Contract Law 2025 – 2026
Theory Notes
1
, Part 1: Formative Elements Notes
Ansons chapter 2: Agreement
1.0 The Nature of Contractual Agreement
1.1. Introduction: The Foundation of Contract
A contract, at its most fundamental level, consists of one or more actionable
promises. Each such promise involves at least two parties: a promisor, who
makes the promise, and a promisee, to whom the promise is made. For the law
to recognise this exchange as a potential contract, there must be an 'outward
expression of common intention and of expectation' between the parties. This
means that their words and actions must objectively demonstrate a shared
understanding regarding the declaration or assurance contained in the promise.
This external manifestation of common intention and expectation is the bedrock
upon which a legally recognised agreement is built, and its analysis is central to
understanding contract formation.
1.2. Core Components of an Agreement
A contract is defined as consisting of an "actionable promise or promises". For
such a promise to exist, certain essential elements must be present:
• At least two parties: a promisor who makes the declaration or
assurance, and a promisee who is the recipient of it.
• An outward expression of common intention between the parties.
• An outward expression of expectation that the promise will be fulfilled.
This outward expression of shared intent and expectation most commonly takes
the form of a legally recognised agreement.
1.3. Scope of this Chapter
This chapter provides a detailed examination of the principles governing the
formation of a contractual agreement, focusing on three key areas:
1. Establishing an agreement through the framework of offer and
acceptance.
2. The legal status of uncertain and incomplete agreements.
3. The requirement for an intention to create legal relations.
Understanding these components is crucial, as practical challenges frequently
arise in determining whether the words, conduct, or correspondence between
parties have successfully formed a valid and enforceable agreement.
--------------------------------------------------------------------------------
2
,2.0 Establishing an Agreement
2.1. Introduction: The Challenge of Identifying Agreement
Correctly identifying the precise moment an agreement is formed is of
paramount strategic importance in contract law. While some agreements are
self-evident, such as those contained in a formal document signed by both
parties, many are not. Agreements concluded through oral communication,
inferred from conduct, or pieced together from a series of letters or emails can
be difficult to analyse. Legal problems often arise even when the facts of what
was said and done are not in dispute, requiring a structured framework to
determine if and when a contract was concluded.
2.2. The Offer and Acceptance Framework
The primary analytical tool employed by English law to determine whether an
agreement exists is the framework of offer and acceptance. This model
dissects negotiations to find a definite offer made by one party that is met with
an equally definite acceptance by the other.
For example, if A agrees to buy a car from B for £10,000, the process can be
traced to a moment where B effectively asked, "Will you give me £10,000 for my
car?" and A replied, "I will."
However, this analysis has its limitations and does not readily apply in all
situations. Key examples include:
• The simultaneous signature of a prepared document.
• The acceptance by two parties of terms suggested by a third party.
• Multiparty agreements.
Despite these limitations, the principle articulated in Gibson v Manchester City
Council (1979) remains central: when a contract is alleged to have been made
through correspondence, the court will look for a clear offer and acceptance to
determine if a binding agreement was formed.
2.3. Categorizing Contracts by Formation
Contracts can be classified as either unilateral or bilateral, depending on the
nature of the promises exchanged.
Feature Unilateral Contract Bilateral Contract
A promise in exchange for a
Definition A promise in exchange for an act.
promise.
A loses her dog and offers a £25 C offers to pay D a sum of
Example reward to anyone who brings it money if D will promise to
home. The contract is formed dig C's garden. When D
3
, when B, knowing of the offer, makes the promise, the
performs the act of returning the contract is formed.
dog.
At the point of formation,
At the point of formation, the
there is an outstanding
Obligation obligation is outstanding on one
obligation on both sides.
Status side only (the promisor's). The
Both parties have future
other party has already performed.
acts to perform.
The term 'unilateral' reflects that Each party is both a
Key only one party is bound by an promisor (making a
Characteristic obligation at the moment the promise) and a promisee
contract comes into existence. (receiving a promise).
In cases of doubt, the law presumes that a bilateral contract was intended. For
instance, if G tells H, "If you will let me have that table you are making, when it is
finished, I will give you £25 for it," and H replies, "All right," a bilateral contract is
formed, and H is bound to deliver the table.
2.4. Exceptions and Alternative Formations
Exception: Promises in Deeds
In one exceptional scenario, a binding contract can be formed without any offer
and acceptance. A promise made in a deed (a formal legal document) is binding
without needing acceptance or even knowledge of the promise by the promisee.
For example, if a wealthy individual executes a deed promising £100,000 to a
college for a scholarship, that promise is legally enforceable.
Inferences from Conduct
Agreement does not always require express words; it can be inferred from
conduct alone. This is common in everyday transactions:
• Boarding a bus or hiring a taxi implies an undertaking to pay the fare.
• Putting a coin into an automatic vending machine creates a contract with
the supplier.
Multiparty Agreements and Conduct
In complex, multiparty situations, looking for a direct offer and acceptance
between two specific parties can be unhelpful. The case of Clarke v Earl of
Dunraven, The Satanita [1897] provides a key illustration.
• Facts: The owners of two yachts, the Satanita and the Valkyrie, entered
them in a club regatta. A club rule stated that competitors were liable for
any damage caused by fouling. The Satanita fouled and sank the Valkyrie.
