Law of Contract – Exam Document
Offer and Acceptance
Offer / Invitation
“Does the maker of the statement objectively intend to be bound by an acceptance of what
they are doing?” – Gibson
The following are offers:
1. Displayed charges on automatic machines (Thornton)
2. Adverts for unilateral contracts with evidence of intention to be bound (Carlill)
a. Burrows (2020): Difficult to disentangle the reasoning here from certainty and
ICLR questions.
3. Requests for tenders where bound to accept the highest bid:
a. Impliedly: Blackpool and Fylde Aero Club.
b. Explicitly: Harvela Investments.
4. Responses to invitations to tenders (Spencer)
The following are invitations to treat:
1. Displays of goods (Pharmaceutical Society; Fisher)
2. Adverts for bilateral contracts (Partridge)
3. Adverts for auctions held without reserve (Barry)
4. Requests for tenders without statement that the highest bid will be accepted (Harvela
Investments).
Acceptance (Bilateral)
A valid acceptance must:
1. Mirror the terms of the offer (Hyde).
2. Be made in response to a known offer (Clarke), irrespective of motive (Williams).
a. Or, in the alternative, there must be an intention formed between the time of
acceptance and the receipt of that to the offeror (Gibbons).
3. Where relevant, be made in a form clearly specified by the offeror, and otherwise in
any form other than unreasonable silence (Felthouse). Conduct can suffice
(Brogden).
4. Be communicated to the offeror, which is taken to have happened upon receipt
(Entores; Brinkibon) or at the next business hour (The Brimnes; Mondial Shipping).
a. Or, where the acceptance is posted, it takes effect upon posting (Adams)
unless explicitly, and reasonably, said otherwise (Holwell Securities) or unless
it doesn’t arrive due to the acceptor’s fault, in which situations it takes effect
upon correction and arrival (Korbetis).
b. There is no authority on what happens if the acceptor tries to post a
withdrawal that overtakes the initial acceptance by post. Scots law says that
said withdrawal will be effective (Dunmore).
, 5. Where one party offers one set of terms and the other accepts with another, the latter
terms, if unequivocally accepted, prevail (Butler Machine Tool Co); otherwise, no
agreement prevails (Tekdata Interconnectors).
Acceptance (Unilateral)
Made by performance of the stipulated act, without need for communication (Carlill).
Contested whether this is upon commencement (Errington; Soulsbury) or completion
(Daulia).
Termination of Offer
Happens in 1 of 4 ways:
1. The offeror revokes, effective upon receipt (Byrne) and possibly done by agent
(Dickinson)
2. The offeree rejects, including by counter-offer
3. The offer lapses, by period of time, express or implied condition, or after reasonable
time.
4. One or both parties die.
Certainty
Voidness for Uncertainty
Contracts may be held “void for uncertainty” if—
1. They do not stipulate the kind of ‘hire-purchase’ they are: Ouston (1941)
2. They do not specify a period of time over which an agreed action will be done: Blue
(2017)
3. They contain vague references with respect to how due sums are to be calculated
that are not practicable: Kyte (2018)
4. They contain unspecific references to the relevant subject matter that cannot be
ascertained by implication: George (2018)
5. They contain agreements to do things upon vague condition consequents, like ‘if C
doesn’t do anything silly’: Broomhead (2018)
6. They contain agreements subject to one of the parties’ satisfaction: The Nissos
Samos (1985).
7. They are “subject to war clause”: Bishop & Baxter (1944).
8. They are “subject to strike and lock out clause”: Love & Stewart (1917)
9. They are “subject to force majeure conditions”: British Electrical (1953)
Where they are not sufficiently certain, the court will almost always be compelled to “fill the
gaps”:
“Gap-Fill” Contracts
, 1. Partly performed agreements, because
a. Performance aids gap-filling: G Percy Trentham (1993)
b. The parties have acted on the agreement: F&G Sykes (1967)
2. Contracts where there are previous dealings between the parties:
a. Hillas & Co (1932): past meaning can be carried over to present language
3. Standard types of agreement
4. Long-term contracts
5. By machinery laid out in agreements
Specific Thorny Agreements
1. Agreements to agree
a. May & Butcher (1934): “it is not open to [the parties] to agree that they will in
the future agree upon a matter which is vital to the arrangement between
them and is not yet determined”
b. But note exceptions to May & Butcher:
i. Where one party determines it: Queensland EGB (1989)
1. Should they fail, court will imply reasonable term if they are at
fault: Eggleton (1983)
2. But should the machinery fail with no attempt made to use it,
courts don’t help: Gillatt (2000)
ii. Arbitration clauses: Foley (1934)
2. Agreements to negotiate
a. Courtney & Fairbairn (1975): “too uncertain”; upheld: Walford (1992)
b. Cable & Wireless (2002): ADR clause = exception to the rule
c. Associated British Ports (2017): renegotiation clause = exception
d. Petromec Inc (2005): complex agreement drafted by top lawyers contained
express duty to negotiate in good faith = exception
3. Agreements to perform in good faith
a. Chelsea Barracks case (2010): “utmost good faith” performance clause was
upheld.
