The principle of a contract is an agreement between partiesthat is enforceable by law. For a contract to be recognised by law there arecertain criteria that must be met, if all of these criteria are not met thenthe contract may be void, voidable or unenforceable. The essential features ofa valid contract are; offer, acceptance, consideration, intention to create legalrelations and certainty of terms. The purpose of this essay is to analyse theelements that create a valid agreement. Agreement is the collective term givenfor offer and acceptance.
An offer is defined by Edwin Peel and G. H. Treital (2015, p.241)as an ‘expression of willingness tocontract on specified terms, made with the intention that it is to becomebinding as soon as it is accepted by the person who it is addressed.’ Foran offer to be valid the offeree must be aware of the offer, a party cannot beheld accountable unless they are aware that an offer has been made. An offercan be made bilaterally to an individual/group or unilaterally to the wholeworld.
The authority for a unilateral offer is the case of ‘Carlill v Carbolic Smoke Ball Co.’ (1892).This case set the precedent for unilateral offers. This case was upheld sinceunilateral offers do not need acceptance, as long as the conditions are followed.It is still cited in many cases to this day, an example of this being the caseof ‘Azevedo v IMCOPA’ (2013).
However,not all advertisements are regarded as offers. Advertisements that do notcontain unilateral offers are regarded as invitations to treat. An invitationto treat is an initial statement that conveys an openness to receiving offers,which can then be accepted or rejected. The authority for this is the case of ‘Partridge v Crittenden’ (1968).There are many examples of invitations to treat such as items on a shelf, thisis shown in the case of ‘PharmaceuticalSociety of Great Britain v Boots Cash Chemists (Southern) Ltd’ (1953)and items that are priced up, shown in the case of ‘Fisher v Bell’ (1960). Both cases have been cited in thecase of ‘WM Morrisons SupermarketsPlce v Reading Borough Council’ (2012) a very recent case showing thatthese cases are the authority to which cases involving invitations to treat areheld. An offer comes to an end when it has either been rejected, thetime the offer was valid for or a reasonable period has lapsed, death orrevocation. For an offer to be accepted the mirror image rule, whichstates that the acceptance must exactly match the offer, must be followed.
Ifthe acceptance is not the exact same as the offer, then this is regarded as acounter offer. Counter offers mean that the original offer has been rejected,it is now up to the original offeror to accept, reject or counter the newlyproposed offer. Acceptance is defined by Edwin Peel and G. H. Treital (2015,p.246) as a ‘final and unqualifiedexpression of assent to the terms of an offer’, which means that for anoffer to be accepted that there must be no conditions that come with the acceptance.
Offers can be accepted by an outward expression of acceptance or it can be inferredfrom conduct as seen in the case of ‘AlexanderBrogden v Metropolitan Railway Co’ (1877). This case has been citednumerous times since as it set the authority for acceptance, some of the mostrecent cases of this are seen in the ‘FinmoonLtd v Baltic Reefers Management Ltd’ (2012) and in the case of ‘Reeille Independent LLC v AnotechInternational (UK) Ltd’ (2016). Silence, however, generally will notconstitute valid acceptance, this can be seen in the case of ‘Felthouse v Bindley’ (1862),this is also a very important case as it set the example for future cases. Arecent example of where this case has been cited is the ‘Linnett v Halliwells LLP’ (2009) case. There are rules regarding when acceptance is valid dependingon how acceptance is communicated. When acceptance is posted, acceptance isvalid when the letter is posted and not when the letter is received, this canbe seen in the case of ‘Adams vLindsell’ (1818) this case is based on the postal rule. Forinstantaneous forms of communication (e.
g. telex, phone conversation, fax), acceptanceoccurs when it is received, this is shown in the case of ‘Entores Ltd v Miles Far East Corp.’ (1955). This means thatacceptance sent outside of the working hours only becomes valid at the start ofthe next working day. Both cases are very important regarding acceptance and wererecently cited in the case of ‘FourSeasons Inc v Brownlie’ (2017), showing how significant these cases arewith regards to acceptance as they are still being used in modern day trials.Not all forms of communication are instant, emails and texts are not classed asan instantaneous form of communication. There is currently no authority on whenthe contract is formed when a non-instantaneous method is used for acceptance,due to this there are different ways to decide when acceptance occurred.Either, the contract is formed when; the message is read, the message isreceived or when the acceptance is sent.
