Contract Law Lecture 3
Contract Formation
Two parties must agree on what they are doing, consensus between two parties of contract
formation, consideration must be in place and must have special form and have intention to create
legal relations. Particular contracts must have certain formats. Capacity, member of contract must
have capacity to do so, ie being an adult and mentally capable. Capacity - in practice - is more often
than not ignored and voided and instead used in terms of a defence, ie individual could not enter into
contract as individual was a child.
Offer
Offer of the terms of contract and agreement, two step formation of contract. Did the parties reach
agreement, if so when did the contract come into existence, what are the terms, all can be answered
with the two step of offer and acceptance.
An offer is an unequivocal willingness to be bound legally upon agreement by external party, you can
make offer and give risk of agreement if you want to back out, putting offerer on risk. Contrasts with
Joke/sales-talk, and invitation to treat (negotiation, suggesting an interest into contract but not
actually making commitment), and supply of information (stating information of deal is not
contractual).
Offers vs puff talk
C may contend that D’s statement was an offer, and D may argue ,no, that is taking it too seriously.
In Carlill v Carbolic Smoke Ball Co (1893), D argued that its newspaper advert, which promising a
payout if its product was used and failed to prevent illness, was just puff.
Here the CoA disagreed given the clear language of the ad, “It was intended to be understood by the
public as an offer which was to be acted upon.”
“Puff” vs legal effect as a term/representation
In Carlill, the issue was whether there was an offer and hence whether there was a contract at all.
Looking ahead, a similar point can arise where a contract definitely was concluded but the issue is
whether a statement made beforehand was a term, or no legal effect at all.
Offer vs invitations to treat
Language of the word offer is not decisive but the language is still crucial, if it intends further
negotiation it is not an offer. Clear language of offer or modals is offer, seen in Storer v Manchester
CC - However in Gibson v Manchester CC, language like may or might with more ambiguity is held
not to be an offer.
Offer vs Supply of information
In Harvey v Facey the following telegram exchange occured:
C: “Will you sell us [name of property]? Telegraph lowest cash price – answer paid”
D: “Lowest price for [name of property] £900”
C: “We agree to buy [name of property] for the sum of [£900]…” - Here an offer made, as it is stating
contents, however there was no contract because the other party never accepted
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Contract Formation
Two parties must agree on what they are doing, consensus between two parties of contract
formation, consideration must be in place and must have special form and have intention to create
legal relations. Particular contracts must have certain formats. Capacity, member of contract must
have capacity to do so, ie being an adult and mentally capable. Capacity - in practice - is more often
than not ignored and voided and instead used in terms of a defence, ie individual could not enter into
contract as individual was a child.
Offer
Offer of the terms of contract and agreement, two step formation of contract. Did the parties reach
agreement, if so when did the contract come into existence, what are the terms, all can be answered
with the two step of offer and acceptance.
An offer is an unequivocal willingness to be bound legally upon agreement by external party, you can
make offer and give risk of agreement if you want to back out, putting offerer on risk. Contrasts with
Joke/sales-talk, and invitation to treat (negotiation, suggesting an interest into contract but not
actually making commitment), and supply of information (stating information of deal is not
contractual).
Offers vs puff talk
C may contend that D’s statement was an offer, and D may argue ,no, that is taking it too seriously.
In Carlill v Carbolic Smoke Ball Co (1893), D argued that its newspaper advert, which promising a
payout if its product was used and failed to prevent illness, was just puff.
Here the CoA disagreed given the clear language of the ad, “It was intended to be understood by the
public as an offer which was to be acted upon.”
“Puff” vs legal effect as a term/representation
In Carlill, the issue was whether there was an offer and hence whether there was a contract at all.
Looking ahead, a similar point can arise where a contract definitely was concluded but the issue is
whether a statement made beforehand was a term, or no legal effect at all.
Offer vs invitations to treat
Language of the word offer is not decisive but the language is still crucial, if it intends further
negotiation it is not an offer. Clear language of offer or modals is offer, seen in Storer v Manchester
CC - However in Gibson v Manchester CC, language like may or might with more ambiguity is held
not to be an offer.
Offer vs Supply of information
In Harvey v Facey the following telegram exchange occured:
C: “Will you sell us [name of property]? Telegraph lowest cash price – answer paid”
D: “Lowest price for [name of property] £900”
C: “We agree to buy [name of property] for the sum of [£900]…” - Here an offer made, as it is stating
contents, however there was no contract because the other party never accepted
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