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FORMATION OF A CONTRACT:
The traditional approach to finding the agreement is to classify negotiations into offer and acceptance
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To find an offer capable of acceptance the test is usually an objective
one - what the parties appear outwardly to have agreed
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OFFER:
Requirements of a Valid Offer:
An OFFER can be defined as: "A proposition put by one person (or persons) to another person (or persons) coupled with an
intimation that he is willing to be bound by that proposition"
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It must be communicated to the offeree
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E
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as in reward cases R
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It cannot be vague
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Ouston ("HP terms”)
 Only a valid contractual offer can bind an offeree to a contract on acceptance
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Thus it is crucial to distinguish an offer from:
a mere supply of information -Harvey v
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g
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Bell (flick knife - shop windows = invitation to treat)
- self service stores-Pharmaceutical Society of GB v
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-auctions- Payne
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- Barry v
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Crittenden (wild birds - advertisements = invitation to treat)
Contrast with: Carlill v
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It only imposes obligations to perform one side of the bargain at a
time
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E
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rewards
 A bilateral offer consists of a promise in exchange for a promise
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A common illustration of this is ordering goods from a seller once the
seller accepts
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An offer is terminated and therefore no longer capable of acceptance in
any of the following circumstances
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Montefiore:
 Revocation by Offeror-Byrne v
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Grant
+ controversy over revocation of a unilateral offer once offeree has embarked upon performance-Errington v
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Wrench
- Death of offeror - Bradbury v
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ACCEPTANCE:
 an offer may only be accepted by the person to whom it is made
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Carbolic Smoke Ball Ltd
 acceptance must be unconditional “mirror image rule” or it is a counter-offer –Hyde v
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Distinguish this from a
request for information - Stevenson v
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Carbolic Smoke Ball
 Battle of the forms - Butler Machine Tool v
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Hoffman
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RULES OF COMMUNICATION:
 offer must be communicated - R v
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Van Tienhoven, by offeror/reliable third party-Dickinson v
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 acceptance must generally be communicated by offeree/agent–Powell v
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Exceptions to this rule are:
-express waiver or implied waiver - Carlill v
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Bindley; Consumer Protection (Distance Selling) Regulations 2000, replaced by
Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 for contract entered into after June
2014; Consumer Protection from Unfair Trading Regulations 2008 imposes criminal sanctions for aggressive sales tactics
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Lindsell BUT
- post must be accepted mode of communication -Household Fire Insurance v
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Hughes; BUT
 instantaneous communication is not an exception
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e
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Miles Far East Corp
NB: Make sure that you understand the DISTINCTIONS between the need to communicate offer revocation and acceptance and
WHY there are exceptions to the rule that acceptance of an offer must be communicated
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The following presumptions are made:
 Commercial Agreements: (intention presumed = rebuttable)
-"not subject to jurisdiction" overrides presumption- Rose & Frank v
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Vernons Pools (pools coupon)
-"ex gratia" not sufficient to rebut presumption -Edwards v
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Malaysian Mining Corp (comfort letter)
 Domestic/Social Agreements: (no intention presumed = rebuttable)
-e
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domestic = presumption re husband/wife + infinite agreements lack certainty -Balfour v
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Padavatton (daughter studying); or
social = Wilson & Another v Burnett (bingo prize)
- breakdown of marriage + formalities e
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putting agreement in writing overrides presumption -Merritt v
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(car/writing)
-agreement between grandmother, granddaughter & lodger; lodger makes it rebuttable -Simpkins v
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CONSIDERATION:
The element which makes an agreement a "bargain" and therefore legally enforceable, is known as "consideration" Currie v
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may consist either in some right, interest, profit or benefit accruing to one party or some forbearance,
detriment, loss or responsibility given, suffered or undertaken by the other
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Bluett (son promising not to complain is not good consideration)
 must not be something the promise is already legally obliged to do by law – Collins v
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Glamorgan or under an existing contract -Stilk v
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Ponsonby BUT note
exception of Williams v
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Nestle/Thomas v
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- but must NOT be PAST – Re McArdle
 Consideration must move from the promise – Tweddle v
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Such consideration must be something other than money i
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sufficient but need not be adequate – Chappell v
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g
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 payment by a third party on condition that the debtor is released from the obligation to pay the full amount - Hirachand
Punamchand v
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Roffey Bros (note the distinction between this case and High Trees (below)
 Interest is payable on any delayed payment that falls short of the full amount owed – Foakes v
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High Trees House – which only suspends the obligation to pay the full amount if the promise to accept less
is voluntarily given, intending the promise to act on it, and the promise does in fact act on it, to his/her detriment
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e
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REMEDIES:
 Damages (common law remedy)
-damages in contract compensate for actual losses only - Robinson v
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Skinner(No2) (survey)
-remoteness? includes losses reasonably contemplated by parties at time of contract Hadley v
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Newman Industries (boiler)
-duty to mitigate losses -Payzu v
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Calder
-damages for injured feelings not usually available -Addis v
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Swan Tours Ltd (holiday)
-or if major aim of contract= pleasure, relaxation, peace of mind- Farley v
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Hicks (missed audition)
-distinguish between a genuine liquidated damages clause and a penalty clause- Dunlop v
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 specific performance – court order to perform terms of the contract as promised; not readily granted due to need for
supervision; therefore goods must be unique–Falcke v
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Warner Bros
 injunction - the court ordering a person to do or not to do something = prohibitory or mandatory; not granted re services
contracts if effect would be the same as an order for specific performance- Page One Records v
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 Rectification – alteration of a legal document having been convinced by external evidence that it does not represent the true
intention of the parties e
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” sham” tenancy agreements to reduce protected rights of tenants
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The court may, if justice so requires, order the defendant to
account to the claimant for the benefits of the contract

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