Contract
1.0 Contracts and its Elements
1.1 Essentials of a Contract
Contracts form part of our daily life e.g. lease of house, sale/purchase of cars, etc. However, there are elements essential to form a contract. These are:
1.1.1 Offer/Invitation
MacMillan & Stone (2004) described offer as “an expression of willingness to contract on certain terms. It must be made with the intention that it will become binding upon acceptance. There must be no further negotiations or discussions required.” This can be understood by taking into account the case of Storer v Manchester City Council whereby the Council sent Storer statements in letter which they stated would be binding as soon as Storer accepted them by signature. The court held that such statements amounted to offer.
However, in Gibson v Manchester City Council the Council sent Gibson letter containing statement on which they requested Gibson to file a formal request to buy the property in response to which the Council then “may be prepared to sell the house” to Gibson. The court held that this statement did not amount to offer because it did not depict the serious expression of willingness to be bound, rather it indicated that council would perhaps be ready to sell the house. Such statements are called invitation to treat i.e. the person making the statement invites the other to negotiations which may or may not lead to a contract. If negotiations fail then no one is liable as there is no contract.
Instances which are treated as ‘invitation to treat’ include: advertisements,1 supply of information,2 display of goods3 (unless the display is made with certain terms)4 request for tenders5 and auctioneer’s request for bids.6
However, an important distinction to note here is that advertisements which contain unilateral offers are to be treated as offers. These generally promise a reward that whoever performs the condition stipulated in the advertisement would be rewarded e.g. it is common that when someone loses his pet, he
1.1 Essentials of a Contract
Contracts form part of our daily life e.g. lease of house, sale/purchase of cars, etc. However, there are elements essential to form a contract. These are:
1.1.1 Offer/Invitation
MacMillan & Stone (2004) described offer as “an expression of willingness to contract on certain terms. It must be made with the intention that it will become binding upon acceptance. There must be no further negotiations or discussions required.” This can be understood by taking into account the case of Storer v Manchester City Council whereby the Council sent Storer statements in letter which they stated would be binding as soon as Storer accepted them by signature. The court held that such statements amounted to offer.
However, in Gibson v Manchester City Council the Council sent Gibson letter containing statement on which they requested Gibson to file a formal request to buy the property in response to which the Council then “may be prepared to sell the house” to Gibson. The court held that this statement did not amount to offer because it did not depict the serious expression of willingness to be bound, rather it indicated that council would perhaps be ready to sell the house. Such statements are called invitation to treat i.e. the person making the statement invites the other to negotiations which may or may not lead to a contract. If negotiations fail then no one is liable as there is no contract.
Instances which are treated as ‘invitation to treat’ include: advertisements,1 supply of information,2 display of goods3 (unless the display is made with certain terms)4 request for tenders5 and auctioneer’s request for bids.6
However, an important distinction to note here is that advertisements which contain unilateral offers are to be treated as offers. These generally promise a reward that whoever performs the condition stipulated in the advertisement would be rewarded e.g. it is common that when someone loses his pet, he