Group 2

INTRODUCTION
(The University of Texas at San Antonio, 2022) defines contract as an agreement between two parties
that creates an obligation to perform (or not perform) on a particular day. (Taylor & Taylor, 2021)
illustrate that all contracts are agreements though not all agreements are contracts. Agreements are
consensual events which require the meeting of minds of the parties involved, this is described as
consensus ad idem. The American law also describes a contract as a set of promises for the breach of
which the law gives a remedy or the performance of which the law recognizes as duty. Finally, in
reference to (Pimentel, 2024) a contract is a formal, legally binding agreement between two parties
whereby the agreement creates mutual obligations that are enforceable by law. The main characteristic
of a contract is that it is enforceable. For a contract to be legally binding and valid it should entail the
following elements:offer,acceptance,consideration, certainity,capacity,intention,legality and formalities.

THE OFFER
A willingness to enter into a contract on certain terms is expressed in an offer, which is intended to
become legally binding as soon as the recipient accepts it. If the other party accepts the offer, the
offeror must objectively demonstrate that they intend to be bound by the terms of the offer.
Consequently, the offeror will be obligated if his actions or words lead a reasonable third-party observer
to assume that he wishes to be bound, even though he does not. Furthermore, (Taylor & Taylor, 2021)
highlights on the fact that it is at times difficult to decide whether A actually intends to make an offer or
they are merely inviting B to make an offer. Therefore, if a genuine offer is made, then B can bind the
speaker by simply accepting the offer. In cases where an invitation is made, then B has nothing to accept
rather B could make an offer in which A is free to accept or reject whilst A has the final say on whether
there is an agreement. The courts will carefully look at the facts of each case to determinedly distinguish
between offers and invitation to treat. In Gibson v Manchester CC (1979), Mr. Gibson argued that there
was a contractual obligation between himself and Manchester City Council. He demanded that the
Council perform its obligation to sell him his council house, but the Council denied that any obligation
had ever arisen on the basis that it never made an offer to Mr. Gibson. In this case, political changes
brought the question of whether there was a binding contract to the fore. There were four important
events on which the case turned. The first was price of buying his Council house, secondly the Council
wrote back that it was willing to sell him back the house and the letter Mr. Gibson to make a formal
application through completion of the enclosed application form, thirdly Mr. Gibson returned the
application form asking them to lower the price and they refused. Fourthly, the Labor Party won control
of the Council and decided to stop the sale of council houses unless there was already a binding contract
of sale. The House of Lords held in favor of the Council. The Council never made an offer to Gibson
which he could have accepted. Words like ‘may be prepared to sell’ were too equivocal to constitute an
offer. The mortgage letter explicitly stated that it was not a firm offer. Furthermore, when intention is
unclear presumption is necessary as in the case of advertisements, displays and auctions. In Partridge v
Crittenden 1968, the key point derived was that advertisements are generally construed by the courts as
invitations to treat and not offers unless the advertiser makes it clear that they intend to make an offer
or includes features in the advertisement that displace the presumption in favor of an invitation is when
the advertisement will be an offer. In the case, Mr. Partridge placed an advertisement in a periodical
that read ‘Bramblefinch cocks, Bramblefinch hems 25s each’. He was charged in a prosecution brought

1
Group 2

by the RSPCA with the offence of unlawfully ‘offering for sale’ a wild live bird contrary to the Protection
of Birds Act 1954.On appeal to the high court, the advertisement was held to be an invitation to treat so
it did not constitute an offer or an offence under the statute. Certainly, the distinction between an offer
and an invitation to treat is mattered in Fisher v Bell (1961). The case involved a shopkeeper, Mr. Bell,
who displayed a flick knife in his shop window with a price tag. Under the Restriction of Offensive
Weapons Act 1959, it was illegal to "offer for sale" offensive weapons like flick knives. The key question
was whether displaying the knife with a price tag constituted an "offer for sale" under the law. The court
ruled that displaying an item with a price tag is not legally an "offer for sale" but rather an "invitation to
treat." This meant that a display invites customers to make an offer, which the shopkeeper can then
accept or decline. Mr. Bell was found not guilty because the display did not constitute an "offer" in the
legal sense required by the statute. Thus, Fisher v Bell set a precedent that items displayed in a shop
window are typically considered "invitations to treat" rather than offers, thus establishing an important
distinction in contract law and influencing the way commercial law interprets advertisements and shop
displays.

