Chapter 1 - Agreement
25 September 2025 11:23
1.2 Offers and invitations to treat
Offer Invitation to treat
• An expression of willingness to contract on certain • Preliminary statement
terms, intended to be binding once accepted. inviting negotiation.
• Offer = objective test: courts look at what a • Cannot be accepted to form
reasonable person would think a binding contract
• Must be addressed to someone (an individual, • Goods in a
class, or public). shop/supermarket =
invitation to treat.
• The offer is made by the
customer at checkout;
cashier accepts/rejects.
Advertisements
• General rule: adverts = invitations to treat (avoid liability if stock runs out).
• Exception: advertisements of reward = offers (unilateral contracts).
○ E.g. Carlill v Carbolic Smoke Ball Co – advert promising £100 to anyone contracting flu
after using smoke ball was an offer.
Auctions
• Inviting bids = invitation to treat.
• Bid = offer.
• Acceptance = fall of auctioneer’s gavel (Sale of Goods Act 1979, s 57(2)).
• Reserve price: no sale unless minimum price reached.
• Without reserve: creates unilateral contract that item will be sold to highest bidder (Barry
v Davies).
Situation Contract Exists? Buyer
Can
Sue?
Reserve not met; auctioneer refuses to sell No Nobod
y
Reserve met; auctioneer refuses Yes Owner
(main)
Auction without reserve; auctioneer refuses to sell Yes (unilateral Auctio
contract) neer
Auction advertised as without reserve by mistake, auctioneer Yes Auctio
refuses neer
only
Auctioneer accepts below reserve by mistake Yes (with Auctio
auctioneer only) neer
Auction without reserve; item withdrawn before any bid No Nobod
y
Contract Law Page 1
,Tenders
• Invitation to tender = invitation to treat.
• Tenders = offers.
• No obligation to accept unless:
○ Promised to accept lowest tender, or
○ Implied obligation to consider all conforming tenders (Blackpool & Fylde Aero Club v
Blackpool BC).
1.3 Acceptance
• Unqualified expression of assent to the terms of the offer.
• Must be:
(a) an expression of assent, and
(b) unqualified (i.e. not conditional).
Communication of acceptance Acceptance by post
• Must be communicated by offeree or authorised • Postal rule: acceptance
agent. effective when posted,
• Silence usually not acceptance, unless coupled with even if lost, if:
conduct. ○ Use of post
• Counter-offers = rejection of original offer and new reasonable.
offer (battle of the forms). ○ Properly
○ Last shot principle (Butler Machine Tool v Ex- stamped/addressed/
Cell-O Corp). posted.
○ Not excluded by
offeror.
• Exclusion example:
requirement of “notice in
writing to [X]” - The notice
needs to be received
1.4 Termination of offers
An offer cannot be accepted once terminated. Termination may occur by:
1. Rejection Express rejection or counter-offer.
2. Revocation
- General rule: can revoke before acceptance, even if offeror promised to keep open.
Exception: if consideration given for keeping open (option contract: Mountford v
Scott).
- Unilateral contracts: once offeree starts performance, courts reluctant to allow
revocation.
- Revocation must be communicated (by offeror or reliable third party).
○ Effective when it should have been read in ordinary business (The Brimnes).
- Public offers (e.g. Carlill): revocation by publishing notice in same way as offer.
3. Lapse of time
Offer lapses after specified time, or after “reasonable time” (depends on context, e.g.
perishables vs non-perishables).
1.5 Certainty and Completeness — Explained Simply
For a contract to be legally binding, the agreement must be sufficiently clear and complete.
Courts don’t enforce “agreements to agree.”
This section of your notes explains when terms are clear enough and when vagueness
makes a contract fail.
Agreement must cover all material terms
Contract Law Page 2
,Agreement must cover all material terms
A contract needs all the essential terms (e.g., price, subject matter, quantity).
If essential points are missing or too vague, the contract may not exist.
Assessed objectively Case examples
Courts don’t look at what the parties subjectively
intended. 1. Too vague – Scammell v Ouston
They ask: Would a reasonable person think there Clause: “hire purchase terms”
was a complete, certain agreement? Problem: There were many types of hire
To decide this, courts consider: purchase agreements; the term was too
• Trade practice uncertain.
If a phrase is vague on its face, but has a standard Result: No contract.
meaning in the industry, it may still be certain.
