© strawberrywaffles 2025
Contract Formation
Valid contract:
1. agreement comprising a valid offer and acceptance,
2. consideration – must be sufficient but need not be adequate,
3. both parties must have capacity to contract and
4. intent that their agreement be legally binding (intention to create legal relations).
Offer & Acceptance
Objective approach. No such thing as “I did not intend to contract”.
1. Is the advert/notice/letter/statement an offer or an invitation to treat (ITT)?
Is there a clear and certain offer displaying an intention to be bound?
- Certainty: court cannot enforce uncertain/incomplete agreements
o Agreement on “hire-purchase” terms was too uncertain
o Agreement on “industry standard” terms too uncertain
o Agreement to buy “timber of fair specification” was enforceable – the words
could give a reasonable meaning, in light of the parties’ past dealings, that the
agreement was binding
- Intention to be bound:
o Storer: clerk said he was enclosing an agreement of sale → offer.
o Gibson: Council merely indicated a price on which they “may be prepared to
sell” the house to Gibson → NOT an offer.
Usually will be an ITT:
1. Advertisements
a. Exception: an advertisement may apply to a unilateral offer (Carlill v Carbolic
Smoke Ball Co) where two requirements are met:
i. Clear prescribed act → performance of which constituted
acceptance.
,© strawberrywaffles 2025
1. E.g. using smoke balls in a specified manner for a specified
period but still contracting influenza
2. E.g. “first come first served” → performance: first to arrive
ii. Clear intention to be bound (defendant deposited £1000 in the bank,
and certainty of language used in the advertisement)
1. Similar reasoning applies to ads offering reward for the return
of lost property, where there is a conditional promise which will
be turned into a binding contract when property is returned.
2. display of goods in person or online (on websites),
a. the words “special offer” does NOT mean it’s an offer.
3. invitations to tender
a. Bids = offers.
i. Referential bids are not valid offers.
b. Where invitation to tender explicitly contains an undertaking to accept the
highest or lowest bid, the party requesting tenders has made an offer to
enter into a unilateral contract with the party submitting the required bid.
c. Exception: invitation to tender could give rise to a binding contract to
consider tenders where:
i. Tenders had been solicited from specified parties who were known
to the requesting party,
ii. There was an absolute deadline for submission, and
iii. The party requesting tenders had laid down absolute and non-
negotiable conditions for submission.
4. Auctions
Auctions with reserve Auctions without reserve
Reserve price = minimum amount that Sold to highest bidder, regardless of the
owner will accept as the winning bid. price. Auctioneer can be sued for breach of
contract damages if they refuse to sell to
the highest bona fide bidder.
Bids = offers.
- NB: remedy cannot be for highest
Fall of the hammer = acceptance.
bidder to obtain the goods.
,© strawberrywaffles 2025
Two contracts:
- Bilateral contract (same as auction
without reserve)
- Unilateral contract that auction will
be without reserve
Have been held as offers:
- Publishing a train timetable → customer purchasing ticket constitutes acceptance
- Running a bus is an offer, which the customer accepts upon boarding
- Signs about parking prices in a carpark are offers, which the customer accepts upon
entering the carpark
Unilateral vs bilateral contract
- Bilateral contract e.g. contract for sale of car (mutual promises)
o “In 10 days’ time, you will deliver a watch to me and I will pay £100.”
- Unilateral contract e.g. person putting up notice for reward to find lost pet
o “If you deliver a watch to me in the next 10 days, I will pay you £100.”
o Person putting up the notice: offeror (he’s the only one promising)
o Person who finds lost pet: accepts the offer by performing
2. Is the acceptance a mirror image (unqualified)?
NO SUCH THING AS CONDITIONAL ACCEPTANCE.
Not acceptance:
- Counter offers – alternative terms e.g. subject to inspection / different price
o Extinguishes original offer – can no longer be accepted
o Asking about delivery (sale of goods) usually not a counter-offer but valid
acceptance
- Requests for further information
o Leaves original offer open
- Cross-offers
, © strawberrywaffles 2025
3. Is acceptance in response to the offer?
Acceptance must be in response to the offer.
- Offer can't be accepted in ignorance of the offer.
- Offer can only be accepted by the person to whom it was made (not just because you
overheard/had notice of it).
- Possible to make an offer to the whole world, in which case anyone with notice of the
offer can accept it (Carlill v Carbolic Smoke Ball).
4. Is acceptance made using a valid mode of acceptance?
- Mandatory language e.g. “must”
- Must also explicitly exclude other
modes e.g. “no other mode is accepted”
If the offeror fails to use mandatory language and exclude other modes explicitly then they
will find themselves bound by any mode that is no less advantageous.
5. Is acceptance communicated?
Exception: communication of acceptance is waived in unilateral contracts e.g. lost property
reward (Carlill v Carbolic Smoke Ball) → performance = acceptance
No such thing as acceptance by silence.
Acceptance via post is binding upon posting (Adams v Lindsell).
