(b)  Promises of reward

One type of offer which in some systems is conceived of as irrevocable is an offer of reward for the performance of some act. A contractual analysis is maintained by most legal systems of this fact situation, even though (unless the reward is offered to a specific party) the promisee is unlikely to accept the offer before performing the task which is the condition for claiming the reward. Alternatively, a promise of reward can be viewed in unilateral promissory terms, an analysis for which there is authority in Germany as well as Scotland.

In the Common law, promises of reward (whether issued to one party or to persons generally) are considered ‘unilateral contracts’, binding on the part of the offeror alone. The party to whom the offer of reward is made (or any member of the public generally, in the case of public offers) has the option of performing the conduct stipulated in the offer of reward, and, if he does, he then becomes entitled to claim the reward. The offeror is prevented from withdrawing the offer once the offeree has begun to perform the stipulated conduct.163 Because of the contractual analysis adopted by the Common law, this means that (unlike in German and Scots law) someone who performs the conduct in ignorance of the reward cannot subsequently claim the reward.164 The adoption of an offer analysis also means that, as is generally the case under English law, the offer can be revoked at any time until it is accepted by the offeree. This creates potential problems for English law: what is the position where an offeror, seeing a member of the public walking towards his house with the offeror’s lost dog, shouts out of the window ‘I revoke my offer of reward’ (a problem avoided in the DCFR by the provision that revocation of an offer made to the public must occur in the same way in which the offer was made165)? The answer which has been suggested is that the offeree who begins to perform the conduct stipulated has validly accepted the offer,166 though in Australia

163Daulia Ltd v. Four Millbank Nominess Ltd [1978] Ch 213. For an Australian example, see Veivers v. Cordingley [1989] 2 Qd R 278; an attempt to withdraw the offer of reward in a case where performance has begun will render the offeror liable to pay the reward in full: Abbot v. Lance (1860) Legge 1283 (NSWSC).

164There is no English case clearly setting out this view, though it would seem to follow from the general principles applicable to acceptances. For an Australian case adopting this view, see R v. Clarke (1927) 40 CLR 227; to similar effect, see the South African case of Bloom v. American Swiss Watch Co. (1915) AD 100.

165DCFR Art. II.-4:202(2).

166No decision of the courts definitively sets out this view, though the comments of Denning LJ in Errington v. Errington [1952] 1 KB 290 (CA), 295, support it. For

the Full Federal Court has opined that it may not always be unjust for an offeror to revoke an offer once the offeree has begun performance.167 The dilemma would be avoided by adoption of a binding unilateral promissory analysis.

In German law, a promise of reward to a specific party is likely to be governed by whichever of the BGB provisions on service contracts,168 work contracts,169 or contracts to transact business,170 is applicable given the nature of the contract entered into by the parties.171 For a public offer of reward (Auslobung), special provision is made in §657 BGB, which states:

Binding promise:

Anyone offering by means of public announcement a reward for undertaking an act, including without limitation for producing an outcome, is obliged to pay the reward to the person who has undertaken the act, even if that person did not act with a view to the promise of a reward.

Unlike the default rule for offers in general in German law (that the offer may not be revoked, unless it is specifically stated to be revocable), §658 states the opposite: the promise of reward may be revoked until the act is undertaken, unless it is stated to be irrevocable. That the Auslobung is seen as a type of unilateral promise, and not an offer which may simply be accepted by conduct, is further confirmed by the fact that it does not matter if the promisee knew of the existence of the reward when he carried out the conduct which is the subject of the reward.172 This puts German law on the same footing as Scots Law, in terms of which it is possible to view a promise of reward as a unilateral promise and therefore one which binds without any mental appreciation of, or acceptance by, the promisee. The contrast with the Common law position discussed earlier will be obvious.

In Scots law a promise of reward, whether made to the public or a specific person, can be characterised as an example of a unilateral promise. If such a promissory character is intended by the party issuing the reward, then, like any other example of a unilateral promise in Scotland, once issued the promise of reward cannot be revoked (unless power to do so has been retained), so that the difficulties of a promisor who subsequently

a discussion of the issues, see Peel, Treitel on Contract, pp. 41–3, and Furmston and Tolhurst, Contract Formation, paras. 3.79–99.

167Mobil Oil Australia Ltd v. Lyndel Nominees Pty Ltd (1998) 153 ALR 198.

168§§611–30. 169 §§631–51. 170 §675.

171See Gordley, The Enforceability of Promises in European Contract Law, pp. 308–9.

172§657.