OFFER IN CONTRACT LAW

1. Introduction

The formation of a valid contract begins with an offer. Without a valid offer, there can be no acceptance and consequently no binding agreement. Courts are frequently called upon to determine whether a statement, letter, advertisement, negotiation, or conduct amounts to a legally enforceable offer or merely a preliminary step in negotiation.

In Ghana, as in common law jurisdictions, the law of offer is governed by well-established judicial principles which emphasize certainty, objectivity, and commercial practicality.

An offer is therefore not simply any proposal or statement. It must reflect a clear intention to be legally bound upon acceptance.

2. Definition of an Offer

An offer is a clear expression by a person, whether natural or artificial such as a company or institution, of an intention to enter into a legally binding agreement on specified terms, such that acceptance by the other party will immediately create a contract.

This definition highlights three central elements:

1. Intention to be legally bound
2. Certainty of terms
3. Finality of expression

3. Essential Requirements of a Valid Offer

3.1 Clarity and Certainty

An offer must be clear and unambiguous. The terms must be sufficiently precise so that the court can identify the rights and obligations of the parties.

Where essential terms such as price, subject matter, quantity, or duration are uncertain, the courts are unlikely to enforce the agreement.

Illustration

If A tells B, “I may sell my land to you at a good price,” this is not an offer because the price and intention are uncertain.

However, if A says, “I will sell my land at Kasoa to you for GHS 250,000 if you accept by 30 June,” this is sufficiently clear and capable of enforcement.

3.2 Finality of the Offer

Finality means that the offeror has reached a point where he is ready to be bound immediately upon acceptance. There must be no essential terms left open for further negotiation.

Once accepted, the offer transforms into a binding contract and all the terms become legally enforceable.

Illustration

If a landlord writes, “I am offering to rent my shop to you at GHS 2,000 per month starting from 1 August,” this shows finality. If the tenant accepts, the contract is formed immediately.

However, if the landlord writes, “We can discuss rent later,” the statement lacks finality and is not an offer.

3.3 Legal Acceptability

The subject matter of the offer must be lawful and not contrary to public policy.

Illustration

An offer to sell stolen property or to perform an illegal activity such as smuggling goods across borders cannot create a valid contract even if accepted.

4. The Objective Test in Determining an Offer

Courts do not examine the secret thoughts or private motives of the parties. Instead, they apply the objective test. This test asks what a reasonable person, having knowledge of the surrounding circumstances, would understand from the words or conduct of the parties.

This principle was established in Smith v Hughes and later reaffirmed by the UK Supreme Court in RTS Flexible Systems Ltd v Molkerei Alois Müller, where the court held that contractual intention is determined by what was communicated objectively by words and conduct.

Ghanaian courts apply the same approach as demonstrated in NTHC v Antwi.

5. Offer Distinguished from Invitation to Treat

5.1 Meaning of Invitation to Treat

An invitation to treat is a preliminary communication inviting others to make offers. It does not show an intention to be bound immediately.

The key distinction between an offer and an invitation to treat lies in intention and finality.

An offer is capable of acceptance.  An invitation to treat invites negotiation.

6. Proposal Letters and Housing Transactions

6.1 Gibson v Manchester City Council (1979)

Facts

Manchester City Council introduced a policy allowing tenants to apply to purchase the houses they occupied. The Council sent Gibson a letter explaining the scheme. The letter stated that the Council “may be prepared to sell” the property and invited Gibson to submit a formal application if he wished to buy.

Gibson wrote back requesting a reduction in the stated price. The Council rejected the reduction. Gibson later wrote again indicating that he was willing to proceed at the original price. Before any final agreement was reached, a new political administration came into office and halted all council house sales where contracts had not already been concluded.

The Council informed Gibson that the sale could not proceed. Gibson sued, arguing that a binding contract had already been formed.

Legal Issue

Whether the original letter from the Council constituted a binding offer capable of acceptance.

