Contract Law – Prepare 1 12.10.21
Unit 1 – Offer and Acceptance
Tutorial 1: Formation of Contracts
1 – Introduction
Contracts occur in day-to-day life – such as buying a train ticket, a newspaper & cinema
tickets
o Also occur with jobs, insurance, mortgages/rent
Contracts are essentially just about “agreements” or “deals” (and “bargains”) – this is
whether the transaction is small or huge
Contract lawyers advise on all sorts of dealings, and may be involved in drafting contracts
where they ensure they achieve what their clients want
o May be involved in litigation (suing and defending claims in contract)
Formation of a contract – requirements for there to be a contract, how a contract gets made
Remedies for breach of contract – what happens if someone breaks a contract, what the
remedies for breach of contract are
Exemption clauses – clauses designed to get someone off the hook in some shape or form,
found in small print?
3 key elements to formation of a contract:
o Agreement – made up of offer and acceptance
o Intention to create legal relations
o Consideration
If these 3 elements are present, then we have a contract
2 – What is an Offer?
English law has a sort of idealised conception of contract formation – sees contracts as
formed by one person putting forward a proposal, and the other person agreeing to it
Offer and acceptance provides the analytical mechanism which the law uses to identify
contract formation
o Offeror = person who makes the proposal
o Offeree = person who received the proposal
A proposal isn’t an offer unless the seller knows exactly what they’re selling, at what price,
and are committed/prepared to sell – the price must be specific and clear
Requirements for an offer are:
o “Willingness to be bound” by the proposal if it’s agreed to
o “Certainty of terms” = sufficient certainty in the terms of the proposal
Willingness to be bound = putting oneself in a position where you may be bound to a
contract has got to be voluntary – therefore law has this requirement
Certainty of terms = prevention of vague conditions (too vague may well mean the
agreement was too uncertain to enforce) – undermined by incompleteness & uncertainty
3 – Acceptance
Terms of offer must be accepted as it’s the offer that’s being agreed to
1
, Contract Law – Prepare 1 12.10.21
Acceptance = the unqualified assent to the terms of the offer
o Assent (express agreement) to contracts is voluntary, so offeree must be doing
something of their own volition in entering into the contract
o ‘Unqualified’ as this ensures complete assent to terms of the offer (i.e. offeree can’t
agree to some bits and not others)
Law takes the view that you need to have let the offeror know that you agree to the terms
of their offer – otherwise they wouldn’t know whether they’re bound by a contract or not
o Law requires the acceptance to be communicated to the offeror
Issue of communication when both parties aren’t in close proximity is tough – do we treat
contents of a letter as communicated when its posted/arrived/read/replied to?
o Requirement for communication of acceptance is only a general rule
4 – Termination of Offer
This is ways in which an offer can cease to be “on the table”
3 main ways an offer can disappear
Revocation = where the offeror takes the offer off the table
o Successful revocation (withdrawal) requires the revocation of the offer to be
communicated to the offeree – it’s still open for acceptance until the offeree is told
otherwise
Rejection = where the offeree sweeps the offer off the table
o Express rejection of offer brings it to an end – you can’t later change your mind and
accept
o Counteroffers impliedly rejects a previous offer (settled law), but often hard to tell if
a response to an offer is actually a counteroffer, or just a request for more info about
the offer
“Would you take £X instead?” = seen as a proposal of its own (counter)
“Would you be prepared to come down a bit on that?” = exploratory enquiry
Lapse = where the offer disappears from the table by itself
6 – Agreements
Some agreements are meant to be legally binding (buying a car from dealership), whereas
others aren’t (agreement with girlfriend about chores)
Commercial agreements = agreements between individuals (could be between individuals
not in business) and businesses – e.g. buying something in a shop
o Presumption of intention to create legal relations
Domestic agreements = agreements where there is some other relationship between the
parties (e.g. family members or close friends)
o Presumption of no intention to create legal relations
Both these presumptions are rebuttable – whether there is (not) intention to create legal
relations is based on a case-by-case basis
There have been few cases involving commercial agreements where the presumption of
intention to create legal relations has been successfully rebutted
A clear statement that the agreement isn’t meant to be legally binding would work
2
Unit 1 – Offer and Acceptance
Tutorial 1: Formation of Contracts
1 – Introduction
Contracts occur in day-to-day life – such as buying a train ticket, a newspaper & cinema
tickets
o Also occur with jobs, insurance, mortgages/rent
Contracts are essentially just about “agreements” or “deals” (and “bargains”) – this is
whether the transaction is small or huge
Contract lawyers advise on all sorts of dealings, and may be involved in drafting contracts
where they ensure they achieve what their clients want
o May be involved in litigation (suing and defending claims in contract)
Formation of a contract – requirements for there to be a contract, how a contract gets made
Remedies for breach of contract – what happens if someone breaks a contract, what the
remedies for breach of contract are
Exemption clauses – clauses designed to get someone off the hook in some shape or form,
found in small print?
