A Contract Is an Agreement Between Two or More People

A contract is an agreement between two or more people or parties that have the intention to create a legal binding. It can also be said to be an agreement between two or more people which creates an obligation to do or not to do a particular thing.

Anson defines a contract as “an agreement enforceable at law made between two or more persons by which rights are acquired by one or more to acts or forbearance on the part of the others.” (Hussain, p. 97)

For a contract to be created, it has essentials which are competent parties, subject matter, legal consideration, mutuality of agreement and lastly mutuality of obligations. In this case mentioned above, we can be able to relate to offer, acceptance, consideration and intention to create legal relation.

An offer is said to be an expression of willingness to be bound by the terms of the contract by the offeror as soon as it is accepted by the offeree. An offer is only considered to be a valid offer if the following requirements are met;

i. It has to be clear, ambiguous and definite.

The offeror should be able to give information that is accurate and well understood by the offeree and it should as well be definite and well grasped by the offeree. This can be related to the case of Guthing V Lynn where the offeror promised to pay a further sum of money for a horse if it was lucky. The offeror was not specific and thus there was no clear meaning determined. Therefore the court held that there was a failure to make a complete agreement since they could not decide what lucky meant and so the defendant could not be bound by the promise. In this case, the shop owner gave Bill the information which was not definite. This is because he had no idea whether the watch was from Switzerland or not, but he did not want to lose that opportunity therefore he gave the wrong information.

ii. Offer must be communicated and reaches the knowledge of the offeree.

Communication is so important between two people or parties in order to create a contract. According to the case of Williams v Carwardine (1833) a reward of £20 was offered to anyone who had the information on the murder of Carwardice and Williams who was dying knew of the murderer and therefore decided to confess. It is held that she was entitled to the reward no matter the motive of giving the information whether it was out of guilt or for the reward because she knew of the reward before giving out the information. The offer was made public and not to a specific person and since the reward is offered in return of the information, acceptance only takes place once. In this case, the shop owner told Billy that the watch was from Switzerland and that is why he decided to buy it.

iii. Offer must be differentiated from invitation to treat.

Invitation to treat is given by an individual