Contract | Formation
Offer: Overview
Revision Note | Degree
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Introduction
- a contract is formed when the following four elements are present: offer, acceptance, consideration (except if in the form of a deed) and contractual intention
- if the required elements are present a legally binding agreement is formed
- a party may be sued for breach of contract
- claimant (previously plaintiff) must prove breach
on the balance of probabilities
then defendant must prove his defenceon the balance of probabilities
Definition
- Professor Treitel provides a leading definition of offer:
.. an expression of willingness to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed...
(The Law of Contract) - party making offer is the offeror and offeree must accept
expression
can be written, verbal or through conductintention
is determined objectively
Objective test
- subjective approach impractical as would require courts to determine the state of mind of parties at the time of alleged agreement or to rely upon what parties later claim they intended
- courts have preferred to take an objective approach, considering conclusion of a
reasonable man
Smith v Hughes (1871) LR 6 QB 597
Facts:
- plaintiff (P) sold defendant (D) some oats in a transaction which was sale by sample
- D thought he was buying old oats but they were in fact new oats
- D discovered they were new oats he refused to pay
Issue:
- was there a breach of contract?
Held:
- Blackburn J:
If, whatever a man's real intentions may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms...
- established the objective approach
- objective approach creates certainty for commercial agreements