Offer and Acceptance
Requirements for a valid contract
• AGREEMENT between the parties
• Requirement of CERTAINTY – terms of the contract/what’s going to happen during the life of the contract
• INTENTION to create legal relations (formal agreement where they expect the law to be involved)
• CONSIDERATION (giving each other party something of value which underlies promise they are making)
AGREEMENT: (bargain negotiated between two parties)
Looking at it objectively: Standing outside the agreement, looking in as an outside observer. What do we think they have agreed?
Smith v Hughes (1871) LR 6 QB 597 → court always objectively views the contract/agreement.
Parties buy/sell new oats. Seller sold new oats while buyer wanted old oats.
RTS v Molkerai (2010) UKSC 14 → that the courts have not diverged from viewing contract objectively. not (depending) upon their subjective state of mind,
Why objective view?
Because sometimes parties forget, or get confused about their intentions at the time the contract was negotiated.
Parties may not mean what they say.
Promotes certainty and reasonable reliance. (parties will be able to rely on the terms, parties can be insured, protected.)
Exceptions: sometimes, we do look at it subjectively.
Looking at it subjectively: concerned with what the two parties themselves thought they got themselves into
When the offeree knows the offeror is mistaken as to the terms.
Hartog c Colin and Shields (1939) All ER 566- Seller charged per pounds as compared to the customary per piece. Objectively, agreement had been reached. However, they were prepared to look at it subjectively. But because buyer was aware of trade customs. Therefore, came to conclusion that there was no real agreement made between parties.
Cf Centrovincial Estates v MIA Co (1983) Com LR 158 (rent review)-
Landlord refused to enter any contract less then 68000 (according to documentation), expected 126000. However, in the