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Elements of Contract
Acceptance must be communicated

Offer and Acceptance

An offer is made by a party either being a buyer or seller to the other party with the intent in definite terms to be accepted by the other party. An offer must be communicated to the other contracting party. An online advertisement made by a seller is in law and invitation to treat an not an offer. Therefore, in such context, an offer is usually made by a buyer who communicates with the seller his intention to buy a certain good from him. For instance, a buyer received an email newsletter from an e-commence merchant. He than clicks to response to it by filling an online form indicating his intention to buy a certain good. This is an offer. The online merchant on receipt of the online form may then response by agreeing to it. This response is called acceptance. The person who makes the offer is called the offeror and the person who accept the offer is called the offeree.

Contracts are normally arrived and become legally enforceable upon acceptance. Therefore, it is important to find out when an acceptance takes place. The traditional view considers an advertisement as an invitation to treat. An advertisement can be in the form of an online catalogue bulk email messages (whether unsolicited or not). However, if an advertisement is communicated in clear terms. For instance, with the produce clearly described, the price and availability clearly made known to online visitors without any reservations, it can be easily considered by the law as an offer. Therefore, an online customer clicking on the “yes” or “buy” button on a virtual shopping cart will be treated as an acceptance. An online merchant making definitive advertisement may easily become liable for breach of contract if no available stock can be found after receiving a customer's order. Prudent online merchant should conspicuously make known to the online buyers that placing of orders is subject to availability of the stocks, thereby having the effect of making the ordering an offer binding only upon a definitive acceptance by the online merchant. Although the order is subject to a subsequent condition i.e. that the stock is available. If the buyer's response towards an online advertisement is an offer, an offer can be withdrawn by the offeree (i.e. the online merchant) has communicated its acceptance may reputation web-sites such as Amazon.com in fact permits customers to cancel their orders before shipments made by the merchant. Alternatively, goods can be returned to the seller without liability within 30 days of the purchase goods returned are only required to pay the shipment costs.

An offer made online over the Internet must be carefully handled. An offer made to the entire would is one which the offeror (an online merchant) is glad, to be accepted by any offeree (an online customer). Offer must therefore be carefully controlled by the offeror. For instance, an online offer posed with wrong price tag can have a disastrous effect on the online merchant if it is accepted by a large number of if online customers. The advertisement in Carlill v Carbonic Smoke Ball Co. [1893] 1QB 256 offered £100 to anyone who used a medicine and still caught influenza. That offer was accepted whenever anyone used the smoke ball according to the product instructions.