⇒ Some contracts require deeds: a formal and written document that has been signed e.g. a contract for the sale of land requires a deed under section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.

⇒ However, most contracts do not need any formalities (i.e. they need not be written/signed, etc.). All that is needed is an agreement.

⇒ An agreement means a meeting of minds.

⇒ An objective approach is taken by the courts when determining if there was an agreement by the parties to a contract. In other words, the court will take the "reasonable person's" point of view and determine whether he/she would believe there had been an agreement.

⇒ The court does not always use the same type of objectivity.

⇒ Types of objectivity:

• Promisor objectivity: the intention of a reasonable promisor.
• Promissee objectivity: the intention of a reasonable promisee
• Detached objectivity: the 3rd party view of a situation.

⇒ For example, in Smith v Hughes (1871), there was a contractual dispute about the type of oats contracted for. Promisee objectivity was used by the court: what would the reasonable person, receiving the promise, intended to have agreed to?

⇒ 1) Offer;

⇒ 2) Acceptance;

⇒ 3) Consideration;

⇒ 4) An intention to create legal relations.

⇒ So where there is an agreement these four elements will be present.

⇒ An offer is where one party shows that he/she is happy to contract with another party (or more than one party) on fixed terms (or terms that are able to be fixed) at that specific time.

• In other words, the court is trying to find a willingness from a party (e.g. a communication in writing or orally) to contract on specific terms.

⇒ Chen-Wishart defined an offer as "a manifestation (whether orally, in writing, or by conduct) by the offeror of a willingness to be bound by the terms proposed to the offeree (the addressee), as soon as the offeree signifies acceptance of the terms".

• So it is an expression of willingness to be bound on stated terms if accepted by the other party.

⇒ An offer can be expressed (either in writing or orally) or implied e.g. see the case of Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007].

⇒ Only the person to who the offer was made to can accept that offer (Lambert v Lewis [1982]).

⇒ An invitation to treat is an invitation for customers to submit an offer, and indicates a willingness to deal.

⇒ It's not always easy to see the difference between an offer and an invitation to treat.

• See, for example, Gibson v Manchester City Council [1979].

⇒ If someone sends a catalogue of goods that is an invitation to treat and not an offer.

• Grainger & Son v Gough [1896]: Lord Herschell said that "the transmission of such a price-list does not amount to an offer" because if it did the company may not be able to fulfil the contract due to a limited stock.

⇒ In Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] it was held that goods on display in a shop is an invitation to treat.

⇒ Similarly, "the display of an article with a price on it in a shop window is merely an invitation to treat": see the case of Fisher v Bell [1961].

⇒ In automated transactions (such as with vending machines) the seller (the machine) is making the offer and the customer accepts that offer by paying for the good: Thornton v Shoe Lane Parking Ltd [1971].

⇒ Company shares:

• When a company announces they have shares available to purchase that is an invitation to treat.
• But if they send out applications for people to buy shares then that is an offer: National Westminster Bank Plc v IRC [1995].

⇒ Advertisement:

• Usually advertisement is NOT seen as an offer: see, for example, Harris v Nickerson (1873) and Partridge v Crittenden [1968].
• Also see the important case of Carlill v Carbolic Smoke Ball Co [1893], where it was found that the advertisement in question was a unilateral contract making an offer to the world.

⇒ A tender is an open offer "to make an offer".

• For example, if you want ten laptops you can send a tender notice to the newspaper listing your requirements you want from the laptops. Manufacturers can then make you offers/bids, and the highest offer/bid will win the tender (i.e. deal/contract).

⇒ In Spencer v Harding (1870) it was held that advertising a sale by tender was seen as the defendant showing readiness to negotiate; it does not prove he was ready to sell. Thus, the advert was an invitation to treat.

⇒ Also see the case of Harvela Investments Ltd v Royal Trust Co. of Canada [1986].

⇒ The Sale of Goods Act 1979, section 57, essentially states that bids in auctions are offers. When the hammer falls at the ends of an auction that is acceptance of the offer (i.e. accepting the bid).

• So it is up to the auctioneer whether to sell an item or not (with limited exceptions).
• The auctioneer is simply inviting offers, so is making an invitation to treat.

⇒ However, where there is an auction 'without reserve' the auctioneer is making an offer to sell to the highest bona fide bidder.

• See, for example, Warlow v Harrison (1859).