Court’s Analysis

The House of Lords examined the wording of the letter. The phrases “may be prepared to sell” and “make a formal application” clearly showed that the Council was not making a firm commitment. Instead, it was inviting tenants to submit offers which the Council could later accept or reject.

The court further noted that the Council never communicated acceptance of Gibson’s later willingness to proceed at the original price.

Decision

The court held that no offer had been made and therefore no contract existed.

Legal Principle

A communication that invites applications or proposals without committing the sender to immediate legal obligation is an invitation to treat.

6.2 Ghanaian Authority: NTHC v Antwi

Facts

The defendant company employed the plaintiff and provided her with official accommodation. The company later decided to sell its staff bungalows and wrote to the plaintiff offering to sell her specific bungalow at a stated price within a stated time period.

The plaintiff replied in writing accepting the offer and requesting information about payment arrangements. The company did not respond but later terminated her employment and demanded possession of the bungalow.

The plaintiff brought an action seeking a declaration that a binding contract of sale had already been formed.

Court’s Analysis

The court applied the objective test and examined the letter carefully. It found that:

1. The purchase price was fixed.
2. The bungalow was clearly identified.
3. A deadline for acceptance was provided.
4. There was no indication that negotiations were still ongoing.

The court also held that the plaintiff’s request for payment details did not amount to a counter-offer because it did not seek to vary any essential term.

Decision

The court concluded that the letter was a firm offer and that the plaintiff’s response constituted acceptance. A binding contract had therefore been formed.

Illustration

1. If an employer writes to an employee stating, “We will sell you House No. 4 at GHS 180,000 if you accept by 15 July,” this is an offer. Once the employee accepts, the employer cannot later withdraw without liability.

2. If an employer states in an employment contract that, “the employee shall have the option to purchase the company car…” this is not an offer because there is no certainty of terms or finality. 

7. Advertisements and Offers

7.1 General Rule on Advertisements

Advertisements are generally treated as invitations to treat. This is because sellers usually do not intend to be bound to every person who responds to an advertisement.

Illustration

If a shop advertises “Rice on sale at GHS 10 per bag,” the shop is not legally bound to sell rice to every person who comes to the store. The customer makes the offer at the counter, which the seller may accept or reject.

7.2 Exception: Carlill v Carbolic Smoke Ball Company (1893)

Facts

The defendant company advertised that it would pay £100 to any person who used its smoke ball product according to instructions and still contracted influenza. The advertisement also stated that £1,000 had been deposited in a bank to demonstrate seriousness.

Mrs Carlill purchased the product, used it as directed, and later contracted influenza. She demanded payment. The company refused, claiming the advertisement was mere sales promotion.

Court’s Analysis

The court found that:

1. The advertisement was specific and detailed.
2. The reward was clearly stated.
3. The deposit of money showed serious intention to be bound.
4. Acceptance occurred by performance of the stated conditions.

Decision

The court held that the advertisement constituted a unilateral offer and that a binding contract had been formed when Mrs Carlill performed the conditions.

Illustration

1. If a company advertises, “We will pay GHS 5,000 to anyone who finds and returns our missing generator,” the advertisement may constitute an offer capable of acceptance by performance.

2. If a company advertises, “sales girl needed. Salary of GHS 3000 to be provided,” this advertisement is not an offer capable of acceptance. Rather, a girl interested, may send an application to be considered for the position which the company can either accept or reject. 

8. Display of Goods in Shops

Fisher v Bell (1961)

Facts

The defendant displayed a prohibited knife in his shop window with a price label. He was charged under legislation that prohibited offering such knives for sale.

Court’s Reasoning

The court held that displaying goods in a shop window is not an offer. It is merely an invitation to treat. The customer makes the offer when he brings the item to the cashier.

Decision

The defendant was not guilty because no legal offer had been made.

Illustration

A supermarket shelf displaying bottled water with prices does not amount to an offer. The offer is made by the customer at the checkout.