Contract Formation
Valid contract:
1. agreement comprising a valid offer and acceptance,
2. consideration – must be sufficient but need not be adequate,
3. both parties must have capacity to contract and
4. intent that their agreement be legally binding (intention to create legal relations).
Offer & Acceptance
Objective approach. No such thing as “I did not intend to contract”.
1. Is the advert/notice/letter/statement an offer or an invitation to treat (ITT)?
Is there a clear and certain offer displaying an intention to be bound?
- Certainty: court cannot enforce uncertain/incomplete agreements
o Agreement on “hire-purchase” terms was too uncertain
o Agreement on “industry standard” terms too uncertain
o Agreement to buy “timber of fair specification” was enforceable – the words
could give a reasonable meaning, in light of the parties’ past dealings, that the
agreement was binding
- Intention to be bound:
o Storer: clerk said he was enclosing an agreement of sale → offer.
o Gibson: Council merely indicated a price on which they “may be prepared to
sell” the house to Gibson → NOT an offer.
Usually will be an ITT:
1. Advertisements
a. Exception: an advertisement may apply to a unilateral offer (Carlill v Carbolic
Smoke Ball Co) where two requirements are met:
i. Clear prescribed act → performance of which constituted
acceptance.
,© strawberrywaffles 2025
1. E.g. using smoke balls in a specified manner for a specified
period but still contracting influenza
2. E.g. “first come first served” → performance: first to arrive
ii. Clear intention to be bound (defendant deposited £1000 in the bank,
and certainty of language used in the advertisement)
1. Similar reasoning applies to ads offering reward for the return
of lost property, where there is a conditional promise which will
be turned into a binding contract when property is returned.
2. display of goods in person or online (on websites),
a. the words “special offer” does NOT mean it’s an offer.
3. invitations to tender
a. Bids = offers.
i. Referential bids are not valid offers.
b. Where invitation to tender explicitly contains an undertaking to accept the
highest or lowest bid, the party requesting tenders has made an offer to
enter into a unilateral contract with the party submitting the required bid.
c. Exception: invitation to tender could give rise to a binding contract to
consider tenders where:
i. Tenders had been solicited from specified parties who were known
to the requesting party,
ii. There was an absolute deadline for submission, and
iii. The party requesting tenders had laid down absolute and non-
negotiable conditions for submission.
4. Auctions
Auctions with reserve Auctions without reserve
Reserve price = minimum amount that Sold to highest bidder, regardless of the
owner will accept as the winning bid. price. Auctioneer can be sued for breach of
contract damages if they refuse to sell to
the highest bona fide bidder.
Bids = offers.
- NB: remedy cannot be for highest
Fall of the hammer = acceptance.
bidder to obtain the goods.
,© strawberrywaffles 2025
Two contracts:
- Bilateral contract (same as auction
without reserve)
- Unilateral contract that auction will
be without reserve
Have been held as offers:
- Publishing a train timetable → customer purchasing ticket constitutes acceptance
- Running a bus is an offer, which the customer accepts upon boarding
- Signs about parking prices in a carpark are offers, which the customer accepts upon
entering the carpark
Unilateral vs bilateral contract
- Bilateral contract e.g. contract for sale of car (mutual promises)
o “In 10 days’ time, you will deliver a watch to me and I will pay £100.”
- Unilateral contract e.g. person putting up notice for reward to find lost pet
o “If you deliver a watch to me in the next 10 days, I will pay you £100.”
o Person putting up the notice: offeror (he’s the only one promising)
o Person who finds lost pet: accepts the offer by performing
2. Is the acceptance a mirror image (unqualified)?
NO SUCH THING AS CONDITIONAL ACCEPTANCE.
Not acceptance:
- Counter offers – alternative terms e.g. subject to inspection / different price
o Extinguishes original offer – can no longer be accepted
o Asking about delivery (sale of goods) usually not a counter-offer but valid
acceptance
- Requests for further information
o Leaves original offer open
- Cross-offers
, © strawberrywaffles 2025
3. Is acceptance in response to the offer?
Acceptance must be in response to the offer.
- Offer can't be accepted in ignorance of the offer.
- Offer can only be accepted by the person to whom it was made (not just because you
overheard/had notice of it).
- Possible to make an offer to the whole world, in which case anyone with notice of the
offer can accept it (Carlill v Carbolic Smoke Ball).
4. Is acceptance made using a valid mode of acceptance?
- Mandatory language e.g. “must”
- Must also explicitly exclude other
modes e.g. “no other mode is accepted”
If the offeror fails to use mandatory language and exclude other modes explicitly then they
will find themselves bound by any mode that is no less advantageous.
5. Is acceptance communicated?
Exception: communication of acceptance is waived in unilateral contracts e.g. lost property
reward (Carlill v Carbolic Smoke Ball) → performance = acceptance
No such thing as acceptance by silence.
Acceptance via post is binding upon posting (Adams v Lindsell).