b. Berkeley Community Villages (2007): as above.
c. Mid Essex Hospital Services NHS Trust (2013): “to act honestly in pursuit of
the objective in question” clause upheld.
d. Barbudev (2012): separate document with agreement to negotiate in good
faith = not upheld.
e. Shaker (2012): separate document with agreement to “proceed in good faith
and use reasonable endeavours to agree” = not upheld.
4. Agreements to use “reasonable / best endeavours to agree”
a. Courts typically allow clauses to “use best endeavours” with regard to some
aspect of performance on the condition that they get to set out what it would
require: Yewbelle (2007), Jet2.com (2012).
b. But where the endeavours are “to agree” or “to negotiate” the clause is
usually unenforceable: Little (1994), London & Regional Investments (2002).
c. The exception would seem to be where the guidelines as to how the
agreement would be reached are capable of being formulated by the court:
Queensland EGB (1989).
d. Where such an agreement allows the parties to take into account their
financial positions, it seems to be taken as not sufficiently certain in its criteria:
Phillips Petroleum (1997).
e. There must be certainty as to what the object of the reasonable endeavours
is, and a yardstick by which to measure them: Dany Lions ltd (2014).
5. Lock out agreements
, a. Will be valid if it specifies how long the must is not to negotiate with others for:
Pitt (1993)
b. If it does not do that, it is never valid: Walford (1992)
Commercial Contracts and Rendering Certainty
It is clear from Hillas & Co (1932) that commercial contracts are permitted to be recorded “in
crude and summary fashion” and that such agreements are unlikely to be held void for
uncertainty unless there is a lack of clarity such that “it [is] legally or practically impossible to
give to the parties’ agreement any sensible content”: Scammell (2005). In that case, Rix LJ
said “that is certain which can be rendered certain”.
How will the courts render things certain?
1. With reference to custom and trade usage
a. Shamrock SS Co (1899): terms usually contained in such guarantees
b. Bayham (1995): with reference to relevant circumstances
c. Nautica Marine (2020): with reference to customary use by parties like the
claimant
d. Ashburn Anstalt (1989): where the uncertain phrase was commonly used in
the trade and so ascertainable by an expert
2. Reasonableness
a. Hillas & Co (1932): contract for subject matter “of fair specification” was
upheld because the phrase imported an objective standard for assessing the
quality of the goods supplied.
b. Baird Textile Holdings (2001): supplier claimed there was an implied contract
‘not to terminate except on reasonable notice’. The CA refuted the claim:
there was no objective standard by which to ascertain what ‘reasonable’
meant here.
c. Willis Management (2005): unqualified commitments to “pay a fair share”,
even when they specify that the parties are to draw up principles by which to
ascertain such a figure, are nothing more than unenforceable ‘agreements to
agree’.
3. Duties to resolve uncertainty
a. Where the contract provides that one of the parties must act so as to resolve
the uncertainty, as by:
i. Picking the port of shipment: David T Boyd & Co (1973)
ii. Selecting a hospital at which to operate: Palmer (2006)
iii. Specifying place of delivery: Bulk Trading Corp (2001)
iv. Flying a before-unspecified amount of times: Durham Tees Valley
Airport (2010)
4. Where there are meaningless and self-contradictory phrases
a. Considerable efforts to give them meaning: The Tropwind (1982)
b. Meaningless terms do not vitiate an agreement however: Nicolene (1953)
c. Nor do self-contradictory ones: EJR Lovelock (1968); The Star Texas (1993).
d. Conflicting provisions can be resolved either by parties via interpretation, or at
a tribunal: Scammell (2005).
e. “If the parties intend it to govern some vital aspect of their relationship its
vagueness will vitiate” (Chitty, 4-190).