9. Auction Sales

9.1 Harris v Nickerson (1872)

Facts

An auctioneer advertised that certain goods would be sold on specific dates. A buyer travelled to attend the auction but the goods were withdrawn. The buyer sued for wasted expenses.

Court’s Decision

The court held that the advertisement was merely a statement of intention to hold an auction. It was not a binding offer to sell the goods.

9.2 Ghanaian Position Under PNDCL 230

Section 13 of the Auction Sales Law, 1989 provides that a notice advertising an auction is not a binding contract.

Reserve Price

Where there is a reserve price, the auctioneer is not obliged to sell below the minimum price. This principle is supported by Section 17 of PNDCL 230 and Warlow v Harrison.

Auction Without Reserve

Where no reserve price is stated, the auctioneer is bound to sell to the highest bidder.

Illustration

If a car is auctioned with a reserve price of GHS 50,000 and the highest bid is GHS 40,000, the auctioneer may refuse to sell. If no reserve price is stated, the auctioneer must sell to the highest bidder.

10. Tender Notices and Government Contracts

Perbi v Attorney General

Facts

The government invited tenders for the supply of food items to a public hospital. The plaintiff’s tender was accepted and supplies were made. The agreement contained termination clauses.

The government later terminated the contract with only two days’ notice and argued that the arrangement was not legally binding.

Court’s Analysis

The court examined the tender documents and found that:

1. The government accepted the tender.
2. The hospital agreed to purchase its requirements from the plaintiff.
3. The agreement contained binding contractual obligations and termination provisions.

Decision

The court held that a binding contract existed and that the government had breached the agreement.

Illustration

If a ministry accepts a contractor’s tender to supply office furniture for one year, the acceptance creates a binding contract even though the quantities may vary.

11. Mistaken Offers and the Snapping Up Doctrine

Hartog v Collins and Shields (1939)

Facts

The seller mistakenly quoted the price of goods per pound instead of per unit. The buyer, knowing that the price was obviously wrong, accepted immediately.

Court’s Decision

The court held that no valid contract existed because the buyer knew of the mistake and attempted to take unfair advantage.

Illustration

If a seller mistakenly advertises a new car for GHS 5,000 instead of GHS 50,000 and the buyer knows this is an error, the buyer cannot enforce the sale.

12. Conclusion

The law of offer ensures certainty and fairness in contractual dealings. Courts consistently emphasize clarity, finality, and objective intention. Invitations to treat, advertisements, displays, and tender notices generally do not constitute offers unless the language and conduct clearly demonstrate an intention to be legally bound.

Both Ghanaian and common law authorities adopt a consistent approach that protects reasonable expectations and promotes commercial stability.

TABULAR SUMMARY OF OFFER IN CONTRACT LAW

Area	Legal Rule	Key Authority	Practical Effect
Meaning of Offer	Clear intention to be bound upon acceptance	Smith v Hughes	Acceptance immediately creates contract
Test Applied	Objective reasonable person standard	RTS Flexible Systems v Müller	Courts ignore private intentions
Clear and Final Offer	Must not leave essential terms open	Storer v Manchester City Council	Binding upon acceptance
Invitation to Treat	Invitation to make offers	Gibson v Manchester City Council	No contract upon response
Ghanaian Authority	Fixed terms indicate offer	NTHC v Antwi	Employer bound by letter
Advertisements	Usually invitation to treat	Partridge v Crittenden	Seller not bound to all respondents
Unilateral Advert	Can be offer	Carlill v Carbolic Smoke Ball	Acceptance by performance
Display of Goods	Invitation to treat	Fisher v Bell	Customer makes offer
Auction Advertisement	Invitation to treat	Harris v Nickerson, PNDCL 230	Auctioneer not bound
Reserve Price Auctions	No duty to sell below reserve	Warlow v Harrison	Owner protected
Tender Acceptance	Creates binding contract	Perbi v Attorney General	Government bound
Mistaken Offer	No snapping up	Hartog v Collins and Shields	Prevents unfair advantage