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Offer- English Law CONTRACT LAW

The Concept of Agreement

3 fundamental requirements for the formation of a contract

1. Agreement – consensus ad idem [The term of the agreement must be certain]

2. Consideration – ‘bargains’, both sides must give something to make their promises binding
[quid pro quo]
3. Intention to create legal/contractual relations – both parties must intend to be legally bound
by the terms of the agreement reached.

Contract must be enforced by law. If the intention to create legal/contractual relations is missing,
then there is no contract, it just an agreement.

Agreement = Valid Offer + Valid Acceptance of offer

Contract = Agreement + Consideration + ITCLR + Certainty of terms + Capacity

Meaning of Offer
An offer is an expression of willingness to contract on specified terms, with the intention that it is to
become binding as soon as it is accepted.

McKendrick:

 An offer is a statement by one party of willingness to enter into a contract on stated terms,
provided that these terms are, in turn, accepted by party or parties to whom the offer is
addressed.
 Whether the offeror intends to be bound is decided objectively (the offeror may be bound if
a reasonable man would believe that the offeror intends to be bound)
 An offer to contract requires a response from the offeree, either an acceptance or a
rejection.

To whom can the offer be made?

-An offer may be addressed to one person or more than one person (ie a group of persons or even
the world at large)

Cases:

 Williams v Carwardine [1835] 5 C&P 566 (offer to world at large)

 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, CA (offer to anybody who performs the
conditions named)

An offer may be express or implied

Expressly: through words used by the offeror

Impliedly: through offeror’s conduct having regard to the surrounding circumstances

Case of offer impliedly: Hart v Mills [1846] 15 L.J. Ex. 200

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1. Offer- English Law CONTRACT LAW

Terms of the offer must be certain

Parties must express their agreement in a form that is sufficiently certain for the courts to be able to
enforce it. Thus, the terms of the offer itself must be certain. If they are vague or uncertain, the
‘contract’ may be unenforceable by reason of uncertainty of terms.

May & Butcher Ltd v The King [1929] All ER Rep 679

Fact: The parties had agreed that the tents would be sold at a price to be agreed later, but no price
was ever agreed.

Held: An agreement to enter into an agreement by which some critical part of the contract (eg the
price) is left to be decided later is no contract at all. The terms of the contract must be certain. If not,
there are no contract.

Scammell and Nephew Ltd v Ouston [1941] AC 251, HL

Held: The clause “on hire-purchase terms” was so vague that no precise meaning could be
contribute to it.

An offer may be subject to a condition precedent

-A condition precedent refers to an event which must happen or an act which must be performed
before something can take effect.

-If an offer is subject to a condition precedent, the offer is not binding at all until and unless the
condition precedent is fulfilled. Even if such an offer is ‘accepted’, there is no contract comes into
existence.

Trans Trust SPRL v Danubian Trading Co Ltd [1952] 2 QB 297, CA

Fact:

 The offer specified that payment to plaintiff must be by confirmed letter of credit to be
opened by A.
 Defendant agreed to ensure that A would open the letter of credit.
 When A didn’t open the letter of credit, defendant refuse to take delivery of the goods sold
to them.
 Plaintiff claimed damages for breach of contract.
 Defendant argued that the opening of letter of credit by A was a condition precedent
attached to P’s offer. Since no letter of credit was opened, there is no contract.

Held: (The court rejected defendant’s argument)

 A contract had come into existence when defendant accepted plaintiff’s offer. D was obliged
to take delivery of the goods.
 Defendant’s obligation to ensure that A would open the letter of credit, was not a condition
precedent to the formation of a contract between plaintiff and defendant. It was a term of
that contract.
 Since defendant breached that term of the contract, and had failed to take delivery of the
goods, defendant had breached the contract.
 Plaintiff was entitled to claim damages for breach of contract from defendant.

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1. Offer- English Law
Offer or Invitation to Treat?
Offer
 Not necessarily 1st stage of negotiations
 Intended to be binding as soon as it is
accepted
Harvey v Facey [1893] AC 662, Privy Council
CONTRACT LAW
Invitation to Treat (ITT)
 Means inviting another person to make
an offer
 Often 1st stage of negotiations
 Merely show willingness to negotiate
on terms proposed in the ITT
 Exp: Advertisements, Goods in shops,
Calls for tenders, Auctions