BP0179636 Contract Law
An agreement between two parties is known as contract. In an
agreement one party must have made an offer and other must accepted it.
There are two types of contracts:
Bilateral contract: all the parties are assuming
an obligation under a contract. The offer is made to one or more than one
party. In bilateral contracts offeree can be selected people.
Unilateral contract: only one party can assumes
an obligation under a contract. The offer is made to general public at large.
In the case of Carl ill v Carbolic smoke ball1
the court held: “the advertisement did constitute an offer to the world at
large, which became a contract when it was accepted by Mrs. Carl ill using
smoke ball and getting flu. She was therefore entitling to the 100 pounds. The legal
principal of this case was the offer can be made to general public and accepted
when the offer is acted upon by a member of general public. Similarly, in Bower
man v ABTA ltd2
the court of appeal held that an ABTA notice that which was displayed on the
premises of a travel agent that was an ABTA member, constituted an offer (or
promise) of ABTA protection for customers performing an act namely, booking
holiday with that ABTA member. This was because the notice requested the
performance of an act as acceptance. However
an offer, it must be clear and definite in its term and leave nothing to open
Offer is the expression of willingness to contract on
certain terms. Offer must be made with an intention to binding upon acceptance.
If there is no intention to accept the offer than it is not a valid contract.
In the case of storer v Mcc 3
the court said, “There would be an offer where the parties have advanced beyond
the stage of negotiation but had not resulted in the exchange of contract.”
The person making an offer is called offeror where as the
person accepting the offer is offeree. Offer must be clear from all other
statements made in the negotiation towards a contract ( so called invitations
to treat) since only offer can be accepted and form a contract between two
An Invitations to Treat is the first step in negotiation. In
Partridge v Crittenden4
the court held ” the advertisement did not amount to an offer but merely an
invitation to treat”
An Invitation to Treat is where a party invite other party
to come and make an offer. For example; the goods on the shelf constitute an
invitation to treat. The customer take good from the shelf and make an offer to
the shop keeper, the shop keeper have and authority to accept it or not. So the
contract therefore concluded at the end, the customer pay the amount.
There is an exception of Invitation to treat where the
display is by a machine. In Thornton v Shoe Lane Parking Ltd5
it was held that the machine itself constituted the offer and acceptance took
place when the car driver put the money. The ticket came out after the acceptance
has been made. Therefore the clause was not a part of contract.
“Acceptance of an offer means unconditional agreement to all
the term of that offer. Acceptance can be oral or written. An acceptance is
voluntary act of the offeree whereby he exercise the power conferred upon him
by the offer and there by creates the set of the legal relations called a
In the case of Day Marris v Vogce7
the court held that a conduct will only amount to acceptance if it is clear
that offeree did an act in question with the intention of accepting the offer.
Acceptance plays a vital role in the contract. If there is
no intention to accept the offer then there is no binding. However acceptance
is necessary to form a contract. Once the offer is accepted the other is bind
to perform the duty.
In the case of President of Methodist conference v Proston8
the court held that the engagements between parties are highly informal to be
classified as contractual dealing.
Traditionally, agreement must be demonstrated by an
unequivocal offer made by one party complete acceptance of the offer by other
party. This approach is designed to promote certainty. However, it is clearly
artificial and inflexible and ignores the reality of the situation by dictating
that no agreement has been reached for purely technical reasons.
Lord Wilberforce in New Zealand Shipping v AM Satterthwaite,
admitted that it was recognized practice to seek to find the necessary offer
and acceptance when he said “English law is committed itself to a rather
technical and schematic doctrine of contract, in application take a practical
approach often at the cost of forcing the facts to fill uneasily into the
marked slot of offer, acceptance and consideration.
This statement was later used by Lord Denning MR to support
his view. In Butler Machine Tool Co. ltd v Ex Cell corporation ltd10
, Lord Denning suggested that the circumstances as a whole should be examined
in an attempt to discover agreement.
The house of Lord in Gibson11
was accepting that offer and acceptance was only mechanism for determining the
existence of contract.
Lord Diplock said; “there may be certain type of contract,
though I think they are exceptional, which do not fit easily into normal
analysis of contract as being constituted by offer and acceptance.
Moreover, there are some case in which contract is form
without an acceptance of the other party but performance has been done. For
example, smith lost his dog and put a poster on tree where he said whosoever
will find his dog he will give him/her 1000 pounds as a reward. Someone appear
on the door and delivered him the dog. There is no acceptance on this offer but
performance is made and this forms a contract.
The court might support traditional approaches but in
different situations court have also rejected this approach.
In conclusion, although there are instance in English law in
which the traditional offer and acceptance is made. The House of Lord said that
this is an exception in traditional approach of acceptance.
Carlill v Carbolic smoke ball 1893 1 QB 256
Bower man v ABTA ltd 1996 CLC 451
Partridge v Crittenden 1968 1 WLR 1204
Thornton v Shoe Lane Parking Ltd 1970 EWCA Civ 2
Day Marris v Vogce 2003 All ER CD 368
Lewis v Browing 1881
President of Methodist conference v Proston 1984 QB 368
Eurymedon 1975 AC 154
Butler Machine Tool Co. Ltd v Ex Cell Corporation Ltd 1979
Gibson 1979 1 WLR 294
(1893) 1 QB 256
(1996) CLC 451
(1974) 1 WLR 1403
(1968) 1 WLR 1204
5(1970) EWCA CIV 2
6 (1881) Lewis v Browing
(2003) All ER CD 368
(1984) QB 368
(1975) AC 154
(1979) 1 WLR 401
(1979) 1 WLR 294