Example: 2. Vague but enforceable – trade
“Timber of fair specification” might sound vague, meaning
but in the timber trade it has a known meaning. “Timber of fair specification”
• Parties’ previous dealings Because both parties were in the trade
If the parties have worked together before, vague and had past dealings, a court could
terms may be interpreted based on their interpret the term using trade practice.
established pattern of dealing. Result: Contract upheld.
• Performance already begun
If the parties have already started performing, 3. Market price clauses
courts may interpret ambiguities rather than void Terms like “price to be fixed at market
the contract. rate” are valid because an objective
• Mechanisms for resolving uncertainty mechanism exists (market pricing
If the contract includes a method for clarifying
unclear terms (e.g., arbitration clause, market
price determination, formula), the court can fill
gaps.
Provisional agreements can still bind
Even if the parties say things like “subject to a formal contract,” the court looks at intention.
If the parties intended to be bound now, the absence of a signed formal document does not
prevent a contract from forming.
This covers situations like heads of agreement, emails, or MoUs — they can be binding if
intention is clear.
Contract Law Page 3
, Chapter 2 - Intention to Create Legal Relations
25 September 2025 17:49
2.2 Commercial agreements
Scope: not just business-to-business, but also:
○ Individual ↔ business (e.g. shopping, online purchases).
○ Individual ↔ individual (e.g. buying a bike in newspaper ad).
Presumption: very strong presumption that agreements are intended to be legally binding.
○ Even trivial subject matter
Rebuttal: only clear, express wording will rebut.
○ E.g. agreement stated to be “binding in honour only”.
○ Very rare for presumption to be rebutted in practice.
2.3 Domestic agreements
agreements between family, friends, close relations.
Presumption: presumed not legally binding, unless rebutted by facts.
Rebuttal factors:
○ Dealings at arm’s length (e.g. divorce settlement involving solicitors).
○ Commercial/financial context (e.g. joint business venture, sale of house).
○ Express wording that agreement is legally binding.
○ Value of subject matter (nominal allowance less likely binding; house sale more
likely binding).
Examples (Table 2.1):
○ Husband & wife settling divorce with solicitors → intention, legally binding.
○ Two friends in joint business venture → intention, binding.
○ Brother & sister expressly agreeing → intention, binding.
○ Two cousins, house sale → intention, binding.
○ Parent & child, allowance conditions → no intention, not binding.
Contract Law Page 4
25 September 2025 11:23
1.2 Offers and invitations to treat
Offer Invitation to treat
• An expression of willingness to contract on certain • Preliminary statement
terms, intended to be binding once accepted. inviting negotiation.
• Offer = objective test: courts look at what a • Cannot be accepted to form
reasonable person would think a binding contract
• Must be addressed to someone (an individual, • Goods in a
class, or public). shop/supermarket =
invitation to treat.
• The offer is made by the
customer at checkout;
cashier accepts/rejects.
Advertisements
• General rule: adverts = invitations to treat (avoid liability if stock runs out).
• Exception: advertisements of reward = offers (unilateral contracts).
○ E.g. Carlill v Carbolic Smoke Ball Co – advert promising £100 to anyone contracting flu
after using smoke ball was an offer.
Auctions
• Inviting bids = invitation to treat.
• Bid = offer.
• Acceptance = fall of auctioneer’s gavel (Sale of Goods Act 1979, s 57(2)).
• Reserve price: no sale unless minimum price reached.
• Without reserve: creates unilateral contract that item will be sold to highest bidder (Barry
v Davies).
Situation Contract Exists? Buyer
Can
Sue?
Reserve not met; auctioneer refuses to sell No Nobod
y
Reserve met; auctioneer refuses Yes Owner
(main)
Auction without reserve; auctioneer refuses to sell Yes (unilateral Auctio
contract) neer
Auction advertised as without reserve by mistake, auctioneer Yes Auctio
refuses neer
only
Auctioneer accepts below reserve by mistake Yes (with Auctio
auctioneer only) neer
Auction without reserve; item withdrawn before any bid No Nobod
y
Contract Law Page 1
,Tenders
• Invitation to tender = invitation to treat.
• Tenders = offers.
• No obligation to accept unless:
○ Promised to accept lowest tender, or
○ Implied obligation to consider all conforming tenders (Blackpool & Fylde Aero Club v
Blackpool BC).
1.3 Acceptance
• Unqualified expression of assent to the terms of the offer.
• Must be:
(a) an expression of assent, and
(b) unqualified (i.e. not conditional).