3 key elements to formation of a contract:
o Agreement – made up of offer and acceptance
o Intention to create legal relations
o Consideration
If these 3 elements are present, then we have a contract
2 – What is an Offer?
English law has a sort of idealised conception of contract formation – sees contracts as
formed by one person putting forward a proposal, and the other person agreeing to it
Offer and acceptance provides the analytical mechanism which the law uses to identify
contract formation
o Offeror = person who makes the proposal
o Offeree = person who received the proposal
A proposal isn’t an offer unless the seller knows exactly what they’re selling, at what price,
and are committed/prepared to sell – the price must be specific and clear
Requirements for an offer are:
o “Willingness to be bound” by the proposal if it’s agreed to
o “Certainty of terms” = sufficient certainty in the terms of the proposal
Willingness to be bound = putting oneself in a position where you may be bound to a
contract has got to be voluntary – therefore law has this requirement
Certainty of terms = prevention of vague conditions (too vague may well mean the
agreement was too uncertain to enforce) – undermined by incompleteness & uncertainty
3 – Acceptance
Terms of offer must be accepted as it’s the offer that’s being agreed to
1
, Contract Law – Prepare 1 12.10.21
Acceptance = the unqualified assent to the terms of the offer
o Assent (express agreement) to contracts is voluntary, so offeree must be doing
something of their own volition in entering into the contract
o ‘Unqualified’ as this ensures complete assent to terms of the offer (i.e. offeree can’t
agree to some bits and not others)
Law takes the view that you need to have let the offeror know that you agree to the terms
of their offer – otherwise they wouldn’t know whether they’re bound by a contract or not
o Law requires the acceptance to be communicated to the offeror
Issue of communication when both parties aren’t in close proximity is tough – do we treat
contents of a letter as communicated when its posted/arrived/read/replied to?
o Requirement for communication of acceptance is only a general rule
4 – Termination of Offer
This is ways in which an offer can cease to be “on the table”
3 main ways an offer can disappear
Revocation = where the offeror takes the offer off the table
o Successful revocation (withdrawal) requires the revocation of the offer to be
communicated to the offeree – it’s still open for acceptance until the offeree is told
otherwise
Rejection = where the offeree sweeps the offer off the table
o Express rejection of offer brings it to an end – you can’t later change your mind and
accept
o Counteroffers impliedly rejects a previous offer (settled law), but often hard to tell if
a response to an offer is actually a counteroffer, or just a request for more info about
the offer
“Would you take £X instead?” = seen as a proposal of its own (counter)
“Would you be prepared to come down a bit on that?” = exploratory enquiry
Lapse = where the offer disappears from the table by itself
6 – Agreements
Some agreements are meant to be legally binding (buying a car from dealership), whereas
others aren’t (agreement with girlfriend about chores)
Commercial agreements = agreements between individuals (could be between individuals
not in business) and businesses – e.g. buying something in a shop
o Presumption of intention to create legal relations
Domestic agreements = agreements where there is some other relationship between the
parties (e.g. family members or close friends)
o Presumption of no intention to create legal relations
Both these presumptions are rebuttable – whether there is (not) intention to create legal
relations is based on a case-by-case basis
There have been few cases involving commercial agreements where the presumption of
intention to create legal relations has been successfully rebutted
A clear statement that the agreement isn’t meant to be legally binding would work
2
