Several lectures per day, multiple supervisions per week and dealing with many exercises leaves me on my toe, may it be the weekend or otherwise. Almost every passing day I now deal with a legal problem or an exercise. Following is a recent exercise in which I was asked to advise a person named Rob in a hypothetical legal problem.

The Problem.
Rob, a wealthy philanthropist, placed an advertisement in the “Herald” newspaper offering to sponsor, at the rate of £1 per mile, anyone willing to walk to Manchester in aid of the Contract Lecturers’ Benevolent Fund, a charity.

Elizabeth, who was already walking to Manchester in order to improve her fitness, heard about Rob’s advertisement and decided to claim the sponsorship money on arrival in Manchester. Richard read the advertisement and decided to set out for Manchester, having first sent an email to Rob informing him that he intended to claim the sponsorship money. When Rob received Richard’s email he placed a second advertisement in the “Herald” revoking his offer, which Yvonne, a friend of Richard told him about when he was half-way to Manchester. Meanwhile, Stewart, who had read Rob’s first advertisement, set out for Manchester having decided to claim the sponsorship money, but did not hear of Rob’s second advertisement.

Elizabeth heard of Rob’s second advertisement before she reached Manchester and gave up her walk before reaching Manchester, but claimed to be entitled to £1 per mile for every mile she had covered. Richard completed the walk and claimed the sponsorship money, as did Stewart when he completed the walk.

Advise Rob.

My Advise:
The case in question requires establishing the existence of a contract between Rob and each of the three candidates Elizabeth, Richard and Stewart, constituting a promise to pay. The existence of a contract can be ascertained by rules of offer and acceptance, where an offer is a statement by one party of a willingness to enter into a contract on stated terms and an acceptance is an unqualified expression of assent to the terms proposed by the offeror. To claim the sponsorship money candidates must prove ‘reliance on the offer’ and ‘performance of the act – the acceptance’ which is necessary for a contract and disprove that the promise to pay was in aid of the charity.

The intention to create legal relations, according to Professor Simpson as cited in Mckendrick (2008), was first introduced by Carlill in her claim in Carlill v Carbolic Smoke Ball Co. (1893) 1 Q.B. 256. It is in this case that the offer and acceptance was used to establish regal relations. Different to intention to create legal relations is ‘intention of the parties’. Intention of the parties is the guiding principle which courts apply in deciding the proper interpretation of the contract. Should a contractual dispute arise out of disagreement over the proper interpretation of a particular phrase in a contract, courts give effect to the intention of the parties; in some cases it is influenced by the court’s view of the ‘desirability’ of the contract term which it is called upon to interpret (see Carlill v Carbolic Smoke Ball Co.; and Bank of Credit and Commerce International SA v. Ali (2001) 151 N.L.J. 1852; or in light of what is reasonable Hillas & Co., Ltd. v Arcos, Ltd (1931) 40 Ll. L. Rep. 206.

Use of offer and acceptance analysis in establishing legal relations is seen in a number of cases including Βutler Machine Tool Co v Ex-cell-o Corp (1979) 1 W.L.R. 401 and Blackpool and Fylde Aero Club Ltd v. Blackpool Borough Council (1990) 1 W.L.R. 1195. More recently Judge Seymour QC in Tesco Stores Ltd v. Costain Construction Ltd (2003) EWHC 1487 said: “The notions of offer and acceptance are…of the highest importance in any consideration of the issues whether the parties intended to be legally bound by those terms.”

Lindley LJ in Carlill v Carbolic Smoke Ball Co. held that words of all advertisements offering rewards are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. It was held that a promise is binding, so far as the element of "reliance" or "detriment" to the promisee, or "benefit" to the promisor can be identified.

In a unilateral contract the acceptance of the offer to enter into contract, and the consideration for it, is the performance of the act. An ‘acceptance’ is an unqualified expression of assent to the terms proposed by the offeror. A purported acceptance which does not accept all the terms and conditions proposed by the offeror but which in fact introduces new terms is not an acceptance or rejection but a counter-offer that cannot subsequently be accepted by the offeree (see  Hyde v. Wrench (1840) 3 Beav 334). Also doing the required act in ignorance of the offer does not amount to acceptance and the authority in this is R v Clarke (1927); Williams v. Carwardine (1833) 110 E.R. 590; and Taylor v Allon (1966) 1 Q.B. 304. In Williams v. Carwardine it was held that once the offer has been communicated to the other party, a person who knows of the offer may do the act required for acceptance with some motive other than that of accepting the offer.

Under the law of England, to be a party in an agreement means to provide a consideration. The doctrine of consideration does not require that the consideration moves to the promisor. In the case of Bolton v. Madden (1873) L.R. 9 Q.B. 55 it was held that the rule is satisfied in the case where the promisee agrees to confer a benefit on a third party at the request of the promisor. More recently s. 1(1)(b) of Contracts (Rights of Third Parties) Act 1999 confers on a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract if the term purports to confer a benefit on him. Furthermore s. 1(5) of the Rights of Third Parties Act reads: “there shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract (and the rules relating to damages, injunctions, specific performance and other relief shall apply accordingly).”

Performance as the determinant for acceptance and the consideration for the contract gives rise to the so-called “Walk to York” problem where it is disputed whether the offeror can effectively withdraw his offer when an offeree has begun to perform the act but has not yet completed it. In Errington v. Errington (1952) 1 K.B. 290 a father and his son and daughter-in-law entered into a unilateral contract and after the father’s death, the widow, his successor in title brought an action against the daughter-in-law for possession of the house and in analysing the nature of the relationship Denning LJ said “...father’s promise was a unilateral contract – a promise of the house in return for their act of paying the instalments. It could not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed”. Goff LJ in Daulia Ltd v. Four Millbank Nominees Ltd (1978) 2 All E.R. 557 said that in a unilateral contract the offeror is entitled to require full performance of the condition and once the offeree has embarked on performance it is too late for the offeror to revoke his offer.

