An offer is a clear statement of willingness to contract on specific terms, made with the intention that it will become binding once accepted.

Key principles:

• The offer must be specific and communicated to the offeree.

• An invitation to treat (e.g. an advertisement or goods on display) is not an offer but an invitation to negotiate.

Cases:

• Fisher v Bell [1961] – Displaying a knife in a shop window was an invitation to treat, not an offer.

• Carlill v Carbolic Smoke Ball Co [1893] – Advertisement offering reward for using the product and catching influenza was a unilateral offer to the world.

Termination of an offer:

• Revocation (Routledge v Grant [1828]) – An offer can be withdrawn before acceptance.

• Rejection or counter-offer (Hyde v Wrench [1840]).

• Lapse of time or failure of condition.

Acceptance is an unqualified agreement to all the terms of the offer.

Key principles:

• Must correspond exactly to the offer (mirror image rule).

• Must be communicated to the offeror.

• Silence does not amount to acceptance (Felthouse v Bindley [1862]).

Communication rules:

• Acceptance by post: effective when posted, not when received (Adams v Lindsell [1818]).

• Acceptance by instantaneous means (e.g. email, fax): effective when received (Entores v Miles Far East Corp [1955]).

Consideration is the price paid for a promise. Each party must give something of value, money, goods, services, or a promise to do (or not do) something.

Key principles:

• Must move from the promisee (Tweddle v Atkinson [1861]).

• Must have some value, but need not be adequate (Chappell v Nestlé [1960]).

• Must not be past consideration – an act done before the promise cannot be used as consideration (Re McArdle [1951]).

• Performance of existing duties is usually not good consideration (Stilk v Myrick [1809]), unless something extra is given (Hartley v Ponsonby [1857]).

• Practical benefits can count as valid consideration (Williams v Roffey Bros [1991]).

Both parties must intend their agreement to be legally binding.

Presumptions:

• Social/domestic agreements: presumed not legally binding (Balfour v Balfour [1919]).

• Commercial agreements: presumed to be legally binding (Esso Petroleum v Commissioners of Customs and Excise [1976]).

These presumptions can be rebutted if clear evidence shows otherwise (Merritt v Merritt [1970] – separated spouses’ agreement was binding).

A contract must be sufficiently clear so that the court can determine the parties’ obligations.

Key points:

• Vague or incomplete terms make an agreement unenforceable (Scammell v Ouston [1941]).

• Courts can imply terms if the intention is clear and essential details can be worked out (Hillas v Arcos [1932]).

• Bilateral contracts – both parties make promises (e.g. sale of goods).

• Unilateral contracts – one party promises something in return for an act (e.g. reward cases such as Carlill).