Formation of bilateral contracts

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Chapter three concerns the formation of bilateral contracts. And I think it's helpful just to have in mind as you go through this chapter, go through all the intricate and quite detailed rules that there are, how the different elements sort of fit together. And so, for this, it's useful to think of perhaps a diagram. So, the first question to think about is whether or not you have an offer at all, because what you might have is just an invitation to treat, or an invitation to make an offer. And this is determined objectively. Which we looked at in chapter two. So, you have to decide whether you have an offer, in the first place, which is sufficiently certain that it's capable of acceptance. And then think about what might happen to that offer. So of course, the offer might be accepted, at which point there's a binding contract. And the acceptance of course, should be unequivocal and it should be communicated to the offeror. And then there's an exception concerning the postal rule, which is very difficult. And of course, not used very much these days, but remains a favourite of examiners. So, it's worth knowing the postal rule. The offer could also be revoked by the offeror. So, in the law of contract, one party is not generally banned without the other. So, if I make an offer to you, you're not bound to accept it and I'm not bound to keep it open. So, I can revoke the offer at any point up until the moment of acceptance. But again, therevocationshould really be communicated to the offeree. The offer could also simply be rejected and the effect of a rejection is to kill off the offer. And it's important to note that a counter offer constitutes a rejection of the original offer coupled with a new offer. So, if I offered to sell you my car for a thousand pounds and you then offer to buy my car for nine hundred pounds, then you've made a counter offer, and I can reject that counter offer. What you can't do is then say, Oh, okay, I'll buy your car for a thousand pounds. That's not possible because your counter offer constitutes to rejection, which killed off my original offer. So, one thing you might think about doing while they're making a counter offer is making a mere inquiry about the offer. And if you're making a mere inquiry about the terms, about what else might be possible, then that won't be a counter offer, and that won't have the effect of killing off the original offer. So, you want to be able to distinguish between rejections outright and mere inquiries. And the offer may also lapse. It may lapse because in the terms of the original offer, it’s said to expire after a certain time, it may lapse after a reasonable period of time as well. And again, that's judged objectively. So, of course in the chapter, these rules have gone into much more detail, but it's perhaps useful to have this sort of diagram in mind when you're approaching this material.