Beatson Burrows Cartwright

2.
The Agreement
Anson's Law of Contract (31st edn)

Jack Beatson FBA, Andrew Burrows FBA, QC (Hon), and
John Cartwright
Publisher: Oxford University Press Print Publication Date: May 2020

Print ISBN-13: 9780198829973 Published online: Sep 2020
DOI: 10.1093/he/ © J. Beatson, A. Burrows, and J.
9780198829973.001.0001 Cartwright 2020
2. The Agreement
Chapter: (p. 31) 2. The Agreement
Author(s): Jack Beatson, Andrew Burrows, and John Cartwright
DOI: 10.1093/he/9780198829973.003.0002
A contract consists of an actionable promise or promises. Every such

promise involves at least two parties, a promisor and a promisee, and an
outward expression of common intention and of expectation as to the
declaration or assurance contained in the promise.
It has been previously pointed out1 that this outward expression of a

common intention and of expectation normally takes the form of an
agreement. In most cases, therefore, it will be necessary to ascertain at
the outset whether or not an agreement has been concluded.
This chapter considers the establishing of an agreement by offer and

acceptance; uncertain and incomplete agreements; and the intention to
create legal relations.
1. Establishing an Agreement
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2. The Agreement
The fact that an agreement has been reached will sometimes be self-
evident, since, although as a general rule English law has no
requirements of writing or other form,2 the agreement will be set out in a
document signed or initialled by both parties. But where there is no such
document, it may be more difficult to discover whether the parties have
agreed. The alleged agreement may, in whole or in part, have been
concluded by word of mouth or by conduct. Difficulties of proof will then
arise and the resultant questions of fact will have to be determined by the
trial judge from the evidence given by the parties and their witnesses. We
are not, however, here concerned with difficulties of proof, but rather
with those problems that occur even where there is no dispute as to what
the parties said or did. Such problems are not infrequent in practice,
especially when the fact of agreement has to be elicited from
correspondence, or from an exchange of other types of communication
such as telex messages, fax, or e-mail.
(a) Offer and Acceptance
To determine whether an agreement has actually been concluded, it is

normally necessary to inquire whether in the negotiations which have
taken place between the parties there has been a definite offer by one
party, and an equally definite acceptance of (p. 32) that offer by the other.
For most contracts are reducible by analysis to the acceptance of an offer.
If, for instance, A and B have agreed that A shall purchase from B a car
for £10,000, we can trace the process to a moment at which B must have
said to A, in effect, ‘Will you give me £10,000 for my car?’, and A has
replied, ‘I will’; or at which A has said to B, ‘Will you let me have the car
for £10,000?’, and B has said, ‘I will’. There are, however, cases to which
this analysis does not readily apply. These include the signature of a
prepared document, the acceptance by two parties of terms suggested by
a third, and multiparty agreements.3 Where, however, a contract is
alleged to have been made by an exchange of correspondence between
the parties in which the successive communications other than the first
are in reply to one another, the Court should look at the correspondence
to see whether there is an offer by one party and an acceptance by the
other party.4 It would be a mistake to think that all contracts can thus be
analysed into the form of offer and acceptance. The analysis is, however,
a working method which, more often than not, enables us, in a doubtful
case, to ascertain whether a contract has in truth been concluded, and as
such may usefully be retained.
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2. The Agreement
(i) Offer and acceptance in unilateral and bilateral contracts
The process of ‘offer and acceptance’ may take place in one of two main
ways:
(1) In the offer of a promise for an act:5 as when a person offers a

reward for the doing of a certain thing, which being done that
person is bound to make good the promise to the doer.
Illustration: A, who has lost her dog, offers by advertisement a
reward of £25 to anyone who will bring the dog safely home; a
promise is offered in return for an act; and when B, knowing of
the reward, brings the dog safely home, the act is done and A is
bound to pay the reward.
(2) In the offer of a promise for a promise: in which case, when the
offer is accepted by the giving of the promise, the contract consists
of an outstanding obligation on both sides.
Illustration: C offers to pay D a certain sum of money if D will
promise to dig C’s garden for him within a certain time. When D
makes the promise asked for, he accepts the promise offered, and
both parties are bound, the one to do the work, the other to allow
the first to do it and to pay for it.
It will be observed that case (1) differs from (2) in an important respect.
In (1), it is performance on one side which makes obligatory the promise
of the other; the outstanding obligation is all on one side. In consequence,
such a contract is termed ‘unilateral’6 as only (p. 33) one person is bound.
In (2), however, each party is obliged to some act or forbearance which,
at the time of entering into the contract, is future; there is an outstanding
obligation on each side. This is known as a ‘bilateral’ contract, and each
party is both a promisor and a promisee. It is reasonable to presume in
cases of doubt that a bilateral, rather than a unilateral contract has been
concluded. Thus if G says to H: ‘If you will let me have that table you are
making, when it is finished, I will give you £25 for it’, and H replies ‘All
right’, there is a bilateral contract and H is bound to deliver the table.7
(ii) Promises in deeds
In one exceptional situation, however, it is clear that a contract can come

into existence without any need for an ‘offer and acceptance’. This is the
case of a promise in a deed. For example, if a wealthy person, by a
document executed as a deed, promises to pay a college £100,000 in
order to establish a scholarship, the promise is binding without any need
for an acceptance or even knowledge of the promise by the person to
whom the promise is made.8
(iii) Inferences from conduct
The description which has been given of the possible forms of offer and
acceptance shows that conduct may take the place of written or spoken
words either in the offer or in the acceptance.9 An agreement may also be
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2. The Agreement
inferred from conduct alone; the intention of the parties is a matter of

inference from their conduct, and the inference is more or less easily
drawn according to the circumstances of the case.10 In day-to-day
contracts such inferences are frequent. For example, a person who
boards a bus or who hires a taxi thereby undertakes to pay the fare to his
destination even though he makes no express promise to do so.11 Again, a
person who puts a coin in an automatic machine thereby enters into a
contract with the supplier although no words have been exchanged on
either side.
Sometimes the inference from conduct is not so clear, because the

contract has assumed a less simple form. If more than two parties are
involved, it may not be (p. 34) particularly helpful to look for a definite
offer and acceptance. In Clarke v Earl of Dunraven, The Satanita:12
The owners of two yachts, the Satanita and the Valkyrie, entered
them in a club regatta. The rules of the regatta bound competitors
to make good any damage caused by fouling. While preparing for
the start of a race, the Satanita fouled and sank the Valkyrie.
Although the immediate relationship of each owner was not with the
other, but with the secretary of the yacht club, it was held that a contract
existed between them, and that the owner of the Valkyrie could recover
damages. Lord Herschell said:13
The effect of their entering for the race, and undertaking to be

bound by these rules to the knowledge of each other, is sufficient,
where those rules indicate a liability on the part of the one to the
other, to create a contractual obligation to discharge that liability.
Similar principles mean that in the case of a company or other corporate

entity there will, for certain purposes, be a contract both between the
entity and its members and between each of the members themselves.14
(b) The Test of Intention
In common with most European legal systems,15 the test of a person’s

intention is not a subjective, but an objective one; that is to say, the
intention which the law will attribute to a person is always that which
that person’s conduct bears when reasonably construed by a person in
the position of the offeree, and not necessarily that which was present in
the offeror’s own mind. Thus a person may be held to have made an offer
although not appreciating that one was being made16 or not realizing that
the terms of the offer embodied a mistake, as where a rent of £65,000
was mistakenly proposed by a landlord instead of £126,000.17 If a
person’s words or conduct, when reasonably construed, amount to an
offer or to an offer on particular terms, that person will be held to have
made that offer provided that the offeree neither knew nor could
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2. The Agreement
reasonably have known of the misunderstanding at the time the offer was
accepted. The same objective (p. 35) approach applies to an acceptance.
Although the approach is objective, the intentions of the parties are not
entirely irrelevant so that a contract cannot be formed which is in
accordance with the intention of neither party.18 It has been stated that
‘the judicial task is not to discover the actual intentions of each party; it is
to decide what each was reasonably entitled to conclude from the attitude
of the other’.19
2. The Offer
An offer is an intimation, by words or conduct, of a willingness

to enter into a legally binding contract, and which in its terms expressly
or impliedly indicates that it is to become binding on the offeror as soon
as it has been accepted by an act, forbearance, or return promise on the
part of the person to whom it is addressed.
(a) Offers And Invitations To Treat
It is sometimes difficult to distinguish statements of intention which

cannot, and are not intended to, result in any binding obligation from
offers which admit of acceptance, and so become binding promises. A
person advertises goods for sale in a newspaper, or announces that they
will be sold by tender or by auction; a shopkeeper displays goods in a
shop window at a certain price; or a bus company advertises that it will
carry passengers from A to Z and will reach Z and other intermediate
stops at certain times. In such cases it may be asked whether the
statement or act made is an offer capable of acceptance or merely an
invitation to make offers, and do business; one that contemplates that
further negotiations will take place. A statement or act of this nature, if it
is not intended to be binding, is known as an ‘invitation to treat’.
As the classification of any particular act or statement as being either an

offer or an invitation to treat depends on intention to be bound rather
than upon any a priori principle of law, it is not easy to reconcile all the
cases or their reasoning. Where the intention is unclear, the Court will
take account of the surrounding circumstances and consequences of
holding an act or statement to be an offer as well as what is in fact said.
A statement of fact made merely to supply information cannot be treated

as an offer, and accepted, so as to create a valid contract. In Harvey v
Facey:20
(p. 36)
A telegraphed to B ‘Will you sell us Bumper Hall Pen? Telegraph

lowest cash price, answer paid’. B replied by telegram, ‘Lowest
price for Bumper Hall Pen £900’. A telegraphed, ‘We agree to buy
Bumper Hall Pen for £900 asked by you’. Bumper Hall Pen was a
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2. The Agreement
plot of land, and A claimed that this exchange of telegrams

constituted a valid offer and acceptance.
The Judicial Committee of the Privy Council pointed out that A’s first
telegram asked two questions, (1) as to the willingness of B to sell, and
(2) as to the lowest price; and that the word ‘telegraph’ in it was
addressed to the second question only. It was held that no contract had
been made, that B in stating the lowest price for the property was not
making an offer but supplying information, that A’s second telegram was
an offer by him—not the less so because he called it an acceptance—and
that this offer had never been accepted by B.
In Gibson v Manchester City Council:21
The city council adopted a policy of selling council houses to its

tenants. Gibson, on a printed form supplied by the council, applied
for details of the price of the council house he was renting and
mortgage terms. The council replied, ‘The corporation may be
prepared to sell the house to you at the purchase price of …
£2,180.’22 Gibson thereupon completed and sent off the application
form to purchase the house.
The House of Lords held that there was no contract because the council’s
letter was not an offer to sell (that is, although this terminology was not
used, it was merely an invitation to treat). The words italicized were fatal
to regarding the letter as an offer.
(i) Advertisements and displays of goods for sale
Generally speaking advertisements in newspapers or periodicals that the

advertiser has goods for sale are not offers.23 Neither are catalogues or
price lists.24 Again, a display of goods marked at a certain price by a
shopkeeper in a shop window25 does not bind the shopkeeper to sell at
that price or to sell at all. The display is merely an invitation to treat; it is
for the customer to offer to buy the goods, and, subject to anti-
discrimination legislation,26 the shopkeeper may choose either to accept
or to refuse the offer. One reason given for this conclusion is that
otherwise the advertiser, catalogue publisher, and shopkeeper would be
obliged to sell to every person who accepted such an ‘offer’, even where
supplies had run out. In the case of displays on shelves in a self-service
shop, which are also generally invitations to treat, it is said that if the
display were an (p. 37) offer, once an article was selected and placed in
the receptacle, the customer would have no right to change his mind.27
Another reason given is that if a display was an offer a shopkeeper might
be forced to contract with his worst enemy: a ‘shop is a place for
bargains, not for compulsory sales’28 but this is less convincing in the
light of modern regulation of trading practices, for example the
prohibition of discrimination on grounds such as disability, race, religion,
sex, and age,29 and the statutory protection of consumers.30 Where the
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2. The Agreement
display clearly states that the goods will be sold to a person who pays the
required price it is, however, likely to be held to be an offer. For example,
a notice stating ‘We will beat any TV HiFi and Video price by £20 on the
spot’ was held to be ‘a continuing offer’ and the shop manager was
criminally liable for a misleading indication as to the price at which goods
may be available.31
(ii) Transactions by machine
Different considerations apply where the transaction is effected through a

machine,32 as where the display is on a vending machine or where, as in
many self-service petrol stations, the product purchased cannot easily be
retrieved from the buyer’s property. In such cases the display is likely to
be an offer. In Re Charge Card Services33 an open offer to sell at pump
prices was held to have been accepted by a motorist putting petrol in the
tank.
(iii) Carriage of persons
The cases differ about the status of acts or statements about the carriage
of persons. A statement in a railway timetable that a certain train will run
at a certain time has been said to be an offer capable of acceptance by a
passenger who goes to the station to buy a ticket,34 although
regulations35 in effect provide that no contractual liability is to arise.
(p. 38) (iv) Tenders
An announcement inviting tenders is not normally an offer; unless

accompanied by words indicating that the highest or the lowest tender
will be accepted,36 it is a mere attempt to ascertain whether an
acceptable offer can be obtained.37 In a case where there is no offer to
contract with the highest or lowest bidder, if the invitation to tender
prescribes a clear, orderly, and familiar procedure, it may be an offer to
consider all conforming tenders. Thus, where, a local authority’s staff
failed to clear a letterbox and the authority did not consider a tender
submitted before the deadline, it was held liable for breach of contract.38
In the case of tenders for major contracts for public works, supplies, and
services the freedom to decide which tender to accept has been limited
by European Union law.39
(v) Auctions
Where goods are put up for sale by auction upon an advertised condition
that the sale shall be ‘without reserve’ the auctioneer thereby indicates to
prospective buyers that the bid of the highest bona fide bidder will be
accepted, and that the goods will not at any stage be withdrawn, for
example, on the ground that the reserve price has not yet been reached.
An auctioneer who does so withdraw the goods is said to be liable for
breach of contract with such a bidder. In Warlow v Harrison:40
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2. The Agreement
An auctioneer advertised a brown mare for sale by auction ‘without

reserve’. The owner’s name was not disclosed. The claimant bid 60
guineas; the owner bid 61 guineas, and the auctioneer knocked
down the mare to him. The claimant sought damages from the
auctioneer as being the highest bona fide bidder.
A majority of the Court of Exchequer Chamber considered that the

auctioneer was liable on a contract that the auction sale was to be
‘without reserve’.41 Certainly there was no contract of sale. A bid at an
auction is only an offer which can be retracted at any time before it is
accepted by the auctioneer by the fall of the hammer,42 and an
advertisement that goods will be auctioned on a certain day is a mere
invitation to treat which does not bind the auctioneer to sell the goods.
Accordingly, where an auctioneer (p. 39) withdraws the goods
prematurely, refusing to knock them down to the highest bidder, there
can be no possible action on any contract of sale because none has yet
come into existence.43
However, the Court’s conclusion that the claimant in Warlow v Harrison

was not suing upon a contract of sale but on a different, collateral
contract between the auctioneer and the highest bona fide bidder that the
sale of the mare be ‘without reserve’,44 which was broken when a bid was
made by or on behalf of the owner, has been criticized.45 First, if an
advertisement that an auction sale will be held is merely an invitation to
treat, how can a stipulation contained in it that the sale will be ‘without
reserve’ be an offer? Secondly, if a bid may be retracted, or outbid, at any
time before it is accepted, how can it be said that it is certain who is the
highest bidder? Thirdly, what is the consideration for the promise, since
the promisee is not bound to purchase but may withdraw the bid at any
time?
But while there is a certain artificiality in treating the bidder as having

provided consideration by bidding, that is, by exposure to the risk that
the bid would be accepted by the auctioneer, this unilateral contract
analysis46 accords with the modern approach to similar situations.47 It
was applied in Barry v Davies,48 effectively ending the controversy over
Warlow v Harrison:
Customs and Excise put up for sale by auction two new engine
analyser machines. Each could be obtained from the manufacturers
for £14,521 but they were being sold without a reserve price. After
the auctioneer failed to obtain bids of £5,000 and £3,000, the
claimant bid £200 for each machine. The auctioneer refused to
accept these bids and withdrew the machines from the auction. The
claimant brought an action against the auctioneer for breach of
contract.
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2. The Agreement
The Court of Appeal, applying the majority’s view in Warlow v Harrison,

held that the holding of an auction without reserve is an offer by the
auctioneer to sell to the highest bidder so that the auctioneer was indeed
contractually bound to sell to the claimant (who was entitled to damages
of £27,600).
(b) General Offers
An offer need not be made to an ascertained person,49 but no contract

can arise until it has been accepted by an ascertained person.
(p. 40) This proposition is best understood by an illustration:
An insurance company offers a reward to any person who finds and

returns a valuable diamond brooch insured by them. X who knows
of the offer, finds and returns the brooch. She is entitled to claim
the reward.50
An offer, by way of advertisement, of a reward for the rendering of certain

services, addressed to the public at large, prima facie creates a power of
acceptance in every person to whom it is made or becomes known. But a
contractual obligation to pay the reward only comes into existence when
an individual person performs the stipulated services, and not before.51 A
general offer may be susceptible of acceptance either by only one person
or by a number of persons.
In some cases, such as the offer of a reward for information or the return
of a lost possession, the offer is exhausted when once accepted. The
offeror clearly does not intend to pay many times over for the same thing.
So, where a reward is offered for information and the information asked
for reaches the offeror from several sources, it has been held that the
person who gave the earliest information is entitled to the reward.52
In other cases the nature of the act asked for by the offeror and the
circumstances in which the offer is made mean that it remains open for
acceptance by any number of persons, such acceptance being signified by
performance of its terms. In Carlill v Carbolic Smoke Ball Co:53
The defendant offered by advertisement to pay £100 to any one

