Business Law

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An agreement that can be legally enforceable is called a contract. In order to make an agreement
legally binding, it must contain four essential requirements. Those are: offer and acceptance,
consideration, competent of parties, legal purpose and legal form.

Offer and acceptance is the first requirement of initiating a legally bound contract. An agreement
can only be accepted after receiving an offer. A counteroffer is created if the party receiving the
initial offer asks for any changes in terms. The initial offerer is released of the terms of their
original offer by this counteroffer(Offer and Acceptance, 1895). While selling or buying a
property, the seller usually provides an invitation to treat. The buyer according to the
advertisement makes an offer and the seller decides whether to accept or reject the offer. If they
accept the offer, this act is called a binder. The offer can be both verbal or written. But in order
to avoid future complications it is advisable to use written contracts in any kind of situation. The
exchange of consideration is required in a contrac(Guaranty: Offer: Acceptance, 1907)t. The
monetary worth of this consideration is not usually of necessity, however, the contract can be
deemed as a gift and as result unenforceable by law if consideration is absent from the contract.
The third and very important element of legally binding contracts is competency of both parties
(Treitel and Peel, 2015). The contract will not be legally enforceable or will be terminated if both
parties are not mentally stable, sober or of legal age. A contract must be part of a legal activity.
Any activity that is prohibited by law can not be part of a contract. Legal form indicates the
usage of proper language and application in order to carry out a contract. In the case of Gibson v
Manchester City Council, the offer was made by the claimant. However, the offer was not
confirmed by the City Council. The other elements of the contract were valid in this case.

An offer and an invitation to treat are completely two different terms. A statement containing the
desire to make a contract with certain legally bound terms can be defined as an offer. On the
other hand, inviting a party to make an offer is called an invitation to treat(McKendrick, 2020).
An offer is a deliberate proposal to enter into a contract where an invitation to treat is put
forward with the intention of negotiating the terms. In the case of Gibson v Manchester City
Council, the policy adopted by city council to sell houses to its tenants is not an actual offer,
however an invitation to treat to which the claimant responded by making an offer of buying the
house. An invitation to offer is not an essential element of making a contract.

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In real estate transactions, first the buyer makes an offer by a letter according to the term stated
in the advertisement. Then the letter is signed by the seller or a different acceptance letter
clarifying the position and terms is prepared(Merkin, Saintier and Poole, 2019). This is to
highlight the most important terms of the initial offer. The offer is first made by the bidder, not
the seller. In the given case, the claimant made an offer using the printed form provided by the
defendant. This offer was not countersigned by the defendant and asked the claimant to make an
formal application. However, this can not be considered as an offer. The offer was not accepted
even upon receiving the formal application by the claimant.

An invitation to treat and an offer can be confusingly similar however both are two different
terms. An invitation to term is the willingness to negotiate and it can not be to be construed a
legally binding contract. The policy adopted by the city counsel did not have clear intention of
selling a certain property, nor did it indicate any definite monetary value. Furthermore, the letter
of 1971 from the city treasurer contained the word ‘may’ which indicated no surety. It also
clearly stated that this letter did not contain a firm offer. An advertisement or a general public
showcase of a good or property is generally an invitation to treat, not an offer. An offer in this
case is made by the willing buyer. All these factors can be used in the court to persuade it that it
was in fact an invitation to treat instead of an actual offer.

A contract can be deemed unenforceable for various reasons. Contracts that can be enforced by
court are called enforceable or legally binding contracts. Contracts are constructed mainly to
reduce controversy of the parties. However, if either one or both parties fails to conform to the
terms of the contract, an intervention of the court might be necessary(Peel, 2015). A contract can
be deemed unenforceable if any one of the five essential elements of making a contract is
missing. In this case all the elements of making a legally binding contract were available except
the agreement of the offer which terminates the contract. Other than that, a contract can be
terminated if there was coercion, deception or manipulation involved. If the contract involves
something illegal, it can not be enforceable by law. Moreover, if one or both parties make a
mistake while signing the contract, it will be deemed void.

In the case of Gibson v Manchester City Council, the confusion was whether the letter of 1971
was an offer or an invitation to treat. As explained above, an advertisement can not be considered

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as an offer. If an offer is not made properly, a contract can not be enforceable by law. Therefore,
the House of Lords can not state a verdict in favor of the claimant.

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Reference:
European Journal of Current legal Issues, 19(2).

Gaus, G., 2012. Property and Ownership. In: D. Estlund, ed., Oxford Handbook of Political
Philosophy. New York: Oxford University Press.

Harvard Law Review, 1895. Offer and Acceptance. 8(8), p.498.

Honoré, A., 1961. Ownership. In: Oxford Essays in Jurisprudence. Oxford: Oxford University
Press, pp.107-147.

McKendrick, E., 2020. Contract Law: Text, Cases, and Materials. 9th ed. Oxford: Oxford
University Press, p.3.

Michigan Law Review, 1907. Guaranty: Offer: Acceptance. 5(6), p.479.

Merkin, R., Saintier, S. and Poole, J., 2019. Poole's casebook on contract law. 14th ed. Oxford:
Oxford University Press, pp.37-60.

Macdonald, E., 2013. Dispatching the dispatch rule? The postal rule, e-mail, revocation and
implied terms.

Peel, E., 2015. The Law of Contract. 14th ed. London: Sweet & Maxwell, p.16.

Stone, R. and Devenney, J., 2017. The modern law of contract. 12th ed. Oxford: Routledge.

Şerban, M., 2014. The Loss of Property Rights and the Construction of Legal Consciousness in
Early Socialist Romania (1950-1965). Law & Society Review, 48(4), pp.773-805.

The Principles of European Contract Law. 2:202 (2).

Treitel, G. and Peel, E., 2015. The Law of Contract. 14th ed. London: Sweet & Maxwell.