legislation referred above.

Homework: read the Case on p. 183, The Aeroplane Charter