‘who contracts the increasing epidemic influenza colds, or any
disease caused by taking cold, after having used the ball three
times daily for two weeks, according to the printed directions’. It
was added that £1,000 was deposited with the Alliance Bank
‘showing our sincerity in the matter’. Mrs Carlill used the smoke
ball as required by the directions; she afterwards suffered from
influenza and sued the company for the promised reward.
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2. The Agreement
The defendant was held liable. It was urged that a notification of

acceptance should have been made to it but the Court held that this was
one of the class of cases in which, as in the case of a reward offered for
information or for the recovery of lost property, there need be no
acceptance of the offer other than performance of the condition.54 The
further argument that the alleged offer was merely an advertisement or
puff which no reasonable person would take to be serious was rejected
because the statement that £1,000 had been deposited to meet demands
was regarded as evidence of the sincerity of the offer. The advertisement
was an offer which was capable of being accepted by a number of
persons, and which had been accepted by Mrs Carlill when she performed
the stipulated conditions.
(p. 41) (c) Communication of the Offer
In general an offer is effective when, and not until, it is communicated to

the offeree. It follows that there can in general be no acceptance in
ignorance of an offer, and, despite one somewhat unsatisfactory contrary
decision,55 this seems correct in principle.
(i) Cross-offers
The necessity for the communication of the offer, and for its consequent
acceptance, appears to be the reason why two identical cross-offers do
not ordinarily make a contract. Two manifestations of a willingness to
make the same bargain do not constitute a contract unless one is made
with reference to the other.56 In Tinn v Hoffman & Co:57
On 28 November 1871, H wrote to T offering to sell him 800 tons of

iron at 69s per ton, together with a further quantity at the same
price. On the same day, T wrote to H offering to buy 800 tons at
69s, together with a further quantity at a lower price. The letters
crossed in the post. T contended that there was, at all events, a
good contract for 800 tons at 69s per ton.
A majority of the Court of Exchequer Chamber expressed the opinion that

H would not be bound as a result of the simultaneous offers, each being
made in ignorance of the other.
(ii) Offer by rendering services must be communicated
Although conduct such as the rendering of services can constitute an

offer, where that offer is not communicated to the party to whom it is
intended to be made there is no opportunity of rejection and no
presumption of acceptance. Thus, if A does work for B without the
request or knowledge of B, A can only sue in contract for the value of the
work where there is evidence of a recognition or acceptance of the work
by B. This is clearly illustrated by Taylor v Laird:58
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2. The Agreement
T was engaged to command L’s ship and to conduct certain

explorers on an expedition up the River Niger. He threw up his
command in the course of the expedition, but helped to work the
vessel home, though without the knowledge of the defendant. He
then claimed to be remunerated for the services thus rendered.
It was held that he could not recover. L never had the option of accepting
or refusing the services while they were being rendered; and he
repudiated them when he became aware of them. T’s offer, being
uncommunicated, did not admit of acceptance and could not give him any
contractual rights against L. Pollock CB said:59
Suppose I clean your property without your knowledge, have I a

claim on you for payment? How can you help it? One cleans
another’s shoes; what can the other do but put them on? Is that
evidence of a contract to pay for the cleaning?
In certain circumstances, for instance where the services

(p. 42)
rendered are necessary services,60 it may be that there is a liability to

make restitution of an unjust enrichment but such liability is not
contractual.
3. The Acceptance
If a contract is to be made, the offeree must accept the offer.

Acceptance of an offer is the expression, by words or conduct,61 of assent
to the terms of the offer in the manner prescribed or indicated by the
offeror.
(a) Offer and Acceptance Must Correspond
The intention of the offeree to accept must be expressed without leaving

room for doubt as to the fact of acceptance, or as to the coincidence of
the terms of the acceptance with those of the offer. These requirements
may be summed up in the general rule, sometimes called the ‘mirror
image’ rule, that the acceptance must be absolute, and must correspond
with the terms of the offer.
In determining whether or not an acceptance is conclusive, an alleged

acceptance must be distinguished from (i) a counter-offer and rejection;
(ii) an acceptance with some variation or addition of terms; or (iii) an
acceptance which is equivocal, or which is qualified by reference to the
subsequent arrangement of terms.
(i) Counter-offer and rejection
A counter-offer amounts to a rejection of the offer, and so operates to

bring it to an end. In Hyde v Wrench,62 for example:
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2. The Agreement
W offered to sell a farm to H for £1,000. H said that he would give

£950. W refused, and H then said he would give £1,000, and, when
W declined to adhere to his original offer, H tried to obtain specific
performance of the alleged contract.
The Court held that an offer to buy at £950 in response to an offer to sell
for £1,000 was a refusal followed by a counter-offer, and that no contract
had come into existence. But making express what would otherwise be
implied63 or inquiring whether the offeror will modify his terms does not
necessarily amount to a counter-offer. So in Stevenson, Jacques & Co v
McLean,64 the offeree could still accept an offer of a certain quantity of
iron ‘at 40s. nett cash per ton’, even though he had telegraphed to the
offeror requesting information as to possible terms of credit. It was held
that this was not a counter-offer, (p. 43) but was ‘a mere inquiry, which
should have been answered and not treated as a rejection of the offer’.65
(ii) Change of terms
A purported acceptance of an offer may introduce terms at variance with

or not comprised in the offer. Although, exceptionally in such a situation
the response may be regarded as an acceptance with an offer to enter a
further contract,66 generally, in such cases no contract is made, for the
offeree in effect rejects the offer and makes a counter-offer.67
In Jones v Daniel:68
A offered £1,450 for a property belonging to B. In a letter accepting

the offer B enclosed a contract for the signature of A. This
document contained various terms as to payment of deposit, date of
completion, and requirement of title which had never been
suggested in the offer.
The Court held that there was no contract; B had not accepted A’s offer
but made a counter-offer of his own, which was never accepted by A.
(iii) ‘Battle of the forms’
The problem of the ‘battle of the forms’ arises where, for example, a firm
offers to buy goods from another on a form which contains or refers to its
standard conditions of trade. The seller ‘accepts’ the offer by a
confirmation on a form which contains or refers to its (the seller’s)
standard conditions of trade. These may differ materially from those of
the buyer. It may then deliver the goods. Two questions typically arise; is
there a contract and, if there is, do the buyer’s or the seller’s conditions
prevail?
One possible solution is by what might be called the ‘first shot’ approach.
Under this the seller-offeree, by purporting to accept the buyer-offeror’s
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2. The Agreement
offer, is said to have waived its own conditions of trade, so that the
contract is concluded subject to the buyer’s conditions.69 In Butler
Machine Tool Co Ltd v Ex-cell-o Corporation (England) Ltd,70 however, a
majority of the Court of Appeal (Lawton and Bridge LJJ) applied the
‘mirror image’ rule and stated that the seller’s confirmation amounts to a
counter-offer. This is capable of acceptance by the buyer. The buyer may
indicate that it accepts the counter-offer made to it by some act or
performance; for example, the receipt and acceptance of the goods or by,
for instance, the return of an ‘acknowledgement’ (p. 44) form containing
the seller’s conditions. This can be called the ‘last shot’ approach. In our
example such an acceptance would conclude a contract subject to the
seller’s conditions, since it was the seller who fired the ‘last shot’ in the
battle of the forms. Lord Denning MR, while arriving at the same result,
advocated a more flexible, but less certain, approach, by which one
should look at whether the documents revealed ‘an agreement on all
material points’,71 but the Court of Appeal in Tekdata Interconnections
Ltd v Amphenol Ltd72 confirmed that the majority in Butler Machine Tool
Co Ltd v Ex-cell-o was correct. Except wherethere is a long-term clear
course of dealing between the parties on particular terms, the normal
rules of offer and acceptance must be applied; and, applying those rules,
the standard result will be that the party which sends its terms last (the
party which ‘fires the last shot’) will win because that will be the offer
which is regarded as accepted by the other party’s conduct. What this
approach lacks in flexibility it gains in terms of certainty.
In cases where there is no contract even though services have been

rendered or goods delivered, the rendering of services or delivery of
goods may give rise to a restitutionary non-contractual obligation in
unjust enrichment to pay a reasonable sum.73 But in such cases, while
restitution may protect the performer by the award of the reasonable
value of the performance rendered, a recipient, who may have had
certain requirements as to the time of performance or its quality, may be
unprotected. This is because, in the absence of a contract, the party
rendering the services or delivering the goods will not be liable in
damages for delay or for defective performance.74 However, the better
view is that this can be satisfactorily dealt with, within the non-
contractual law of unjust enrichment, as going to the relevant enrichment
of the recipient.75
(iv) Equivocal or qualified acceptance
The acceptance must assent unequivocally and without qualification to

the terms of the offer. For example, the reply ‘Your order is receiving our
attention’ is too indefinite to amount to an acceptance.76 The acceptance
may also be qualified by reference to the preparation of a more formal
contract or by reference to terms which have still to be negotiated. In
such a case the agreement is incomplete77 and there is no binding
contract.
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(p. 45) (b) Communication of the Acceptance
(i) Mental assent insufficient
Acceptance means, in general, communicated acceptance, which must be

something more than a mere mental assent. A tacit formation of intention
is insufficient.
In an old case in the Year Books78 it was argued that where the produce
of a field was offered to a man at a certain price if he was pleased with it
on inspection, the contract was made and the property passed when he
had seen and approved of the subject of the sale. But Brian CJ said:
It seems to me the plea is not good without showing that he had

certified the other of his pleasure; for it is trite learning that the
thought of man is not triable, for the devil himself knows not the
thought of man; but if you had agreed that if the bargain pleased
then you should have signified it to such an one, then I grant you
need not have done more, for it is matter of fact.
Lord Blackburn approved this decision in Brogden v Metropolitan Railway

Co:79
B (a supplier of coal) altered a draft coal supply agreement sent to

him by M and returned it signed and marked ‘approved’. M’s agent
put it in a drawer. The parties appear to have ordered and supplied
coal upon the terms stated but, a dispute having arisen, B
contended that he was not bound by the agreement.
It was held that there was a contract between the parties. This had not,
however, come into existence at the time M’s agent acquiesced in the
offer by putting the letter in his drawer but later, either when coal was
ordered by M or supplied by B.
(ii) Communication to the offeror
Even if there is some overt act or speech to give evidence of the intention
to accept, English law stipulates, in addition, that acceptance is normally
not complete unless and until it is communicated to the offeror. In the
words of Lindley LJ: ‘Unquestionably, as a general proposition, when an
offer is made, it is necessary in order to make a binding contract, not only
that it should be accepted, but that acceptance should be notified’.80
Thus, if an offer is made by telephone, and in the middle of the reply the
line goes dead, so that the offeror does not hear the words of acceptance,
there is no contract.81 Again, if a person shouts to another across a river
or courtyard, but the offeror does not hear the reply because it is
drowned by an aircraft flying overhead, there is no contract at that
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2. The Agreement
moment and the offeree must repeat the acceptance in order that it might
be effective.
(p. 46) (iii) Communication other than by offeree
The justification for the rule requiring communication is that the offeror
is entitled to know whether a binding contract has been concluded by
acceptance. In principle, therefore, there would seem to be no reason
(other than one of certainty) why a contract should not come into
existence if the offeror is made aware or is informed that the offer has
been accepted even though the acceptance is not communicated to the
offeror by the offeree.82 Powell v Lee,83 however, appears to hold that it is
necessary that the acceptance be communicated by the offeree or by his
duly authorized agent.
The managers of a school resolved to appoint the claimant as its

headmaster. One of the managers, acting in his individual capacity,
informed the claimant. The claimant received no other
communication and subsequently the resolution was rescinded.
It was held that there was no concluded contract. It was said: ‘the mere
fact that the [whole body of] managers did not authorize such a
communication, which is the usual course to be adopted, implied that
they meant to reserve the power to reconsider the decision at which they
had arrived’.84 In the absence of facts giving rise to such an implication,
however, communication by a third party should, it is submitted, suffice.
We now turn to the exceptions to the general rule that acceptance must
be communicated before it can take effect.
(iv) Waiver of communication
The general rule that an acceptance of an offer made ought to be notified

to the offeror is for the benefit of the offeror, who may expressly or
impliedly waive the requirement of notification and agree that an
uncommunicated acceptance will suffice. Thus acceptance may in certain
circumstances be held to have been made even though it has not yet
come to the notice of the offeror. In such a case two things are necessary.
There must be an express or implied intimation from the offeror that a
particular mode of acceptance will suffice. And there must be some overt
act or conduct on the part of the offeree which is evidence of an intention
to accept, and which conforms to the mode of acceptance indicated by the
offeror.
In Carlill v Carbolic Smoke Ball Co,85 previously discussed, it will be

remembered that the manufacturers of the smoke balls advertised
inviting performance of a condition, and it was sufficient for the purposes
of binding them that Mrs Carlill had performed the condition without
communicating to them the acceptance of the offer. Bowen LJ stated:86
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The person who makes the offer may dispense with notice to
himself if he thinks it desirable to do so, and I suppose there can be
no doubt that where a person in an offer made by him to another
person, expressly or impliedly intimates a particular method of
acceptance as sufficient to make the bargain binding, it is only
necessary for the other person to whom (p. 47) such offer is made
to follow the indicated mode of acceptance; and if the person
making the offer, expressly or impliedly intimates in his offer that it
will be sufficient to act on the proposal without communicating
acceptance of it to himself, performance of the condition is a
sufficient acceptance without notification.
The nature and terms of the offer need to be considered carefully to

ascertain whether they entitle the offeree to dispense with notice of
acceptance. If A tells B by letter that he will receive and pay for certain
goods if B will send them to him, such an offer may be accepted by
sending the goods.87
(v) Promise for an act
In the case of general offers and other offers which indicate performance
as a mode of acceptance so as to create a unilateral contract, as in Carlill
v Carbolic Smoke Ball Co, it is performance, not notice of acceptance,
that is contemplated. An offer of reward for the supply of information, or
for the return of a lost dog, does not contemplate an intimation of
acceptance from every person who, on becoming aware of the offer,
decides to ascertain the information or to search for the dog.88 Indeed the
offeree may already have the information or have found the dog, and can
do no more than send it on to the offeror. The question as to whether it is
the commencement of performance, or its completion, that constitutes
the acceptance of an offer of a unilateral contract is discussed below in
the context of revocation of the offer.89
(vi) Acceptance by post
A distinction is drawn between acceptance by instantaneous methods

such as telephone and e-mail,90 and acceptance by non-instantaneous
methods such as post.91 Instantaneous methods, where the acceptor will
generally know that his communication has not arrived at once and can
try again, are subject to the general requirement that acceptance must be
communicated to the offeror.92 Where, however, it is reasonable for the
offeree to notify acceptance by post,93 the acceptance is completed when
the letter is posted.94 The offeror is bound from that time although the
acceptance has not been delivered and may never be delivered.
(p. 48) The postal acceptance rule was laid down in Adams v Lindsell:95
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2. The Agreement
On 2 September 1817, L wrote offering to sell to A a certain

quantity of wool, and added ‘receiving your answer in course of
post’. If the letter containing this offer had been properly directed,
an answer might have been received by the 7th; but it was
misdirected and did not reach A until the 5th so that their
acceptance, posted the same day, was not received by L until the
9th. On the 8th, however, that is before the acceptance had arrived,
L sold the wool to another. A sued for breach of contract.
It was unsuccessfully argued on behalf of L that there was no contract

between the parties until the letter of acceptance was actually received.
The Court stated:96
If that were so, no contract could ever be completed by post. For if

