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Beale, H. G.; Chitty, Joseph et al., Chitty on Contracts, Vol. 1, London 2004.

Beale, H. G.; Chitty, Joseph et al., Chitty on Contracts, Vol. 1, London 2004.
Table of Contents

Volume 1

Part Two - Formation of Contract

2. The Agreement

4. Termination of the Offer

163 2-085"

Introductory. An offer may be terminated by withdrawal, rejection, lapse of time, occurrence of a condition, death and supervening incapacity. These methods of termination will be discussed in the paragraphs that follow.

(b) Rejection

What amounts to rejection; counter-offers. A rejection terminates an offer, so that it can no longer be accepted.352For this purpose, an attempt to accept an offer on new terms (not contained in the offer) may be a rejection accompanied by a counter-offer.353 Thus in Hyde v Wrench354 the defendant offered to sell a farm for £1,000. The offeree replied offering to buy for £950, and when that counter-offer was rejected, purported to accept the defendant's original offer to 166 sell for £1,000. It was held that there was no contract as the offeree had, by making a counter-offer of £950, rejected, and so terminated, the original offer.


(c) Lapse of time

Specified time. An offer which expressly states that it will last only for a specified time cannot be accepted after that time. The most common application 167of this rule is to offers taking the form of options,362 which obviously cannot be accepted after the expiry of the period during which the option is expressed to be exercisable. On a similar principle, an offer which stipulates for acceptance "by return of post" must be accepted either in the specified way or by some other no less expeditious method.363


Reasonable time. Where the duration of an offer is not limited by its express terms, the offer comes to an end after the lapse of a reasonable time.364 What is a reasonable time depends on all the circumstances: for example on the nature of the subject-matter and on the means used to communicate the offer. An offer to sell a perishable thing, or a thing subject to violent price fluctuations, would terminate after a relatively short time; and this would often also be true of an offer made by telegram365 or by other equally speedy means of communication such as telex or fax.

(e) Death



Death of the offeror. The effect of the death of the offeror has been considered in a number of cases concerning continuing guarantees. Such a guarantee (e.g. of a bank overdraft) is, in general, divisible: it is a continuing offer, accepted from time to time as the bank makes further loans to its customer. It seems that a guarantee of this kind is not determined merely by the death of the guarantor.373 But it is determined if the creditor knows that the guarantor is dead and that his personal representatives have no power under his will to continue the guarantee374 or if for some other reason it is inequitable to charge the guarantor's estate. 375If the guarantee expressly provides that it can be determined only by notice given by the guarantor or his personal representatives, the death of the guarantor (even if known to the creditor) will not determine the guarantee; only express notice will have this effect.376In so far as any general statement can be based on this special group, of cases, it seems that the death of the offeror determines an offer only if the offer on its true construction so provides.

169 2-099"

Death of the offeree. Two cases have some bearing on the effect of the death of the offeree. In Reynolds v Atherton377 an offer to sell shares was made in 1911 to "the directors" of a company. An attempt to accept the offer was made in 1919 by the survivors of the persons who were directors in 1911 and by the personal representatives of those who had since died. The purported acceptance was held to be ineffective; and Warrington L.J. said: "The offer having been made to a living person who ceases to be a living person before the offer is accepted, there is no longer an offer at all. The offer is not intended to be made to a dead person or to his executors, and the offer ceases to be an offer capable of acceptance. "The actual ground for the decision, however, was that the offer had, on its true construction, been made to the directors of the company for the time being, and not to those who had happened to hold office in 1911. In Kennedy v Thomassen378 acceptance by solicitors of the offeree in ignorance of her death was held ineffective on the grounds that their authority to act on her behalf had been revoked by her death379 and that they had acted under a mistake. Neither case supports the view that an offer can never be accepted after the death of the offeree. It is submitted that, where an offer related to a contract which was not "personal," 380 it might, on its true construction, be held to have been made to the offeree or to his executors, and that such an offer could be accepted after the death of the original offeree.


8. Conditional Agreements

(a) Classification

Introductory. An agreement is conditional if its operation depends on an event which is not certain to occur. Discussions of this topic are made difficult by the fact that in the law of contract the word "condition" bears many senses: 193 it is "a chameleon-like word which takes on its meaning from its surroundings." 570 At this stage, we are concerned with only one of these meanings: but to clear the ground it is necessary to draw a number of preliminary distinctions.



Conditions precedent and subsequent. Contingent conditions may be precedent or subsequent.573 A condition is precedent if it provides that the contract is not to be binding until the specified event occurs. It is subsequent if it provides that a previously binding contract is to determine on the occurrence of the event: e.g. where A contracts to pay an allowance to B until B marries.574

Part Six - Joint Obligations, Third Parties and Assignment

19. Assignment

1. Assignment


1164 19-004"

Statutory and equitabile assignments.[...]But an assignment which fails to comply wïth the statutory requirements is not necessarily invalid, for it may take effect as a perfectly good equitable assignment [...].

[Subsequently the author presents a comprehensive survey of statutory and equitable assignment-doctrine under English commen law.]

