Offer and Acceptance

In the given question the issue is whether there is a binding contract between Gerard and Reg. A contract can be defined as a voluntary assumption of obligation .In order to establish a contract there must be an offer followed by an acceptance. In order to see whether the parties have come to an agreement the court would look at the intention of the parties. Intention will be looked at objectively .In applying the objective test the courts consider whether the reasonable person in the other parties’ position would conclude that there was an intention to enter in to an agreement. A good example of the application of the objective test is provided in Centrovincial Estates Plc vs. merchant investors’ assurance Company Ltd. It should not, however, be assumed that the subjective intentions of the parties are irrelevant. A subjective test attempts to ascertain the actual intention of the contracting parties. In Hartog vs. colin and Shields the court adopted the objective test subject to subjective consideration.
In Gibson vs. Manchester city council the House of Lords emphasized the importance of identifying an offer and acceptance when deciding whether the parties reached an agreement.
An offer is a firm undertaking to be bound in the every its terms are accepted by the other. It must be final, certain and unambiguous. There must be no further negotiations or discussion required.
The nature of an offer was discussed in Gibson vs. Manchester City Council. The council decided to sell the council houses to the tenants. The council then decided not to sell the houses .The council sent Gibson a document which asked him to make a formal invitation to buy and stated that the Council “may be prepared to sell’ the house to him. Gibson signed the document and returned it. The House of Lords held that a contract had not been concluded because the council had not made an offer capable of being accepted. Lord Diplock stated: The words “may be prepared to sell” are fatal…so is the