CONTRACTS
1) Offer
A valid contract requires an offer, acceptance and consideration. An offer requires three elements.
Firstly, there must be a promise or undertaking with an intent to make an offer. Such intent is
generally derived from the language of the offer. Expressions such as ‘I offer’ or ‘I promise to’ will
suffice as an intent to make an offer, rather than ‘I hope’ or ‘I would’. An intent to make an offer
can also be considered by the circumstances of the contract or the parties, the parties’ previous
dealings or the method of communication where the power of acceptance lies with the offeree.
Unilateral offers include contests/prizes/rewards, but not advertisements which are seen as mere
invitations. Furthermore, a signed offer may count as an intent to make an offer, rather than a
proposal requiring the signatures of both parties.
Secondly, there must be certainty regarding the terms of the offer. For services contracts, the
contract must include the parties’ identities, subject matter, price and quantity. For real estate
contracts, it is imperative that it includes the land description, parties’ identities and price of the
property to be sold. For sale of goods contracts, only the quantity is required. Whereas other
missing terms may be filled by UCC gap-filler terms as reasonably appropriate. Where terms are
vague, part performance by the parties may be used to determine the meaning of the terms. For
requirements contracts or output contracts, the quantity of goods to be sold does not have to be
certain. It may be ascertained in good faith based on any previous dealings, anticipated amounts or
statutory requirements.
Lastly, the offer must be communicated to the offeree. This means that the offeree must have actual
knowledge of the offer’s contents, rather than just receiving the offer.
2) Termination
Although an offeror makes an offer, it may be terminated before the offeree accepts it. An offer can
be terminated by law where the offer becomes illegal after it was made, the offeror dies or becomes
insane (unless an option contract is made), or the subject matter of the offer is destroyed.
An offer may also be terminated by the parties themselves. The offeror may terminate an offer by
expressly communicating to the offeree that he wants to revoke the offer. Alternatively, the offeree
may receive notice from a reliable third party source that the offer is terminated and a reasonable
person would conclude that based on the offeree’s conduct the offer was terminated. Public offers
may be terminated by either the same or comparable means as the offer was made. However, there
are limitations as to when an offer may be terminated by the offeror. Clearly an offeree who has no
notice of the revocation of the offer will continue to recognise the offer. Also, an options contract
cannot be terminated by the offeror. This is a separate contract where the offeror promises to keep
his offer open for a specific period of time and the offeree gives in return consideration. An offer
may remain open without consideration if it is made for sale of goods under Article 2 UCC, in
which the offeror is a merchant (not a salesman) and he makes a signed writing promising to keep
the offer open. This is known as the ‘Merchant Firm Offer Rule’ (MFOR). The offeror may keep
the offer open for a maximum of three months. If the period goes beyond such limit, it will remain
open up to three months and become revocable after three months. However, this still means that
the offer is open after such period, until the offeror actually revokes the offer. If there is no
specified period, the offer will be open for a reasonable period of time. Moreover, an offer may
1) Offer
A valid contract requires an offer, acceptance and consideration. An offer requires three elements.
Firstly, there must be a promise or undertaking with an intent to make an offer. Such intent is
generally derived from the language of the offer. Expressions such as ‘I offer’ or ‘I promise to’ will
suffice as an intent to make an offer, rather than ‘I hope’ or ‘I would’. An intent to make an offer
can also be considered by the circumstances of the contract or the parties, the parties’ previous
dealings or the method of communication where the power of acceptance lies with the offeree.
Unilateral offers include contests/prizes/rewards, but not advertisements which are seen as mere
invitations. Furthermore, a signed offer may count as an intent to make an offer, rather than a
proposal requiring the signatures of both parties.
Secondly, there must be certainty regarding the terms of the offer. For services contracts, the
contract must include the parties’ identities, subject matter, price and quantity. For real estate
contracts, it is imperative that it includes the land description, parties’ identities and price of the
property to be sold. For sale of goods contracts, only the quantity is required. Whereas other
missing terms may be filled by UCC gap-filler terms as reasonably appropriate. Where terms are
vague, part performance by the parties may be used to determine the meaning of the terms. For
requirements contracts or output contracts, the quantity of goods to be sold does not have to be
certain. It may be ascertained in good faith based on any previous dealings, anticipated amounts or
statutory requirements.
Lastly, the offer must be communicated to the offeree. This means that the offeree must have actual
knowledge of the offer’s contents, rather than just receiving the offer.
2) Termination
Although an offeror makes an offer, it may be terminated before the offeree accepts it. An offer can
be terminated by law where the offer becomes illegal after it was made, the offeror dies or becomes
insane (unless an option contract is made), or the subject matter of the offer is destroyed.
An offer may also be terminated by the parties themselves. The offeror may terminate an offer by
expressly communicating to the offeree that he wants to revoke the offer. Alternatively, the offeree
may receive notice from a reliable third party source that the offer is terminated and a reasonable
person would conclude that based on the offeree’s conduct the offer was terminated. Public offers
may be terminated by either the same or comparable means as the offer was made. However, there
are limitations as to when an offer may be terminated by the offeror. Clearly an offeree who has no
notice of the revocation of the offer will continue to recognise the offer. Also, an options contract
cannot be terminated by the offeror. This is a separate contract where the offeror promises to keep
his offer open for a specific period of time and the offeree gives in return consideration. An offer
may remain open without consideration if it is made for sale of goods under Article 2 UCC, in
which the offeror is a merchant (not a salesman) and he makes a signed writing promising to keep
the offer open. This is known as the ‘Merchant Firm Offer Rule’ (MFOR). The offeror may keep
the offer open for a maximum of three months. If the period goes beyond such limit, it will remain
open up to three months and become revocable after three months. However, this still means that
the offer is open after such period, until the offeror actually revokes the offer. If there is no
specified period, the offer will be open for a reasonable period of time. Moreover, an offer may
