By Chinmay Bhat

Abstract

Labels such as “offer” and “acceptance” have become central to contract law, but their use as first principles for adjudication and understanding cases can be problematic. This article argues that the application of such labels is a ruse, with courts first determining reasonable thresholds in a locality and then applying these labels to the aftermath of their deliberations. These labels are best denominated as contrived, and ideas like offer, acceptance, and meeting of minds exist only in the interstices of the ius civile and lex communis traditions. Understanding their historical context is essential to comprehend the complexities of the common law of contracts.

Labels like offer and acceptance are amongst contract law’s strangest creatures. Let me explicate.

It is almost as though the trope of our times to locate questions of contract formation in the realm of discursive labels like those of offer and acceptance. It would seem absurd to suggest that the foundations upon which private law in the 21^st century is built need rethinking. These ideas seem to have found widespread dissemination and internalisation amongst the legal community, almost to the point where it seems counterintuitive to suggest that these notions are oblique.

Theorising about contract law in popular juristic discourse today seems to be built on the substratum of offer and acceptance, with the domain forming some sort of system. It is allegedly systemic in the sense that the non-basic norms that apply to cases can be deduced from the general norms of the domain. One would then expect that judges engage in logical deduction, religiously applying well-established principles of offer and acceptance to cases at hand. However, a vigilant perusal of cases will lead one to the conclusion that this is a ruse. These labels are best denominated as contrived, with courts first determining reasonable thresholds in the locality and then applying these labels to the aftermath of their deliberations.

To adjudicate matters of contract law by using labels like offer and acceptance, and meeting of minds as though they were conspicuous systemic-normative entities is to engage in redundant analysis that can be traced back only to the metaphysical level.

Ideas like offer, acceptance and meeting of minds in this locale exist only in the interstices of the ius civile and lex communis traditions, in a state which jurisprudents might be compelled to describe as juridical hybridity.

It is perhaps best to examine a few cases to make the claim of backward reasoning more perspicuous.

Take, for instance, the case of Pharmaceutical Society of Great Britain v. Boots Cash Chemists. In this case, the defendant operated a self-service shop, where pharmaceuticals were displayed on shelves and customers could pick up products and acquire them by paying at the till. The court considered the issue of whether the contract is formed when the customer picks up the product from the shelves or when the product is paid for at the till. The court held that it is payment at the till that must be considered acceptance, since a customer is free to put the product back on the shelf if they changed their mind after picking it up. 

In Grainger & Son v. Gough, the defendant was a wine merchant who had circulated a pamphlet advertising a wines’ price list. The plaintiff ordered a certain number of bottles from the seller, which the merchant then refused to supply at the mentioned rates. The plaintiff sued stating there was a contract between the parties. The court had to contend with the issue of whether the pamphlet constituted an offer or simply an invitation to offer. The court held the latter and ruled for the defendant, stating that if the pamphlet were to constitute an offer, it would mean that the seller would be obliged to deliver unlimited amounts of bottles and this is unreasonable since the seller only had limited stock.

In the grossly misunderstood case of Felthouse v. Bindley, the claimant had a conversation with his nephew about buying his horse. He later sent a mail to him stating that if the nephew did not reply, he would assume that he accepted the offer and that the complainant would then be the rightful owner of the house. Though he did not reply to the letter, the nephew directed his auctioneer not to reserve the horse since it had already been sold. However, the auctioneer accidentally sold the horse. The uncle brought an action against the auctioneer for conversion. The court held in favour of the auctioneer, stating that since the nephew did not do anything to communicate his acceptance, there was no contract between the duo and hence the uncle was not the owner of the horse. The court stated that though the nephew intended to sell the horse to his uncle, he did not communicate anything vis-à-vis the same. Though there was a metaphysical meeting of the minds (consensus ad idem), the nephew did not do anything to bind himself. But Judge Keating hints at the fact that it would have been a very different matter if the uncle was suing the nephew, the court would most definitely hold that there was a contract between the parties.

At this point, it will have become glaringly obvious to even the most unfamiliar layman that there is a common thread of reasoning running through these cases. In all of these leading cases, the courts first set reasonable thresholds for acceptance and engaged in backward reasoning and applied labels. It becomes apparent that the claim made in the third paragraph with regards to synthetic reasoning has found validation. 

No amount of harping on definitions like ones previously discussed can ever help solve these cases. Then how might one explain this dissonance in contract law regarding the application of these labels?

Let us for a moment return to the claim I made regarding the interstices of the common and civil law. Notions like offer, acceptance and meeting of the minds in fact did not exist in English law until the 19^th century. These were imported from the civil law by proponents of the will theory, and they were used to denominate the results of the common law tradition of contract law reasoning. But they did not replace the common law tradition of reasoning using reasonable thresholds altogether.

Thus, it becomes obvious that while these labels can be helpful for understanding the fruit of the common law tradition of contractual reasoning, to use them as first principles for adjudicating and understanding cases of the common law of contracts is indeed a grave mistake.

Clearly, these creatures of the common law of contracts are not as straightforward as they may seem.

About the Author

The author is a first-year law student at the Jindal Global Law School. He primarily works in Philosophy of Law and Law and Culture.