[L] were not bound by their offer when accepted by [A] until the
answer was received, then [A] ought not to be bound till they had
received the notification that [L] had received their answer and
assented to it. And so it might go on ad infinitum.
The logic of this passage is questionable, but it was undoubtedly

necessary for the Court to establish some definite rule as to the time of a
postal acceptance.
One of the more obvious consequences of the postal acceptance rule is

that the offeror must bear the risk of the letter of acceptance being
delayed or lost. In Household Fire and Carriage Accident Insurance Co
Ltd v Grant:97
The defendant offered to buy shares in the claimant company. The

claimant sent a letter of acceptance to the defendant but it was lost
in the post and never arrived. The liquidator of the company sued
the defendant for the money owing for the shares.
The Court of Appeal held that, as an acceptance by post is valid when

sent, there was a contract under which the defendant was bound to pay
for the shares.
Where, however, the delay or loss is due to the fault of the offeree, as in
the case of an acceptance which is improperly addressed or insufficiently
stamped, it would seem that it only takes effect if and when it is received
by the offeror, provided that this occurs within the time within which a
regular acceptance would have been received.98
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2. The Agreement
(vii) Place of contracting
Whether the postal acceptance rule applies also determines where a

contract is made. If the means of communication is by letter, the contract
is complete when the letter is posted,99 (p. 49) and it is there that the
contract is made. In other cases the general rule that the contract is
made when and where the acceptance is received applies.100
(viii) Rationale of postal rule
Various attempts have been made to justify the postal acceptance rule
analytically.101 One line of reasoning attempts to eliminate any difficulties
as to consensus by treating the post office as the agent of the offeror not
only for delivering the offer, but for receiving the notification of its
acceptance;102 yet the post office is clearly not an agent to whom
acceptance is or could be communicated. Another is based on the fact
that posting the acceptance puts it irretrievably out of the offeree’s
control. The same can, however, be said of communication by telex which
is not completed until receipt103 so this does not explain why posting
exceptionally constitutes an acceptance without notification.
The better explanation would seem to be that the rule is based, not on
logic, but on commercial convenience.104 If hardship is caused, as it
obviously may be, by the delay or loss of a letter of acceptance, some rule
is necessary, and the rule at which the Courts have arrived is probably as
satisfactory as any other would be.105
First, it is always open to the offeror to secure protection by requiring

actual notification of the acceptance.106 The nature of the offer or the
circumstances in which it was made may indicate that notification is
required and Courts may be willing to displace what has been termed an
‘artificial concept of communication’.107 Secondly, the rule is a pragmatic
way of limiting the power to revoke an offer before acceptance,108 even
where the offeror has promised not to.109 It also prevents the offeree from
being able to nullify the acceptance while it is in transit and thus from
speculating by watching the market and deciding whether to send an
overtaking rejection.110 Further, in the (p. 50) event of delay or loss of the
letter of acceptance, it is the offeror who is more likely to be the first to
enquire why no reply has been received to the offer, rather than the
offeree to enquire whether the acceptance has been received.
The rule has, however, been criticized.111 The number of different modes
of communication now available112 has been said to give rise to an
increasing number of problems of demarcation and it is argued that the
law would be much more coherent if there were only one rule for all
means of communication. It has also been said that the law should not, as
the postal acceptance rule does, favour the offeree because, while the
offeror is in ignorance as to the actions of the offeree, the offeree has full
knowledge of what the position is. The offeree knows that the acceptance
has been posted and knows or ought to know that mail is not infrequently
delayed.113 Nevertheless, the ability of the offeror to control the method
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2. The Agreement
of acceptance, the offeror’s ability to revoke even a ‘firm’ offer before

acceptance,114 and the desirability of preventing speculation by the
offeree are, it is suggested, good reasons for the rule. It is significant that
the Scottish Law Commission’s proposal to abolish it was made together
with a proposal to prohibit the offeror from revoking a ‘firm’ offer.115
The rule may in any event not be as anomalous as it appears when

compared only with the rules governing instantaneous modes of
communication. In a previous edition of this work, it was argued that the
principles governing postal acceptance were merely examples of a wider
principle that where the offeror either expressly or impliedly indicates the
mode of acceptance and this, as a means of communication, proves to be
nugatory or insufficient, he does so at his own risk.116 Suppose that A
sends an offer to B by messenger across a lake with a request that B, if
she accepts, will at a certain hour communicate her acceptance by firing
a gun or lighting a fire. Why, it was asked, should B suffer if a storm
renders the gun inaudible or a fog obscures the light of the fire?
Although, as we have seen,117 this ‘risk’ approach does not apply where
instantaneous communication is concerned, it is suggested that it has
validity in cases where there is bound to be a substantial interval between
the time when the acceptance is sent and the time when it is received.118
(ix) Acceptance by silence
In principle, it is difficult to see how the silence or inaction of an offeree

who fails to reply to an offer can operate as an acceptance, for there will
have been no communication (p. 51) of the acceptance to the offeror.
Even if the offeror has waived119 communication by indicating that
acceptance by silence will suffice, it is clear that the offeror cannot
confront the offeree with the alternative of either refusing the offer or
being subjected to a contractual obligation by reason of the failure to
reply. Although a form or time of acceptance may be prescribed, an
offeror cannot prescribe the form or time of refusal so as to impose a
contract on the other party if the other party does not refuse in some
particular way or within some particular time.120 In Felthouse v Bindley,
for example:121
F offered by letter to buy his nephew’s horse for £30 15s, adding,
‘If I hear no more about him I shall consider the horse mine at £30
15s’. No answer was returned to this letter, but the nephew told B,
an auctioneer, to keep the horse out of a sale of his farm stock, as
he intended to reserve it for his uncle F. B sold the horse by
mistake, and F sued him for conversion of his property.
The Court held that as the nephew had never signified to F his
acceptance of the offer before the auction sale took place, there was no
bargain to pass the property in the horse to F, and therefore he had no
right to complain of the sale. Willes J said:122 ‘It is clear that the uncle
had no right to impose upon the nephew a sale of his horse for £30 15s
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2. The Agreement
unless he chose to comply with the condition of writing to repudiate the

offer’.
In more modern times this same principle may be illustrated by the

practice of sending out unsolicited goods. A publisher may, for example,
without previous order, send a book to a prospective customer with a
letter saying, in effect, ‘If you do not return the book by a certain day, I
shall presume that you have bought it’. It is clear that he cannot by these
means impose a contract on the unwilling recipient. But persons with no
knowledge of the law may well be misled into thinking that they are
bound to pay for the book, and the subsequent letters which they receive
may frequently be designed to foster this misapprehension. As a result, in
1971, the legislature enacted the Unsolicited Goods and Services Act
whereby the recipients of unsolicited goods may, in certain
circumstances, treat them as if they were an unconditional gift to
themselves, and suppliers may be guilty of a criminal offence if they
demand or threaten legal proceedings for payment.123
On the other hand, circumstances can arise where acceptance could more
legitimately be presumed from silence. Previous dealings between the
parties may have been conducted on the basis, for example, that orders
for goods have been fulfilled by the seller without any notification of
acceptance other than the despatch of the goods, and the offeror has
thereby been led to believe that the practice will continue.124 It is even
arguable by analogy with the cases we have noted on waiver by the
offeror of the need (p. 52) for communication of acceptance, that, if the
offeror stipulates that acceptance may be constituted by silence or
inaction, an unequivocal manifestation of an intention to accept on the
part of the offeree (or, possibly, detrimental reliance on the offer by the
offeree),125 should bind the offeror. This, however, would run counter to
the decision in Felthouse v Bindley, where, it will be noted, the nephew
made known his intention to accept his uncle’s offer. No doubt, in many
cases, silence is ambiguous126 and therefore cannot constitute an
acceptance. But if, as in Felthouse v Bindley itself, the necessary intention
to accept could be proved, there seems to be no convincing reason why a
contract should not come into existence, particularly where the offeree
has relied on the terms of the offer and it is the offeror who now denies
that there is a contract. More recent dicta support this. Thus, it has been
stated:127
[W]here the offeree himself indicates that an offer is to be taken as

accepted if he does not indicate to the contrary by an ascertainable
time, he is undertaking to speak if he does not want an agreement
to be concluded. I see no reason in principle why that should not be
an exceptional circumstance such that the offer can be accepted by
silence.
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(c) Acceptor Must Have Knowledge of Offer
If A offers a promise for an act and B does the act in ignorance of the
offer, can B claim performance of the offer on becoming aware of its
existence? As illustrated by the case of cross-offers,128 the answer
appears to be that, if B has not heard of the offer before doing the act, it
cannot be accepted.129 In Gibbons v Proctor,130 however, a Divisional
Court held that a police officer was entitled to claim a reward, offered by
handbills, for information given to a superintendent of police, although it
seems the officer did not know of the handbills before giving the
information. The decision, as reported, is an unsatisfactory one, for the
facts of the case are by no means clear. Accordingly, it cannot be
considered as of compelling authority, and a New York case, Fitch v
Snedaker,131 is sometimes cited to the contrary. It was there laid down
that a reward cannot be claimed by one who did not know that it had
been offered. The latter decision seems correct in principle. A person who
does an act for which a reward has been offered in ignorance of the offer
cannot say either that there was a consensus of wills with the offeror, or
that the act was done in return for or in reliance on the promise offered.
If, however, the acceptor knows of the offer, but is inspired to
performance by a motive other than that (p. 53) of claiming the reward,
such a motive is immaterial. So in Williams v Carwardine132 where the
claimant, with knowledge of the reward, supplied information leading to
the conviction of an assailant for murder, but only did this ‘to ease her
conscience, and in hopes of forgiveness hereafter’, she was held entitled
to claim the £20 offered. Her acceptance could be referred to the offer.
(d) Prescribed Mode of Acceptance
If the terms or the circumstances of the offer do no more than suggest a

mode of acceptance, it seems that the offeree would not be bound to this
mode so long as the mode used was one which did not cause delay, and
which brought the acceptance to the knowledge of the offeror. A
departure from the usual or suggested method of communication would
probably throw upon the offeree the risk that the acceptance would be
delayed, but, subject to this, an offer delivered by hand could be accepted
by post, or an offer made by post could be accepted by telex. Is, however,
an offeror who expressly prescribes the method of communication free to
treat any departure from this method as a nullity? In the American case,
Eliason v Henshaw:133
E offered to buy flour from H, requesting that an answer should be

sent to him at Harper’s Ferry by the wagon which brought the offer.
H sent a letter of acceptance by mail to Georgetown, thinking that
this would reach E more speedily. He was wrong, and the letter
arrived after the time that the reply might have been expected.
The Supreme Court of the United States held that E was entitled to refuse
to purchase:134
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2. The Agreement
It is an undeniable principle of the law of contracts, that an offer of

a bargain by one person to another, imposes no obligation upon the
former, until it is accepted by the latter, according to the terms in
which the offer was made. Any qualification of, or departure from,
those terms, invalidates the offer, unless the same be agreed to by
the person who made it.
The same rule applies in English law: an offeror, who by the terms of the
offer insists upon its acceptance in a particular manner, is entitled to say
that he is not bound unless acceptance is effected or communicated in
that precise way.135 Nevertheless, if the stipulation as to the mode of
acceptance is inserted at the instance of and for the protection or benefit
of the offeror, the offeror may by conduct or otherwise waive strict
compliance with it, provided that the offeree is not adversely affected.136
Moreover, unless as a matter of construction that prescribed mode of
acceptance is mandatory, another mode of acceptance which is no less
advantageous to the offeror will suffice.137
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2. The Agreement
(p. 54) (e) Revocation of the Acceptance
Since the general rule is that acceptance is not complete until it has been
communicated to the offeror, it follows that an acceptance can be revoked
at any time before this occurs, provided, of course, that the revocation
itself is communicated before the acceptance arrives. But what is the
position in relation to postal acceptances? Since the acceptance is
complete as soon as the letter of acceptance is posted, a telephone call
revoking the acceptance would be inoperative, though it reached the
offeror before the letter. This, it is argued, is both the logical and fair
conclusion; otherwise the offeree could blow both hot and cold, having
the benefit of certainty in the postal acceptance, and the opportunity to
revoke it if the offer turned out suddenly to be disadvantageous. On the
other hand, it is contended that such a revocation can in no way prejudice
the offeror, who could not know of the acceptance until it arrived, by
which time he would already be aware of the revocation. There is no
direct English authority on this point138 but it is probably the better view
that the offeree cannot so revoke.139 If, for example, shares are offered on
a fluctuating market, it would seem unfair if the offeree could bind the
offeror by a postal acceptance when the shares advanced in price, but
send off a revocation if the market fell. There is no reason why an offeree
who chooses to accept by post should have an opportunity of changing his
mind which would not have been available if the contract had been made
face-to-face.
This solution should not, however, be operated to the detriment of the

offeror. If the offeror acts on the purported revocation, for example by
selling the shares which are the subject-matter of the offer, the offeree
would not be permitted once again to change his mind and rely on the
postal acceptance rule in order to claim damages for breach of contract.
4. Termination of the Offer
Once the acceptance has been communicated to the offeror, it

cannot be recalled or undone. But until an offer is accepted, it creates no
legal rights, and it may be terminated at any time. Termination of the
offer may come about in a number of ways: it may be revoked before
acceptance, or the offeree may reject the offer. Also, an offer may lapse
by the passage of time or be determined by the death of the offeror or
offeree.
(a) Revocation of the Offer
The law relating to the revocation of an offer may be summed up in two

rules: (1) an offer may be revoked at any time before acceptance; and (2)
an offer is made irrevocable by acceptance.
(p. 55) (i) Revocable before acceptance
The first of these rules may be illustrated by the case of Offord v

Davies:140
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2. The Agreement
D made a written offer to O that, if he would discount bills for

another firm, D would guarantee the payment of such bills to the
extent of £600 during a period of twelve calendar months. Some
bills were discounted by O, and duly paid, but before the twelve
months had expired D, the guarantor, revoked his offer and notified
O that he would guarantee no more bills. O continued to discount
bills, some of which were not paid, and then sued D on the
guarantee.
It was held that the revocation was a good defence to the action. The
alleged guarantee was an offer, for a period of 12 months, of promises for
acts, of guarantees for discounts. Each discount turned the offer into a
promise, pro tanto, but the entire offer could at any time be revoked
except as regards discounts made before notice of revocation.
(ii) Irrevocable after acceptance
The rule that an offer is made irrevocable by acceptance is illustrated by

Great Northern Railway Co v Witham,141 which, like that in Offord v
Davies, involved a continuing relationship:
The GNR company advertised for tenders for the supply of such
iron articles as it might require between 1 November 1871, and 31
October 1872. W sent in a tender to supply the articles required on
certain terms and in such quantities as the company ‘might order
from time to time’, and his tender was accepted by the company.
Orders were given and executed for some time on the terms of the
tender but finally W was given an order which he refused to
execute. The company sued him for breach of contract in that he
had failed to perform this order.
It is important to note the exact relationship of the parties. The company

by advertisement invited all dealers in iron to make tenders, that is, to
state the terms of the offers which they were prepared to make. W’s
tender stated the terms of an offer which might be accepted at any time,
or any number of times, in the ensuing 12 months. The acceptance of the
tender did not in itself make a contract; it was merely an intimation by
the company that it regarded W’s tender as a standing offer, which on its
part it would be willing to accept as and when it required the articles to
be supplied. Each fresh order constituted an acceptance of this standing
offer. If W wished to revoke his offer he could have done so, but only as to
the future; in the meantime he was bound to perform any order already
made. The Court therefore held that he was liable for breach of contract.
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2. The Agreement
(iii) Unilateral contracts
Some difficulty is experienced in the case of ‘unilateral’ contracts, where

an act is done in return for a promise.142 If one person promises a certain
sum to another on performance by that other of a stipulated act, at what
point in time is the acceptance (p. 56) of the offer complete? The
traditional answer to this question is that the acceptance is complete only
when the act has been completely performed. It therefore follows that up
to this time the offeror is at liberty to revoke the offer. If, for example, a
firm of breakfast food manufacturers were to offer to pay £100 to any
person who consumed one hundredweight of their breakfast food within
the next three months, they would be able to revoke their offer after two
months had elapsed—to the detriment of those who had almost completed
their part of the bargain, and with profit to themselves. Or to use a
judicial example,143 if one man offers another £100 if he will go to York,
he can revoke when the other is half-way there.
In order to avoid such an inequitable result,144 Sir Frederick Pollock

argued that a distinction should be drawn between the acceptance of the
offer and the performance of the stipulated act: the acceptance is
complete once the offeree has unequivocally commenced performance (so
that the offeror cannot effectively revoke the offer after this time), but the
offeror is not bound to pay the £100 until the act has been completely
performed.145 This view has some judicial support. In Errington v
Errington,146 where a father promised his son and daughter-in-law that a
house in which they were living should belong to them as soon as they
had paid off the instalments of a mortgage on the premises, and they
commenced to pay them to his knowledge, Denning LJ considered that
this promise could not be revoked:147
The father’s promise was a unilateral contractual promise of the

