Contract Law: Formation of a Contract

Comprehensive vocabulary flashcards covering the key legal principles, concepts, and foundational case law governing the formation of contracts under the law of England and Wales.

Contract

A bargain between two or more parties, a reciprocal agreement, or an exchange of promises that generally does not need to be in writing to be legally binding.

Bilateral Contract

A contract formed by an exchange of reciprocal promises between parties where each party promises an obligation to the other.

Unilateral Contract

A contract where one party promises to do something in return for the other party performing a specified act, rather than making a reciprocal promise.

Offer

An indication in writing, orally, or by conduct by the offeror showing a willingness to enter into a binding agreement if the offeree accepts their terms.

Invitation to Treat

A preliminary communication, such as the opening of negotiations or a request for expressions of interest, designed to invite another person to make an offer.

Objective Test of Intention

The legal standard used to distinguish an offer from an invitation to treat by assessing what a reasonable person would have understood the offeror to be proposing.

Partridge v Crittenden [1968]

The case establishing the general rule that advertisements of goods are invitations to treat rather than binding offers.

Fisher v Bell [1961]

The case confirming that the display of goods in a shop window or on shelves is an invitation to treat rather than an offer.

Spencer v Harding (1870)

The authority establishing that a general request for tenders or bids is an invitation to treat, with the submitted tenders constituting the actual offers.

Revocation

The withdrawal of an offer by an offeror, which can generally occur at any time before acceptance but must be communicated to the offeree to be effective.

Dickinson v Dodds (1876)

The case establishing that revocation of an offer does not have to be communicated by the offeror directly, but can be effectively communicated by a reliable third party.

Counteroffer

A response by an offeree that seeks to vary the terms of an offer, which destroys the original offer and constitutes a new offer capable of acceptance.

Hyde v Wrench (1840)

The case establishing that making a counteroffer destroys the original offer, preventing the offeree from subsequently accepting the initial proposal.

Request for Information

An inquiry seeking clarification on the terms of an offer that does not attempt to vary the terms or reject the proposal, thereby leaving the original offer open.

Acceptance

A clear, objectively judged indication of an offeree's unqualified assent to all the terms of an offer.

Felthouse v Bindley [1862]

The case establishing the rule that acceptance of an offer cannot be communicated through silence or doing nothing.

Postal Rule

The rule establishing that where post is within the contemplation of the parties, acceptance is deemed communicated the moment a correctly addressed letter is posted.

Adams v Lindsell (1818)

The foundational case that established the postal rule for contract acceptance.

Holwell Securities v Hughes [1974]

The case establishing that the postal rule does not apply when the offeror specifies actual notice or when its application would cause manifest inconvenience or absurdity.

Receipt Rule

The rule applying to instantaneous forms of communication (e.g., telephone, telex, fax, and email) requiring actual communication to the offeror for acceptance to be valid.

Battle of the Forms

A conflict arising when contracting parties negotiate by exchanging conflicting standard business terms, traditionally won by the party firing the 'last shot.'

Butler Machine Tool Co Ltd v Ex-Cell-O Corp [1979]

The leading case regarding the battle of the forms, affirming the traditional 'last shot' doctrine for conflicting standard terms.

Presumption in Domestic and Social Arrangements

The rebuttable legal presumption that parties entering into domestic, social, or family agreements do not intend to create legally binding relations.

Presumption in Commercial Arrangements

The rebuttable legal presumption that parties entering into business or commercial agreements do intend to create legally binding relations.