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Say person X lost his valuable item and advertised a reward for the return of it. Person Y, who knew X personally, found the item before reading the ad, and returned it to X, who just thanked Y for that.

Later Y read the ad and demanded the reward. X refused.

Contract Law teaches us that it was perfectly legal for X to refuse as there was no contract. Which legal principles apply here?

P.S. It was a question in a test, to which I answered that the principle was past consideration as Y returned the item before reading the ad and so without expecting any reward. However, the tutor did not give any credit for my answer and explained that "X never agreed to pay Y anything. To accept an offer, you must be aware of it.".

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  • Why are you asking us - your tutor gave you the right answer
    – Dale M ♦
    Apr 11, 2018 at 10:47
  • @DaleM The answer I got does not make good sense to me, so I would like to hear opinions from the community before discussing it with the tutor. Specifically, did not X actually agree to pay by virtue of advertising — to whoever returns the item? Then, Y actually did become aware of the offer, though late. Does not past consideration apply here?
    – Greendrake
    Apr 11, 2018 at 10:54

2 Answers 2

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The formation of a contract occurs at the point where an offer is made and accepted by a person to whom it was made. The acceptance must be in reliance of the offer - if you don’t know the offer has been made you cannot accept it because you lack the intent to create a legal obligation.

The reward for the lost dog is the textbook example. A real example is R v Clarke (1927) 40 CLR 227 in the High Court of Australia.

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  • "if you don’t know the offer has been made you cannot accept it" But eventually you learn about the offer. Why can't you accept it at that point? Will it have been revoked by virtue of returning the item earlier?
    – Greendrake
    Apr 11, 2018 at 11:36
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    Classic unilateral contract if the person returning the item did know about the offer, though.
    – A.fm.
    Apr 11, 2018 at 20:28
  • @Greendrake because you have already paid the consideration that the contract requires (returning the dog) and past consideration is no consideration.
    – Dale M ♦
    Apr 11, 2018 at 20:35
  • So is past consideration (as opposed to lack of elements of contract) the ultimate legal principle that makes the case no contract? The main question was about the applicable principle rather than to explain what my tutor said.
    – Greendrake
    Apr 11, 2018 at 22:03
  • No lock of consideration is the legal concept - you can’t return a lost dog that is not lost
    – Dale M ♦
    Apr 11, 2018 at 23:23
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For an offer to be valid it must be communicated to the offeree.there's no contract here.x does not have to pay y

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    This is correct, though I suspect the downvotes come from the lack of elaboration.
    – Pat W. ♦
    Aug 31, 2020 at 16:00

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