Communication of acceptance Acceptance by post
• Must be communicated by offeree or authorised • Postal rule: acceptance
agent. effective when posted,
• Silence usually not acceptance, unless coupled with even if lost, if:
conduct. ○ Use of post
• Counter-offers = rejection of original offer and new reasonable.
offer (battle of the forms). ○ Properly
○ Last shot principle (Butler Machine Tool v Ex- stamped/addressed/
Cell-O Corp). posted.
○ Not excluded by
offeror.
• Exclusion example:
requirement of “notice in
writing to [X]” - The notice
needs to be received
1.4 Termination of offers
An offer cannot be accepted once terminated. Termination may occur by:
1. Rejection Express rejection or counter-offer.
2. Revocation
- General rule: can revoke before acceptance, even if offeror promised to keep open.
Exception: if consideration given for keeping open (option contract: Mountford v
Scott).
- Unilateral contracts: once offeree starts performance, courts reluctant to allow
revocation.
- Revocation must be communicated (by offeror or reliable third party).
○ Effective when it should have been read in ordinary business (The Brimnes).
- Public offers (e.g. Carlill): revocation by publishing notice in same way as offer.
3. Lapse of time
Offer lapses after specified time, or after “reasonable time” (depends on context, e.g.
perishables vs non-perishables).
1.5 Certainty and Completeness — Explained Simply
For a contract to be legally binding, the agreement must be sufficiently clear and complete.
Courts don’t enforce “agreements to agree.”
This section of your notes explains when terms are clear enough and when vagueness
makes a contract fail.
Agreement must cover all material terms
Contract Law Page 2
,Agreement must cover all material terms
A contract needs all the essential terms (e.g., price, subject matter, quantity).
If essential points are missing or too vague, the contract may not exist.
Assessed objectively Case examples
Courts don’t look at what the parties subjectively
intended. 1. Too vague – Scammell v Ouston
They ask: Would a reasonable person think there Clause: “hire purchase terms”
was a complete, certain agreement? Problem: There were many types of hire
To decide this, courts consider: purchase agreements; the term was too
• Trade practice uncertain.
If a phrase is vague on its face, but has a standard Result: No contract.
meaning in the industry, it may still be certain.
Example: 2. Vague but enforceable – trade
“Timber of fair specification” might sound vague, meaning
but in the timber trade it has a known meaning. “Timber of fair specification”
• Parties’ previous dealings Because both parties were in the trade
If the parties have worked together before, vague and had past dealings, a court could
terms may be interpreted based on their interpret the term using trade practice.
established pattern of dealing. Result: Contract upheld.
• Performance already begun
If the parties have already started performing, 3. Market price clauses
courts may interpret ambiguities rather than void Terms like “price to be fixed at market
the contract. rate” are valid because an objective
• Mechanisms for resolving uncertainty mechanism exists (market pricing
If the contract includes a method for clarifying
unclear terms (e.g., arbitration clause, market
price determination, formula), the court can fill
gaps.
Provisional agreements can still bind
Even if the parties say things like “subject to a formal contract,” the court looks at intention.
If the parties intended to be bound now, the absence of a signed formal document does not
prevent a contract from forming.
This covers situations like heads of agreement, emails, or MoUs — they can be binding if
intention is clear.
Contract Law Page 3
, Chapter 2 - Intention to Create Legal Relations
25 September 2025 17:49
2.2 Commercial agreements
Scope: not just business-to-business, but also:
○ Individual ↔ business (e.g. shopping, online purchases).
○ Individual ↔ individual (e.g. buying a bike in newspaper ad).
Presumption: very strong presumption that agreements are intended to be legally binding.
○ Even trivial subject matter
Rebuttal: only clear, express wording will rebut.
○ E.g. agreement stated to be “binding in honour only”.
○ Very rare for presumption to be rebutted in practice.
2.3 Domestic agreements
agreements between family, friends, close relations.
Presumption: presumed not legally binding, unless rebutted by facts.
Rebuttal factors:
○ Dealings at arm’s length (e.g. divorce settlement involving solicitors).
○ Commercial/financial context (e.g. joint business venture, sale of house).
○ Express wording that agreement is legally binding.
○ Value of subject matter (nominal allowance less likely binding; house sale more
likely binding).
Examples (Table 2.1):
○ Husband & wife settling divorce with solicitors → intention, legally binding.
○ Two friends in joint business venture → intention, binding.
○ Brother & sister expressly agreeing → intention, binding.
○ Two cousins, house sale → intention, binding.
○ Parent & child, allowance conditions → no intention, not binding.
Contract Law Page 4
