Do the courts always rigorously apply the established rules of offer and acceptance governing the formation of contracts?
Do the courts always rigorously apply the established rules of offer and acceptance governing the formation of contracts?
Put bluntly, no, the courts do not always rigorously apply the established rules of offer and acceptance governing the formation of contracts. Judgments by Lord Denning in Butler Machine Tool Co Ltd v Ex-Cell-O Corporation Ltd (1979) and Gibson v Manchester City Council (1979) have challenged this ‘mirror image’ approach. Nonetheless, these are very much exceptions to the general principle governing the formation of contracts and it is true that in the vast majority of cases the established rules of offer and acceptance are applied. The courts will be creative in order to comply with the ‘mirror image’ theory and shoehorn the rules of offer and acceptance into transactions in which offer and acceptance are difficult to identify such as in Carlill v Carbolic Smoke Ball (1893).
Since a contract is an agreement, it follows that, in order for such an agreement to be reached, there must be an offer made by one party which is accepted by the other. The purpose of this ‘mirror image’ formula (agreement = offer + acceptance) is to ensure that there is a ‘meeting of the minds’. However, the established rules of offer and acceptance are not always rigorously applied. For example, although silence cannot amount to acceptance as shown in Felthouse v. Brindley (1863), where the court held that there was no contract since the nephew had never communicated his intention to accept to his uncle “or done anything to bind himself”, in the case of Vitol SA v. Norelf Ltd Lord Steyn recognised that this is not an absolute rule as “our law does in exceptional case recognise acceptance of an offer by silence”1.
Much case law can be read as examples of when it is reasonable for the parties to rely on what has been done or said2. The possible approaches to contract formation can be demonstrated succinctly by reference to the ‘Manchester cases’. In Storer v
Put bluntly, no, the courts do not always rigorously apply the established rules of offer and acceptance governing the formation of contracts. Judgments by Lord Denning in Butler Machine Tool Co Ltd v Ex-Cell-O Corporation Ltd (1979) and Gibson v Manchester City Council (1979) have challenged this ‘mirror image’ approach. Nonetheless, these are very much exceptions to the general principle governing the formation of contracts and it is true that in the vast majority of cases the established rules of offer and acceptance are applied. The courts will be creative in order to comply with the ‘mirror image’ theory and shoehorn the rules of offer and acceptance into transactions in which offer and acceptance are difficult to identify such as in Carlill v Carbolic Smoke Ball (1893).
Since a contract is an agreement, it follows that, in order for such an agreement to be reached, there must be an offer made by one party which is accepted by the other. The purpose of this ‘mirror image’ formula (agreement = offer + acceptance) is to ensure that there is a ‘meeting of the minds’. However, the established rules of offer and acceptance are not always rigorously applied. For example, although silence cannot amount to acceptance as shown in Felthouse v. Brindley (1863), where the court held that there was no contract since the nephew had never communicated his intention to accept to his uncle “or done anything to bind himself”, in the case of Vitol SA v. Norelf Ltd Lord Steyn recognised that this is not an absolute rule as “our law does in exceptional case recognise acceptance of an offer by silence”1.
Much case law can be read as examples of when it is reasonable for the parties to rely on what has been done or said2. The possible approaches to contract formation can be demonstrated succinctly by reference to the ‘Manchester cases’. In Storer v