⇒ If this auction is 'without reserve', the auctioneer is bound by the highest bid irrespective of the amount: Barry v Davies (Trading as Heathcote Ball & Co. (Commercial Auctions) Ltd [2000].

⇒ For there to be a valid offer there needs to be a communication of promise from the offeror to the offeree.

• See, for example, Forman & Co. Proprietary. Ltd v Ship Liddesdale [1900].
• However, see the exception to this in Gibbons v Proctor (1891).

⇒ It can be difficult to identify if there has been acceptance where the parties have undertaken lots of negotiation.

⇒ Andrews: "[A]n acceptance is an unequivocal expression of willingness to be accede, without qualification, to the terms contained in the offer."

⇒ Mckendrick: "An acceptance is an unqualified expression of assent to the terms proposed by the offeror."

⇒ For there to be acceptance there must be a definite and unqualified assent to the offer, and on the terms indicated in the offer.

⇒ An acceptance has to mirror the terms of the offer.

⇒ 1) The acceptance must be final

• If no final answer is given to the offer then there is no acceptance (and, therefore, no contract).
• Merely "intending to place an order" is not enough to show acceptance: OTM v Hydranautics [1981] .
• A request for more information is also not acceptance: Stevenson v McLean (1880).

⇒ 2) The acceptance must unqualified and unconditional

• When introducing extra terms to a contract the other party must accept those extra terms.
• If a party says "yes" to an offer, but say that using your own terms, then this is NOT acceptance; that would be a counter-offer.
• If you have a counter offer then you need to find an acceptance of that counter-offer. If you do not have an acceptance by the other party, then you have another counter-offer.
• An interesting case on counter-offers is Tinn v Hoffmann & Co. (1873).
• If an offer is rejected it cannot later be accepted: Hyde v Wrench (1840). Note, a counter-offer is also seen as a rejection of an offer. So a party will be unable to accept an initial offer if they have made their own counter-offer.
• A request for information (as seen in the case of Stevenson v McLean (1880)) is NOT a counter-offer.

⇒ 'Battle of the forms' is the situation where two companies are negotiating and send each other their respective company contract forms to conclude the deal. The contention, then, is which company's contract form should be used for the deal if the terms are not the same?

• If the contract is simple (e.g. one company selling a good to another company) the court may find the required offer and acceptance at an earlier stage during their negotiations (meaning the company forms are irrelevant). This is what happened in the Court of Appeal case of Hertford Foods Ltd v Lidl UK [2001].

⇒ However, if earlier negotiations cannot be used (to circumvent the need to use the forms of the companies), the following solutions are available:

• a) The party who put forward their terms forward FIRST would have their terms used: so the contract would be finalised on the terms of the company who put their terms forward first.
• b) The party who put forward their terms forward LAST would have their terms used: so the contract would be finalised on the terms of the company who put their terms forward last (this is also known as the 'last shot’ approach).
• c) There is no contract at all as there is no offer and acceptance.

⇒ In Butler Machine Tool v Ex-Cell-O [1979], Denning tried to put forward a new method of dealing with 'battle of the forms'. He said that the court should be able to determine the terms which the parties actually agreed and ignore all the non-essential term. However, the court rejected this approach.

⇒ In Tekdata Interconnections Ltd v Amphenol Ltd [2010] the 'last shot' approach was used.

⇒ In Trentham Ltd v Archital Luxfer [1993] it appeared that contracts do not necessarily need matching offer and acceptance.

⇒ Provision agreements concern a situation where the parties have some kind of agreement in place but it is said it is merely provisional e.g. where the parties have had an oral agreement with an intention to write up terms later.

• Provisional agreements can constitute valid contracts: see, for example, Branca v Cobarro [1947] and Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012].

⇒ With unilateral contracts acceptance is always done by conduct: see, for example, Carlill v Carbolic Smoke Ball Co [1893].

⇒ With Bilateral contracts sometimes conduct can amount to acceptance too e.g. in a shop no words may be spoken but a transaction can be done.

⇒ Even where the contract is more complex it may be possible for conduct to amount to acceptance: see, for example, Brogden v Metropolitan Railway (1877).

⇒ Acceptance should be made in the manner prescribed by the offer: see, for example, Haughland Tankers AS v RMK Marine [2005].

⇒ Again, see the case of Brogden v Metropolitan Railway (1877): this case shows that the reasonable person must be able to tell there was some intention to accept where there is acceptance by silence.

