Contract Law Lecture 4 (15.10) 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: · Offer · Acceptance · Consideration Together with an intention to create legal relations 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 Therefore the starting point= offer + acceptance The 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 which the offeror is prepared to contract The terms of the offer need to be clear (clarity must be the bedrock of any offer) The offer could refer to tems which were discussed in earlier communication An offer can be contained in spoken words, a documents, a letter, email communication or an advertisement As simple of an answer as "yes" to an offer will lead to a binding contract (if nothing more needs to be done then it is an offer, if more does need to be done then it is not classed as an offer- everything must be contained to be an offer) . 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 Distinguish 'offer' from 'invitation to treat' Once a statement or action is categorised as an 'offer', 'yes' or assent 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 saying 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' Gibson v Manchester City Council See 'tort seminar 4 prep' Council had not signed the document so they said they have not entered into the contract. Mr Gibson received a letter that stated that "the corporation may prepared to sell the house" to him for a certain price however as it said may it was an invitation to treat, not an offer Storer v Manchester City Council See 'tort seminar 4 prep' Mr Storer signed and returned a document titled 'Agreement of Sale' The document amounted to an offer from the Council which Storer accepted by signing and returning it The document was seemed to be sufficiently definite to be an offer Particular situations: Displays of goods in shop windows o Fisher v Bell [1961]- defendant displayed a flick-knife in his shop window. o At the time it was a criminal offence to sell a flick-knife o Per Lord Parker