When advising Arnold we must first examine if a valid contract exists between him and Bob. For a valid contract to be in existence, it must consist intention to create legal relations, agreement, consideration, and no vitiating factors according to Lord Wilberforce in the Eurymedon. Before we look at whether the contract is formed, a valid agreement must be formed. A valid agreement is a promise of set of promises that is binding by law. An agreement consists of an offer that is followed by an acceptance resulting in (consensus as idem).
An offer an expression of willingness to be bound seen in the case of Storer v Manchester city council where there mortgage details were included should always be contrasted from an invitation to treat, an expression of willingness to negotiate seen in Gibson v Manchester city council where precatory words such as ‘may be’ are used. The courts would objectively look at the advertisement in the morning gazette and derive whether it is an offer or invitation to treat and because advertisements, auctions, tenders and display of goods are stereotypically invitations to treat, the advertisement by Arnold would be considered a invitation to treat.
Advertisments are also divded into unilateral and bilateral transactions. A Unilateral transaction is an offer of a promise in exchange for an act while a bilateral offer is an exchange of a promise for another promise. Therefore following the case of Patridge v Crittenden, where Lord Land said that advertisements have a ‘business sense’ and would if considered an offer would possibly be contracting with more than the stock that the offeror has.
However there exists a contrasting authority, the American case of Leofkovitz v Great Minneapolis store, where the terms in the advertisement were so specific including the amount available that it was found to be an offer. Looking at the facts, we find that the words ‘asking price’ show intent to negotiate and because Arnold would not want to be contracted to the first person that calls him, the advertisement is found to be an invitation to treat. We would then look for an offer. When Bob, called Arnold, it could be possibly considered an offer that must be contrasted from a mere inquiry following Stevenson v Mclean that has no legal effect.
Because Arnold was specifically said 7,000 it could be said that following Storer v Manchester city council had given Bob an offer. As the conversation continued, before there was a possible valid acceptance where this is an unconditional assent to all the terms of the offer, as it was sought to be given by Bob, the line went dead. Following the dictim of Lord Denning in Entores v Far East Miles, when the line goes dead in the middle of a conversation, it is not a valid acceptance and the responsibility is on the offeree who in this case is Bob to call Arnold back to accept his offer.
This does not occur, so the legal standing between Bob and Arnold is therefore where an offer has been proposed but is yet to be accepted. Bob then texts Arnold confirming his offer, but it was misdirected, therefore because Arnold did not have actual notice of the offer by text, the principle of Powell v Lee to possibly be extended to offers would seem probabe, leaving the text message withot any legal effect. The first offer that was given by bob would be relied upon.
Two days later, Cynthia, a friend of Arnold’s tells Bob that Arnold had accepted his offer. At this point, it is probable that Cynthia communicates acceptance following Powell v Lee. However, Cynthia is only a friend of Arnold and arguably not an authorized agent of Arnold, therefore her information could possibly not equate to acceptance. However, if we extend the principle of Dickinson v Dodds where revocation is possible if communicated through a third party, to the acceptance it could arguably result is an acceptance.
As Dickinson v Dodds has been heavily criticized by many academics, I would prefer my previous argument (no acceptance is formed between Arnold and Bob) and hold that if Bob would want to retract his offer, he would have to give Arnold actual notice of his retraction seen in Routledge v Grant. Alternatively, if Arnold would want to accept the offer he should give Bob actual notice of his acceptance following Powell v Lee.