⇒ In some cases acceptance by silence is possible e.g. in unilateral contracts to the world, like in Carlill v Carbolic Smoke Ball Co [1893], acceptance is made through performance of the contract.

⇒ In bilateral contracts, almost always it will be the case that silence cannot amount to acceptance

• See the case of Felthouse v Bindley (1862) .
• Robert Goff J in The Leonidas D [1985]: "We have all been bought up to believe it to be axiomatic that acceptance of an offer cannot be inferred from silence, save in the most exceptional of circumstances."
• In Vitol SA v Norelf Ltd [1996] it was suggested this "exceptional circumstance" would be where the silence was a "clear and unequivocal" acceptance.

⇒ The general rule is that acceptance is complete as soon as you post the letter i.e. if you are made an offer and said acceptance must be made by post, your acceptance is complete when your letter is put in the letterbox.

• See, for example, Adams v Lindsell (1818).

⇒ Limitations to the postal rule:

• The postal rule only applies to acceptance.
• The postal rule only applies when it is reasonable for acceptance to be sent by post.
• If the offeror asks for acceptance to be made in a particular way, that can circumvent the postal rule e.g. Holwell Securities Ltd v Hughes [1974].

⇒ Bal v Van Staden (1902): the court held you cannot rely on postal acceptance if you know there are disruptions to the postal system e.g. if you know there is a postal strike you cannot rely on the postal rule.

⇒ In Entores v Miles Far East Corp [1955], Denning said acceptance - with electronic communication - only happens when it has been received.

⇒ In Pretty Pictures v Quixote Films Ltd [2003], the court held that you can exclude acceptance by electronic communication if you want your contract written.

⇒ Also see the case of In The Brimnes [1975]: it was held that acceptance occurred when the telex was received during the office hours (even though nobody actually read it until the following day). So there was acceptance when it was received, despite the fact it had not been read at that time.

⇒ Acceptance occurs through performance of the contract: see the case of Carlill v Carbolic Smoke Ball Co [1893].

⇒ Partial performance of a contract may also amount to acceptance: see the case of Errington v Errington (1952).

⇒ For example, think of a situation of where there is an offer of £1000 for the return of your lost cat. And there are posters around town saying there is this reward for your cat's return. Then, let's say, someone who had not seen the reward had returned the cat to you knowing that it belonged to you. Would he/she be able to get the reward anyway?

• The answer is maybe.
• See, for example, the case of Gibbons v Proctor (1891).

⇒ The general rule is that you can withdraw an offer any time before it is accepted (even if there was a specified time set for the offer to remain open for e.g. Routledge v Grant (1828)).

⇒ If you want to revoke an offer it must be communicated before it can be effective e.g. Byrne v van Tienhoven (1880).

• The revocation of an offer need not come from the offeror e.g. Dickinson v Dodds (1876).

⇒ An offer can be terminated expressly or impliedly.

⇒ Lapse of time → if there is no specified time that the offer will remain open for, it will be an offer open for a reasonable time (what is a reasonable time for the offer to remain open for is decided on a case by case basis) e.g. Ramsgate Victoria Hotel v Montefiore (1866) held the 5 month wait before accepting to buy shares was a lapse of time making the offer no longer existing.

⇒ Failure of a condition → if an offer contains a condition and that condition failes then there is no contract e.g. Financings Ltd v Stimson [1962].

⇒ As soon as there has been acceptance of an offer you have a contract, which entails rights and obligations. If you breach these rights and obligations the other party can sue for breach of contract.

• In other words, you cannot revoke acceptance e.g. Soulsbury v Soulsbury [2008] confirms you cannot revoke acceptance in England and Wales. Although, in Scotland it may be possible to revoke acceptance in some circumstances.
• You cannot revoke postal acceptance by using a faster method of communication in England, but you can in Scotland (Dunmore v Alexander (1830)).

⇒ Exception: some consumer contracts do allow the person who accepted the contract to change his mind e.g. a provision found in section 67 of the Consumer Credit Act 1974.

• This is to ensure consumer fairness.

⇒ See notes on this here.

⇒ See notes on this here.

⇒ Have a think about whether or not the postal rule should still apply in an era of much more sophisticated and rapid communication.

⇒ Also think about the problems that might arise if English law took the view that a person who has primsed to keep an offer open for a particular period should always be obliged to keep that promise.

⇒ Some other helpful legal resources on forming an agreement in contract law:

• Dispatching the Dispatch Rule?
• SEQ Legal: Offer and Acceptance Online