The are (ITT) invitation to treat, counter-offer and

The matters which are
applicable in this scenario are (ITT) invitation to treat, counter-offer and
the promise to keep an offer open and revocation and whether a contract has
been made between Zantek Airways (“Zantek Airways”) and Pinto Aviation LTD
(“Francesco”).

First, has an offer been made?
An offer in contract law is a specific and definite proposition in exchange for
the performance of another party. There are different ways of which a contract
can be frustrated or revoked or even terminated. There are also certain
conditions in a contract which needs to be respected. An offer in a contract
can also be counter-offered which is a negotiation between the two parties
which is beneficial. An offer may be also being defined as a clear statement of
the terms between the offeror and offeree, due to the fact that the offeree is
willing accept the offer. If the offer lacks any contractual significance, this
constitutes an invitation to treat. An invitation to treat (ITT) is where a
person invites customers to make an offer to buy, which may be accepted or
rejected. For example, a sign in a shop window advertising chocolate bars is a
(ITT). Here Zantek Airways advertised an airbus for sale for a price of 12.6
million.

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Advertisements will generate
customers as it is an of invitation to treat. Customers will look at
advertisement when in the market to buy a product and advertisements is one way
of approaching a sale. In Partridge v Crittenden where an ad was placed in Cage
and Aviary Birds which stated, “Bramble finch cocks and hens, 25s each” the
Court held that advertisements were merely invitations to treat and not offer
to sell. In the case of Fisher v Bell the plaintiff’s conviction was cancelled
as goods on display in shops are not ‘offers’ but an invitation to treat. Nevertheless,
although most advertisements will be treated as invitation to treat, there are
situations where an advertisement can be construed as an offer. For example, in
Carlill v Carbolic Smoke Ball Co. Ltd the advertisement was specific and
definite (£100
reward will be paid to anyone contracting influenza) and demonstrated the requisite
intent to be bound (£1000
has been deposited with Alliance Bank… showing our sincerity in this matter). The
Court held that acceptance consists of performing the requested act and
notification of acceptance is not necessary.

Zantek Airways placed an
advertisement for the sale of an Airbus 456. The advertisement states a
definite price of £12.6m
and it is unlikely that a buyer would come forward without an internal
inspection of the Airbus and test-drive, and an advertisement is normally
considered to be a means of generating interest rather than the final stage
before a contract is concluded.

Consequently, as the
contractual status of the advertisement is debatable, the answer below will
assume that either proposition is valid.

Francesco from Pinto Aviation
LTD is clearly making an offer to Zantek Airways to pay £120,000 if Zantek Airways
promises not to sell the aircraft to another buyer for the next 5 days. These
now becomes the terms of the contract and given that it is accepted by Zantek
Airways, it will become binding. When an offer is accepted, it is essential
that the offeree accept the exact terms of the offer. If, in doing so, the
offeree introduces a new term, he is making a counter-offer, the effect of
which is to destroy the original offer. In the case of Hyde v Wrench where the
defendant offered to sell his farm for £1000
to which the plaintiff agreed to buy but for £900
and readily later accepted the offer of £1000,
the Court held that there was no contract as a counter-offer had been made
which destroyed the original offer so it could no longer be accepted. By
introducing this new price, Francesco’s response maybe classified as a
counter-offer. If so, the counter-offer destroys Zantek Airways original offer.

Francesco’s response would
clearly constitute a counter-offer as a lower price was offered. On this basis,
Francesco’s subsequent request for Zantek Airways not to sell it to another
buyer for the next 5 days would either be a counter-offer, in which no contract
comes to existence yet, or an acceptance of that counter-offer. Zantek airways
agreed to the counter-offer and promised not to sell it to another buyer for
the next 5 days. This was agreed over the telephone on 8 September 2017. Whilst,
it could be argued that there is a strong presumption that accepting ‘subject
to contract’ creates no contractual liability (Branca v Cobarro 1947 KB 854) the
purported acceptance containing the new terms was accepted and therefore
resulted in a contract being formed. (Hyde v Wrench).

Secondly, if an offer has been
made, has the offeree unequivocally accepted this offer? An acceptance can be
given orally or in writing. In the case of Felthouse v Bindley, it was
established that the offeree’s silence or failure to act cannot constitute a
valid acceptance. The offeree’s acceptance of the offer must be communicated to
the offeror and offeror would need to accept this counter-offer before any
contract comes into existence. Zantek airways agreed to the counter-offer and
promised not to sell it to another buyer for the next 5 days. This was agreed
over the telephone on 8 September 2017. Francesco would assume at this point
that the offer had been accepted. On this basis, there is no information as to
whether there was a chosen method of acceptance and as Zantak Airways agreed to
not sell it to another buyer for the next 5 days over the telephone and there
is evidence that Zantak Airways has communicated their acceptance it could be
argued that this fulfils the intentions of the offeror and it becomes binding.

