Contract

Topics: Contract, Tort, Contract law Pages: 11 (4407 words) Published: January 3, 2015
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 would advertise in which he would have promised reward for the one who finds his pet. Such advertisement promising reward is called unilateral offer and becomes binding once the person has fulfilled the condition.7 1.1.2 Communication of Offer

However, another important element is that offer in order to be validly accepted must be within the attention of the offeree. This is called the communication of the offer. If a person does something which was also laid down in an offer and he didn’t know about it then he cannot be said to have accepted the offer. For example, if someone promised reward for the one who brings to him his lost pet but another person who was unaware of the offer comes across the pet and brings it to the owner he cannot be rewarded because he did not know about the offer. This is due to two factors: acceptance and minds being ‘ad idem’. These are discussed below. 1.1.3 Acceptance

Acceptance of the offer is when the person to whom offer is being made becomes aware of the offer and then accepts it. It is vital that the offeree becomes aware of the offer otherwise there can be no valid acceptance. The offer in order to be validly accepted must be accepted as per the same terms which are contained within the offer. If the offeree tends to add further terms to the offer then this amounts to revocation of offer which has the effect of replacing the existing offer with a new one. The new offer is then called ‘counter offer’.8 Acceptance can only be made once the offeree is aware of the existence of the offer. If the offeree is unaware of the offer and does something which was required in the offer he cannot be said to have accepted it because he wasn’t aware of it. That is why it was held in R v Clarke that, “there cannot be assent (acceptance) 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.” 1.1.4 Communication of Acceptance

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