5. Vague subsidiary terms
a. Does not vitiate agreement as a whole: Pena (2003)
Offer and Acceptance
Offer / Invitation
“Does the maker of the statement objectively intend to be bound by an acceptance of what
they are doing?” – Gibson
The following are offers:
1. Displayed charges on automatic machines (Thornton)
2. Adverts for unilateral contracts with evidence of intention to be bound (Carlill)
a. Burrows (2020): Difficult to disentangle the reasoning here from certainty and
ICLR questions.
3. Requests for tenders where bound to accept the highest bid:
a. Impliedly: Blackpool and Fylde Aero Club.
b. Explicitly: Harvela Investments.
4. Responses to invitations to tenders (Spencer)
The following are invitations to treat:
1. Displays of goods (Pharmaceutical Society; Fisher)
2. Adverts for bilateral contracts (Partridge)
3. Adverts for auctions held without reserve (Barry)
4. Requests for tenders without statement that the highest bid will be accepted (Harvela
Investments).
Acceptance (Bilateral)
A valid acceptance must:
1. Mirror the terms of the offer (Hyde).
2. Be made in response to a known offer (Clarke), irrespective of motive (Williams).
a. Or, in the alternative, there must be an intention formed between the time of
acceptance and the receipt of that to the offeror (Gibbons).
3. Where relevant, be made in a form clearly specified by the offeror, and otherwise in
any form other than unreasonable silence (Felthouse). Conduct can suffice
(Brogden).
4. Be communicated to the offeror, which is taken to have happened upon receipt
(Entores; Brinkibon) or at the next business hour (The Brimnes; Mondial Shipping).
a. Or, where the acceptance is posted, it takes effect upon posting (Adams)
unless explicitly, and reasonably, said otherwise (Holwell Securities) or unless
it doesn’t arrive due to the acceptor’s fault, in which situations it takes effect
upon correction and arrival (Korbetis).
b. There is no authority on what happens if the acceptor tries to post a
withdrawal that overtakes the initial acceptance by post. Scots law says that
said withdrawal will be effective (Dunmore).
, 5. Where one party offers one set of terms and the other accepts with another, the latter
terms, if unequivocally accepted, prevail (Butler Machine Tool Co); otherwise, no
agreement prevails (Tekdata Interconnectors).
Acceptance (Unilateral)
Made by performance of the stipulated act, without need for communication (Carlill).
Contested whether this is upon commencement (Errington; Soulsbury) or completion
(Daulia).
Termination of Offer
Happens in 1 of 4 ways:
1. The offeror revokes, effective upon receipt (Byrne) and possibly done by agent
(Dickinson)
2. The offeree rejects, including by counter-offer
3. The offer lapses, by period of time, express or implied condition, or after reasonable
time.
4. One or both parties die.
Certainty
Voidness for Uncertainty
Contracts may be held “void for uncertainty” if—
1. They do not stipulate the kind of ‘hire-purchase’ they are: Ouston (1941)
2. They do not specify a period of time over which an agreed action will be done: Blue
(2017)
3. They contain vague references with respect to how due sums are to be calculated
that are not practicable: Kyte (2018)
4. They contain unspecific references to the relevant subject matter that cannot be
ascertained by implication: George (2018)
5. They contain agreements to do things upon vague condition consequents, like ‘if C
doesn’t do anything silly’: Broomhead (2018)
6. They contain agreements subject to one of the parties’ satisfaction: The Nissos
Samos (1985).
7. They are “subject to war clause”: Bishop & Baxter (1944).
8. They are “subject to strike and lock out clause”: Love & Stewart (1917)
9. They are “subject to force majeure conditions”: British Electrical (1953)
Where they are not sufficiently certain, the court will almost always be compelled to “fill the
gaps”:
“Gap-Fill” Contracts
, 1. Partly performed agreements, because
a. Performance aids gap-filling: G Percy Trentham (1993)
b. The parties have acted on the agreement: F&G Sykes (1967)
2. Contracts where there are previous dealings between the parties:
a. Hillas & Co (1932): past meaning can be carried over to present language
3. Standard types of agreement
4. Long-term contracts
5. By machinery laid out in agreements
Specific Thorny Agreements
1. Agreements to agree
a. May & Butcher (1934): “it is not open to [the parties] to agree that they will in
the future agree upon a matter which is vital to the arrangement between
them and is not yet determined”
b. But note exceptions to May & Butcher:
i. Where one party determines it: Queensland EGB (1989)
1. Should they fail, court will imply reasonable term if they are at
fault: Eggleton (1983)
2. But should the machinery fail with no attempt made to use it,
courts don’t help: Gillatt (2000)
ii. Arbitration clauses: Foley (1934)
2. Agreements to negotiate
a. Courtney & Fairbairn (1975): “too uncertain”; upheld: Walford (1992)
b. Cable & Wireless (2002): ADR clause = exception to the rule
c. Associated British Ports (2017): renegotiation clause = exception
d. Petromec Inc (2005): complex agreement drafted by top lawyers contained
express duty to negotiate in good faith = exception
3. Agreements to perform in good faith
a. Chelsea Barracks case (2010): “utmost good faith” performance clause was
upheld.