house in return for their act of paying the instalments. It could not
be revoked by him once the couple entered on performance of the
act, but it would cease to bind him if they left it incomplete and
unperformed.
On this view, the offeror is unable to revoke his offer; but his duty to
perform his obligation is conditional upon performance of the stipulated
act by the offeree.
Denning LJ’s statement was approved by the Court of Appeal in Soulsbury

v Soulsbury:148
The deceased former husband of the claimant promised her that

she would receive £100,000 on his death if she did not enforce an
order for periodical payments in her favour against (p. 57) him or
seek any other order for ancillary relief against him. The question
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2. The Agreement
was whether that constituted a binding contract that could be

enforced by the claimant against the estate of the deceased.
It was held that there was a binding contract. Although the discussion in
the case focused on dismissing policy objections to enforcing this contract
(eg that it ousted the jurisdiction of the Courts), Longmore LJ, with whom
Smith LJ agreed, pointed out that the facts involved a unilateral contract.
Citing Denning LJ in Errington v Errington, Longmore LJ said that there
could be no revocation once the claimant had refrained from suing for
maintenance and that this was a stronger case than Errington because
here the claimant, on the deceased’s death, had completed all possible
performance of the act required for enforcement of the deceased’s
promise.
To overcome the objection that the consideration for the promise (ie what
the offeror has bargained for) is the completion rather than the starting
of the performance, one might argue that there is a subsidiary unilateral
contract under which the offeror promises not to revoke the offer of the
main unilateral contract once the offeree has started to perform.
It may well be, of course, that the nature of the offer itself, or the
circumstances under which it was made, indicate that it was never
intended to be irrevocable by the offeror.149 But otherwise it is submitted
that English law will not deny the offeree a remedy if the offer is revoked
after the performance requested has been commenced.
(iv) ‘Firm’ offers
It will be noted that in Offord v Davies, discussed above, the mere fact
that the defendants promised to guarantee payment for 12 months did
not preclude them from revoking before that period had elapsed.150 It is a
rule of English law that a promise to keep an offer open needs
consideration to make it binding. The offeree in such a case is said to
‘purchase an option’; that is, the offeror, in consideration usually of a
money payment, sometimes nominal,151 makes a separate contract not to
revoke the offer during a stated period. The position is similar where the
offeree expressly or impliedly promises to do or refrain from doing
something in exchange for the offeror’s promise not to revoke the offer.
For example, the offeree may promise not to negotiate with anyone else
for a fixed period.152 Again, a builder tendering for a construction
contract may have invited quotations for a fixed period (ie firm offers)
from electricity or carpentry subcontractors and expressly or impliedly
promised to use the figures contained in those offers in its tender. In
these cases the offeror by its promise precludes itself from exercising its
right to revoke the offer; but where it receives no consideration for
keeping the offer open, it says in effect, ‘You may accept within such and
such a time, but this limitation is (p. 58) entirely for my benefit, and I
make no binding promise not to revoke my offer in the meantime’. The
Law Revision Committee recommended reform of the law on firm offers
so that ‘an agreement to keep an offer open for a definite period of time
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2. The Agreement
or until the occurrence of some specified event shall not be unenforceable

by reason of the absence of consideration’.153 This has not been
implemented.154
A firm offer may, moreover, also become irrevocable where the

transaction can be characterized as a unilateral contract and the offeree
has relied on the offer by embarking on performance of the specified
act.155 We shall see that in its present state of development English law
does not recognize a general principle based on the protection of
reliance.156 Unless a unilateral contract can be found or the action in
reliance has been requested by the offeror and amounts to consideration,
an offeree who relies on a firm offer will not be protected by the law of
contract. Similarly there is unlikely to be a remedy in tort for revoking an
offer that has been relied on157 but, where the offeree’s action in reliance
consists in the rendering of services or the delivery of goods, unless the
offeree can be said to have taken the risk that the offer might be
withdrawn, as may well be the case in the context of tendering, the
offeror may be obliged by the law of unjust enrichment to pay a
reasonable sum in respect of the services or goods.158
(v) Revocation must be communicated
Revocation, if it is to be operative, must be communicated. In the case of

acceptance we have seen that, in certain circumstances, it is not
necessary that the acceptance should have actually come to the notice of
the offeror; the posting of a letter, the doing of an act, may constitute an
acceptance and make a contract. A revocation of an offer cannot,
however, be communicated in the same way, by the posting of a letter of
revocation, or by the sale to A of an article offered to B to purchase but
must be brought to the notice of the offeree. The law on this subject was
settled by Byrne & Co v Leon Van Tienhoven & Co:159
VT, writing from Cardiff on 1 October, made an offer to B in New

York asking for a reply by cable. B received the letter on the 11th,
and at once accepted in the manner requested. In the meantime,
however, VT had, on 8 October, posted a letter revoking the offer.
This letter did not reach B until the 20th.
Lindley J held, first, that a revocation was inoperative until

communicated, and secondly, that the revocation of an offer was not
communicated by the mere posting of a letter; (p. 59) therefore B’s
acceptance on 11 October could not be affected by the fact that VT’s
letter of revocation was already on its way. He pointed out the
inconvenience which would result from any other conclusion:160
If [VT’s] contention were to prevail no person who had received an

offer by post and had accepted it would know his position until he
had waited such a time as to be quite sure that a letter withdrawing
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2. The Agreement
the offer had not been posted before his acceptance of it. It appears
to me that both legal principles, and practical convenience require
that a person who has accepted an offer not known to him to have
been revoked, shall be in a position safely to act upon the footing
that the offer and acceptance constitute a contract binding on both
parties.
It has been stated that a revocation must be ‘brought to the mind’ of the
offeree161 but it is submitted that where it arrives at its address it will be
effective when it would, in the ordinary course of business, have come to
the offeree’s attention.162 Where the offeree refrains from opening a
letter or neglects to pay attention to the telex or fax machine163 it should,
therefore, be effective on arrival. The requirement that a revocation be
communicated means that, in law, an offeror may be bound by an
agreement which it does not believe itself to have made; but, again, if one
of the two parties must suffer, there would seem no good reason why it
should be the offeree rather than the offeror.
The case of Dickinson v Dodds164 establishes that an offeree who knows

that an offer has been withdrawn cannot accept it even if the
communication has not come from the offeror:
On 10 June 1874, Dodds made a written offer to Dickinson to sell

certain premises for £800, and stating that this offer would remain
open until 9 a.m. on 12 June. On the 11th, however, he sold the
property to a third person without notice to Dickinson. Dickinson
had in fact been informed of the sale, though not by anyone acting
under the authority of Dodds. Nevertheless before 9 a.m. on the
12th he purported to accept Dodds’ offer. He then brought an
action for specific performance of the contract.
The Court of Appeal held that there was no contract. James LJ, after
stating that a promise to keep the offer open could not be binding, and
that at any moment before a completed acceptance of the offer one party
was as free as the other, went on to say:165
[I]n this case, beyond all question, the plaintiff knew that Dodds
was no longer minded to sell the property to him as plainly and
clearly as if Dodds had told him in so many words, ‘I withdraw the
offer’.
(p. 60) Is it then the case that information of the offeror’s intention to
revoke, from whatever source it reaches the offeree, is good notice of

revocation? The inconvenience might be grave. Suppose a company
receives an offer of a consignment of goods from a distant correspondent,
with liberty to reserve an answer for some days. In the meantime an
unauthorized person tells the offeree-company that the offeror has sold or
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2. The Agreement
promised the goods to another. What is the offeree to do? The informant
may be right, and then, if the offeree accepts, the acceptance may be
worthless. Or the informant may be a gossip or mischief-maker and if,
because of what the offeree has been told, it refrains from accepting it
may lose a bargain. The answer might be that it is open to an offeror, who
has revoked an offer without direct communication to the offeree, to show
that the offeree knew, from a trustworthy source, that the offer had been
withdrawn.166 The Court would have to decide every such case on the
facts presented, but the onus would be upon the offeror to establish that
the information ought reasonably to have been believed.
(b) Rejection of the Offer
An offer will be held to have terminated once it has been rejected by the
offeree.167 The rejection need not be express, provided that the offeror is
justified in inferring that the offeree does not intend to accept the
offer.168 It would seem, therefore, that a rejection would not operate so as
to destroy the power of acceptance until it comes to the notice of the
offeror:
Suppose that A makes an offer to B by letter. Immediately on

receiving the letter B writes a letter rejecting the offer. Before the
rejection arrives, B changes her mind and telephones her
acceptance.
There would be a contract between A and B.169 It should not be supposed,

however, that an uncommunicated rejection would always be without
effect. It would, in certain circumstances, preclude the operation of the
rule that a letter of acceptance is complete when posted:
Suppose that C Ltd makes an offer to D. Immediately on receiving

the offer D writes a letter rejecting the offer. Before the rejection
arrives, D changes his mind and posts a letter accepting the offer.
Although there is no English authority on this point, it would not seem

possible for D to claim that the normal rule as to postal acceptance
applied. The letter of acceptance would only create an obligation if
received by the offeror before the rejection.170
(p. 61) (c) Lapse of the Offer
An offer may be considered to have lapsed owing to the passing of time.
(i) Offer for a fixed time
The parties may expressly fix a time within which an offer is to remain
open. Where the offeror prescribes a specific time limit for acceptance,
the offer is conditional upon acceptance within that time.171 For example,
‘This offer to be left open until Friday, 9 a.m. 12 June’, allows the offeree
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2. The Agreement
to accept the offer, if unrevoked, at any time up to the hour named, after
which the offer would lapse.172 Similarly, an offer to supply goods of a
certain sort at a certain price for a year from the present date,173 or an
offer to guarantee the payment of any bills of exchange discounted for a
third party for a year from the present date,174 are offers which may be
revoked at any time, except as regards orders already given or bills
already discounted, and which will, in any event, lapse at the end of a
year from the date of offer.
(ii) No fixed time
In most cases, the offeror will not specify any particular time and it is left
to the Court, in the event of litigation, to say what is a reasonable time
within which an offer may be accepted. We have already seen that an
offer is accepted when acceptance is made in a manner prescribed or
indicated by the offeror.175 If the circumstances of the offer suggest that a
reply is required urgently, the offer will be considered to have lapsed if
the offeree does not quickly decide whether to accept, or chooses a
means of communication which will delay the notification of the
acceptance.176 In other cases, the effluxion of a reasonable time will
terminate the offer. An instance of this is provided by Ramsgate Victoria
Hotel Co v Montefiore:177
The defendant, M, offered by letter dated 8 June to purchase shares

in the claimant company. No answer was received by him until 23
November, when he was informed that shares were allotted to him.
He refused to accept them.
It was held that M’s offer had lapsed by reason of the delay of the
company in notifying its acceptance, and that he was not bound to accept
the shares.
(iii) Express or implied condition
The terms of the offer may expressly indicate that its continuance is
conditional upon the existence of circumstances other than time; and a
condition of this nature may also be implied. For example, where the
contract requires for its performance the existence of a (p. 62) particular
thing, and before acceptance the thing is destroyed or substantially
damaged, the offer is terminated unless the offeror has assumed the risk
of such mischance.178 Thus, in Financings Ltd v Stimson:179
S signed an ‘agreement’ whereby he undertook to buy a car on hire-

purchase terms from F company. The agreement contained a clause
which stated that it was to become binding only upon acceptance
by signature on F’s behalf. Before F signed, the car was stolen by
thieves. It was subsequently recovered in a damaged condition.
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2. The Agreement
It was clear that the ‘agreement’ was in fact only an offer by S since it
contemplated acceptance by F. The Court of Appeal held that S’s offer
was only capable of acceptance if the car remained in substantially the
same condition as it was when the offer was made. Since this was not the
case, the offer had lapsed and there was no binding contract.
(d) Effect of Death
In principle, an offeree cannot accept after being informed of the death of

the offeror.180 An acceptance communicated to the offeror’s personal
representatives will not bind them, unless the offer is one which could not
have been revoked by the offeror during his lifetime.181 Where the offeree
accepts in ignorance of the offeror’s death the position is less clear. One
view is that the offer is terminated automatically and that knowledge is
irrelevant.182 The alternative, and it is submitted better, view183 is that an
offeree who does not know of the offeror’s death should be entitled to
accept the offer, unless the offer on its true construction indicates the
contrary,184 for example where the offer is personal to the offeror.
It would seem that an offer is determined by the death of the offeree;185

his personal representatives could not accept the offer on behalf of the
offeree’s estate.
5. Uncertain and Incomplete Agreements
Although the parties may have reached agreement in the sense

that the requirements of offer and acceptance have been complied with,
there may be no contract because the terms of the agreement are
uncertain or because the agreement is qualified by reference to the need
for a future agreement between them. For ‘unless all the material terms
of (p. 63) the contract are agreed there is no binding obligation. An
agreement to agree in future is not a contract; nor is there a contract if a
material term is neither settled nor implied by law and the document
contains no machinery for ascertaining it’.186
The terms of a contract must provide a basis for determining the

existence of a breach and for giving an appropriate remedy.187
Nevertheless, as we shall see, although there are differences of approach
in the cases, the law is generally anxious to uphold the contract wherever
possible lest it should be criticized as the destroyer of bargains.188 In
addition, where uncertainty or incompleteness prevent an agreement
from constituting a contract the factual situation may give rise to liability
in tort, for instance for misrepresentation,189 or in the law of unjust
enrichment in respect of benefits received.190
(a) Certainty of Terms
The law requires the parties to make their own contract; it will not
construct a contract for them out of terms which are indefinite or
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2. The Agreement
unsettled. A vague or uncertain promise does not accordingly give rise to

an enforceable contract. Thus:
C agreed to sell land to D. The agreement provided that the price

was to be paid by instalments and that on each payment ‘a
proportionate part’ of the land was to be conveyed. It was held that,
since the part to be conveyed on each occasion could not be
identified, the agreement as a whole was uncertain and
unenforceable.191
Similarly when a van was to be bought on the understanding that part of

the price should be paid on ‘hire-purchase’ terms,192 and when woollen
goods were to be bought ‘subject to war clause’,193 there was no contract
in either case, for ‘hire-purchase’ terms, and ‘war clauses’ may take many
forms, and it is for the parties, and not for the Court, to define them.
On the other hand, in many transactions, particularly those for future

performance over a period, the parties may neither be able nor desire to
specify all matters. A transaction which at first sight seems to leave some
essential term of the bargain undetermined may, by implication, if not
expressly, provide some method of determination other than a future
agreement between the parties. In that event, since it is a maxim of the
law that (p. 64) that is certain which can be made certain, there will be a
good contract.194 In every case the function of the Court is to put a fair
construction on what the parties have said and done, though the task is
often a difficult one. As Lord Wright stated:195
Business men often record the most important agreements in crude

and summary fashion; modes of expression sufficient and clear to
them in the course of their business may appear to those unfamiliar
with the business far from complete or precise. It is accordingly the
duty of the Court to construe such documents fairly and broadly,
without being too astute or subtle in finding defects; but, on the
contrary, the Court should seek to apply the old maxim of English
law, verba ita sunt intelligenda ut res magis valeat quam pereat.196
The line between discovering the agreement of the parties and imposing
an agreement on the basis of what the Court considers the parties ought
to have intended can be fine. The Court must be satisfied that the parties
have in fact concluded a contract, and not merely expressed willingness
to contract in the future. It may have regard to what has been said and
done, the context in which it was said or done, the relative importance of
the unsettled matter, and whether the parties have provided machinery
for settling it.
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2. The Agreement
If the contract contains an indefinite, but subsidiary provision, the Courts

have felt at liberty to strike it out as being without significance, and to
give effect to the rest of the contract without the meaningless term.197
(i) Previous transactions; trade custom
In Hillas & Co v Arcos Ltd198 the terms were ascertained from previous
transactions between the same parties and the custom of the particular
trade:
In 1930, H agreed to buy from A a quantity of Russian softwood

timber ‘of fair specification’. The contract contained a clause giving
to H an option to purchase further timber in 1931, but the option
gave no particulars as to the kind or size or quality of the timber,
nor of the manner of shipment. When H sought to exercise the
option, A pleaded that the clause was too indeterminate and
uncertain to indicate an unequivocal intention to be bound, and that
it was merely an agreement to negotiate a future agreement.
The House of Lords held that, in the light of the previous dealings
between the parties, there was a sufficient intention to be bound: the
terms left uncertain in the option could be ascertained by reference to
those contained in the original contract and from the normal practice of
the timber trade.199
(p. 65) (ii) The standard of reasonableness
Alternatively, where the intention to buy and to sell is clear, incidents of

the transaction may be determined by the standard of reasonableness, or
by rules of law. Thus, in Hillas v Arcos the phrase ‘of fair specification’
was held to mean timber distributed over kinds, qualities, and sizes in fair
proportions having regard to the season’s output, a matter which, if the
parties failed to agree, could be ascertained by the Court determining
what was reasonable.200 Similar principles apply to standards provided in
the agreement such as ‘market value’201 ‘open market value’,202 and that
hire shall be ‘equitably decreased’.203 In the case of price, in transactions
for the sale of goods or the supply of services the matter is now governed
by statute. By section 8 of the Sale of Goods Act 1979:204
(1) The price in a contract of sale may be fixed by the

