Contract v Agreement

A contract is an agreement.
All contracts are agreements; all agreements are not contracts.
Use of contracts: pacta sunt servanda (Your word is your bond), promises must be observed. Koran: ‘O ye who
believe fulfil your agreement’.
Justification for enforcement of contracts: means of communication in doing business; security of business
The core element of a contract is an ‘agreement’ between two or more persons [that is, natural and juridical
persons].
‘Agreement’ means a meeting of minds/ coincidence of the wills (consensus ad idem). The parties must
concur, and know that they concur, on all or major aspects of the transaction.
Contractual agreements (serious intention to be bound)): animus contrahendi) v social agreements (e.g.,
family relationship, promises between friends, Memorandum of Understanding between two institutions, etc)
–These are moral obligations (promises to be met for reasons of honour) and are not enforceable by courts.
Agreement is expressed through consent.
Consent is given through offer and acceptance. A party, who gives an offer is called ‘offeror’ and the other
party to whom offer is addressed is called ‘offeree’.

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Offer and Acceptance
A contract, therefore, requires a consent; the consent is manifested in two declarations
when the parties are transacting at some distance from each other.
Offer by one party should be matched by an acceptance by the other.
Offer is an expression of will by a party (offeror) that is sufficiently definite and specifying
the essentials of the proposed deal with sufficient precision that a valid contract will be
formed if the addressee who is a specific individual (or group of individuals) (offeree)
announces that he accepts. [no ambiguity/ unequivocal]
It is imperative that the offer must make it clear that if it is accepted, the offeror intends to
be bound legally [animus contrahendi] by the terms or obligations created as a result.
Offer and acceptance may be expressed in writing, verbally, by conduct (vending machine) or
by signs known and used by parties (thumbs up!).
Invitatio ad offeredum (Invitation to treat): invitation for the recipient to make an offer or say
if he is ready to start bargaining is called invitatio ad offerendum.
The inviting party is merely soliciting from the recipient that the latter makes an offer so that
the inviting party may consider it to accept or reject.

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[…]
The following instances are not offers:
(1) Invitation to Treat (Invitatio ad offerendum): offers could be rejected without caring to
provide reasons for so doing.
(2) Advertisements/circulars/ price tickets
(3) a display of goods with prices in a shop or supermarket
(4) a statement of price (price lists) or catalogues
E.g., Crawley v R (1909]
(5) an auctioneer’s bidding
(6) Call for tenders (in private contracting):[… reserves the right to reject all or any tenders at
will]

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Invitatio ad offerendum
Exceptions:
(1) Call for Tenders (ITT): State entities involved in the procurement of construction works,
services and supply of goods.
A modified form of Invitatio ad offerendum: the public procurement system, which applies
the following principles in the selection of private contracting partners:
Non-discrimination
 Value for money (economic)
 Transparency
 Accountability
 Competitiveness
 Fairness (equity)

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[…]
All these requirements, which are set out in the Act and Regulations were enunciated by
cases including, but not limited to:
WBHO Construction v PPADB: The Board should provide precise reasons for its decisions in
awarding tenders.
Letsatsi Investments v South East District Council: The decision-making process must display
all the hallmarks of fair play, transparency, competitiveness, and costs-effectiveness, and
whether it was free of all elements of arbitrariness.

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 […]
Lee v American Swiss Watch Co/ Siphton v American Swiss Watch Co
Termination of offer
Duration of offer: an offeror may keep his offer open for a fixed period of time within which the
offeree is entitled to make acceptance.
In the absence of such stated period of time, the offeror can revoke (withdraw) his offer at any time.
Nevertheless, if the offeror does not revoke it, it remains open for a reasonable period of time.
Dietrichsen v Dietrichsen
Offer is irrevocable if the offeror contracts with someone to keep his offer open for a specific time.
This is called an OPTION.
In summary, an offer may come to an end (terminated) in any of the following situations:
(1) effluxion of time
(2) lapse of reasonable time
(3) death
(4) loss of contractual capacity
(5) rejection [Watermeyer v Murray] (6) counter-offer (7) withdrawal or revocation

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 General offers for public reward

(2) General Offers for Reward

However, a public notice may amount to an offer where a party offers a reward for giving
information or doing a certain act.
E.g., Carlil v Carbolic Smoke Ball Co. [A party, through advertisement, can offer to pay a sum
of money to a user of certain products in order to prove that the products do have specific
qualities.
Bloom v American Swiss Watch Co. [The claimant was not aware of the advertisement
that conveyed the offer at the time when he/she related the required information to the
policy leading to the are arrest of the robbers.
But if the person provides the required information or achieves the result advertised under
the public notice unaware of the public notice, there is no contract and he/she is not entitled
to the reward. This is because of the fact that no offer has been communicated to the person
an that he cannot be presumed to have accepted the offer of which he is not aware as it
happened in Bloom v American Swiss Watch Co.