Valid Offer and Acceptance in Contract Law

Introduction

In the Law of Contract, special predetermined agreements between the sides determine the existence of a contract. The importance of the contract refers to the necessity to identify both rights and obligation of the parties, which possibly allows detecting a breach of contract, if necessary. This paper discusses the nature of the contract formation and the identification of a valid offer and valid acceptance based on case law.

Identifying Contract Formation

A contract can be defined as an agreement between the two parties, which appears in the context of a legal system and is recognized by law. Agreement implies the mutuality of the intentions of both sides.¹ A range of legal components that are critical to form a contract involves an offer, acceptance, intention, and consideration. Intention and consideration refer to legal bounds and obligations, which determine the essence of the contract. In many cases, the contract is shaped in a written form, although a discussion can also be used to design it. In Winter v Nemeth [2018]², the plaintiff claimed that the defendant’s oral promise to buy her a house was not performed.³ In this case, only an outline of the agreement was written, yet the court decided that the mentioned promise was not legally enforceable. However, a person buying a bus ticket enters into an enforceable agreement, which is defined by the law as a legal transaction.

Recognizing Valid Offer and Valid Acceptance

Any contract begins with an offeror’s offer to an offeree. There can also be an invitation to treat, which is not an offer. For example, products on the shelves of a supermarket compose an invitation to buyers to consider an offer. In Pharmaceutical Society of GB v. Boots Cash Chemists Ltd [1953]⁴, the court decided that an offer appeared when a pharmacist was present near the drugs, not just when drugs were put on the shelves.⁵ This case shows that self-service shops are sensible to customers. For instance, children cannot take alcohol from the shelves since it is not a valid offer. The rules of the offer imply that it should be clearly communicated to the offeree. To make an offer valid and enforceable, it is critical to understand all the terms of the offer. The case of Inland Revenue Commissioners v. Fry [2001]⁶ illustrates that a lack of the check’s full statement led to the acceptance fail.

Another term of the valid offer is its withdrawal issues. The Law of Contract suggests that the offer can be withdrawn at any time before its acceptance, which should be communicated in advance.⁷ The third party can declare the withdrawal; in Dickinson v. Dodds [1876]⁸, the third person was reliable to discuss the sale of houses.⁹ The termination of the offer is another important issue which can be performed in several ways: the time can lapse for an offer acceptance, or one of the parties can die.

Likewise, with an offer that requires clarity regarding the offeree, acceptance needs to be communicated to the offeror. Only if a person is aware of the existence of an offer, they can accept it to form a contract. Following the so-called mirror image rule, acceptance should be exact.¹⁰ In other words, it should unconditional, meaning that no “ifs” or “buts” can be used. In Hyde v. Wrench [1840]¹¹, the potential buyers rejected the initial offer and tried to buy for a lower price, which led to the offer cancellation.¹² At the same time, the law does not interpret the so-called technical counter-offers as rejections. The case of Brogden v. Metropolitan Railway Co [1877]¹³ shows that supplemental conditions cannot be considered as the rejection of the initial offer, and the counter-offer can be disregarded. The rules of acceptance can be absolute, but they can also vary regarding a specific case, which is to be resolved in court.

In many cases, companies tend to use a standard form of contracts that can involve conflict terms. A liability waiver often appears to be the point of conflict in business.¹⁴ Consequently, a dispute seems to result from the so-called battle of the forms. The last document rule, also known as the last shot rule in the US, regulates the standard to be accepted by both companies.¹⁵ Some examples of this are cases of Leicester Circuits Ltd. v. Coates Brothers plc [2002]¹⁶ and GHSP Incorporated v. AB Electronic Ltd [2010]¹⁷. The court ruled that none of the companies’ standard forms will be applied. This decision was based on the fact that the firms may have not agreed on liability options. It was impossible to apply the last shot rule since none of the companies agreed to accept the standards of the other one. Therefore, the UK’s Sale of Goods Act 1979 was followed, and implied terms were adopted.

In comparison to an offer, acceptance can be in both written and oral forms. An offeree’s behavior can be one more acceptance form, such as using the goods bought. At the same time, silence or mental acceptance are not satisfactory. As for the electronic means of communication, e-mails do not require writing the letter of acceptance, but postal communication implies providing the answer with proper address/stamps.¹⁸ Furthermore, the execution of the contract includes a set of measures aimed at achieving its objectives through the interaction of the offeror with the offeree in accordance with contract law.