ACCEPTANCE
In the context of contracts, acceptance refers to a person’s compliance with the terms of an offer made
by another party in which, it is judged objectively and can either be expressly stated or implied by the
offeree’s conduct (Cornell Law School, n.d.). Just as an offer is distinguished from an invitation to treat,
acceptance should be distinguished from counter-offers. The classic case on counter offers is Hyde v
Wrench (1840). Wrench offered to sell his farm to Hyde for £1,000. Hyde responded with a counter-
offer of £950, which Wrench rejected. Later, Hyde tried to accept the original £1,000 offer, but Wrench
refused to sell. The legal question was whether Wrench’s original offer of £1,000 still stand after Hyde’s
counter-offer of £950 was rejected. The court ruled that Hyde’s counter-offer of £950 effectively
rejected Wrench’s original offer of £1,000, so it was no longer available to accept. This meant Hyde
could not later accept the original offer, as it was void once the counter-offer was made. Thus, this case
established that a counter-offer nullifies the original offer, meaning that once a counter-offer is made,
the original offer is considered rejected and cannot be accepted later.

CONSIDERATION
Consideration is defined as a benefit or burden provided or incurred by the promise in return for the
promise. In a bilateral contract, each party makes a promise to the other and so there are promises on
each side of the of the contract. Normally, there will be separate considerations on each side of the
contract but what counts as consideration in any given contractual dispute will depend on which
obligation on which side of the contract the court is asked to enforce, this obviously depending on who
is suing whom.

SUFFICIENT AND ADEQUATE CONSIDERATION

(Agrawal, 2024) explains that the term "adequacy of consideration" refers to the fairness and
equivalence in value of the consideration exchanged between contracting parties. It is a measure of
whether the consideration is rational and free of suspicion, however it is not always equal or
comprehensive. Moreover, the law does not require that consideration be economically adequate in
order to be legitimate; the emphasis is on the presence of consideration rather than its worth.

2
Group 2

Inadequate consideration means that the consideration provided is insufficient or of equal value to what
is received, but it remains legally bound as long as any consideration exists. In Chappell v Nestlé (1960),
Nestlé promised to send a record to anyone who sent in a postal order for 1s.6d. and three Nestlé
chocolate wrappers. It did not matter that the wrappers in themselves were worth very little and did not
equal the market value of the record.

LEGALLY SUFFICIENT CONSIDERATION

For a consideration to be legally sufficient, it should not be something that a party is obligated to
perform. White v Bluett (1853) is an English contract law case that deals with the requirement of valid
consideration for a promise to be enforceable. The case established that a promise must be supported
by genuine consideration to form a binding contract. In this case, a son was upset by his father’s
distribution of property amongst his children and complained to his father. The father said that he
would forgive a debt owed to him by the son if he stopped complaining. The court held that the son’s
promise to refrain from complaining did not constitute valid consideration. Stopping complaints was
seen as something he had no legal right to do indefinitely, and it provided no tangible benefit to the
father or detriment to the son. Significantly, White v Bluett established that valid consideration in a
contract must be something of real value in the eyes of the law. Mere promises that lack tangible or
legal substance—like refraining from complaining—do not meet the standard for consideration, thus
reinforcing that enforceable agreements require genuine, valuable exchanges between parties

PAST CONSIDERATION

Past consideration refers to a time before the making of a promise and thus not generally accepted as
good consideration. Roscorla v Thomas (1842) is an English contract law case that deals with the
principle of past consideration and clarifies when promises made after a contract’s formation are
enforceable. Roscorla bought a horse from Thomas. After the sale, Thomas assured Roscorla that the
horse was "sound and free from vice." However, the horse later turned out to have behavioral issues,
and Roscorla sued based on Thomas's statement. The legal question was; Could Thomas’s promise
about the horse's condition, made after the sale, be enforced as part of the contract? The court held
that Thomas's statement about the horse’s quality was unenforceable because it was made after the
sale. This was considered past consideration, which is not sufficient to create a binding obligation.
However, exceptions are made when there was an implied promise made before the consideration thus
consideration is not past in relation to the earlier implied promise.

CONSIDERATION MUST MOVE FROM THE PROMISEE

In general terms, this means that the benefit must be conferred, or detriment incurred by the promise
and not by someone else. Thus in Tweddle v Atkinson (1869), the fathers of a young couple, Tweddle
and Guy, agreed in writing that each would pay a sum of money to the couple after their marriage. The
bride’s father (Guy) died without paying his portion, and the groom (Tweddle) sued the executor of
Guy’s estate, Atkinson, to enforce the promise. The legal questions arising from this were; 1. Could
Tweddle, who was not a party to the agreement between the fathers, sue to enforce the contract? 2.
Was there valid consideration for Tweddle to enforce the agreement? The court held that Tweddle
could not enforce the contract. As he was not a party to the agreement between the fathers, he had no
legal standing to sue (doctrine of privity of contract). Additionally, Tweddle had provided no
consideration for the promise, which is necessary for enforceability.