Take any aspect of the English law of contract which you think is open to improvement and describe with reasons how it could be made better

Chris Bond

“Take any aspect of the English law of contract which you think is open to improvement and describe with reasons how it could be made better”

The doctrine of offer and acceptance has been described by many, most notably Lord Denning, as outdated and inflexible. Many cases have shown that rigidly trying to fit the facts of a case into the template of offer and acceptance can mean that a reasonable conclusion is often not reached. Although the current method works in the majority of situations, there are exceptional cases where a new outlook is required. The current offer and acceptance model will be examined to ascertain whether is too limited to satisfy all situations, and consideration will be given to any suitable alternatives.

It is first important to examine the current model of offer and acceptance. The doctrine is one of common law and it demands that, for a binding contract, there must be an offer by one person, and a corresponding unequivocal acceptance, accompanied by consideration. An offer can be described as “An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed”. Without these aspects, there can be no binding contract between two parties. In simple cases where A offers to sell B a property and B accepts this offer, then there are no problems. This approach favoured by English Law is known as the objective approach and is illustrated by Moran v University College Salford, where a student was offered an unconditional place at the university, and the contract stood even though it was made in error. Following the objective approach, this case had all the requirements of a contract, so there was no debate as to its validity. The courts look from the viewpoint of a reasonable observer, and ask whether he would have assumed that an agreement had been concluded by the parties. This is done by collecting and viewing the external evidence. Lord Denning summarized this point in Storer v Manchester City Council in saying, “you do not look into the actual intent in a man’s mind. You look at what he said and did”. There are a number of benefits of using such a system in our society where fairness and equality is paramount. Each party knows that a valid contract cannot be formed until the specific requirements of offer and acceptance have actually been met. Common law can be consulted here in order to ascertain how an offer is distinct from an invitation to treat etc. This method has been tradition for hundreds of years without significant development. This objective reasoning, however, has received criticism and a number of cases show that it can provide unsatisfactory results in more complex situations.

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Lord Denning criticised the approach of some courts to narrowly construe the doctrine. In Gibson he argued that, “It is a mistake to think that all contracts can be analysed into the form of offer and acceptance”. In this case, the courts decided that the acceptance by Gibson was not in reply to a formal offer, therefore there was no contract. If the case was to be viewed by a lay person, one might interpret that the council had implied that an offer to sell a house was being made. In this case Denning was of the opinion that the negotiations should be viewed as a whole, instead of trying to fulfil the specific categories of offer and acceptance. Conversely, the court found in Trentham v Luxfer, that a contract had been concluded, even though there had been no formal offer or acceptance. Here the court maintained that the contract had been concluded via conduct without the need for formal offer and acceptance. There seems to be some inconsistency in the approaches used here. The fact that probably tipped the Gibson case however, was that the council specifically stated that the “corporation may be prepared to sell the house”, therefore they did not formally offer the house to Gibson. The main argument that can be drawn from these cases is that difficulties can arise when parties are not in a conventional bargaining situation, and inconsistent approaches are often adopted by the courts, even when they have limited themselves to an objective observation of the facts.

This problem of complex bargaining situations can be specifically exemplified in a “battle of the forms” situation, such as in the Butler Machine Tool case. In such situations it is difficult to see how a contract can be concluded by trying to fulfil neat criteria. As in Brogden v Metropolitan Railway Co, it was stressed by Denning that it is important of look for a “consensus” between the parties, rather than looking to objectively ascertain the precise moment at which the contract was concluded. In Butler Machine Tool, it was difficult to fathom which form, or part of form, made up the contract. The current law is unclear as to whether the “first shot” or “last shot” approach is favoured here. Denning argued that the courts should look reasonably at the case, and try to decide when the parties had reached a decision. This approach is more flexible than the traditional approach, although it can be criticised for producing yet more uncertainty, since the courts would seem to gain an even wider discretion.

More criticism for the current offer and acceptance model can be found in The Eurymedon case, where some of Lord Wilberforce’s comments are especially significant. He observed that “English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots”. In this case, Wilberforce’s view could be referring the tendency of the court to “reason backwards”. This is where they first decide whether there has been a contract, then try and force the facts into the offer and acceptance model. It could be said that this reasoning is in fact more liberal than the courts may like to admit, and if this is so, they may as well embrace the idea of using a more liberal method, if they are doing so already.

I propose that a more liberal approach should be taken by the courts, when there is confusion as to when a contract has been concluded or not. The courts should examine the documents to “glean whether the parties have agreed”. The current method of reasoning, although supporting the “reliance theory” of contract, seems to ignore the classic “will theory”, which was popularised in the 19th Century. Perhaps more emphasis should also be placed on what a party meant rather than what the other party interpreted. This is presuming that the courts could effectively discover the party’s true intentions, which may be a fairly difficult task. Where there has been prolonged and complex negotiation over the terms of a contract, such as in a “battle of the forms” scenario, I feel that it should be the responsibility of the courts to use their discretion to decide when the parties have arrived at an agreement. This approach would mean that the courts examine communication between the parties and then decide when there has been a general “Consensus ad idem” or meeting of the minds. If this approach had been used in many of the discussed cases, it would appear that a more just solution would have been reached.

There are however a number of criticisms of imposing such a liberal method of reasoning. The courts will be given much scope in order to decide when an agreement has been made. This may promote uncertainty if they do not have to fulfil specific criteria for the formation of a contract. It may be difficult to understand a party’s true intention if the contract is purely verbal, as well as the fact that they may lie to the judge. It could also be argued that parties require certainty. A new approach could lead to confusion as to when contract had actually been concluded, if a judge could contend that one had been made through the course of negotiation. This view has already been once rejected in the House of Lords in Gibson, and judicial opinion has favoured the traditional prescriptive rigidity of the objective viewpoint. It is therefore unlikely to be well received by the judiciary.

I however believe that in order to cater for modern contracts, where parties are becoming more aware that if they do not empirically state an offer they can escape liability, such as in the case of Gibson, the judges should be able to apply a more fluid approach to justice. The cases which have been discussed prove that the current model is not adequate in all situations. It also seems that, according to the “backwards reasoning” theory, judges are already coming to a conclusion before specifically looking at the categories of offer and acceptance, so a more liberal approach may as well be implemented. The real question should be whether there was an agreement, not whether rigid categories were fulfilled.