Offer and Acceptance
For a contract to be legally binding there needs to be 4 ingredients: 1. Offer 2. Acceptance 3. Intention to create legal relations 4. Consideration
Building on this, in order to prove that a contract is legally binding 5 things need to be proven: 1. That an agreement has been reached. This is usually done by demonstrating that one of the parties has made an offer which the other accepted. 2. The agreement has been expressed in a form that is sufficiently certain for the court to enforce. 3. That the agreement is supported by consideration. (Possibly not needed if there is estoppel). 4. That the contract is only valid if it was entered into in a particular form e.g. writing. 5. That the parties had intent to create legal relations. This is presumed for commercial transactions, but in the case of domestic and social agreement, the starting point is that the parties do not intend to be legally bound.
The offer and acceptance constitute the agreement. But how is this ascertained, by an objective or subjective test? The courts need to ascertain whether there has been an agreement, so they look to the intentions of the two parties. This might not have been explicitly expressed and therefore we look at what can be inferred from the actions of the parties.
Agreement: Objective or Subjective?
We are not concerned with the subjective intentions of the parties; rather we look at what a reasonable man might do. As was said in Smith v Hughes (1871) LR 6 QB 597:
“if whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that the other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s term.”
Additionally, John Cartwright (Unequal