Contract Law Lecture 4 : Formation of Contracts - Offer Requirements for contract: The courts look for an external (objective) sign of an agreement. The courts look for a number of specific elements, such as: - Offer - Acceptance - Consideration Together with an intention to create legal relations. Bilateral Contracts: Are 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 thus has to agree to the terms. So the starting point is offer & acceptance. Meaning of offer: Def: A promise or indication by a party that they are prepared to enter into contract with another party, on certain terms. The courts look for some behaviour which indicates 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 earlier in agreement. An offer can be contained in spoken words, a document, letter, email 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 Claimants made the highest tender (bid), but he defendants refused to give them the goods. Held - the requests (bid) was not an offer, it would have been different if the defendants had said that they would accept whoever the highest bidder was, but they didn't. Offer v 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 an 'invitation to treat'. Examples : Gibson v Manchester City Council Mr Gibson received a letter which stated: "the corporation may be prepared to sell the house to you ... " at that price. The letter also instructed Mr Gibson to make a formal application if he wished.
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: Fisher v Bell [1961] - SHOP WINDOWS Defendant displayed flick knives (illegal to sell) in his shop window. Per Lord Parker - It is clear that according to the ordinary law of contract, the display of an article with a price on it in a shop window is merely an invitation to