4
Theory Notes
1
, Part 1: Formative Elements Notes
Ansons chapter 2: Agreement
1.0 The Nature of Contractual Agreement
1.1. Introduction: The Foundation of Contract
A contract, at its most fundamental level, consists of one or more actionable
promises. Each such promise involves at least two parties: a promisor, who
makes the promise, and a promisee, to whom the promise is made. For the law
to recognise this exchange as a potential contract, there must be an 'outward
expression of common intention and of expectation' between the parties. This
means that their words and actions must objectively demonstrate a shared
understanding regarding the declaration or assurance contained in the promise.
This external manifestation of common intention and expectation is the bedrock
upon which a legally recognised agreement is built, and its analysis is central to
understanding contract formation.
1.2. Core Components of an Agreement
A contract is defined as consisting of an "actionable promise or promises". For
such a promise to exist, certain essential elements must be present:
• At least two parties: a promisor who makes the declaration or
assurance, and a promisee who is the recipient of it.
• An outward expression of common intention between the parties.
• An outward expression of expectation that the promise will be fulfilled.
This outward expression of shared intent and expectation most commonly takes
the form of a legally recognised agreement.
1.3. Scope of this Chapter
This chapter provides a detailed examination of the principles governing the
formation of a contractual agreement, focusing on three key areas:
1. Establishing an agreement through the framework of offer and
acceptance.
2. The legal status of uncertain and incomplete agreements.
3. The requirement for an intention to create legal relations.
Understanding these components is crucial, as practical challenges frequently
arise in determining whether the words, conduct, or correspondence between
parties have successfully formed a valid and enforceable agreement.
--------------------------------------------------------------------------------
2
,2.0 Establishing an Agreement
2.1. Introduction: The Challenge of Identifying Agreement
Correctly identifying the precise moment an agreement is formed is of
paramount strategic importance in contract law. While some agreements are
self-evident, such as those contained in a formal document signed by both
parties, many are not. Agreements concluded through oral communication,
inferred from conduct, or pieced together from a series of letters or emails can
be difficult to analyse. Legal problems often arise even when the facts of what
was said and done are not in dispute, requiring a structured framework to
determine if and when a contract was concluded.
2.2. The Offer and Acceptance Framework
The primary analytical tool employed by English law to determine whether an
agreement exists is the framework of offer and acceptance. This model
dissects negotiations to find a definite offer made by one party that is met with
an equally definite acceptance by the other.
For example, if A agrees to buy a car from B for £10,000, the process can be
traced to a moment where B effectively asked, "Will you give me £10,000 for my
car?" and A replied, "I will."
However, this analysis has its limitations and does not readily apply in all
situations. Key examples include:
• The simultaneous signature of a prepared document.
• The acceptance by two parties of terms suggested by a third party.
• Multiparty agreements.
Despite these limitations, the principle articulated in Gibson v Manchester City
Council (1979) remains central: when a contract is alleged to have been made
through correspondence, the court will look for a clear offer and acceptance to
determine if a binding agreement was formed.
2.3. Categorizing Contracts by Formation
Contracts can be classified as either unilateral or bilateral, depending on the
nature of the promises exchanged.
Feature Unilateral Contract Bilateral Contract
A promise in exchange for a
Definition A promise in exchange for an act.
promise.
A loses her dog and offers a £25 C offers to pay D a sum of
Example reward to anyone who brings it money if D will promise to
home. The contract is formed dig C's garden. When D
3
, when B, knowing of the offer, makes the promise, the
performs the act of returning the contract is formed.
dog.
At the point of formation,
At the point of formation, the
there is an outstanding
Obligation obligation is outstanding on one
obligation on both sides.
Status side only (the promisor's). The
Both parties have future
other party has already performed.
acts to perform.
The term 'unilateral' reflects that Each party is both a
Key only one party is bound by an promisor (making a
Characteristic obligation at the moment the promise) and a promisee
contract comes into existence. (receiving a promise).
In cases of doubt, the law presumes that a bilateral contract was intended. For
instance, if G tells H, "If you will let me have that table you are making, when it is
finished, I will give you £25 for it," and H replies, "All right," a bilateral contract is
formed, and H is bound to deliver the table.
2.4. Exceptions and Alternative Formations
Exception: Promises in Deeds
In one exceptional scenario, a binding contract can be formed without any offer
and acceptance. A promise made in a deed (a formal legal document) is binding
without needing acceptance or even knowledge of the promise by the promisee.
For example, if a wealthy individual executes a deed promising £100,000 to a
college for a scholarship, that promise is legally enforceable.
Inferences from Conduct
Agreement does not always require express words; it can be inferred from
conduct alone. This is common in everyday transactions:
• Boarding a bus or hiring a taxi implies an undertaking to pay the fare.
• Putting a coin into an automatic vending machine creates a contract with
the supplier.
Multiparty Agreements and Conduct
In complex, multiparty situations, looking for a direct offer and acceptance
between two specific parties can be unhelpful. The case of Clarke v Earl of
Dunraven, The Satanita [1897] provides a key illustration.
• Facts: The owners of two yachts, the Satanita and the Valkyrie, entered
them in a club regatta. A club rule stated that competitors were liable for
any damage caused by fouling. The Satanita fouled and sank the Valkyrie.
4