The Sale of Goods Act 1979 is an actthat contains many regulations relating to contract law. Part II of the act isbased on the formation of contracts, it states that the sale of goods is a contractby which for a price the seller will deliver goods to the buyer (legislation.gov.uk,2017).If issues arise once a contract is in place or during theformation of a contract, as long as the contract is enforceable, it can gothrough the courts system. For civil cases, which contract law is part of, thecase will usually be seen in the County Court, these can then go to the HighCourt, then through the Court of Appeal and then to the UK Supreme Court whichis the highest court within our system. A contract is only enforceable if thecontract that is in place is based on an agreement between the parties and bothparties had capacity to enter into a binding contract. All living adults whoare sober and of sound mind have the ability to enter into such contracts.
Thismeans that minors, anyone aged under 18, do not have the ability to enter into suchcontracts. Due to this the other party will be unable to enforce the contractagainst the minor, however, the minor is able to enforce the contract againstthem. There are of course some exceptions to this rule, this includes where itis necessary that a minor enter into such contract; an example being buying foodor drink, or accessing medical services. The Sale of Goods Act 1979 containsthe rules regarding capacity to buy and sell. Stating that only necessaries canbe sold, at a fair price, to a person who isn’t competent to contract (legislation.gov.
uk,2017). Another exception is when entering employment or becoming an apprentice,as long as the contract is of benefit to the minor. Overall, an agreement occurs when an offer is made to an offereewho accepts the proposed offer. As long as the criteria are met, and thecontract is enforceable, the courts will be able to take action against one orboth of the parties should a case be brought to court. There are many casesthat are used as the authority when these cases go to trial as shown above andexplained further in the appendix. ReferencesPeel, E and Treital, G.H (2015) Treitel on the law of contract. 14th edn.
London: Sweet and Maxwell ‘Carlill v Carbolic Smoke Ball Co.’ (1892) United KingdomCourt of Appeal, case 256. WestlawOnline.(Accessed 8th January 2018)’Azevedo v IMCOPA’ (2013) United Kingdom Court of Appeal,case A3/2012/1532. Westlaw Online (Accessed 8th January 2018) ‘Partridge v Crittenden’ (1968) United Kingdom Queen’s BenchDivision. Lexis Online (Accessed 8th January 2018) ‘Pharmaceutical Society of Great Britain v Boots CashChemists (Southern) Ltd.
‘ (1953) United Kingdom Queen’s Bench Divisional Court,case 1413. Lexis Online(Accessed 8th January 2018) ‘Fisher v Bell’ (1960) United Kingdom Queen’s BenchDivision, case 394. Westlaw Online (Accessed 8th January 2018) ‘WM Morrisons Supermarkets Plce v Reading Borough Council'(2012) United Kingdom High Court of Justice Queen’s Bench Division DivisionalCourt, case CO/2962/2011. WestlawOnline (Accessed 8th January 2018) ‘Alexander Brogden v Metropolitan Railway Co’ (1877) UnitedKingdom House of Lords, case 666. LexisOnline (Accessed 8th January 2018) ‘Finmoon Ltd v Baltic Reefers Management Ltd’ (2012) UnitedKingdom Queen’s Bench Division (Commercial Court) case 2011 FOLIO 115. Westlaw Online(Accessed 8th January 2018) ‘Revielle Independent LLC v Anotech International (UK) Ltd'(2016) United Kingdom Court of Appeal, case 443. Lexis Online(Accessed 8th January 2018) ‘Felthouse v Bindley’ (1862) United Kingdom Court of CommonPleas. Westlaw Online (Accessed 8th January 2018) ‘Linnett v Halliwell LLP’ (2009) United Kingdom Queen’sBench Division (Technology & Construction Court), case 8QZ06856.
Westlaw Online (Accessed 8th January 2018) ‘Adams v Lindsell’ (1818) United Kingdom Court of King’sBench, case 250. Westlaw Online (Accessed 8th January 2018) ‘Entores Ltd v Miles Far East Corp.’ (1955) United KingdomCourt of Appeal, case 327. Lexis Online(Accessed 8th January 2018) ‘Four Seasons HoldingInc v Brownlie’ (2017) United Kingdom Supreme Court, case 2015/0175. Westlaw Online (Accessed 8th January 2018) Legislation.gov.uk (2017) Sale of Goods Act 1979. Available at: https://www.
legislation.gov.uk/ukpga/1979/54(Accessed 9th January 2018) Appendix ‘Carlill v Carbolic Smoke Ball Co.’ (1892) where an advert was placed in the newspaper offering £100 to anyone who caughtthe flu after using their product, they deposited £1000 into the bank as a signof sincerity. This case was upheld by the court and Carlill won her case as thecourt deemed that the advert was a unilateral offer meaning that acceptance didnot need to be communicated and the deposit of £1000 showed they had theintention to pay out for any claims.’Azevedov IMCOPA’ (2013) An offer was made in terms of an ‘if’ contract; if you case the votes in favourof the resolution, and if the resolution is duly passed, then I will pay youthe stated amount.
