A contract is a binding agreement between parties. An agreement requires an offer and acceptance of that offer. There is an objective test to determine if there is an agreement: whether a reasonable man would conclude there is an agreement . There must be a complete meeting of the minds of the parties, which involves not only an agreement in fact but also for the offeree to communicate acceptance.
Professor Treitel defines acceptance as:
.. a final and unqualified expression of assent to the terms of an offer... (The Law of Contract).
Awareness of the offer
An offer can only be accepted if the party was aware the offer existed.
An Australian High Court case.
The Government had advertised an offer of a reward for £1000 for information leading to the arrest of the murderers of two police officers.
Mr Clarke saw the offer but had forgotten about the reward. He was later accused of the murders and he then gave information leading to the conviction of the murderers.
Can there be acceptance without knowingly accepting the offer?
There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing of it or forgetting it after hearing....
The defendant placed advertisements stating that:
whosoever would give such information as might lead to a discovery of the murderer of the said Walter Carwardine, should, on conviction, receive a reward of £20.
The plaintiff knew of the reward but gave information because she knew she was dying and wished to ease her conscience.
Was there acceptance of the offer?
The supply of information was an acceptance and the money should be paid, the plaintiff's motive was irrelevant.
.. the plaintiff gave the information which led to the discovery of the murderers; but that she did not give that information for the sake of the £20 reward... but from stings of conscience....
Battle of the forms
Contractual problems are present in business deals, where two parties may exchange standard terms and conditions as part of the negotiation. These documents will inevitably differ and a
battle of the forms arises. This can lead to disputes over which party's terms are effective.
On 23 May, the plaintiff sent a letter to the defendant offering some new machinery for £75535 to be delivered in 10 months. On the back of the quotation was a copy of the plaintiff's standard terms and conditions, which included a price variation clause. The clause meant that the defendant would be liable to pay for any increase in the manufacturing costs.
On 27 May, the defendant ordered the machinery but on the back of their order was a copy of their standard terms, which did not have a price variation clause. Additionally, the defendant requested to vary the delivery date details to read 10/11 months.
On 5 June, the plaintiff returned the tear-off slip from the defendant's order, which read:
We accept your order on the terms and conditions stated therein. However, the plaintiff also sent a note stating that the items would be
delivered in accordance with our revised quotation of 23rd May for delivery in 10/11 months.
On delivery the plaintiff requested £75535 and an additional £2892 in increased costs. The defendant refused to pay the excess charge.
No doubt a contract was then concluded. But on what terms? The sellers rely on their general conditions and on their last letter which said 'in accordance with our revised quotation of 25rd May' (which had on the back the price variation clause). The buyers rely on the acknowledgement signed by the sellers which accepted the buyer's order 'on the terms and conditions stated thereon' (which did not include a price variation clause)....
The contract was made on the defendant's terms. However, the judges differed in their reasoning.
In many cases our traditional analysis of offer, counter offer, rejection, acceptance and so forth is out of date... The better way is to look at all the documents passing between the parties and glean from them or from the conduct of the parties, whether they have reached agreement on all material points... I think the acknowledgement of the 5th June, 1969 is the decisive document. It makes it clear that the contract was on the buyers' terms and not on the sellers' terms: and the buyers' terms did not include a price variation clause....
Lawton and Bridge LJJ held that the contract had been made on the defendant's terms by taking a more traditional approach. They found that the defendant had made a counter offer which the plaintiff accepted by returning the tear-off slip.
The more traditional approach is generally preferred because it promotes certainty which is crucial in commercial agreements.
Acceptance by conduct
battle of the forms exists and two incompatible terms have been exchanged the question of whether a contract has been formed at all can also arise.
The plaintiffs supplied coal to the defendant railway company for a number of years. The parties decided to formalise the agreement in a written contract.
The defendant sent a draft contract to the plaintiff. The plaintiff made some minor adjustments and completed some blanks and returned it to the defendant, marked
Without further communication, the defendant filed the document. For a further two years the plaintiff continued to supply the coal, then a dispute arose.
Whether the written contract was valid.
There was a valid agreement. The amendments made by the plaintiff constituted a counter offer, which was clearly accepted by the defendant, by continuing to receive the coal. Conduct could amount to acceptance.
