Contract Law
Contract is an agreement between two or more competent parties in which an offer is made and accepted, and each party benefits. No contract can come into being unless the following features exist: an actual offer, an acceptance, consideration (this means that each party will contribute something of a material value to the bargain) and an intention to create legal relations. The agreement can be formal, informal, written, or just plain understood.
(a) For a contract to exist the offer must be made and then accepted. An offer may be defined as a statement of the terms put forward as the basis of the bargain which carries with it a promise, express or implied, to adhere to the terms. A legally binding offer will include clearly stated terms, intention to do business and the communication of that intention. The offer must be clearly stated, because it may be held to be too vague to compromise a valid offer. This happened in Guthing v Lynn in 1831 where the buyer of the horse promised to pay the seller an extra £5 “if the horse is lucky for me”, this was held to be too vague to be enforceable. Apart from that a legally binding offer should be distinguished from an invitation to treat. Invitation to treat means an “invitation to offer” and can be described as an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed. A display of goods in a shop window, with or without a price tag is a merely an invitation to treat. Customers are making offers to sellers and sellers then decide if they want to accept. (Fisher v Bell, 1961)[1]. Anton is making an offer to Bernard and it was communicated successfully as Bernard replied back by post.
The offeree, by acceptance, agrees to be bound by all the terms of the offer. Such acceptance must fulfill three main rules: first of all, it must be the ‘mirror image’ of an offer, and secondly it must be firm,
(a) For a contract to exist the offer must be made and then accepted. An offer may be defined as a statement of the terms put forward as the basis of the bargain which carries with it a promise, express or implied, to adhere to the terms. A legally binding offer will include clearly stated terms, intention to do business and the communication of that intention. The offer must be clearly stated, because it may be held to be too vague to compromise a valid offer. This happened in Guthing v Lynn in 1831 where the buyer of the horse promised to pay the seller an extra £5 “if the horse is lucky for me”, this was held to be too vague to be enforceable. Apart from that a legally binding offer should be distinguished from an invitation to treat. Invitation to treat means an “invitation to offer” and can be described as an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed. A display of goods in a shop window, with or without a price tag is a merely an invitation to treat. Customers are making offers to sellers and sellers then decide if they want to accept. (Fisher v Bell, 1961)[1]. Anton is making an offer to Bernard and it was communicated successfully as Bernard replied back by post.
The offeree, by acceptance, agrees to be bound by all the terms of the offer. Such acceptance must fulfill three main rules: first of all, it must be the ‘mirror image’ of an offer, and secondly it must be firm,
Bibliography: 3. Sarah Riches, Vida Allen, 2009, Keenan and Riches Business Law, 9th edition, Pearson. 4. Stefan Fafinski, Emily Finch, 2009. Law Express: Contract Law, 2nd edition, Pearson.