b. Berkeley Community Villages (2007): as above.
c. Mid Essex Hospital Services NHS Trust (2013): “to act honestly in pursuit of
the objective in question” clause upheld.
d. Barbudev (2012): separate document with agreement to negotiate in good
faith = not upheld.
e. Shaker (2012): separate document with agreement to “proceed in good faith
and use reasonable endeavours to agree” = not upheld.
4. Agreements to use “reasonable / best endeavours to agree”
a. Courts typically allow clauses to “use best endeavours” with regard to some
aspect of performance on the condition that they get to set out what it would
require: Yewbelle (2007), Jet2.com (2012).
b. But where the endeavours are “to agree” or “to negotiate” the clause is
usually unenforceable: Little (1994), London & Regional Investments (2002).
c. The exception would seem to be where the guidelines as to how the
agreement would be reached are capable of being formulated by the court:
Queensland EGB (1989).
d. Where such an agreement allows the parties to take into account their
financial positions, it seems to be taken as not sufficiently certain in its criteria:
Phillips Petroleum (1997).
e. There must be certainty as to what the object of the reasonable endeavours
is, and a yardstick by which to measure them: Dany Lions ltd (2014).
5. Lock out agreements
, a. Will be valid if it specifies how long the must is not to negotiate with others for:
Pitt (1993)
b. If it does not do that, it is never valid: Walford (1992)
Commercial Contracts and Rendering Certainty
It is clear from Hillas & Co (1932) that commercial contracts are permitted to be recorded “in
crude and summary fashion” and that such agreements are unlikely to be held void for
uncertainty unless there is a lack of clarity such that “it [is] legally or practically impossible to
give to the parties’ agreement any sensible content”: Scammell (2005). In that case, Rix LJ
said “that is certain which can be rendered certain”.
How will the courts render things certain?
1. With reference to custom and trade usage
a. Shamrock SS Co (1899): terms usually contained in such guarantees
b. Bayham (1995): with reference to relevant circumstances
c. Nautica Marine (2020): with reference to customary use by parties like the
claimant
d. Ashburn Anstalt (1989): where the uncertain phrase was commonly used in
the trade and so ascertainable by an expert
2. Reasonableness
a. Hillas & Co (1932): contract for subject matter “of fair specification” was
upheld because the phrase imported an objective standard for assessing the
quality of the goods supplied.
b. Baird Textile Holdings (2001): supplier claimed there was an implied contract
‘not to terminate except on reasonable notice’. The CA refuted the claim:
there was no objective standard by which to ascertain what ‘reasonable’
meant here.
c. Willis Management (2005): unqualified commitments to “pay a fair share”,
even when they specify that the parties are to draw up principles by which to
ascertain such a figure, are nothing more than unenforceable ‘agreements to
agree’.
3. Duties to resolve uncertainty
a. Where the contract provides that one of the parties must act so as to resolve
the uncertainty, as by:
i. Picking the port of shipment: David T Boyd & Co (1973)
ii. Selecting a hospital at which to operate: Palmer (2006)
iii. Specifying place of delivery: Bulk Trading Corp (2001)
iv. Flying a before-unspecified amount of times: Durham Tees Valley
Airport (2010)
4. Where there are meaningless and self-contradictory phrases
a. Considerable efforts to give them meaning: The Tropwind (1982)
b. Meaningless terms do not vitiate an agreement however: Nicolene (1953)
c. Nor do self-contradictory ones: EJR Lovelock (1968); The Star Texas (1993).
d. Conflicting provisions can be resolved either by parties via interpretation, or at
a tribunal: Scammell (2005).
e. “If the parties intend it to govern some vital aspect of their relationship its
vagueness will vitiate” (Chitty, 4-190).
5. Vague subsidiary terms
a. Does not vitiate agreement as a whole: Pena (2003)