contract, or may be left to be fixed in a manner agreed by the
contract, or may be determined by the course of dealing
between the parties.
(2) Where the price is not determined as mentioned in
subsection (1) above the buyer must pay a reasonable price.
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2. The Agreement
In such cases, the Court will allow an action to recover a reasonable sum
for what the goods or services are worth.205
It has been held that section 8(2) provides for silence as to the price, and
will not apply where an agreement states that the parties will
subsequently agree the price to be paid.206
(iii) Executed transactions
The Court will also have regard to what has been done by the parties.
Where a transaction has been wholly or partially performed it will be:
difficult to submit that the contract is void for vagueness or

uncertainty. Specifically, the fact that the transaction is executed
makes it easier to imply a term resolving any uncertainty, or,
alternatively, it may make it possible to treat a matter not finalised
in negotiations as inessential.207
(p. 66)In the case of executed transactions, the basis of liability is not,
however, always contractual. In some cases the objective test of
intention208 may mean that a contract comes into existence as a result of
the performance and liability can be characterized as consensual.209 In
others, however, as noted in the context of ‘the battle of the forms’,210 no
contractual analysis is possible and, where it is held that there is liability,
it is imposed by the Court in the form of an obligation in the law of unjust
enrichment to pay a reasonable sum for the work done or the goods
received.211 In determining whether to give a restitutionary remedy,
considerations of ‘risk’ and ‘fault’ in relation to the reason the transaction
fails to come to fruition as a contract are taken into account so that a
person who is held to have taken the risk of the transaction failing or to
have been responsible for this will not be entitled to recompense for the
services rendered.212
(iv) Machinery for ascertainment
A contract will not fail for uncertainty even though a material term is to
be agreed in future if the contract itself provides machinery for
ascertaining it. So, for example, if the contract provides that the parties
are to agree a price or quantities for delivery, but also contains an
arbitration clause which covers a failure to agree the price or the
quantities, the Courts will imply that, in default of agreement, a
reasonable price is to be paid, such price to be determined by
arbitration.213 Moreover, in the case of a lease, if premises are let to a
tenant for (say) a term of 10 years at a fixed rent for the first five years,
but at a rent ‘to be agreed’ thereafter, the Court will itself determine by
inquiry what is a reasonable rent for the premises should the parties fail
to agree.214 Unless the machinery is held to be an essential part of the
agreement,215 the Court will similarly intervene if, for any reason, its
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2. The Agreement
operation is stultified, for example, by the refusal of one of the parties to

appoint a valuer or an arbitrator.216
(v) Agreements to negotiate and not to negotiate
The position of agreements to negotiate and agreements not to negotiate

was considered by the House of Lords in Walford v Miles:217
(p. 67)
On 17 March M agreed that, provided that W’s bank confirmed that

W had the necessary financial resources to purchase M’s
photographic processing business for £2 million, they would ‘break
off any negotiations with any third party and would not consider
any other alternative and would not accept a better offer but would
deal exclusively with W, with a view to concluding the deal as soon
as possible after April 6’. M continued to keep in touch with
another interested party and on 27 March withdrew from the
negotiations with W. M later sold the business to the third party. W
sued for breach of contract and for misrepresentation.
It was found that M had represented that they were not in negotiation
with the other interested party and W were awarded tortious damages for
misrepresentation.218 The contractual claims, however, failed.
It was held that an agreement to negotiate (a ‘lock-in’ agreement) is like

an agreement to agree and is unenforceable ‘simply because it lacks the
necessary certainty’.219 Two reasons have been given in the cases for this
conclusion. First, in Walford v Miles, Lord Ackner asked how the Court is
to police such an agreement and questioned whether it is possible to tell
whether it has been breached:220 ‘How can a court be expected to decide
whether, subjectively, a proper reason existed for the termination of
negotiations?’. The position of parties in negotiations was stated to be
adversarial and to entitle them to pursue their own interests so long as
they avoided making misrepresentations and, if they so wished, to
withdraw from the negotiations at any time and for any reason. It was
said not to be possible to cure this uncertainty by asking whether the
negotiations have been conducted ‘in good faith’ because a duty to
negotiate in good faith ‘is as unworkable in practice as it is inherently
inconsistent with the position of a negotiating party’. Secondly, it has
been said that ‘no court could estimate the damages because no one can
tell whether the negotiations would be successful or would fall through:
or if successful, what the result would be’.221
There are, however, difficulties with those reasons and with this
(p. 68)
aspect of the decision in Walford v Miles.222 First, it is unlikely to give

effect to the reasonable expectations of business people which it is an
important object of the law of contract to facilitate.223 It appears to
require a higher degree of certainty and less willingness to use the
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2. The Agreement
standard of reasonableness to resolve ambiguity than some of the cases

considered above. Secondly, it is not the case that it is a fundamental
attribute of a negotiation that the parties should have absolute freedom to
walk away from it for any reason or no reason at all. Thirdly, the objection
that it would not be possible to assess damages is also open to question.
As will be seen, in other contexts in which the transaction contains a
large amount of chance, it has been possible to assess damages and the
Court has not held that there is no contract.224 It is unfortunate that Lord
Wright’s dictum in Hillas v Arcos,225 which recognized a contract to
negotiate, has now been rejected by the House of Lords.
An agreement not to negotiate with any third party, a ‘lock-out’

agreement, has been held not to be enforceable where, as in Walford v
Miles, it does not specify a time limit for its duration apparently on the
ground that it would impose indirectly a duty to negotiate in good faith
which, for the reasons given above, could not be a contract.226 But it was
accepted in Walford v Miles that such an agreement is sufficiently certain
if it is limited to a fixed period.227 The distinction between these two
types of ‘lock-out’ agreement is difficult to justify. It is submitted that
neither indirectly imposes a duty to negotiate in good faith, since the
obligation is a negative one and that it should have been possible to
resolve the uncertainty of there being no fixed period by applying the
standard of a reasonable period.228
(p. 69) (b) Incomplete Agreement
The parties may agree on certain points, but nevertheless leave other
points unresolved. The question then arises whether or not their
agreement is complete. Difficulties of interpretation most frequently arise
where there have been lengthy negotiations in correspondence. The
parties discuss terms, approach, and recede from an agreement;
proposals are made and met by the suggestion of fresh terms. Finally
there is a difference, and one party asserts that a contract has been
made, and the other that matters have never gone beyond the discussion
of terms. Where such a correspondence appears to result, at any moment
of its course, in an agreement, it is necessary to ask whether this
agreement amounts to a completed agreement, or whether there are
other terms of the intended contract, beyond and besides those expressed
in the agreement, which are still in a state of negotiation only, and
without the settlement of which the parties have no idea of concluding
any contract.229 Where, however, the correspondence shows that the
parties have definitely come to terms, even though certain material points
may still be left open, a subsequent revival of negotiations cannot, except
with the consent of both parties, affect the contract so made.230
(i) Effect of reference to further agreement
The classic statement of the issues involved in cases where the

agreement is couched in general terms, but reference is made to a
contract in which the intentions of the parties may be more precisely
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2. The Agreement
stated, is to be found in the judgment of Parker J in Von Hatzfeldt-

Wildenburg v Alexander:231
If the documents or letters relied on as constituting a contract

contemplate the execution of a further contract between the
parties, it is a question of construction whether the execution of the
further contract is a condition or term of the bargain or whether it
is a mere expression of the desire of the parties as to the manner in
which the transaction already agreed to will in fact go through. In
the former case there is no enforceable contract either because the
condition is unfulfilled or because the law does not recognize a
contract to enter into a contract. In the latter case there is a
binding contract and the reference to the more formal document
may be ignored.
(ii) Letters of intent
Difficulties frequently arise where parties in negotiations reach ‘points of

agreement’ or have a ‘memorandum of understanding’ or exchange
‘letters of intent’ or ‘letters of comfort’, but nevertheless contemplate that
a formal document is later to be drawn up.232 (p. 70) In such situations
the question whether or not a binding contract has been concluded is a
matter of interpretation for the Court. While such a letter can have
contractual effect where it contains an express promise as to future
conduct,233 the Court may be unwilling to imply such a promise from a
statement of present fact because the language is often vague or
equivocal or because the surrounding circumstances, including previous
negotiations, indicate that all that is assumed is a moral responsibility.234
The position may be even further complicated by the fact that the parties
often act on their informal agreement pending the execution of a formal
contract. Where a formal contract is eventually concluded, the Court may
be prepared to imply a term that, although the informal agreement is not
legally binding, the formal contract is to have retrospective effect. It will,
in consequence, apply to work done and services rendered before it was
made.235 Where no formal contract is concluded, work done or goods
delivered under a letter of intent which is not legally binding may give
rise to an obligation in the law of unjust enrichment to pay a reasonable
sum for the work or the goods.236
(iii) Agreement ‘subject to contract’
The initial agreement for the sale or lease of land is usually entered into
‘subject to contract’ or ‘subject to formal contract’. Such an agreement
gives rise to no contractual liability.237 Thus in Winn v Bull:238
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2. The Agreement
A written agreement was drawn up whereby the defendant agreed

to take a lease of a house for a definite period and at a fixed rent,
but ‘subject to the preparation and approval of a formal contract’.
It was held there was no contract. Jessel MR explained:239
It comes, therefore, to this, that where you have a proposal or

agreement made in writing expressed to be subject to a formal
contract being prepared, it means what it says; it is subject to and
is dependent upon a formal contract being prepared.
The insertion of the words ‘subject to contract’ renders the agreement

nugatory in fact, and this is so notwithstanding that a deposit may have
been paid.240 As a normal rule, (p. 71) a binding contract for the sale of
land will come into existence only when a formal ‘exchange of contracts’
contained in writing signed by or on behalf of each party241 has taken
place.242 Up to this time either party is free to renegotiate the price, or
even to withdraw entirely from the transaction and to do so because of
movements in the value of property. The express use of the words ‘subject
to contract’ has also been held to preclude a claim in the law of unjust
enrichment for expenses incurred in respect of the intended contract; the
use of those words was said to mean that the parties had in effect
expressly agreed that there should be no legal obligation by either party
to the other unless and until a formal contract had been entered into.243
But in other cases, restitutionary remedies for the return of money
paid244 or for the value of work done under anticipated contracts
concerning land have been granted.245
On the other hand, an agreement for the sale or lease of land will be
binding if the terms of the further formal contract are in existence and
known to the parties, and not merely in contemplation. For example:
An offer was made to buy land, and ‘if offer accepted, to pay deposit
and sign contract on the auction particulars’; this was accepted,
‘subject to contract as agreed’. The acceptance clearly embodied
the terms of the contract mentioned in the offer, and constituted a
complete contract.246
Further, it has been held that if the parties use the phrase ‘a provisional
agreement’, they then agree to be bound from the beginning, even though
they stipulate that a formal document is to be drawn up later on.247
(iv) Contracts subject to condition
There are situations which at first sight appear to be cases of incomplete

agreement, but really turn out to be cases where there is an immediate
binding contract, although some of the parties’ rights and obligations may
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2. The Agreement
be dependent upon the happening of a particular event.248 For example,

the agreement may contain such a term as ‘subject to the purchaser’s
solicitors approving the title’. Until this approval is given, the contract
need not be implemented, although neither party is free to withdraw from
it unilaterally. Alternatively, the contract may be fully operative at once,
but upon the happening of a particular event it (p. 72) is thereby
discharged.249 The insertion of such conditions produces a quite different
effect from a reservation like ‘subject to contract’ which prevents the
formation of any contract at all. They are dealt with in Chapter 5, The
Terms of the Contract.250
6. Intention To Create Legal Relations
Although a separate requirement of intention to create legal

relations did not exist until the nineteenth century,251 it is now
established that an agreement will not constitute a binding contract
unless it is one which can reasonably be regarded as having been made in
contemplation of legal consequences. A mere statement of intention made
in the course of conversation will not constitute a binding promise,
though acted upon by the party to whom it was made,252 and even
negotiated agreements do not necessarily give rise to legal obligations.
For example, a collective agreement between employers and trade unions
is conclusively presumed not to have been intended by the parties to be
legally enforceable unless it is in writing and contains a provision stating
that the parties intend it to be a legally enforceable contract.253
A recent and entertaining example of the requirement of an intention to

create legal relations is provided by Blue v Ashley:254
In a conversation in a pub, A said to B that he would pay him £15

million if B could get the price of shares in Sports Direct, which A
owned, to £8. B alleged that that was a binding offer of a unilateral
contract and that, when the shares did reach £8, A had broken the
contract by refusing to pay him the £15 million.
It was held that there was no binding contract. This was essentially
because A had had no intention to create legal relations when he made
that ‘promise’. No one present thought that A had made a serious
commitment. What he had said was merely jocular banter.
(a) Social Engagements
Sometimes it is clear from the nature of the agreement that there was no
intention to enter into a binding contract. A prime example is a social
engagement. This is not always because such engagements are not
reducible to a money value, for they often may be. The (p. 73) acceptance
of an invitation to dinner or to play in a cricket match,255 of an offer to
share the cost of petrol used on a journey,256 or to take part in a golf
club’s competition257 or between friends relating to musical performances
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2. The Agreement
by them258 form agreements in which the promisee may incur expense in

reliance on the promise. The damages resulting from breach might be
ascertainable, but the Courts would hold that, if no legal consequences
could reasonably have been contemplated by the parties, no action will
lie.
In Balfour v Balfour, Atkin LJ stated:259
It is necessary to remember that there are agreements between

parties which do not result in contracts within the meaning of that
term in our law. The ordinary example is where two parties agree to
take a walk together, or where there is an offer and an acceptance
of hospitality. Nobody would suggest in ordinary circumstances that
those agreements result in what we know as a contract.
(b) Family Arrangements
Family arrangements are another category of agreement in which there

may be no intention to create legal relations. In Balfour v Balfour:
A husband was employed in a government post in Ceylon. He

returned with his wife to England on leave, but she was unable to
go back to Ceylon with him for medical reasons. He consequently
promised orally to make her an allowance of £30 a month until she
rejoined him. He failed to make this payment and she sued him.
The Court of Appeal held that, although it was not impossible for a
husband and wife to enter into a contract for maintenance, in this case
they never intended to make a bargain which could be enforced in law.
While that decision has been criticized,260 agreements between spouses
and between parents and children261 are, as we shall see, presumed not
to be enforceable contracts. Thus, it has been said that a parent’s promise
to pay a child an allowance while at university ordinarily creates only a
moral obligation.262
(c) Determining Intention
The test of an intention to create legal relations is an objective one. It

may be that the promisor never anticipated that the promise would give
rise to any legal obligation, but if a reasonable person would consider
there was an intention so to contract, then the (p. 74) promisor will be
bound.263 It has therefore been contended that the common law does not
require any positive intention to create a legal obligation as an element of
contract, and that ‘a deliberate promise seriously made is enforced
irrespective of the promisor’s views regarding his legal liability’.264 This
view commands considerable respect, but it is submitted that there are
difficulties in the way of its acceptance.
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2. The Agreement
In the first place, the parties to a business transaction may deliberately

state that they do not intend to enter into any legal obligation, and the
Court will then treat their promises as binding in honour only. Thus in
Appleson v Littlewood Ltd,265 it was held that a competitor who claimed
to have sent in a successful coupon in a football pool, of which one of the
conditions was that the conduct of the pools and everything done in
connection therewith was not to be ‘attended by or give rise to any legal
relationship whatsoever’, could have no claim which a Court would
enforce. As regards a ‘minister’ and his church, there is no longer any
presumption of there being no intention to create legal relations but the
circumstances may indicate that there was no such intention.266
Moreover, until recently the Crown and civil servants were held not to be
in a contractual relationship because the Civil Service Pay and Conditions
Code’s statement that ‘a civil servant does not have a contract of
employment enforceable in the courts’ meant that the Crown did not have
the requisite intention to contract.267 What was said when the agreement
was made,268 and the vagueness of the language used269 may be held to
be inconsistent with an intent to contract. Where the agreement is made
in a commercial context, it has been said there that there is a
presumption that there is an intention to create legal relations and that
the onus on a party who asserts that an agreement was made without the
intent is a heavy one.270 However, the better view is that that
presumption applies only to express commercial agreements (that are
certain and complete) and that in respect of contracts that are wholly or
partly implied from (p. 75) conduct, there is no such presumption so that
it is for the party alleging that there is a contract to prove that intention,
without the benefit of any presumption.271 However, where a term is
being introduced into a pre-existing contractual relationship, there is a
strong presumption that it is intended to be legally binding.272
Secondly, where the agreement falls into that class of cases where legal
contracts are not normally made, exemplified by social engagements or
family arrangements, it will be presumed that no intent to create an
enforceable contract is present, even though there may have been an
exchange of mutual promises and a ‘consideration’ moving from the
promisee.273 On the other hand, this presumption may be rebutted upon
proof of the true intention of the parties, which is to be inferred from the
language they use and the circumstances in which they use it. Thus in
Parker v Clark:274
The defendants, an elderly couple, agreed with the claimants, who

were 20 years younger, that if the latter would sell their cottage
and come to live with the defendants, sharing household expenses,
the male defendant would leave them a portion of his estate in his
will. The claimants sold their cottage and moved in with the
defendants. Difficulties developed between the two couples, and the
defendants repudiated the agreement by requiring the claimants to
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2. The Agreement
find somewhere else to live. The claimants sought damages for

breach of contract.
It was argued that the agreement amounted to no more than a family

arrangement of the type considered in Balfour v Balfour, but Devlin J held
that the circumstances indicated that the parties intended to affect their
legal relations and that the defendants were therefore liable. Indeed
Balfour v Balfour has been said to be an extreme example of this
presumption,275 and there are several cases in which it has been held that
a husband’s promise to his wife, from whom he was about to separate,
that she could have the matrimonial home, was enforceable as a
contract.276 Similarly, in Radmacher v Granatino277 a majority of the
Supreme Court took the view, in obiter dicta, that pre-nuptial agreements
are binding contracts. Again, an informal family arrangement, to share
the winnings of a football pool entry,278 was enforceable since the
necessary intention was present.
Thirdly, it has been clearly established that the distinction

