There are 3 requirements for the creation/formation of a valid enforceable contract: 1. Agreement (offer and acceptance) 2.

Consideration (or made under seal) 3. Intention to create legal relations. Contracts opperate on a general principle of placing importance on what is said or done, rather than what is meant, as found in Smith v. Hughes (1871) LR 6QB 597. A textbook example of this can be seen in Bob Bushell ltd v. Luxel Varese SAS (20 Fec 1998, unreported), contract over exlusive disrtibutiion rights over catelogue. Held that the defendant's secret intention not to award exclusivity could not affect the contract that had actally been reached. Similiarly, in Bowerman v. ABTA (1995) 145 NLJ 1815, Hobhouse LJ warned that A contracting party can not escapre liability by saying that he had his fingers crossed behind his back. Offer A clear and unambigioius statement of the terms upon which the first party is willing to contract should the second party accept. Section 58 of the Sale of Goods Act 1893 gives rules for sale at auction; 1. Where goods are put up for sale in lots, such lot is rima facie deemed to be the subject of seperate contracts of sale. 2. A sale at auction is only complete upon the fall of the hammer, until then a bidder may withdraw their bid. 3. The seller is not allowed to bid on their own item. 4. A sale by auction may be notified to be subject to a reserve, or upset price, and a right to bid may also be reserver expressly by or on behlaf of the seller. The announcement of an auction is not an invitation to bid, rather an announcment of the oppertunity to bid, as seen in Harris v. Nickerson (1873) LR 8 QB 286, where an auctioneer, acting in good faith advertised that certain furniture would be sold. The plaintiff travelled to the auction only to find the item was removed from sale. The Queen's bench held there should be no damages for loss of time. Warlow v. Harrison (1859) 1 El309, 120 ER 925, held that the correct plaintiff of an auction is the highest bidder.