So, on the authority of Carlill v Carbolic Smoke Ball Co.,if the resolution is passed, and if the noteholder voted in favour they wouldbe entitled to a payment in line with the offer’Partridgev Crittenden’ (1968) An advertisement was put in the ‘Classified Advertisements’ section of a paper,there were no use of the words ‘offer for sale’. The bird sold was a wild livebird which is against the Protection of Birds Act 1945. However, theadvertisement on appeal was seen as an invitation to sell and not an offer forsale so the offence was not established.
‘PharmaceuticalSociety of Great Britain v Boots Cash Chemists (Southern) Ltd.’ (1953) A customer took items off the shelf, that were specified in Part I of thePoisons List, then took them to the counter this constituted an offer to buyfrom the customer and not the acceptance of an offer by Boots. A Pharmacistsupervised the transaction, in line with the provision provided in the Pharmacyand Poisons Act 1933. ‘Fisherv Bell’ (1960) A “flick knife” was displayed in the window of a shop, police alleged that theknife was offered for sale. The court deemed that in the absence of adefinition of “offer for sale” in the Restriction of Offensive Weapons Act1959, that it was merely an invitation to treat and not an offer for sale. ‘WMMorrisons Supermarkets Plce v Reading Borough Council’ (2012) A young person acting on behalf of the local authority was sold tobaccoproducts; the case of Fisher v Bell was used as this case establishes that themeaning given by the law of contract must prevail unless a different meaning isgiven in the statute. As “sells” was not given a meaning in the statute, thecontractual meaning stands. Therefore, as the young person was acting an agentfor the local authority who are the principle, meaning the sale was to theprinciple and the tobacco was not sold to the young man.
‘AlexanderBrogden v Metropolitan Railway Co’ (1877) A contract was drawn up between the two parties, B added to it and gave it tothe arbitrator who wrote approved at the bottom and signed it. Both partiesthen acted in accordance with the arrangements in the contract. When issuesstarted to arise Brogden denied that there was a contract in place. Aaacceptance was implied by conduct and the arbitrator signed the agreement, thecontract was enforced. ‘FinmoonLtd v Baltic Reefers Management Ltd’ (2012) A contract of affreightment was in place between the parties, weekly shipmentswere taken to Petersburg from Ecuador. After the COAs came to an end the weeklyvessels for the shipments were still supplied.
Based on the conduct it wasinferred that a COA was still in place on the authority of Alexander Brogden vMetropolitan Railway Co ‘RevielleIndependent LLC v Anotech International (UK) Ltd’ (2016) A standard form ‘Deal Memo’ was sent to Anotech, it was also expected that along form agreement would be entered into, Anotech’s director signed thedocument and sent it back along with handwritten amendments. The long formagreement was also never reached. Anotech wouldn’t pay and stated that nocontract had been formed. It was ruled that acceptance was implied by conduct.Referred to the Brogden v Metropolitan Railway Co. ‘Felthousev Bindley’ (1862) There was a discussion involving the sale of a horse and an offer was made, thehorse was then sold at an auction. However, as the offer had never beenaccepted (silence does not constitute acceptance) the auction of the horse waslegal as it had not been sold.
‘Linnettv Halliwell LLP’ (2009) An adjudicator did not have jurisdiction and a contract was formed by conductwith an obligation to pay the adjudicators fees and expenses. Silence does notconstitute acceptance of an offer and as there was no acceptance a contract wasnot formed. The authority for this is the case of Felthouse v Bindley. ‘Adamsv Lindsell’ (1818) An offer was made by post and acceptance sent by post however by the time theacceptance had reached the offeree they had already sold the goods.
Asacceptance occurs when the letter is sent, the offeree was in breach andtherefore owed damages. This is based on the postal rule. ‘EntoresLtd v Miles Far East Corp.’ (1955) Offer and acceptance were sent via Telex which is an instantaneous form ofcommunication.
As the acceptance to the offer was received in London, thecontract was made within the jurisdiction and the leave to serve notice of thewrit in an action for damages due to breach of contract could be served. Thiscase references Adams v Lindsell ‘Four Seasons Holding Inc v Brownlie’ (2017) Following an excursion in Egypt, a car accident occurred where Brownlie wasinjured and her husband was killed, which she had organised from the UK viatelephone. Citing both Entores v Miles Far East Corp with reference toinstantaneous forms of communications and citing Adams v Lindsell regardingwhen acceptance is posted.