(p. 76)
between a warranty, which is a term of a contract, and a ‘mere

representation’ depends upon whether the parties intended the statement
to have contractual effect.279 It would be somewhat curious if contractual
intention could be dispensed with in proving the existence of a contract,
but not in proving the terms of which it is necessarily composed.
The conclusion is that an intention to create legal relations is essential to

the formation of a contract in English law.
Further Reading
HUDSON, ‘Retractation of Letters of Acceptance’ (1966) 82 LQR 169
HUDSON, ‘Gibbons v Proctor Revisited’ (1968) 84 LQR 503
HEPPLE, ‘Intention to Create Legal Relations’ [1970] CLJ 122, 127–37
MILLER, ‘Felthouse v Bindley Revisited’ (1972) 35 MLR 489
RAWLINGS, ‘The Battle of Forms’ (1979) 42 MLR 715
HEDLEY,‘Keeping Contract in its Place—Balfour v Balfour and the

Enforceability of Informal Agreements’ (1985) 5 OJLS 391
GARDNER,‘Trashing with Trollope: a Deconstruction of the Postal Rules in

Contract’ (1992) 12 OJLS 170
SIMPSON,‘Quackery and Contract Law: Carlill v Carbolic Smoke Ball

Company’ in Leading Cases in the Common Law (Oxford: Clarendon
Press, 1995) 259
BERG, ‘Promises to Negotiate in Good Faith’ (2003) 119 LQR 357
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2. The Agreement
PEEL,‘The Status of Agreements to Negotiate in Good Faith’ in BURROWS

and PEEL (eds), Contract Formation and Parties (Oxford: Oxford University
Press, 2010) 37
NOLAN, ‘Offer and Acceptance in the Electronic Age’ in BURROWS and PEEL
(eds), Contract Formation and Parties (Oxford: Oxford University Press,
2010) 61
Notes:
1 See above, p 2.
2 On such requirements, see below, Chapter 3.
3 Clarke v Earl of Dunraven, The Satanita [1897] AC 59, below, p 34.
4 Gibson v Manchester City Council [1979] 1 WLR 294, 297 (Lord

Diplock). Cf Port Sudan Cotton Co v Govindaswamy Chettiar & Sons
[1977] 2 Lloyd’s Rep 5.
5 Or forbearance. See also below, p 105.
6GN Ry v Witham (1873) LR 9 CP 16, 19; New Zealand Shipping Co Ltd v

AM Satterthwaite & Co Ltd [1975] AC 154, 167–8, 171, 177; Soulsbury v
Soulsbury [2007] EWCA Civ 969, [2008] Fam 1.
7 ALI Restatement, Contracts (2d) para 31.
8Although he cannot be compelled to accept the benefit: Townson v

Tickel (1819) 3 B & Ald 31. On deeds, see generally below, Chapter 3.
9 Save in the most exceptional circumstances an offer or acceptance

cannot be inferred from inactivity. On acceptance by silence, see below,
pp 50–2. On the suggestion that an offer to abandon an arbitration can be
inferred, where neither party has taken any steps in the proceedings for a
very long time: Paal Wilson & Co A/S v Partenreederei Hannah
Blumenthal [1981] 2 Lloyd’s Rep 438, 439, [1983] 1 AC 854, 865, 885,
914, 916, 924. But the question here is whether a contract to arbitrate
disputes between the parties which undoubtedly exists has been
modified. Even in that context inactivity on its own, without some overt
act, is almost always likely to be insufficient: Allied Marine Transport Ltd
v Vale do Rio Doce Navegacao SA [1983] 2 Lloyd’s Rep 411, 417, [1985] 1
WLR 925, 937; Yamashita-Shinnihon SS Co Ltd v l’Office Cherifien des
Phosphates [1994] AC 486. For legislative modification see (a) the
Arbitration Act 1996, s 41(6) empowering arbitrators to dismiss a claim
for want of prosecution, and (b) the Consumer Protection (Distance
Selling) Regulations 2000 (SI 2000 No 2334) reg 24 providing that the
despatch of goods without any prior request (ie ‘inertia selling’) may
constitute a gift rather than an offer.
10Cited with approval in Wright & Co Ltd v Maunder [1962] NZLR 355,
358.
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2. The Agreement
11See Wilkie v London Passenger Transport Board [1947] 1 All ER 258.

See also Steven v Bromley & Son [1919] 2 KB 722; Sullivan v Constable
(1932) 48 TLR 369.
12 [1897] AC 59.
13 Ibid, 63.
14Rayfield v Hands [1960] Ch 1 (company); Companies Act 2006, s 33; JH

Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1989] Ch
72, 190, [1990] 2 AC 413, 515 (international organization whose members
were states).
15An exception is French law: see Lando and Beale, Principles of

European Contract Law Parts I and II (2000) 145–6.
16 Upton-on-Severn RDC v Powell [1942] 1 All ER 220. But there the

liability (to pay for the provision of fire-fighting services) is probably (see
William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932, 938) best
regarded as non-contractual restitution for the value of the services
rendered rather than being contractual because neither party believed it
was entering into a contract: the fire brigade rendering the services (the
‘offeree’) believed it was under a duty to provide the service without
charge. Cf Henkel v Pape (1870) LR 6 Ex 7.
17Centrovincial Estates plc v Merchant Investors Assurance Co Ltd

[1983] Com LR 158. See also Moran v University College Salford (No 2),
The Times, 23 November 1993 (mistaken unconditional offer of university
place); OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd’s Rep 700
(payment of £150,000 mistakenly offered instead of $150,000). See also
below, pp 272–4.
18Cf Upton-on-Severn RDC v Powell [1942] 1 All ER 220, above, n 16;

Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd [1990] 1
Lloyd’s Rep 236, 243; Williston on Contracts (4th edn, 1991) para 6.58.
On the merits and demerits of this ‘detached objectivity’, see Howarth
(1984) 100 LQR 265; Vorster (1987) 104 LQR 274.
19Gloag on Contract (2nd edn, 1929) 7; approved by Lord Reid in

McCutcheon v David Macbrayne Ltd [1964] 1 WLR 125, 128. See also
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC
854, 924 (Lord Brightman); ibid, 914 (Lord Brandon) and cf ibid, 916
(Lord Diplock); Edmonds v Lawson [2000] QB 501. See generally Spencer
[1973] CLJ 104, 106–13; Cartwright, Unequal Bargaining (1991) 5–24. On
the objective test generally see below, pp 272–8.
20[1893] AC 552. See also Schuldenfrei v Hilton (IT) [1999] STC 821, 831,
833.
21 [1979] 1 WLR 294.
22 Author’s emphasis.
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2. The Agreement
23Partridge v Crittenden [1968] 1 WLR 1204 (advertisement of

‘Bramblefinch cocks and hens’ for sale). The position is the same in
Germany but not in France: Lando and Beale, Principles of European
Contract Law Parts I and II (2000) 162. But advertisements of a unilateral
contract are offers: Carlill v Carbolic Smoke Ball Co Ltd [1893] 2 QB 49,
below, p 41; Bowerman v ABTA [1995] 145 NLJR 1815; the ‘reward’ cases,
below, pp 52–3.
24Grainger & Son v Gough [1896] AC 325 (bookseller’s catalogue with

prices); Seacarriers A/S v Aoteraroa International Ltd [1985] 2 Lloyd’s
Rep 419 (quotation of freight rates).
25Timothy v Simpson (1834) 6 C & P 499 (below, n 29); Fisher v Bell

[1961] 1 QB 394 (on which, see now, Restriction of Offensive Weapons Act
1961, s 1); Esso Petroleum Ltd v Commissioners of Customs and Excise
[1976] 1 WLR 1 (indication of price at which petrol to be sold at attended
service station not an offer).
26 Above, p 5.
27Pharmaceutical Society of Great Britain v Boots Cash Chemists

(Southern) Ltd [1952] 2 QB 795 aff’d [1953] 1 QB 401, criticized by
Unger (1953) 16 MLR 369. Note (i) the context was whether the display
constituted an unlawful ‘sale’ of drugs unsupervised by a registered
pharmacist under the Pharmacy and Poisons Act 1933, s 18(1), and (ii) in
the USA it has been held that there is no acceptance until the goods are
presented at the checkout: Lasky v Economic Stores 5 NE 2d 305 (1946).
28 Winfield (1939) 55 LQR 499, 518. See Said v Butt [1920] 3 KB 497
(theatre manager refused entry to critic who had got someone else to buy
a ticket for him to a first night performance).
29 Equality Act 2010, above, p 5. See also Quinn v Williams Furniture

[1981] ICR 328; Gill v El Vino [1983] QB 425. Cf Timothy v Simpson
(1834) 6 C & P 499 (a person who went into a shop was asked to pay 7/6d
although item was marked at 5/11d and the shop assistant said ‘don’t let
him have it, he’s only a Jew. Turn him out’).
30 Below, n 31.
31Warwickshire CC v Johnson [1993] 1 All ER 299, 302; see also

Consumer Protection from Unfair Trading Regulations 2008 (SI 2008 No
1277).
32Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, 169 (machine

controlling entry to car park); National Car Parks Ltd v HMRC [2019]
EWCA Civ 854, [2019] 3 All ER 590 (analysis of offer and acceptance in
relation to a parking ticket machine that does not give change).
33 [1989] Ch 497, 512. See also Chapelton v Barry UDC [1940] 1 KB 532
(display of deckchairs for hire an offer). On non-self service petrol sales,
see above, n 25.
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2. The Agreement
34 Denton v Great Northern Railway Co (1856) 5 E & B 860 (Lord

Campbell CJ and Wightman J; Crompton J dissenting). See also Wilkie v
LPTB [1947] 1 All ER 258 (contract formed when passenger boarded bus,
ie running the bus constituted the offer).
35 Made by the Railways Board and the independent railways contractors

under the Transport Act 1962 and the Railways Act 1993. In the context
of bus services, see Public Passenger Vehicles Act 1981 and regulations
made under it.
36Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd [1986] AC

207.
37Spencer v Harding (1870) LR 5 CP 561. Contrast GN Ry v Witham

(1873) LR 9 CP 16; Percival Ltd v LCC Asylums etc Committee (1918) 87
LJ KB 677.
38Blackpool and Fylde Aero Club Ltd v Blackpool BC [1990] 1 WLR 1195.
See below, p 533 on the remedy for breach of this obligation.
39 See below, pp 241–2 (and above, p 21).
40(1858–59) 1 E & E 295, 309; Johnston v Boyes [1899] 2 Ch 73. Contrast

Fenwick v Macdonald, Fraser & Co Ltd (1904) 6 F 850 (Scotland). By the
Sale of Goods Act 1979, s 57(4) the seller is now precluded without
notification from the bidding himself or employing anyone to bid for him,
and any sale contravening this rule may be treated as fraudulent by the
buyer.
41The minority held that the auctioneer would be liable for breach of
warranty of authority: see below, pp 695–6. In fact, a new trial was
ordered but never took place.
42 Payne v Cave (1789) 3 Term R 148. See now Sale of Goods Act 1979, s
57(2). See further Harris v Nickerson (1873) LR 8 QB 286 (auctioneer not
liable upon a contract to indemnify those who have incurred expense in
order to attend the sale).
43At that time the Statute of Frauds required such a contract to be

evidenced in writing: see below, p 81.
44 (1858) 1 E & E 309, 317.
45See Slade (1952) 68 LQR 238; Gower (1952) 68 LQR 456; Slade (1953)
69 LQR 21; Cox (1982) 132 NLJ 719.
46 Above, p 32.
47See, on tenders, Harvela Investments Ltd v Royal Trust of Canada (CI)

Ltd [1986] AC 207; Blackpool and Fylde Aero Club Ltd v Blackpool BC
[1990] 1 WLR 1195.
48 [2000] 1 WLR 1962.

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2. The Agreement
49A proposal not addressed to one or more specific persons is

presumptively merely an invitation to treat under the Convention on the
International Sale of Goods (CISG) art 14(2) but presumptively an offer
under the Italian Civil Code, art 1336(1) and by judicial decision in
French law: Nicholas, The French Law of Contract (2nd edn, 1992) 63–4.
50 For the position where X does not know of the offer, see below, p 52.
51New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC

154, 168. See also Williams v Carwardine (1833) 4 B & Ad 621, below, p
53.
52 Lancaster v Walsh (1838) 4 M & W 16.
53 [1893] 1 QB 256. See also Bowerman v ABTA [1995] 145 NLJR 1815.
54 Below, p 47.
55Gibbons v Proctor (1891) 64 LT 594, 55 JP 616. For criticism and

contrary authority, see below, p 52.
56 If one is made with reference to the other, there is no reason why a

contract should not be held to exist, even though it is expressed to be an
‘offer’ and not an acceptance: but see Gibson v Manchester City Council
[1979] 1 WLR 294.
57(1873) 29 LT 271, 275, 277, 278, 279; ALI Restatement, Contracts (2d)
para 23.
58(1856) 25 LJ Ex 329. See also Forman & Co Pty Ltd v Ship Liddesdale
[1900] AC 190.
59 (1856) 25 LJ Ex 329, 332.
60Jenkins v Tucker (1788) 1 Hy Bl 90 (burial of the dead); Re Rhodes

(1890) 44 Ch D 94 (maintenance of a mentally incapable person, although
no recovery on the facts because there was no intention to charge).
61Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, below, p 45;

Day Morris Associates v Voyce [2003] EWCA Civ 189, [2003] 2 P & CR
DG2. See also above, pp 33–4.
62 (1840) 3 Beav 334.
63 Lark v Outhwaite [1991] 2 Lloyd’s Rep 132, 139.
64
(1880) 5 QBD 346. See also Gibson v Manchester City Council [1979] 1
WLR 294, 302.
65 (1880) 5 QBD 346, 350.
66Monvia Motorship Corp v Keppel Shipyard (Private) Ltd [1983] 1

Lloyd’s Rep 356 (PC).
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2. The Agreement
67The position is similar in many European systems; see Lando and

Beale, Principles of European Contract Law Parts I and II (2000) 179.
68[1894] 2 Ch 332. See also Brogden v Metropolitan Ry Co (1877) 2 App

Cas 666, below, p 45. Cf Global Tankers Inc v Amercoat Europa NV [1975]
1 Lloyd’s Rep 666, 671.
69See also Chas Davis (Metal Brokers) Ltd v Gilyott & Scott Ltd [1975] 2
Lloyd’s Rep 422, 425 (Donaldson J).
70[1979] 1 WLR 401, 406, 407; Rawlings (1979) 42 MLR 715. See also
British Road Services v Arthur Crutchley Ltd [1968] 1 All ER 811; A
Davies & Co (Shopfitters) v William Old (1969) 67 LGR 395; Tekdata
Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209, [2010] 1
Lloyd’s Rep 357.
71[1979] 1 WLR 401, 404. Support for similar forms of flexibility can be
found in the Uniform Laws on International Sales Act 1967, Sched 2, art
7(2); CISG art 19; von Mehren (1990) 38 Am J Comp Law 265.
72 [2009] EWCA Civ 1209, [2010] 1 Lloyd’s Rep 357.
73Peter Lind & Co v Mersey Docks & Harbour Board [1972] 2 Lloyd’s Rep
234. For the conditions of such liability, see below, pp 66, 70.
74 McKendrick (1988) 8 OJLS 197, 212–13; Ball (1983) 99 LQR 572.
75So, eg, goods delivered late to the defendant may not be as valuable to
him as goods delivered on time and this will be reflected in measuring the
defendant’s enrichment: see Burrows, The Law of Restitution (3rd edn,
2011) 375.
76Rees v Warwick (1818) 2 B & Ald 113; ALI Restatement, Contracts (2d)
para 57.
77 See below, p 69.
78 Anon (1477) YB Pasch. 17 Edw IV, f 1, pl 2.
79 (1877) 2 App Cas 666.
80 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, 262. See also

