Chapter 2 Guidance for end of chapter questions

Agreement

Question

The Offer and Acceptance model is flawed - only an agreement is necessary.' Discuss.

Answer

This question wants you to address whether it is really necessary to identify a separate offer and acceptance instead of simply looking for any evidence of an agreement.

Paragraph 1: Here you should demonstrate that you know what the 'Offer and Acceptance model' is - i.e. there must be an offer with a corresponding acceptance. Judicial support for this exists in the form of Lord Diplock Gibson v Manchester CC [1979] 1 W.L.R. 294 (must be an offer and acceptance except in exceptional circumstances e.g. Clark v Dunraven). You should also briefly explain what constitutes an offer or acceptance - this is not the place for a full examination of presumptions and the like. For example, you could point out that the courts take an objective approach and look for outwards signs of an intention to be bound rather than looking at what each party subjectively intended.

Paragraph 2: Now you can start to address the rationale behind the 'Offer and Acceptance model. Once you have laid out the reasons why this model is used you will be in a position to discuss whether or not it is flawed.

You could argue that the offer and acceptance model increases certainty for both parties as each knows that he will not be bound until there is a corresponding offer and acceptance. They can rely on the case-law precedents which give guidance on when an offer will be an offer rather than an invitation to treat, and when an acceptance will be an acceptance rather than a counter-offer.

The model also protects the ideology of 'freedom of contract' because a contract is only binding when the parties have consensually exchanged offer and acceptance rather than when a judge gleans from the circumstances that there has been an agreement. The objective approach to offer and acceptance obviously makes an inroad into the parties' freedom of contract, but this may be justified on the basis that it removes uncertainty for the parties.

Paragraph 3: It is now time to address the second part of the question - that an alternative approach is to simply identify an agreement. You could refer to Lord Denning's support for such a liberal approach in Gibson and Butler Machine Tools. There is also Lord Wilberforce's view in New Zealand Shipping Co [1975] AC 154 that the traditional approach is 'often at the cost of forcing the facts to fit uneasily into the marked slots of offer, acceptance and consideration'. You should explain the criticism of the offer and acceptance model is that the courts 'reason backwards' and, in reality, first decide whether there has been an agreement and then force the facts into an offer and acceptance structure. Perhaps use the 'battle of the forms' scenario to show just how impossible and artificial it is to look for a matching offer and acceptance when there has been complex and prolonged negotiation over the terms. You could argue that in such complicated cases the only just solution is to say that the parties arrived at an agreement but it is not possible to identify a matching offer and acceptance.

One problem with a more liberal approach is that it is very uncertain. Much is left to the judge's interpretation of whether the parties came to an agreement and so there is a danger of encroaching on the parties' freedom of contract. There is also the danger that a judge may look too closely at what each party subjectively intended in order to decide in difficult circumstances whether there was an overall agreement, and the objective approach (and the certainty that goes with it) will be undermined.

Paragraph 4: You are now in a position to draw together the previous three sections of your essay. You might want to argue that the rule based offer and acceptance model is necessary because contracting parties need certainty and the whole of contract is based on a party's freedom of contract, an ideal that is worth protecting. On the other hand, you may favour the criticisms of the rigid offer and acceptance model and agree that it is unnecessary because even when the courts purport to use the offer and acceptance model, they reason backwards; the real question is whether there is an agreement.

A more sensitive student might take a middle line (often a good approach!) You could perhaps suggest that the offer and acceptance model has a flaw (the objective approach overrides the parties' true consent) but that this does not mean that the model is completely flawed and should be replaced with a broad brush approach. Perhaps a rule based approach, with all its advantages, is appropriate and more workable in practice if more exceptions are allowed to deal with difficult cases. The messy contractual regime in Clark v Dunraven is one obvious example but could an exception be extended to 'battle of the forms' type cases? A major problem with this idea is identifying when there has simply been extensive negotiation over the terms and when there has been a 'battle of the forms.'

Remember not to simply repeat the pros and cons identified in earlier paragraphs; this is the point of the essay where you can think creatively and argue persuasively for your preferred approach (and that's something we are not going to do for you here!)