Agreement and Offer
March 19, 2023
1 A Contract
• For a contract there must be agreement, contractual intention and con-
sideration.
2 Agreement - Offer
• In order for parties to reach an agreement, one party must make an of-
fer (that is, a definite promise to be bound by specified terms) which is
accepted by the other party.
• Naturally, then, the definition of ‘offer’ is integral. Treitel defined an offer
as an expression of willingness to contract on certain terms, made with
the intention that it shall become binding as soon as it is accepted by the
person to whom it is addressed (Treitel, The Law of Contract, 13th edn,
p 8).
• The person who makes the offer is called the ‘offeror’ and the person to
whom the offer is made is called the ‘offeree.’
• The ‘expression’ may take many different forms: a letter, newspaper ad-
vertisement, fax and even conduct, as long as it communicates the basis
on which the offeror is prepared to contract.
• The ‘intention’ does not necessarily mean the offeror’s actual intention.
The courts adopt what is primarily an ‘objective’ approach to deciding
whether there was agreement between the parties (Smith v Hughes (1871)
LR 6 QB 597). Courts look at what was said and done between the
parties, from the point of view of a reasonable person, and try to decide
what a reasonable person would have thought was going on.
• In Allied Marine Transport v Vale do Rio Doce Navegacao SA (The Leonidas)
[1985] 1 WLR 925, Goff LJ approved the following statement of the law
relating to the making of an offer: [I]f the offeror so acts that his conduct,
objectively considered, constitutes an offer, and the offeree, believing that
1
, the conduct of the offeror represents his actual intention, accepts the offer,
then a contract will come into existence.
• Although the test is predominantly an objective one, the offeree must
believe that the offeror actually intended to make an offer.
3 Offer or Invitation to Treat - Adverts
• While an offer directly allows one party to enter into a contract with
another party as soon as this offer is accepted, an invitation to treat from
one party merely invites another party to make an offer.
• Goods on display are held as being offers to treat. For if the goods on
display constituted offers, then as soon as a customer accepted them by
placing them in a basket, that customer would be legally bound to buy
them. This argument was used by counsel for the defendant in Pharma-
ceutical Society of Great Britain v Boots Cash Chemists.
• Regarding goods on display, the customer offers to buy the goods when
the customer presents them at the payment point, and acceptance takes
place when the shop takes payment for the goods (Pharmaceutical Society
of Great Britain v Boots Cash Chemists).
• Note that a display may amount to an offer in very limited circumstances
where there is a clear intention to be bound, such as a display of goods in
a special sale.
• Adverts are generally regarded as being invitations to treat. An authority
for this is Partridge v Crittenden [1968] 1 WLR 1204. If such advertise-
ments were offers, it would mean that anyone asking for the advertised
goods would be accepting, in which case it would be a problem if the
advertiser had run out of stock.
• Interestingly, an advertisement of a reward has traditionally been treated
as an offer as there is an intention to be bound as soon as the information
is given (Williams v Carwardine (1833) 5 C P 566).
• Treating the advertisement of a reward as an offer means that the money
has to be paid once the offer is accepted by the supply of the information.
• However, if there are special circumstances which show an intention to be
bound, an advert may amount to an offer. Each case depends on what
the court interprets as the objective intention behind the advertisement.
• Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 is authority for the
proposition that an advertisement can constitute an offer to ‘the world’
(that is anyone who learns of it), and that it may, by the way in which it
is stated, waive the need for communication of acceptance prior to a claim
under it.
2
March 19, 2023
1 A Contract
• For a contract there must be agreement, contractual intention and con-
sideration.
2 Agreement - Offer
• In order for parties to reach an agreement, one party must make an of-
fer (that is, a definite promise to be bound by specified terms) which is
accepted by the other party.
• Naturally, then, the definition of ‘offer’ is integral. Treitel defined an offer
as an expression of willingness to contract on certain terms, made with
the intention that it shall become binding as soon as it is accepted by the
person to whom it is addressed (Treitel, The Law of Contract, 13th edn,
p 8).
• The person who makes the offer is called the ‘offeror’ and the person to
whom the offer is made is called the ‘offeree.’
• The ‘expression’ may take many different forms: a letter, newspaper ad-
vertisement, fax and even conduct, as long as it communicates the basis
on which the offeror is prepared to contract.
• The ‘intention’ does not necessarily mean the offeror’s actual intention.
The courts adopt what is primarily an ‘objective’ approach to deciding
whether there was agreement between the parties (Smith v Hughes (1871)
LR 6 QB 597). Courts look at what was said and done between the
parties, from the point of view of a reasonable person, and try to decide
what a reasonable person would have thought was going on.
• In Allied Marine Transport v Vale do Rio Doce Navegacao SA (The Leonidas)
[1985] 1 WLR 925, Goff LJ approved the following statement of the law
relating to the making of an offer: [I]f the offeror so acts that his conduct,
objectively considered, constitutes an offer, and the offeree, believing that
1
, the conduct of the offeror represents his actual intention, accepts the offer,
then a contract will come into existence.
• Although the test is predominantly an objective one, the offeree must
believe that the offeror actually intended to make an offer.
3 Offer or Invitation to Treat - Adverts
• While an offer directly allows one party to enter into a contract with
another party as soon as this offer is accepted, an invitation to treat from
one party merely invites another party to make an offer.
• Goods on display are held as being offers to treat. For if the goods on
display constituted offers, then as soon as a customer accepted them by
placing them in a basket, that customer would be legally bound to buy
them. This argument was used by counsel for the defendant in Pharma-
ceutical Society of Great Britain v Boots Cash Chemists.
• Regarding goods on display, the customer offers to buy the goods when
the customer presents them at the payment point, and acceptance takes
place when the shop takes payment for the goods (Pharmaceutical Society
of Great Britain v Boots Cash Chemists).
• Note that a display may amount to an offer in very limited circumstances
where there is a clear intention to be bound, such as a display of goods in
a special sale.
• Adverts are generally regarded as being invitations to treat. An authority
for this is Partridge v Crittenden [1968] 1 WLR 1204. If such advertise-
ments were offers, it would mean that anyone asking for the advertised
goods would be accepting, in which case it would be a problem if the
advertiser had run out of stock.
• Interestingly, an advertisement of a reward has traditionally been treated
as an offer as there is an intention to be bound as soon as the information
is given (Williams v Carwardine (1833) 5 C P 566).
• Treating the advertisement of a reward as an offer means that the money
has to be paid once the offer is accepted by the supply of the information.
• However, if there are special circumstances which show an intention to be
bound, an advert may amount to an offer. Each case depends on what
the court interprets as the objective intention behind the advertisement.
• Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 is authority for the
proposition that an advertisement can constitute an offer to ‘the world’
(that is anyone who learns of it), and that it may, by the way in which it
is stated, waive the need for communication of acceptance prior to a claim
under it.
2