Robophone Facilities Ltd v Blank [1966] 1 WLR 1428; Allied Marine
Transport Ltd v Vale do Rio Doce Navegacao [1985] 1 WLR 925, 937;
CISG art 23. Cf below, p 47 (no need for communication where offer
stipulates a prescribed mode of acceptance).
81Entores v Miles Far East Corporation [1955] 2 QB 327, 332 (Denning

LJ); Winfield (1939) 55 LQR 499, 514; ALI Restatement, Contracts (2d)
para 65. But cf below, pp 47–50, for the different rule which applies to
acceptance by post.
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2. The Agreement
82 Levita’s Case (1867) LR 3 Ch App 36. See also Dickinson v Dodds

(1876) 2 Ch D 463, below, p 59 (third-party notification of revocation of
offer effective).
83 (1908) 99 LT 284.
84 Ibid, 286 (Channell J).
85 [1893] 1 QB 256, above, p 40.
86Ibid, 269. See also Lindley LJ at 262. See further Manchester Diocesan
Council for Education v Commercial & General Investments Ltd [1970] 1
WLR 241, 245.
87 Harvey v Johnston (1848) 6 CB 295, 304; Newcomb v De Roos (1859) 2

E & E 271. Cf Kennedy v Thomassen [1929] 1 Ch 426. But cf Rust v Abbey
Life Assurance Co Ltd [1978] 1 Lloyd’s Rep 386, 392 (offer to invest in
property bond accepted by allocation of units; no need to send policy to
offeror).
88 Carlill v Carbolic Smoke Ball Co[1893] 1 QB 256, 270.
89 Below, pp 55–7.
90For the view that the same rule should be applied to e-mails as for telex
and fax, see Hill (2001) 17 JCL 151; Nolan, in Burrows and Peel (eds),
Contract Formation and Parties (2010) ch 4.
91Before they fell out of use, telegrams were treated legally in the same
way as letters.
92 Entores v Miles Far East Corp [1955] 2 QB 327 (telex); Brinkibon Ltd v
Stahag Stahl und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34
(telex); JSC Zestafoni G Nikoladze Ferralloy Plant v Ronly Holdings Ltd
[2004] EWHC 245 (Comm), [2004] 2 Lloyd’s Rep 335 (fax).
93 Henthorn v Fraser [1892] 2 Ch 27, 33.
94Adams v Lindsell (1818) 1 B & Ald 681; Dunlop v Higgins (1848) 1 HLC
381; Household Fire and Carriage Accident Insurance Co Ltd v Grant
(1879) 4 Ex D 216; Henthorn v Fraser [1892] 2 Ch 27; Port Sudan Cotton
Co v Govindaswamy Chettiar & Sons [1977] 2 Lloyd’s Rep 5. For the
equivalent rule for telegrams, see Stevenson, Jacques & Co v McLean
(1880) 5 QBD 346; Bruner v Moore [1904] 1 Ch 305, 316.
95 (1818) 1 B & Ald 681.
96Ibid, 683. The ratio decidendi of the case is complicated by the

assertion that the delay was caused by the defendants’ negligence in
misdirecting their offer. The effect of such delay appears to extend the
permissible period within which the offer may be accepted (see below, p
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2. The Agreement
61) unless the offeree knows or has reason to know of the delay: ALI
Restatement, Contracts (2d) para 51.
97 (1879) 4 Ex D 216.
98Korbetis v Transgrain Shipping BV [2005] EWHC 1345 (QB). See also

Getreide-Import-Gesellschaft v Contimar SA Compania Commercial y
Maritima [1953] 1 WLR 793; ALI Restatement, Contracts (2d) paras 67–8.
99 Cowan v O’Connor (1888) 20 QBD 640.
100Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH

[1983] 2 AC 34 approving Entores v Miles Far East Corp [1955] 2 QB 327
(acceptance by telex from Holland to London held to constitute a contract
made in England).
101 Winfield (1939) 55 LQR 499; Nussbaum (1936) 36 Col L Rev 920.
102Household Fire and Carriage Accident Insurance Co Ltd v Grant

(1879) 4 Ex D 216, 221; Hebb’s Case (1867) LR 4 Eq 9, 12.
103 Entores v Miles Far East Corp [1955] 2 QB 327.
104Re Imperial Land Co of Marseilles (Harris’ Case) (1872) LR 7 Ch App

587, 594; Brinkibon Ltd v Stahag Stahl und
Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34, 41, 48.
105 Winfield (1939) 55 LQR 499, 506. Three principal systems seem to be
in operation in other countries: (i) information: when the offeror is
actually informed of the acceptance; (ii) expedition: when the offeree
despatches the letter of acceptance; and (iii) reception: when the
acceptance is received at its destination, whether the offeror is actually
informed or not. See Evans (1966) 15 ICLQ 553. Under CISG arts 18(2),
24, and 21(2) the acceptance becomes effective at the moment the
indication of assent is delivered at the address of the offeror; if the letter
is lost, there is no contract, but if it is delayed, there is normally a
contract, unless the offeror has promptly informed the offeree that he
considers his offer as having lapsed.
106 Holwell Securities Ltd v Hughes [1974] 1 WLR 155.
107 Ibid, 157, 158, 161; New Hart Builders Ltd v Brindley [1975] Ch 342
(rule displaced where contracts required ‘notice to …’ or ‘to notify’).
108Re Imperial Land Co of Marseilles (Harris’ Case) (1872) LR 7 Ch App

587, 594.
109Below, p 58. Nussbaum (1936) 36 Col L Rev 920, 922–7. The Scottish
Law Commission, rejecting the rule (Scot Law Com No 144 (1993) paras
4.4–4.7), did not consider this.
110 Below, p 54.
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2. The Agreement
111eg by Gardner (1992) 12 OJLS 170; Scot Law Com No 144 (1993)
paras 4.4–4.7.
112Apart from telex, fax, e-mail, and the various types of electronic
document interchange, there are also couriers, private messenger
delivery, and document exchange services.
113Scot Law Com Memorandum No 36 [1977] para 48, quoted in Scot

Law Com No 144 (1993) para 4.5.
114 Below, p 57.
115 Prevention of speculation by the offeree, who unlike the offeror has
full knowledge, does not appear to have been considered by the Scottish
Law Commission: Scot Law Com No 144 (1993) paras 4.4–4.7. See also
paras 3.10–3.14.
116 Anson (20th edn, 1952) 36.
117Entores v Miles Far East Corporation [1955] 2 QB 327; Brinkibon Ltd v

Stahag Stahl und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34,
above, p 45.
118Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH

[1983] 2 AC 34, 48.
119 See above, p 46.
120 Pollock, Principles of Contract (13th edn, 1950) 22.
121(1862) 11 CBNS 869, aff’d (1863) 7 LT 835. See also Allied Marine
Transport Ltd v Vale do Rio Doce Navegacao SA [1985] 1 WLR 925, 937.
See further Miller (1972) 35 MLR 489.
122 (1862) 11 CBNS 869, 875.
123The Unsolicited Goods and Services Act 1971 has been amended, and
partly replaced, by the Consumer Protection (Distance Selling)
Regulations 2000 (SI 2000 No 2334).
125Cf Fairline Shipping Corp v Adamson [1975] QB 180; Schuldenfrei v

Hilton (IT) [1999] STC 821, 831, 833. See also, below, p 119 (promissory
estoppel).
126 Above, pp 33–4.
127Re Selectmove Ltd [1995] 1 WLR 474, 478 (Peter Gibson LJ). See also
Vitol SA v Norelf Ltd [1996] AC 800, 812.
128 See Tinn v Hoffman & Co (1873) 29 LT 271, above, p 41.
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2. The Agreement
129Taylor v Allon [1966] 1 QB 304, 311; Tracomin SA v Anton C Nielsen

[1984] 2 Lloyd’s Rep 195, 203.
130(1891) 64 LT 594, 55 JP 616. Cf Neville v Kelly (1862) 12 CBNS 740.

See Hudson (1968) 84 LQR 503.
131(1868) 38 NY 248. See also Bloom v American Swiss Watch Co 1915

AD 100 (South Africa); R v Clarke (1927) 40 CLR 227 (Australia); ALI
Restatement, Contracts (2d) para 51 and Comment a.
132(1833) 4 B & Ad 621; the fact of her knowledge is disclosed by the

report in (1833) 5 C & P 566; Lark v Outhwaite [1991] 2 Lloyd’s Rep 132,
140. Cf R v Clarke (1927) 40 CLR 227. See Mitchell and Phillips (2002) 22
OJLS 115.
133 (1819) 4 Wheaton 225.
134 Ibid, 228 (Washington J).
135Manchester Diocesan Council for Education v Commercial & General

Investments Ltd [1970] 1 WLR 241, 246.
136Ibid; Carlyle Finance Ltd v Pallas Industrial Finance Ltd [1999] All ER
(Comm) 659.
137Tinn v Hoffman & Co (1873) 29 LT 271, 274, 278; Manchester

Diocesan Council for Education v Commercial & General Investments Ltd
[1970] 1 WLR 241, 246; ALI Restatement, Contracts (2d) paras 29, 68;
Winfield (1939) 55 LQR 499, 516.
138In Household Fire and Carriage Accident Insurance Co Ltd v Grant

(1879) 4 Ex D 216, Bramwell LJ at 255 was of the opinion that the
revocation would be effective. See also Dick v US 82 Fed Supp 326
(1949); Ellison Kahn (1955) 72 SALJ 246, 257; Hudson (1966) 82 LQR
169.
139In Countess of Dunmore v Alexander (1830) 9 S 190 (Scotland), Lord

Craigie (dissenting) held that an offeree could not revoke her acceptance,
but the majority of the Court treated the case as one of the revocation of
an offer. See also Wenkheim v Arndt (1873) 1 JR 73 (NZ); Kinch v Bullard
[1999] 1 WLR 423.
140 (1862) 12 CBNS 748; Scammell v Dicker [2001] 1 WLR 631.
141
(1873) LR 9 CP 16. Contrast Percival Ltd v LCC Asylums etc
Committee (1918) 87 LJKB 677.
142 See above, p 32.
143 Rogers v Snow (1573) Dalison 94; GN Ry v Witham (1873) LR 9 CP 16,

19.
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2. The Agreement
144 It has been contended that there is no injustice, since the offeree is
not bound to go to York and may give up at any time. The offeror, it is
argued, ought to have a similar right to give up his side of the
transaction: Wormser (1916) 26 Yale LJ 136. This reasoning is not
attractive.
145Pollock, Principles of Contract (13th edn, 1950) 19; see also Offord v
Davies (1862) 12 CBNS 748, 753; Law Revision Committee, Sixth Interim
Report (Cmd 5449 1937) para 39; ALI Restatement, Contracts (2d) para
45; CISG art 16(2)(b).
146 [1952] 1 KB 290.
147 Ibid, 295. See also Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch
231, 239; Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd
[1986] AC 207 (submitting bid in response to invitation to tender). For a
slightly different view, see Morrison Steamship Co Ltd v The Crown
(1924) 20 Ll L R 283, 297 where Viscount Cave LC suggested that ‘when
work is done and expense incurred on the faith of a conditional promise,
the promisor comes under an obligation not to revoke his promise, and if
he does so he may be sued for damages or on a quantum meruit’. On that
view, it would appear that the claimant could not insist on completing
performance and claiming the promised sum.
148 [2007] EWCA Civ 969, [2008] Fam 1.
149 Luxor (Eastbourne) Ltd v Cooper [1941] AC 108.
150Above, p 55. See also Dickinson v Dodds (1876) 2 Ch D 463, below, p

59; Routledge v Grant (1828) 4 Bing 653.
151 Mountford v Scott [1975] Ch 258. See further, below, pp 102–3.
152 Pitt v PHH Asset Management Ltd [1994] 1 WLR 327, 332, below, p 68
although this is probably better explained as a unilateral contract.
153 Sixth Interim Report (Cmd 5449, 1937) para 38. CISG art 16(2)
provides that an offer indicating that it is irrevocable or one that has been
relied on by the offeree cannot be revoked.
154An offer in a deed is an exception to the general law on firm offers:

Beesly v Hallwood Estates Ltd [1961] Ch 105; ALI Restatement, Contracts
(2d) para 25, Comment c.
155 Above, pp 55–7.
156 See below, p 126 (the limits of equitable estoppel).
157Holman Construction Ltd v Delta Timber Co Ltd [1972] NZLR 1081

(negligent pre-contractual statement).
158 Above, p 44.
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2. The Agreement
159(1880) 5 CPD 344. See also Thomson v James (1855) 18 D 1

(Scotland); Stevenson v McLean (1880) 5 QBD 346; Henthorn v Fraser
[1892] 2 Ch 27. But in Shuey v United States 92 US 73 (1875), where a
reward was offered in a newspaper, it was held that this offer could be
‘withdrawn through the same channel by which it was made’, even
though the revocation did not come to the notice of the offeree.
160 (1880) 5 CPD 344, 348.
161Henthorn v Fraser [1892] 2 Ch 27, 32 (Lord Herschell). See also ibid,

37 (Kay LJ) (‘actual knowledge’, ‘actually received’).
162 Tenax SS Co Ltd v The Brimnes (Owners) [1975] 1 QB 929, 945, 966,
969 (revocation by telex). See also CISG arts 16(1) and 24 (revocation
effective if it ‘reaches’ the offeree’s place of business or mailing address
before he has dispatched an acceptance).
163Tenax SS Co Ltd v The Brimnes (Owners) [1975] 1 QB 929. But not

where it arrives after or near the close of a working day and is not seen
on that day; ibid, 970; Brinkibon Ltd v Stahag Stahl und
Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34, 42.
164 (1876) 2 Ch D 463.
165 Ibid, 472; see also 474 (Mellish LJ).
166Cartwright v Hoogstoel (1911) 105 LT 628; ALI Restatement,

Contracts (2d) para 42.
167 Hyde v Wrench (1840) 3 Beav 334 (counter-offer, constituting a

rejection, terminates the offer); Trollope & Colls Ltd v Atomic Power
Constructions Ltd [1963] 1 WLR 333, 337 (counter-offer ‘kills’ the original
offer). Cf Stevenson, Jacques & Co v McLean (1880) 5 QBD 346. See
above, p 42.
168ALI Restatement, Contracts (2d) para 37. The position is similar in

many European systems, see, eg, Germany, BGB para 146; Lando and
Beale, Principles of European Contract Law Parts I and II (2000) 168.
169Winfield (1939) 55 LQR 499, 513; ALI Restatement, Contracts (2d)

para 39.
171 The offeror could nevertheless waive this condition, and treat the late
acceptance as valid, provided he did not thereby adversely affect the
offeree.
172 Dickinson v Dodds (1876) 2 Ch D 463, above, p 59.
173 GN Ry v Witham (1873) LR 9 CP 16.
174 Offord v Davies (1862) 12 CBNS 748.
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2. The Agreement
175 Above, p 53.
176 Quenerduaine v Cole (1883) 32 WR 185.
177(1866) LR 1 Ex 109. See also Manchester Diocesan Council for

Education v Commercial & General Investments Ltd [1970] 1 WLR 241,
247–9; Chemco Leasing SpA v Rediffusion Ltd [1987] 1 FTLR 201.
179 [1962] 1 WLR 1184.
180 Coulthart v Clementson (1870) 5 QBD 42.
181 Errington v Errington [1952] 1 KB 290, 295. Even in this case, death
may terminate the offer where it is dependent on the personality of the
offeror.
182Dickinson v Dodds (1876) 2 Ch D 463, 475; ALI Restatement,

Contracts (2d) para 48.
183
Bradbury v Morgan (1862) 1 H & C 249, often said to support this,
was in fact a case where a contract had been concluded before death.
184Harris v Fawcett (1873) LR 8 Ch App 866, 869; Coulthart v

Clementson (1870) 5 QBD 42, 46.
185Re Cheshire Banking Co (Duff’s Executor’s Case) (1886) 32 Ch D 301;

Reynolds v Atherton (1921) 125 LT 690, 695, but see (1922) 127 LT 189,
191; Somerville v National Coal Board 1963 SLT 334 (Scotland).
186 Foley v Classique Coaches Ltd [1934] 2 KB 1, 13 (Maugham LJ).
187ALI Restatement, Contracts (2d) para 33(2). See also Lando and Beale,
Principles of European Contract Law Parts I and II (2000) 146, art 2:103.
188 Hillas v Arcos (1932) 147 LT 503, 512 (Lord Tomlin).
189 Below, pp 67 and 340–4.
190 Below, pp 66, 70.
191Bushwell Properties Ltd v Vortex Properties Ltd [1976] 1 WLR 591.

