WHAT IS A CONTRACT ?

A contract is a legally binding agreement.

In order to create a legally binding agreement it is necessary to show each of the five following elements :

1. An offer
2. An acceptance
3. Certainty of subject matter
4. An intention to create legally binding obligations
5. Consideration

A concluded contract may be classified as multilateral (many parties), bilateral ( two parties each assuming an obligation to the other ) or unilateral ( obligation by one party only ).

If a term of a contract is breached then assuming there is privity of contract and no valid exclusion clause the party wronged by the breach will have various different remedies depending on the circumstances of the case.

THE OFFER

The first task of a party seeking to prove the existence of a legally binding agreement is to point to the presence of a definite offer.

An offer is a proposition put by one party ( the offeror ) to another party ( the offeree ) coupled with an intimation that the first party is willing to be bound by the offer.

The offer may be made in writing, or by spoken words or by conduct or by any combination of the above.

As the law requires no set formalities for an offer it is important to distinguish an offer from :

1. An Invitation to Treat

2. Tenders

3. Pre-contractual Negotiations

Once made a valid offer may be accepted unless it has previously terminated

TERMINATION OF OFFER

An offer may not be accepted in any of the following circumstances.

1. Revocation by Offeror

An offer may be withdrawn at any time prior to acceptance by notification of the offeree : Payne v Cave.
Such notification may also be to a third party (case example): Dickinson v Dodds
It follows from the general rule that an offer may usually be revoked even during the time period expressly provided for its acceptance : Routledge v Grant

N.B. The postal rule does not apply to a revocation : Byrne v Van Tienhoven
Revocation is very difficult in the context of unilateral contracts because of the problem of ascertaining the time when acceptance of such contracts occurs.
The problem of revoking offers made to the world at large e.g. rewards advertised in newspapers : Shuey v United States

2. Rejection by Offeree

Destroys the original offer.

3. Lapse of Time :

If no express time stipulated a reasonable time pertains: Loring v City of Boston.

4. Failure of Condition

Where original offer is subject to a condition

5. Death of Offeree or Offeror ?