Part Seven - Performance and Discharge

24. Discharge by Breach

2. Renunciation

1383 24-021"

Anticipatory breach. If, before the time arrives at which a party is bound to perform a contract, he expresses an intention to break it, or acts in such a way as to lead a reasonable person to the conclusion that he does not intend to fulfil his part,138this constitutes an "anticipatory breach"139 of the contract and entitles the other party to take one of two courses. He may "accept" 140 the renunciation, treat it as discharging him from further performance, and sue for damages forthwith, or he may wait till the time for performance arrives and then sue. On the other hand, where the anticipatory breach lakes a continuing form,141 the fact that the 1384innocent party initially continued to press for performance does not normally preclude him from later electing to terminate the contract provided that the parry in breach has persisted in his stance up to the moment of termination.142


Part Eight - Remedies for Breach of Contract

26. Damages

6. Penalty or Liquidated Damages

1489 26-109"

Damages fixed by the Parties.Where the Parties to a contract agree that, in the event of a breach, the contract-breaker shall pay to the other a specified sum of money, the sum fixed may be classified by the Courts either as a penalty (which is irrecoverable) or as liquidated damages (which are recoverable).583

[Subsequently set out in detail.]

352Tinn v Hoffmann & Co (1873) 29 L.T. 271, 278.
353Above, para.2-030; for an exception see Vienna Convention on Contracts for the International Sale of Goods(above, para.2-061), Art.19(2).
354(1840) 3 Beav. 334; cf. O.T.M. Ltd v Hydranautics [1981] 2 Lloyd's Rep. 211, 214.
362For the legal nature of an enforceable option, see below, para.3-170, n.870.
363cf. above, paras 2-063, 2-065.
364Ramsgate Victoria Hotel Co v Montefiore (1866) L.R. 1 Ex. 109; see also Reynolds v Atherton (1922) 127 L.T. 189; Chem Co Leasing SpA v Rediffusion [1987] 1 F.T.L.R. 201. Semble, the offeror could waive the delay. See also Vienna Convention on Contracts for the International Sale of Goods (above, para.2-061 ), Art.21(1).
365Quenerduaine v Cole (1883) 32 W.R. 185.
373Bradbury v Morgan (1862) 1 H. & C. 249; Harriss v Fawcett (1873) L.R. 8 Ch.App. 866, 869; Coulthart v Clementson (1879) 5 Q.B.D. 42, 46.
374 Coulthart v Clementson, above.);
375Harriss v Fawcett (1873) L.R. 8 Ch.App. 866. 
376Re Silvester [1895] 1 Ch. 573.
377(1921) 125 L.T. 690, 695; affirmed (1922) 127 L.T. 189; cf. Somerville v N.C.B., 1963 S.L.T. 334.
378[1929] 1 Ch. 426.
379Vol.II, para.31-160.
380"Personal" is here used in the same sense as in the law relating to termination of a contract by the death of a party: see n.372, above (Below, para.23-036. Even in such cases the legal effects of saying that the offer was determined, so that there was never any contract, would be likely to differ from those of saying that there had been a contract which had been determined: e.g. the Law Reform (Frustrated Contracts) Act 1943 could apply to the latter, but not to the former, situation.)
570Skips A/S Nordheim v Petrofina SA (The Varenna) [1984] Q.B. 599. 618.
573Conditions precedent are also sometimes called "suspensive," and conditions subsequent "resolutive," conditions: see Treitel, Remedies for Breach of Contract, (1988) 262-263. In Ignazio Messina & Co v Polskie Linie Oceaniczne [1995] 2 Lloyd's Rep. 566, 580 a condition there under discussion was said to be "a true condition subsequent or suspensive condition." "Subsequent" here seems to be a misprint for "precedent".
574cf. Brown v Knowsley B.C. [1986] I.R.L.R. 102 (appointment to "last only as long as sufficient funds were provided" from specified sources); (semble) Gyllenhammar & Partners International v Sour Brodogradevna Industria [1986] 2 Lloyd's Rep. 403 (contract to "become null and void" it certain consents were not obtained) and Jameson v CEGB [2000] 1. A.C. 455 at 477 (settlement of tort claim immediately binding but subject to implied resolutive condition that it was to become void if the agreed amount was not paid). The distinction between conditions precedent and subsequent was criticised by Holmes (The Common Law (1881), 371); for discussion of this criticism, see Treitel, Remedies for Breach of Contract (1988), 263-264. English authority recognises that the distinction is by no means always clear cut: see below at n.582.
138Forslind v Becheley-Crundall, 1922 S.C.(HL) 173; Universal Cargo Carriers Corp. v Citati [ 1957] 2 Q.B. 401; affirmed in part [1957] 1 W.L.R. 979 and reversed in part [1958] 2 Q.B. 254; Greenaway Harrison Ltd. v Wiles [1994] I.R.L.R. 380 Stocznia Gdanska SA v Latvian Shipping Co [2001] 1 Lloyd's Rep. 537, 563; Proctor & Gamble Ltd. v Carrier Holdings Ltd [2003] EWHC 83 (TCC); [2003] B.L.R. 255, at [35].
139For a criticism of this expression, see Bradley v H. Newsom Sons & Co [1919] A.C. 16, 53; Dawson [1981] C.L.J. 83; Mustill, Butterworth Lectures 1989 1990, p.l.
140See above. para. 24-013.
141Not all anticipatory breaches are of a continuing nature: see, for example, Howard v Pickford Tool Co Ltd [1951] 1 K.B. 417.
142Stocznia Gdanska SA v Latvian Shipping Co [2002] EWCA Civ 889; [2002] 2 Lloyd's Rep. 436 at [94]-[100].
583A valid agreed damages clause is probably not subject to the Unfair Contract Terms Act 1977 (above, paras 14-059 et seq.): see Treitel op. cit. (10th ed.), pp. 227, 933. cf. however, the Unfair Terms in Consumer Contracts Regulations 1999 (above, paras 15-004 et seq.), (below, para. 26-133).

Referring Principles
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