Agreement

Valid contract requires:

• Agreement, certainty, intention to create legal relations, consideration.
• Bilateral contract: parties EXCHANGE promises to constitute valid contract. Both parties have obligations and rights. 
• Unilateral contract: one promise in return for an act, no contractual obligation for person performing the act. Only party making the promise has obligations.

Gibson v Manchester City Council 1978

• Council offered houses for sale to tenants. C sent in form asking for price. Council reply 'may be prepared to sell' for certain price and he sent application form and repaired house assuming he had a binding contract.
• Council changed to Labour, only keeping contracts already gone through. Argued= no binding contract w/Gibson to sell the houes. Held by CoA there was a contract in place.
• Lord Denning: "OFFER AND ACCEPTANCE NEED NOT ALWAYS BE CLEAR".
• Overturned by HoL, held: NEED CLEAR OFFER AND ACCEPTANCE. 'May be prepared to sell' was NOT AN OFFER, C's application was the offer which wasn't accepted. No contract.

Nature of offer

• Can be made EXPRESSLY/BY CONDUCT, must be a promise: "expression of willingness to contract certain terms with the intention that it shall become binding as soon as it is accepted"- Treitel.
• Objective: would a reasonable person have though offeror was promising to be bound?
• May be ITT: statement indicating willingness to receive offer (Fisher v Bell) but some ads/goods for sale ARE offers e.g. Carlill v Carbolic Smokeball Co 1893.

Acceptance

• 2 rules constitute it + thus agreement: MIRROR IMAGE + COMMUNICATION.
• Mirror image: offeree's unequivocal expression of intention + assent must be made in response to, + exactly match, the terms of the offer (Hyde v Wrench).
• Communication: this matching acceptance must be communicated to offeror effectively.
• Reponse making variations to proposed terms is a REJECTION of original offer, makes a COUNTER OFFER 

Nature of offer

• Can be made EXPRESSLY/BY CONDUCT, must be a promise: "expression of willingness to contract certain terms with the intention that it shall become binding as soon as it is accepted"- Treitel.
• Objective: would a reasonable person have though offeror was promising to be bound?
• May be ITT: statement indicating willingness to receive offer (Fisher v Bell) but some ads/goods for sale ARE offers e.g. Carlill v Carbolic Smokeball Co 1893= made offer to entire world, ad was an offer- clear intention to contract portrayed in ad.

Acceptance

• 2 rules constitute it + thus agreement: MIRROR IMAGE + COMMUNICATION.
• Mirror image: offeree's unequivocal expression of intention + assent must be made in response to, + exactly match, the terms of the offer (Hyde v Wrench).
• Communication: this matching acceptance must be communicated to offeror effectively.
• Reponse making variations to proposed terms is a REJECTION of original offer, makes a COUNTER OFFER 

Nature of offer

• Can be made EXPRESSLY/BY CONDUCT, must be a promise: "expression of willingness to contract certain terms with the intention that it shall become binding as soon as it is accepted"- Treitel.
• Objective: would a reasonable person have though offeror was promising to be bound?
• May be ITT: statement indicating willingness to receive offer (Fisher v Bell) but some ads/goods for sale ARE offers e.g. Carlill v Carbolic Smokeball Co 1893= made offer to entire world, ad was an offer- clear intention to contract portrayed in ad.

Acceptance

• 2 rules constitute it + thus agreement: MIRROR IMAGE + COMMUNICATION.
• Mirror image: offeree's unequivocal expression of intention + assent must be made in response to, + exactly match, the terms of the offer (Hyde v Wrench).
• Communication: this matching acceptance must be communicated to offeror effectively.
• Reponse making variations to proposed terms is a REJECTION of original offer, makes a COUNTER OFFER.
• Request for tenders is ITT: tender is the offer, auctioneer's request for bids is ITT

• R v Clarke: offeree must act on the good faith of/in reliance upon the offer.
• Mirror image acceptance must be communicated to offeror to be effective ALWAYS in BILATERAL contracts, implied wavier in unilateral.
• Offeror can OUST communication rule in bilateral contracts but offeror cannot force that contract on offeree by assuming acceptance within time deadline. 
• SILENCE= insufficient to bind unless requested (Felthouse v Bindley 1862).
• BUT Re Selectmove 1955: Obiter dicta= if offeree indicates his silence should be relied on as acceptance.

POSTAL RULE

• Acceptance valid at time of posting, not arrival (Adams v Linsell). Exception to Communication rule.

INSTANTANEOUS METHODS OF COMMUNICATING ACCEPTANCE 

• Answering machine: only when acceptance is sent. Generally- onus is on offeree to get communication through, if line goes dead knowingly he must repeat but if offeror knows of attempt and doesn't receive, must ask for it and if not hes bound. 

1. Actively revoked (withdrawn by offeror): effective when communicated to offeree, offeree can revoke if he promised to keep it only BEFORE acceptance (Routledge v Grant 1828).

2. Offer lapses: rejected by offeree due to counter-offer (Hyde v Wrench), e.g. adds new terms.

3. Offer lapses? if offeree fixes no time for which it remains open, lapses after reasonable time.

• Offer may be revoked anytime prior to acceptance. Must be brought to other party's attention to be effective. Withdrawal of contract must be communicated before latter accepts it so they can validly withdraw offer to protect freedom of contract.
• Revocation need not be communicated by offeror: DICKENSON V DODDS 1876: Revocation can be effected via fax/email within normal business working hours even if not read until later. Offer to public may be revoked if sufficient steps are taken to notify those to whom it was made.
• Revocation must occur prior to acceptance and be sufficiently communicated, where there's a unilateral contract- irrevocable once performance is commenced.
• HYDE V WRENCH 1840: Objective intention: if an acceptance seeks to vary any terms in the offer, it's not a valid acceptance- no binding agreement- no contract.

Errington v Errington 1952

• When's a unilateral contract accepted? one of two.
• ON commencement of performance of requested act? Offeree accepts by commencing performance of requested act but promise not enforceable until performance complete?
• Case: father bought house for son/daughter-in-law to occupy, promised that if they paid mortgage instalments he'd transfer ownership. Died leaving property to widow. Son and partner separated. Daughter-in-law continued paying instalments and widow tried to evict her, CoA held she had contractual right to occupy property as long as continued to pay instalments.
• Father's promise generated a UNILATERAL contract, binding once performance commenced but would cease if left incomplete.

IF OFFEREE DOES NOTHING, AFTER A REASONABLE LENGTH OF TIME THE OFFER EXPIRES: Ramsgate Victoria Hotel Co Ltd v Montefiore 1866.

Butler Machine Tool Co Ltd v Ex-Cell-O Corp

• Rejection kills offer. Any response proposing variation of terms constitutes rejection of original ofer and is a new offer. Rejection/counter-offer must be communicated to take effect.
• Case: Claimant sellers offered to deliver machine on their terms (w/price escalation clause). D buyers replied giving an order differing from sellers quoatation and stating order was on buyer's terms and conditions with NO price escalatio clause. 
• When machine was delivered, C sought to rely on the price escalation clause but CoA unanimously held that he couldn't as the contract had been concluded on the buyer's terms. due to the rip-off sheet he had signed. Last shot approach.