Contract Law Lecture 4 Formation of Contracts - Offer Requirements for 'contract' · The courts look for external (objective) signs of an agreement. · The courts look for a number of specific elements as follows: · Offer · Acceptance · Consideration · Together with an intention to create legal relations. Bilateral Contracts · Formed by an exchange of promises between 2 parties · 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. Meaning of 'offer' A promise or indication by a party (offeror) that he/she is prepared to enter into contract with another party (offeree), on certain terms. . The courts look for some behaviour which indicates a willingness to enter into a contractual agreement. o 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 . Circular issued by the defendants read 'we are instructed to offer to the wholesale trade by tender the stock in trade ... ' · Claimants made the highest tender (bid), but defendants refused to grant them the goods. . Held: the request for tenders was not an offer. Distinguish 'offer' from 'invitation to treat' . Once a statement or action is categorised as an 'offer', a simple yes or assent to it will lead to a binding contract. . Therefore, it must be clear that the statement or action indicates an intention to be bound in contract, without anything more. · An intention to open negotiations is not an offer · Preliminary communications in which parties only wish to open negotiations is 'invitation to treat'
Lecture 4 Contract Law Gibson v Manchester City Council Mr Gibson received a letter which indicated a price for the house and stated as follows: 'The Corporation may be prepared to sell the house to you ... ' at that price. The letter also instructed Mr Gibson, if he wished to make a 'formal application', to complete a form and return it to the Council. Storer v Manchester City Council Mr Storer signed and returned a document titled 'Agreement for Sale' The document amounted to an offer from the Council which Mr Storer accepted by signing and returning it. The document was deemed to be sufficiently definite to be an offer. Particular Situations · Display of goods- Shop windows