Formation of Contract- Lecture 4 Requirements for contract: · The courts look for external (objective) signs of an agreement. · The courts look for a number of specific elements as follows: V Offer Acceptance V Consideration V Determining if there is a contract And how to form a legally binding contract. Together with an intention to create legal relations. The requirements are not about subjective intentions and what the reasonable man would say and who he would be. To be able to find if there is a contract and there is no contract in the force of law. Bilateral Contracts: · Formed by an exchange of promises. · Offeror makes an offer. · Offeree accepts the offer. · Contracts are about bargains. · Usually, one party proposes the terms. · The other party has to agree to the terms. · So, starting point=Offer + Acceptance. · 2 parties exchange promises · One side makes an offer · It is all about bargaining . The other party can accept or reject. Meaning of Offer:
A promise or indication by a party that he/she is prepared to enter into contract with another party, on certain terms . The courts look for some behaviour which indicates a willingness to enter into a contractual agreement. . This indication could be by words or conduct. . The indication needs to communicate to the potential 'acceptor' of the offer, the basis upon which the 'offeror' is prepared to contract. . The terms of the offer need to be clear. . The offer could refer to terms which were discussed in earlier communication. · An offer can be contained in spoken words, a document, a letter, email communication or an advertisement. . A simple 'yes' to an offer will lead to a binding contract. . Note: The use of the word 'offer' does not necessarily mean a contractual offer has been made- Spencer v Harding [1870] LR 5 CP 561 . The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co. The advertisement specified where the goods could be viewed, the time of opening for tenders and that the goods must be paid for in cash. No reserve was stated. The claimant submitted the highest tender but the defendant refused to sell to him. . An offer doesn't mean its contractual . The defendant said we are instructed to offer to trade. . A tender is a deed for a contract. . If this was an offer it meant claimant was to accept and if they refused the offer it meant they was in breach of the contract. . Court said there was no offer · Willingness to enter into a contract . Court said it would be different if the company was willing to contract with the highest bidder and happy to go into contract. . It was an invitation to trade. . Circular issued by the defendants read 'we are instructed to offer to the wholesale trade by tender