Contract Law - Offer And Acceptance

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Contract Law

Offer And Acceptance


Unilateral – Bilateral Contract

Subjective-Objective Approach To An Agreement


Invitation To Treat


Revocation Of Offer, Recall of Acceptance


Postal Rule-Limitation



  • Is an agreement between two or more parties that is intended to be legally binding (enforceable agreement)
  • Legally binding agreement needs of offer, acceptance, intention to create legal relations and consideration(difference between social agreement and legal agreement)
  • Is any promise or set of promises made by one party to another for the breach of which the law provides remedies
  • The remedies for the breach of contract is an award of monetary compensation, injunction, & specific performance(quantum meruit)

Essential Element

  • The promise or promises may be express (either writing or oral) or may be implied from circumstances
  • Needs of writing is not essential for contract the Courts of US approved that as long as there is meeting of minds as though there is written, formal, signed contract then contract exists
  • However, for certain type of contract signed writing contract is needed (Statute of Fraud)
  • Mass production and nationalisation have led to the standard form contract
  • Freedom of contract is modified by some acts such as Consumer Credit Act 1974 & Unfair Contract Act 1977(regulate the extend of terms in a contract)
  • Law sometimes implies some terms into contract to observe certain standard of behaviour s.12-15 Sale Of Goods Act 1979 (terms such as the fitness, title, and quality of goods into the sale of goods contract)

Determination Of Agreement

  • Is determined objectively not subjectively
  • Contract is the outcome of ‘consenting minds’ ‘consensus ad idem’
  • The older theories ‘ contract requires the party to have a true meeting of minds between the parties.
  • This is unsatisfactory , as other parties have no means of knowing their counterparts’ undisclosed intentions or understanding  
  • But outcome of ‘consenting minds’ also misleading as parties are judged by what they have said, written, or done, and not by what in their mind. Thus, an objective standard is applied

The Objective Test

  • Contract is an agreement giving rise to obligation which are enforced/recognised by law
  • The objective test ; ‘ a person is bound “whether his real intention may be” if “ a reasonable man could believe that he was assenting to the term proposed by the other party and that other party upon that believe enters into a contract with him”
  • The objective test is as a safeguard from prejudice for the offeree
  • Exception is only when the offeree knew that the offeror have no real intention to make a contract
  • Agreement formed when a party accepts an offer made by other, it should be certain and final

Type of Contract

Termination of Contract

  • Escape from contract;
  • mutual / unilateral mistake
  • Misrepresentation of facts inducing another party
  • Duress inducing another party
  • Lack of capacity to contract (infancy, influence of drugs/alcohols/mental illness)
  • Unconscionability
  • Violation of public policy/illegality
  • Absence of a writing evidence
  • Impossibility or unwillingness to perform contract (repudiation)
  • Misleading/ deceptive conduct by one of the party (tort of deceit)
  • Frustration of purpose of the contract without default by either party  


Offer defined – Objective Test 

  • Offer is an express of willingness to be bound by specific terms, made with intention that it is shall become binding as soon as it is accepted by person to whom it is addressed
  • Cannot be vague
  • Must be communicated
  • It may be in writing, orally, by conduct, a combination of these methods
  • Three (3) different situations where the role of objective test differ

-  B believe that A intends to be bound --- objective test

-  B knows that A has no intention --- x objective test

- B has never thought about A intention --- x objective test, as the main purpose is to safeguard B, but don’t care about the risk

Conduct as an Offer

  • Offer can be expressly or by conduct made to an individual, a group of people(specific offer -bilateral  offer )  or to the world at large (general offer – unilateral offer)
  • Tender is an offer by conduct  even if it contradicting  Unsolicated Goods And Service Act 1991

Invitation To Treat (ITT)

  • ITT is an  invites other party to enter into negotiations.  
  • Thus the different between offer and ITT is depends on the exclusive criterion of intention
  • Wording is not conclusive in each matter. E.g;

- ‘offer’  Harvela Investment v Royal Trust Co. of Canada (C.I) 1985, Spencer v Harding,Clifton v Harding   

- ‘acceptance’ Bigg v Boyd Gibbons Ltd 1971

  •  Stereotype situation distinction is decided by evidence adduced and not by intention

The Mere Supply Of Information

  • Before an offer is made, the preliminary stage of communication which involves response to a request for information and other similar request.
  • So, it is just a supply of information and not an offer

Harvey v Facey 1893

The plaintiff telegraph the defendant “Will you sell the Bumper Hall Pen?Telegraph the lower cash price”. The defendant telegraphed in reply, “Lowest price for Bumper Pen Hall ₤900”. The plaintiff then telegraphed, we agree to buy Bumper Pen Hall for ₤900 asked by you.

The court held that there is no contract concluded as the reply of defendant is just and mere statement of price.  

Gibson v Manchester City Council 1979

The council sent to tenants details of a scheme for the sale of council houses. The plaintiff immediately replied, paying the £3 administration fee. The council replied: "The corporation may be prepared to sell the house to you at the purchase price of £2,725 less 20 per cent. £2,180 (freehold)." The letter gave details about a mortgage and went on "This letter should not be regarded as a firm offer of a mortgage. If you would like to make a formal application to buy your council house, please complete the enclosed application form and return it to me as soon as possible." G filled in and returned the form. Labour took control of the council from the Conservatives and instructed their officers not to sell council houses unless they were legally bound to do so. The council declined to sell to G.

In the House of Lords, Lord Diplock stated that words italicised seem to make it quite impossible to construe this letter as a contractual offer capable of being converted into a legally enforceable open contract for the sale of land by G's written acceptance of it. It was a letter setting out the financial terms on which it may be the council would be prepared to consider a sale and purchase in due course.

  • In the course of negotiations for a sale, the vendor states the price at which he will sell, that may be an offer which can be accepted

Bigg v Boyd Gibbins Ltd 1971

A statement says “For a quick sale , I would accept £ 26,000…if you are not interested in this price would you please let me know immediately’. 

Held it was an offer. Had agreed on a price and made a contract.  

Advertisement and Other Display


  • Advertisement for return of lost, information leading to arrest/conviction of the perpetrator of crime is offer
  • Those are the unilateral contract, in addition there is no further bargaining 
  • However for bilateral contract, it is not offer as there is further bargaining of assuring himself that the other party is able to perform his part of the contract 
  • Advertisement for auction, advertisement for scholarship exam, circulation of price-list by wine merchant are ITT
  • Notice on entrance car park is offer, it is accepted by driving into the car park
  • Display of deck chair for hire…it is an offer 
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Carlill v Carbolic Smokeball Co (1893)

The manufacture company offered to pay ₤100 reward will be paid by the Carbolic Smoke Ball Company to any person who contract the increasing epidemic of influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed direction supplied with each ball. ₤1,000 was deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.


BOWEN LJ, “It is not like cases whish you offer to negotiation, or you issue advertisement that you have got a ...

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Good summary of the law, though the format would not work well in the examination context. More detail on intention and certainty would improve this essay, as would a more concise approach to case summaries. 3 stars.