Whether or not an act performed in the past can amount to consideration is answered by Lord Scarman in Pao On v. Lau Yiu (1979) 3 W.L.R. 435. As cited in Mckendrick (2008), in Pao On v. Lau Yiu it was held that an act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. In order to apply the doctrine of past consideration, the act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated either by payment or the conferment of some other benefit, and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.

In light of the string of authorities cited above, the facts of the case in question are evaluated here. Rob placed an advertisement in the “Herald” newspaper offering to sponsor, at the rate of £ 1 per mile, anyone willing to walk to Manchester in aid of the Contract Lecturers’ Benevolet Fund. On the words of the advertisement, it is a conditional offer to walk for a cause where the condition is that the offeree must be willing to walk to Manchester and to confer the benefit to the Contract Lecturers’ Benevolet Fund (hereinafter referred to as ‘charity’). The condition thus means that anyone of the public who comes forward to perform the act must be willing to perform in aid of the cause, the charity. More on the ‘condition’ later, establishing a contract is viewed as a priority now.

To begin by establishing possible contracts between each of the three claimants Elizabeth, Richard and Stewart and Rob the offeror is simply to dismiss those who did not make it to a contract. What is left will then be examined.

Elizabeth who was already walking to Manchester in order to improve her fitness heard about Rob’s advertisement and embarked on performing the act. To qualify for her walk up to the point she first heard about the offer (hereinafter referred to as partE1), the act must have been done on Rob’s request and both Rob and Elizabeth must have understood her walk was to be remunerated. In the absence of a promise in advance, an enforceable contract, Elizabeth’s walk for partE1 may not constitute a contract. For the part of her walk to Manchester on reliance of Rob’s offer (hereinafter referred to as partE2) the circumstances were different. Elizabeth’s motive to walk, although for her own fitness, is immaterial so long as she was relying on the offer. Although Rob placed an advertisement revoking his offer, in partE2 Elizabeth had already embarked on performance; Elezabeth’s options for a contract remained unaltered as at that time. Had Elizabeth completed her walk to Manchester as required by Rob, irrespective of her motive and Rob’s attempt to revoke the offer, she would have a contract for the partE2. Nonetheless this is not the case; on hearing of Rob’s second advertisement, Elizabeth gave up her walk to Manchester. The consequence is nudum pactum – that there is no consideration. Furthermore, Rob is entitled to require full performance of the condition which he imposed and short of that he is not bound. Consequently Elizabeth does not have a contract.

Richard read Rob’s advertisement and decided to set out for Manchester. This is while in a unilateral contract the acceptance of the offer to enter into contract and the consideration for it, is the performance of the act. Richard’s email to Rob stating his intention to claim the sponsorship money in this case has no legal effect. In order to accept the offer, he must perform the condition in its entirety, and that is to walk to Manchester. Subsequent to Richard’s email, Rob placed a second advertisement revoking his offer. On the facts, Richard has already embarked on performance and it is too late for Rob to revoke his offer; the contract is made. Yvonne had no legal position in the option-for-contract Richard had with Rob at the time. Richard completed his walk to Manchester and it is deemed sufficient consideration and acceptance of the offer causing his contract to be binding.
 
Walking to Manchester is the act requested by Rob and Steward embarked on performance, having read Rob’s advertisement. Rob’s second advertisement to revoke the offer is second to Stewart’s action. Besides, Stewart completed his walk to Manchester in its entirety and that amounts to a consideration and acceptance of the offer.

Both Richard and Stewart relied on the promise and began performing the act prior to Rob’s second advertisement revoking the offer. Subsequently Richard and Stewart completed the performance of the act; they are thus in contract with Rob.

I now come to the remaining issues. Richard’s email informing Rob of his intention to claim the sponsorship money is a departure from Rob’s offer in which the offeree had to confer the benefit to the charity. In a bilateral contract such a communication will at best be a counter-offer which Rob could not have accepted. The case is about a unilateral contract where performance of the act is the contract. As examined already Richard performed the act and entered into the contract, as did Stewart when he completed the act.

The walk to Manchester is the consideration for the contract. The offer was to walk in aid of the charity and the walk performed by Richard and Stewart sufficed for their individual enforceable contract. It is not required that the consideration move to the promisor. Both Richard and Steward, by accepting Rob’s offer by conduct, agreed to confer the benefit in aid of the charity, a third party to the contract. Since a term in the contract purports to confer a benefit to the charity, the charity in its own right can enforce that term. The fact that the law confers a right of action is sufficient to displace the requirement for the third party to provide consideration. In an action for breach of contract the Charity has all remedies available (and the rules relating to damages, injunctions, specific performance and other relief accordingly) just as it had been a party to the contract.

If in an event Richard and Stewart lodge claims for the sponsorship money for themselves in court, Rob’s advertisement is likely to come under scrutiny. Should a contractual dispute arise of out a disagreement over the interpretation, it is not for the parties but for the courts to interpret. The offer in Rob’s advertisement makes an express statement that the walk is in aid of the charity. Courts are likely to identify this with ease. In any case the intentions of the parties are clear except that of Richard and Stewart who seem to have entered into an enforceable contract by their own misreading.

On these facts Rob is not obliged to pay any of the claimants namely Stewart, Richard, and Elizabeth but the charity can recover.