Formation of a contract. A contract is an agreement that is enforceable at law. Characteristics of a Contract. 1. There will be a promise or promises. 2. They will be made by “parties to the contract”. 3. They will create an obligation. 4. That obligation will be enforceable at law.
1. There will be a promise or promises.
2. They will be made by “parties to the contract”.
3. They will create an obligation.
4. That obligation will be enforceable at law.
5. Often found in negotiations, rather than a formal document.
+ = AGREEMENT
“the indication by one person to another of his or her willingness to enter into a contract with that person on certain terms”
Carter and Harland, “Contract Law in Australia” 4th edn p28
A request for the supply of information
Harvey v Facey  AC 552
An invitation to treat
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd  1QB 401.
Gibson v Manchester City Council  1AllER 972
A FINAL and UNQUALIFIED assent to the terms of an offer made in the manner specified or indicated by the offeror
The “yes” which ends negotiations
So, only those persons:
-to whom the offer was made; and
-who have the offer in mind at the point of “acceptance”
R v Clarke: must rely on offer at time of acceptance
Can you accept ‘with strings attached’?
- “subject to” some reservation.
NO - BECAUSE there is no “final and unqualified assent to the terms of the offer.”
Whether an acceptance is truly “conditional” depends on whether the parties INTENDED TO BE BOUND by what they agreed.
1. The parties had reached FINALITY, intended to be bound immediately, but wanted the terms set out in a MORE PRECISE but NOT MATERIALLY DIFFERENT form.
2. The parties had reached finality, intended NO DEPARTURE from the terms of the agreement but made PERFORMANCE of one or more of the terms conditional on execution of a formal document.
3. The parties did not intend to make a CONCLUDEDBARGAIN unless or until a formal contract was drawn up.
not enforceable BECAUSE the courts cannot be sure what was agreed.
“Agreement to agree” not enforceable as final agreement not reached“Agreement to negotiate in good faith” may be enforceable (Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd)Agreement with missing terms may be completed (and enforceable) if terms can be objectively determined (eg arbitration clause.) (Booker Industries v Wilson Parking)
“To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly”
Atkin LJ in Rose & Frank Co v JR Crompton & Bros Ltd  2 KB 261 at 293