GENERAL PRINCIPLES

We traditionally require an offer and acceptance in order to form a contract. This indicates that a contract is an agreement and that the parties’ intentions determine whether a contract is formed and what the contents of this contract are (what obligations it places on the parties and what rights it gives each party against the other)

In order to ascertain whether a contract has been formed (i.e. whether there has been offer and acceptance), we often do not focus on the parties’ actual intention, instead focusing on what each party’s intention reasonably appeared to be to the other party. Courts also take into account factors other than the apparent intentions of the parties.

In some contexts we impose duties and bestow rights upon the parties that they have not agreed to. We imply terms into a contract, while statute may permit us to strike down terms of the contract that seem unfair. Contract law also gives one party various remedies against the other party when the latter breaches a term of the contract, despite the fact that the parties have not agreed to any such remedies.

Therefore, the presence of offer and acceptance is SUFFICIENT to establish a contract, though it is not a NECESSARY ingredient of a contract

FREEDOM OF CONTRACT

This principle permits parties to conclude agreements on a wide range of matters, and on such terms they wish. The principle embraces the following liberties:

• Parties have a general freedom to enter into transactions which are intended (explicitly or otherwise) to create legal obligations. This freedom includes the power to formulate individual terms within such a transaction or to acquiesce in terms implied by statute or common law.

• Parties to a transaction can stipulate that it will not be legally binding

• Parties can compromise a legal dispute, or waive legal liability.

Yet, the freedom whether or not to contract at all is inhibited by legal devices (e.g. statutory rights for tenants to purchase their council houses under the Housing Act 1985). The freedom to choose with whom to contract is restricted by statutes outlawing various forms of discrimination (e.g. Race Relations Act 1976, outlawing the refusal to provide goods and services on a discriminatory basis) . The freedom to choose the terms and content of the contract is qualified by statutory controls (e.g. UCTA) and the prevalence of non-negotiable standard contract terms.

OBJECTIVE PRINCIPLE

The parties’ language and conduct must be assessed according to their OUTWARD and REASONABLE meaning or appearance eg Crest Nicholson v. Akaria [2010]) (confusion over “market rent” and “target rent” used by the defendant is objectively seen as not an offer) ie an OBJECTIVE TEST

1. Objective principle gives effect to REASONABLE interpretation of the language and not fanciful or unrealistic interpretations

• Eg Thake v Maurice [1986] (It was lunacy for claimant to rely on doctor’s assurance that the vasectomy was “irreversible” to be read as “irreversible by God or man”. That it was reasonable to know that “medicine is not an exact science” and that the doctor’s reassurance was “mere therapeutic comfort”)

2. One party REASONABLY KNOWS that the other party is suffering from a mistake (Mance J in OT Africa Line Ltd v Vickers plc [1996], though it was held in this case there was nothing to indicate that the parties reasonably ought to know a mistake has been made)

• Can be used to explain (and is consistent with) earlier decisions like Centrovincial Estates plc v Merchant Investors Assurance Co (1983) where landlord proposed renewal of rent but actually intended the rent to be higher. CA held that the tenant was prima facie

entitled to the rent unless the tenant could show the error was apparent to the tenant)

• SG courts in Chwee Kin Keong v Digilandmall.com Pte Ltd (2005) that the law has no place for such reasonably ought to know errors. At most, equity might intervene if A had sufficient suspicion of B’s error and it was unconscionable for A to maintain the contract

• Andrews submits that the English law is more straightforward in that if A was sufficiently alerted to the probability that B was mistaken in that way there would be no contract (there would not even be a need to recourse to equity)

3. Error regarding mistake to quality, value or nature of subject matter (Smith v Hughes (1871) (HC) , just stated as oats, there was a contract even though seller knew the buyer wanted new oats for his racing horses though the contract just stated “oats”)

• Decision followed consistently and endorsed by the HL in multiple occasions: Lord Atkin in Bell v Lever Bros Ltd [1932] Lord Hoffman in BCCI v Ali [2002]

4. One party is unaware that the offer is not aimed at him, party can accept the offer (Moran v University College Salford (No 2) (1993)) (University offered C wrongly, held to be a contract)

5. Even if X INNOCENTLY misleds Y by mistakenly presenting or accepting terms, X cannot take advantage of the offer (Scriven Brothers [1913], innocent mix up and poor labelling of what was being auctioned resulting in the buyer buying tow when he thought it was hemp, held that no contract)

OFFER

An offer is an expression of willingness to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed (Treitel). It has two features: First, it indicates that the offeror intends to be legally bound providing that the party to whom the statement is addressed takes certain steps. Second, it contains not only a promise to do something but also lays down what the offeree must do in return.

In order for the offer to be effective, it has to be communicated to the offeree (flipside of the requirement that the offeree must be aware of the offer in order to accept it).

INVITATIONS TO TREAT

An invitation to treat is a statement made by a party inviting offers which that party is then free to accept or reject. An invitation to treat...

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