Thirdly, has the acceptance
been communicated effectively?  An
acceptance must be communicated to the offeror and it is at the time that the
acceptance is received that a contract is formed. In this scenario no mode of
communication has been prescribed by the offeror and the offeree has the
flexibility to choose a mode of communication. Francesco therefore used a
telephone conversation as the mode of communication and a contract had been
completed during a telephone conversation between both parties in which
Francesco made the counter-offer and Zantek Airways had accepted.

Fourthly, once the acceptance
is deemed to have been effective, is the offer still open in particular a
revocation is effective at any time before the date of effective acceptance. Three
days after promising to accepting Francesco’s offer Zantek Airways decided to
revoke the offer as they no longer wished to sell the Airbus. The revocation
must be communicated to the offeree and the postal rule does not apply to
revocation, which means a letter posted confirming revocation does not take
effect until it is received by the offeree. There is no evidence that Zantek’s
Airways’ revocation has been communicated with Francesco. In the case of Byrne
v Van Tienhoven it was established that the letter of revocation was
ineffective as it was received after the acceptance was complete. It will only
be effective if it is communicated to the offeree personally or through a third
party source. In the case of Dickinson v Dodds (1876) where the offer was
expresses to be open until a certain date and time such an offer may be revoked
before the end of the time limit, unless it has already been accepted.
Therefore, is debatable whether the counter-offer had been accepted on the 8
September 2017 or would have been accepted at the end of the 5 day period. Even
if the offeror promises to keep his offer open for a certain period, he is
still entitled to revoke his offer. In the case of Routledge v Grant  the offeror promised to keep his offer open
for six weeks but revoked after three. it was established that the defendant could
withdraw the offer at any time before the acceptance, even though the deadline
had not yet expired. In this scenario Zantek Airways promised not to sell to
another buyer for the next 5 days. “A
promise to keep an offer open will be binding if it can be enforced as a
separate contract”. However, in this scenario it could be argued that no
consideration was given as the offeree had just offered a sum of £120,000 providing the Airbus
is not sold within the next 5 days. Zantek’s Airways promise to keep their
offer open is not legally binding because it is unsupported by consideration.
If Francesco had provided any monetary value such as a deposit for the Zantek
Airways to keep the offer open then Zantek Airways could not revoke the offer.

Zantek airways withdraw their sale of the aircraft three
days after the official advertisement. ZA had claimed they now need the
aircraft after putting it on sale. Like in the Payne v Cave (1789) case the
defendant had made the highest bid for the plaintiff’s good at an auction sale
and he then withdrew his sale before the hammer was thrown down. This then
resulted in that he could have withdrawn his offer any time before the hammer
went down and not after otherwise the auctioneer would of have accepted the
offer. Also, once Zantek airways had accepted the offer, which in this case was
through telephone communication the only way to withdraw the offer was through
a mode of communication. As there is no proof of revocation has been
communicated between ZA and Pinto Aviation. In the Byrne v Tienhoven case it
was stated that revocation was ineffective because it was received after the
acceptance was complete. Therefore, Zantek airways should have communicated
with Pinto Aviation before withdrawing from the sale. The only way for Zantek
airways withdrawal to be effective is to be communicated between the two
parties either personally or through third party.

In conclusion, there is no
further information to confirm the validity of the revocation as there is
nothing to suggest that it was communicated to Zantek Airways by the end of the
5 days period if we were to argue that acceptance would have only taken place
when the 5 days period had expired. If we were to argue that acceptance took
place on 8 September 2017 then it could be argued that Zantek Airways had a
valid contract on the 8 September 2017 and therefore Zantek’s Airways decision
not to sell the Airbus anymore would not constitute as a revocation of his
offer because it would have already been accepted on the 8 September 2017. Zantek
Airways had accepted Pinto Aviation’s counter offer of £120,000 on not to sell the
aircraft and this was agreed over communication over the phone. This then lead
Pinto Aviation to believe that they have a contract with Zantek airways over
the aircraft but Zantek airways had the right to withdraw from their sale three
days after because it was before the day of the agreement for the aircraft to
be sold. If Pinto Aviation had proposed a deposit of an amount then Zantek
airways would not be eligible to withdraw from the sale because a contract
would have been accepted once the deposit has been confirmed.