However, it was unclear when the defendant had in fact accepted the offer. It was sufficient that a valid contract was found to exist so it was not necessary for the House of Lords to determine if the acceptance occurred when the defendant first ordered coal, after receipt of the offer, or when it took delivery of the coal.
The defendants were running a large construction project and invited the plaintiffs to manufacture steel for the project. The plaintiffs submitted a tender, which the defendant rejected. However, the parties entered negotiations.
The defendants sent a letter to the plaintiff stating their intention to enter into a contract, subject to further negotiation on some details, on the defendants' standard terms. The defendant also requested the plaintiff commence manufacture
.. pending the preparation and issuing to you of the official form of sub-contract....
The plaintiffs did not respond to the letter as a formal agreement was expected imminently. The plaintiff would not have agreed to the defendants' standard terms, as they included a clause which provided for unlimited liability for consequential loss arising from late delivery.
Negotiations continued alongside the plaintiff manufacturing and delivering the steel to the defendant. However, the parties were unable to conclude negotiations.
The plaintiff sued for payment for the steel already provided. The defendants made a counter claim on the ground that the plaintiff had broken the contract by delivering the steel too late.
Did a valid contract exist?
There was no contract because the defendants had rejected the plaintiffs' tender on the plaintiffs' standard terms. The plaintiffs had not replied to the defendants' letter, which stated that the contract would be on the defendants' standard terms.
The plaintiffs' conduct (commencing manufacture of the steel) on the defendants' request did not create a valid contract because the negotiations were ongoing. The work was being carried in anticipation of a contract being agreed.
Both parties confidently expected a contract to eventuate. In the circumstances, to expedite performance under that anticipated contract, one requested the other to commence the contract work and the other complied with that request. If, contrary to their expectation, no contract was entered into, then the performance of the work is not referable to any contract of which the terms can be ascertained, and the law simply imposes an obligation on the party who made the request to pay a reasonable sum for such work as has been done pursuant to that request, such an obligation sounding in quasi-contract or, as we now say, in restitution....
Certainty is a requirement, if the parties appear to have reached an agreement it may not be sufficient. The courts may refuse to enforce the terms are unclear or an important term is left undecided.
The plaintiff supplied the defendant with a van.
The defendant traded in his old van. Additionally, he was to pay an £286
on hire-purchase terms over two years. No further details of instalments were given.
Was there sufficient certainty for an enforceable contract?
on hire-purchase terms were too vague. Therefore the contract was unenforceable.
Branca v Cobarro  2 All ER 101
The defendant agreed to sell his mushroom farm to the plaintiff for £5000.
The defendant wrote:
This is a provisional agreement until a fully legalised agreement drawn up by a solicitor and embodying all the conditions herewith stated is signed....
Was there a valid contract?
The court found that there was an immediately binding document, the precise language may be formalised at a later date but the terms were clear and the parties had reached an agreement. Contracts do not have to be in a particular form, a formal agreement is irrelevant.
Nicolene Ltd v Simmonds  1 QB 543
The defendant agreed to sell the plaintiff steel bars.
In letters between the parties (the alleged contract) it was stated:
I assume that the usual conditions of acceptance apply....
The defendant failed to deliver and sought to rely upon the statement to create uncertainty.
Did a lack of explicit agreement on the
conditions of acceptance mean that there was no contract?
A valid contract existed as meaningless clauses are irrelevant.
There were no usual conditions of acceptance and so it is said that those words are meaningless, that there is nothing to which they can apply, and that, therefore, there was never any contract between the parties. In my opinion, a distinction must be drawn between a clause which is meaningless and a clause which is yet to be agreed. A clause which is meaningless can often be ignored, while still leaving the contract good, whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms....
The plaintiff agreed to purchase
22,000 standards of softwood of fair specification from the defendant. There was an option to purchase an additional
The plaintiff attempted to exercise the option to buy more, the defendant refused.
The defendant argued there was
.. was an agreement to make an agreement, the terms of which were not defined, and so was unenforceable....
fair specification too vague a term for an agreement?
There was an enforceable contract. The court found, that on the basis of previous agreements between the parties the seemingly vague words
fair specification had sufficient specific meaning. Also relevant was the fact taht the parties had acted on the assumption there was a contract.