Conclusion

To conclude, it should be stated that a valid offer is an expression of readiness to create a contract on specific conditions. This is made with the intention that it become binding as soon as it is accepted by the offeree. Valid acceptance implies a promise or action from the offeree, which indicates willingness to stand on the terms and conditions contained in the offer. As a result, the valid offer and acceptance allow forming a contract.

Cases

• Brogden v. Metropolitan Railway Company [1877] 2 AppCas 666, HL(E).
• Dickinson v. Dodds (1876) 2 Ch D 463
• GHSP Inc v. AB Electronics Ltd [2010] EWHC 1828 (Comm), High Court, QB
• Hyde v. Wrench [1840] EWHC Ch J90
• Inland Revenue Commissioners v. Fry [2001] S.T.C. 1715 (30 November 2001)
• Leicester Circuits Ltd v. Coates Brothers plc [2003] EWCA Civ 333
• Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6, [1953] QB 401
• Winter v. Nemeth [2018] NSWSC 644

Bibliography

Cooper, Tracey, and Ewan Kirk, Contract Law, Routledge, 2021.

Cornelius, Kristin B, “Standard Form Contracts and a Smart Contract Future,” Internet Policy Review 7.2 (2018): 1-18.

Holland, James, and Julian Webb, Learning Legal Rules: A Students’ Guide to Legal Method and Reasoning, Oxford University Press, 2013.

J Martin and C Turner, AQA Law for A2 (4th edn, Hodder Education 2011) 99.

Morgan, Jonathan, Great Debates in Contract Law, Red Globe Press, 2020.

O’Sullivan, Janet, O’Sullivan and Hilliard’s the Law of Contract, Oxford University Press, 2020.

Poole, Jill, James Devenney, and Adam Shaw-Mellors, Contract Law Concentrate: Law Revision and Study Guide, Oxford University Press, 2021.

Salih, Rdhwan Shareef, “The Concept of Offer in Different Legal Systems,” Journal of Law, Policy and Globalization 101 (2020): 146-164.

Stewart, Andrew, Warren Swain, and Karen Fairweather, Contract Law: Principles and Context, Cambridge University Press, 2019.

Wacks, Raymond, Law: A Very Short Introduction, Oxford University Press, 2015.

Footnotes

1. J Martin and C Turner, AQA Law for A2 (4th edn, Hodder Education 2011) 99.
2. Winter v. Nemeth [2018] NSWSC 644.
3. Andrew Stewart, Swain and Fairweather: Contract Law: Principles and Context (Cambridge University Press 2019) 166.
4. Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6, [1953] QB 401
5. O’Sullivan, Janet, O’Sullivan and Hilliard’s the Law of Contract (Oxford University Press 2020) 69
6. Inland Revenue Commissioners v. Fry [2001] S.T.C. 1715
7. Holland, James, and Julian Webb, Learning Legal Rules: A Students’ Guide to Legal Method and Reasoning (Oxford University Press 2013) 88
8. Dickinson v. Dodds (1876) 2 Ch D 463
9. J Martin and C Turner, AQA Law for A2 (4th edn, Hodder Education 2011) 107
10. Poole, Jill, James Devenney, and Adam Shaw-Mellors, Contract Law Concentrate: Law Revision and Study Guide (Oxford University Press 2021) 178
11. Hyde v. Wrench [1840] EWHC Ch J90
12. Salih, Rdhwan Shareef, “The Concept of Offer in Different Legal Systems,” 2020. Web.
13. Brogden v. Metropolitan Railway Company [1877] 2 AppCas 666, HL(E)
14. Cornelius, Kristin B, “Standard Form Contracts and a Smart Contract Future,” 2018. Web.
15. Morgan, Jonathan, Great Debates in Contract Law (Red Globe Press 2020) 325
16. Leicester Circuits Ltd v. Coates Brothers plc [2003] EWCA Civ 333
17. GHSP Inc v. AB Electronics Ltd [2010] EWHC 1828 (Comm), High Court, QB
18. Wacks, Raymond, Law: A Very Short Introduction (Oxford University Press 2015) 126.

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