See also Montreal Gas Co v Vasey [1900] AC 595; Jacques v Lloyd D
George & Partners [1968] 1 WLR 625; Stabilad Ltd v Stephens & Carter
Ltd (No 2) [1999] 2 All ER (Comm) 651 (performance left to discretion of
promisor); Blue v Ashley [2017] EWHC 1928 (Comm) (see below p 72: in
addition to there being no intention to create legal relations there was
insufficient certainty not least because no time period was stated for the
share price to reach the specified price).
192 G Scammell & Nephews Ltd v Ouston [1941] AC 251.
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2. The Agreement
193Bishop & Baxter v Anglo-Eastern Trading Co and Industrial Ltd [1944]

KB 12; British Electrical and Associated Industries (Cardiff) Ltd v Patley
Pressings Ltd [1953] 1 WLR 280.
194Id certum est quod certum reddi potest. See Scammell v Dicker [2005]
EWCA Civ 405, [2005] 3 All ER 838 distinguishing Scammell v Ouston
[1941] AC 251. See generally Fridman (1960) 76 LQR 521; Samek (1970)
47 Can Bar Rev 203.
195 Hillas & Co v Arcos Ltd (1932) 147 LT 503, 514.
196‘Words are to be interpreted so as to give effect to the subject matter

rather than to defeat it.’
197Nicolene Ltd v Simmonds [1953] 1 QB 543. See also Adamastos

Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133; Whitlock
v Brew (1968) 118 CLR 445 (Australia).
198 (1932) 147 LT 503.
199 On the terms implied by trade custom see further, below, pp 166–8.
200(1932) 147 LT 503, 512, 513, 516. See also Mamidoil-Jetoil Greek
Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd’s Rep 76,
91 (reasonable fees for services); Durham Tees Valley Airport Ltd v
Bmibaby Ltd [2010] EWCA Civ 485, [2011] 1 Lloyd’s Rep 68 (long-term
obligation to fly two planes from an airport held to be sufficiently certain).
Cf Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ
274, [2002] 1 All ER (Comm) 737 (no long-term contract to be supplied
with garments because of lack of certainty consequent on there being no
objective criteria by which the Court could assess what would be
reasonable for the purchaser to acquire either as to quantity or price).
201 Brown v Gould [1972] Ch 53.
202 Gillatt v Sky Television Ltd [2000] 1 All ER (Comm) 46.
203Didymi Corp v Atlantic Lines and Navigation Co Ltd [1988] 2 Lloyd’s

Rep 108.
204See also Supply of Goods and Services Act 1982, s 15(1). Cf CISG art
55 (‘current trade price’).
205British Bank for Foreign Trade Ltd v Novinex [1949] 1 KB 623; Powell
v Braun [1954] 1 WLR 401 (executed transactions); Hondly v M’Laine
(1834) 10 Bing 482 (executory transaction).
206 May & Butcher v R [1934] 2 KB 17n; King’s Motors (Oxford) Ltd v Lax
[1970] 1 WLR 426; Smith v Morgan [1971] 1 WLR 803. For forceful
criticism of May & Butcher v R, see Fletcher Challenge Energy Ltd v
Electricity Corp of New Zealand Ltd [2002] 2 NZLR 433, 466–7.
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2. The Agreement
207G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25,
27 (Steyn LJ). See also F & G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1
Lloyd’s Rep 53, 57–8; Foley v Classique Coaches Ltd [1934] 2 KB 1.
208 Above, pp 34–5.
209Foley v Classique Coaches Ltd [1934] 2 KB 1; Way v Latilla [1937] 3 All

ER 759 (but cf ibid, 764–5); RTS Flexible Systems Ltd v Molkerei Alois
Müller GmbH & Co KG [2010] UKSC 14, [2010] 1 WLR 753, at [45]–[56];
Devani v Wells [2019] UKSC 4, [2019] 2 WLR 617, at [17]–[26].
210 Above, p 43.
211 British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1
All ER 504, 511 in the context of goods delivered under a letter of intent,
below, pp 69–70. Birks, An Introduction to the Law of Restitution (rvsd ed,
1989) 271–2 explains Way v Latilla [1937] 3 All ER 759 in this way and
see ibid, 764–5. Cf Dietrich [2001] LS 153.
212Jennings & Chapman Ltd v Woodman, Matthews & Co [1952] 2 TLR

409; William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932; Regalian
Properties plc v London Dockland Development Corp [1995] 1 WLR 212;
Countrywide Communications Ltd v ICL Pathway [2000] CLC 324.
213Foley v Classique Coaches Ltd [1934] 2 KB 1; F & G Sykes (Wessex)

Ltd v Fine Fare Ltd [1967] 1 Lloyd’s Rep 53; Vosper Thornycroft Ltd v
Ministry of Defence [1976] 1 Lloyd’s Rep 58; Queensland Electricity
Generating Board v New Hope Collieries Pty Ltd [1989] 1 Lloyd’s Rep
205, 210.
214 Beer v Bowden [1981] 1 WLR 522.
215 As in Gillatt v Sky Television Ltd [2000] 1 All ER (Comm) 46.
216 Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444.
217 [1992] 2 AC 128.
218These amounted to £700 and were in respect of the expenses of the

negotiation and the preparation of the contract documents: [1992] 2 AC
128, 135. On damages for misrepresentation, see below, pp 340–4.
219[1992] 2 AC 128, 138. See also Courtney & Fairbairn Ltd v Tolaini Bros
(Hotels) Ltd [1975] 1 WLR 297; Mallozzi v Carapelli SpA [1976] 1 Lloyd’s
Rep 407. Cf Hillas v Arcos (1932) 147 LT 503, 515 (Lord Wright).
220 [1992] 2 AC 128, 138. As Millett LJ explained in Little v Courage

(1995) P & CR 469, 475 (and see also Andrews J in Dany Lions Ltd v
Bristol Cars Ltd [2014] EWHC 817 (QB), [2014] 2 All ER (Comm) 403)
Lord Ackner’s reference to an agreement to use ‘best endeavours’ being
different and sufficiently certain must be read as referring to best or
reasonable endeavours to achieve a result other than the conclusion of a
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2. The Agreement
contract with the other party (as in Jet2.com Ltd v Blackpool Airport Ltd
[2012] EWCA Civ 417, [2012] 2 All ER (Comm) 1053 where the obligation
to use reasonable endeavours to promote a low-cost airline was held
sufficiently certain). There is no real difference between an agreement to
negotiate in good faith and an agreement to use best or reasonable
endeavours to agree. For a decision that an obligation to use best or
reasonable endeavours to negotiate is too uncertain, see, eg, Multiplex
Constructions UK Ltd v Cleveland Bridge UK Ltd [2006] EWHC 1341
(TCC), (2007) 107 Con LR 1. But in Astor Management AG v Atalaya
Mining plc [2017] EWHC 425 (Comm), [2018] 1 All ER (Comm) 547
(upheld by the Court of Appeal, without mentioning this point, [2018]
EWCA Civ 2407, [2019] 1 All ER (Comm) 885) Leggatt J in an enlightened
judgment (albeit without mentioning Walford v Miles) held that a term to
use reasonable endeavours to make a contract with a third party (ie to
secure borrowing from a third party) was sufficiently certain to be
enforceable; and he cast doubt on there being any ‘uncertainty’ objection
to upholding a term requiring reasonable endeavours to negotiate a
contract with the other party or a term requiring negotiation in good
faith.
221Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 WLR
297, 301 (Lord Denning MR).
222For persuasive criticism of Walford v Miles, see Neill (1992) 108 LQR
405; Berg (2003) 119 LQR 357; Peel, in Burrows and Peel (eds), Contract
Formation and Parties (2010) ch 3. In Petromec Inc v Petroleo Brasileiro
SA Petrobas [2005] EWCA Civ 891, [2006] 1 Lloyd’s Rep 161 at [121]
Longmore LJ, obiter, suggested that it would be a strong thing to declare
unenforceable an express clause to negotiate in good faith. In Emirates
Trading Agency LLC v Prime Mineral Exports Pte Ltd [2014] EWHC 2104
(Comm), [2015] 1 WLR 1145 an express dispute resolution clause in an
otherwise binding contract, requiring the parties to seek to resolve a
dispute in good faith and within a limited period of time prior to
arbitration, was held enforceable. Note also that in Queensland Electricity
Generating Board v New Hope Collieries Pty Ltd [1989] 1 Lloyd’s Rep
205, 209–10 (PC) an obligation to make reasonable endeavours to agree
was implied; and in Re Debtors (Nos 4449 and 4450 of 1998) [1999] 1 All
ER (Comm) 149, 157–8 an obligation to negotiate in good faith was
imposed on Lloyds as it was performing functions in the public interest.
223FP (1932) 48 LQR 141; Davenport (1991) 107 LQR 366; Lord Steyn
(1997) 113 LQR 433.
224Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602, 1620
and below, p 533.
225 (1932) 147 LT 503, 515. A majority of the New South Wales Court of
Appeal has rejected the view that every promise to negotiate in good faith
is unenforceable: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991)
24 NSWLR 1, 26. In the USA the majority view gives contractual effect to
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2. The Agreement
an agreement to negotiate: Farnsworth (1987) 87 Colum L Rev 217, 265–

7.
226 Walford v Miles [1992] 2 AC 128, 140.
227For an example, see Pitt v PHH Asset Management Ltd [1994] 1 WLR
327.
228 Neill (1992) 108 LQR 405, 413. Bingham LJ, dissenting in the Court of
Appeal, was of this view: (1990) 62 P & CR 410. The agreement provided
a standard in stating that the transaction was to be concluded as soon as
possible after 6 April: [1990] 1 EGLR 212.
229 Hussey v Horne Payne (1879) 4 App Cas 311.
230Perry v Suffields Ltd [1916] 2 Ch 187; Mitsui Babcock Energy Ltd v

John Brown Engineering Ltd (1996) 51 Con LR 129, 167, 175, 179.
231 [1912] 1 Ch 284, 288.
232See, generally, Mouzat and Furmston [2008] CLJ 37; Furmston (2009)
JCL 95; Furmston, in Burrows and Peel (eds), Contract Formation and
Parties (2010) ch 2.
233Chemco Leasing SpA v Rediffusion [1987] 1 FTLR 201 (comfort letter

an offer but lapsed before acceptance). See also Staughton J’s judgment
quoted in Kleinwort Benson Ltd v Malaysia Mining Corp Bdh [1988] 1
WLR 799, 805–6.
234Kleinwort Benson Ltd v Malaysia Mining Corp Bdh [1989] 1 WLR 379,
388, 391, 393 (letter of comfort not legally binding because it expressed
the present policy of the company rather than containing a promise);
Associated British Ports v Ferryways NV [2009] EWCA Civ 189, [2009] 1
Lloyd’s Rep 595 at [24] (per Maurice Kay LJ: ‘I regard a letter of comfort,
properly so called, as one that does not give rise to contractual liability’).
Cf Wilson Smithett & Cape (Sugar) Ltd v Bangladesh Sugar Industries Ltd
[1986] 1 Lloyd’s Rep 378 (letter of intent for the supply of sugar
specifying amount, price, and shipping details held to be an acceptance).
235Trollope & Colls Ltd v Atomic Power Construction Ltd [1963] 1 WLR
333. See Ball (1983) 99 LQR 572.
236 British Steel Corp v Cleveland Bridge & Engineering Co Ltd [1984] 1
All ER 504. See above, p 66.
237See Law Com No 65, ‘Subject to Contract’ Agreements (1975) and Law
Com No 164, Formalities for Contracts for Sale etc of Land (1987) paras
1.4, 4.15.
238(1877) 7 Ch D 29. See also Galliard Homes Ltd v J Jarvis & Sons plc
(1999) 71 Con LR 219, 235–6, 243.
239 (1877) 7 Ch D 29, 32.

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2. The Agreement
240Coope v Ridout [1921] 1 Ch 291; Chillingworth v Esche [1924] 1 Ch

97; Eccles v Bryant and Pollock [1948] Ch 93; Tiverton Estates Ltd v
Wearwell Ltd [1975] Ch 146.
241Law of Property (Miscellaneous Provisions) Act 1989, s 2, on which

see below, pp 85–91.
242 Cf Alpenstow Ltd v Regalian Properties Ltd [1985] 1 WLR 721

(exceptionally, agreement ‘subject to contract’ drawn up by a lawyer after
five months of negotiation containing detailed and mandatory provisions
of the approval, amendment, and exchange of contracts held binding). In
A-G of Hong Kong v Humphreys Estates (Queens Gardens) Ltd [1987] 1
AC 114, 127–8, the possibility (said to be unlikely) of the parties being
estopped from refusing to proceed was accepted. See also Akiens v
Saloman (1992) 65 P & CR 364, 370.
243Regalian Properties plc v London Dockland Development Corp [1995]

1 WLR 212, 225.
244 Chillingworth v Esche [1924] 1 Ch 97 (restitution of deposit).
245Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55, [2008] 1

WLR 1752 (quantum meruit for value of work done in obtaining planning
permission in respect of an anticipated contract/agreement ‘subject to
contract’).
246Filby v Hounsell [1896] 2 Ch 737; Rossiter v Miller (1878) 3 App Cas

1124.
247Branca v Cobarro [1947] KB 854. See also Damon Comp Nav SA v

Hapag-Lloyd International SA [1985] 1 WLR 434, 443, 452; Global
Container Lines Ltd v State Black Sea SS Co [1999] 1 Lloyd’s Rep 127,
156.
248
Smith v Butler [1900] 1 QB 694; Marten v Whale [1917] 2 KB 480. Cf
Pym v Campbell (1856) 6 E & B 370, below, p 148.
249 Head v Tattersall (1871) LR 7 Ex 7, below, p 149.
250 Below, pp 147–9.
251 Simpson (1975) 91 LQR 247, 263–5; Hedley (1985) 5 OJLS 391.
252 Weeks v Tybald (1605) Noy 11; Guthing v Lynn (1831) 2 B & Ad 232.
But these cases appear to turn on uncertainty and vagueness rather than
lack of intent. There is a close link between uncertainty and lack of
intention to contract.
253Trade Union and Labour Relations (Consolidation) Act 1992, s 179,

see NCB v NUM [1986] ICR 736. The position at common law was similar:
Ford Motor Co Ltd v AUEFW [1969] 1 WLR 339. See Hepple [1970] CLJ
122.
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2. The Agreement
254[2017] EWHC 1928 (Comm). Leggatt J also decided that the

arrangement was not sufficiently certain to be enforceable: see above, n
191.
255 See Atkin LJ in Balfour v Balfour, below, n 259.
256Coward v Motor Insurers’ Bureau [1963] 1 QB 259; Buckpitt v Oates

[1968] 1 All ER 1145. But see now Road Traffic Act 1988, ss 145, 149.
257Lens v Devonshire Club, The Times, 4 December 1914 (Scrutton J),

referred to in Rose and Frank Co v JR Crompton & Bros Ltd [1923] 2 KB
261, 288. Cf Clarke v Earl of Dunraven [1897] AC 59, above, p 34
(contract between competitors in yacht club regatta).
258 Hadley v Kemp [1999] EMLR 589, 623.
259[1919] 2 KB 571, 578. See also Vaughan v Vaughan [1953] 1 QB 762,

765; Gould v Gould [1970] 1 QB 275.
260 Below, p 75.
261 Jones v Padavatton [1969] 1 WLR 328.
262 Fleming v Beeves [1994] 1 NZLR 385, 389 (New Zealand).
263Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; British Airways

Board v Taylor [1976] 1 WLR 13. See above, p 34.
264Williston, Contracts, vol 1, para 21; Hepple [1970] CLJ 122; Hedley
(1985) 5 OJLS 391; ALI Restatement, Contracts (2d) para 21B.
265[1939] 1 All ER 464. See also Rose and Frank Co v Crompton & Bros
Ltd [1925] AC 445; Jones v Vernons’ Pools [1938] 2 All ER 626. Cf
Edwards v Skyways Ltd [1964] 1 WLR 349 (‘ex gratia’ payment); Home
Insurance Co Ltd v Administratia Asigurarilor [1983] 2 Lloyd’s Rep 674,
677 (agreement to be ‘interpreted as an honourable engagement’).
266See Preston v President of the Methodist Conference [2013] UKSC 29,

[2013] 2 AC 163 and President of the Methodist Conference v Parfitt
[1984] QB 368 (no intention to create legal relations). Cf Percy v Board of
National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC
28; New Testament Church of God v Stewart [2007] EWCA Civ 1004,
[2008] ICR 282 (in both of which, an intention to create legal relations
was found).
267R v Civil Service Appeal Board, ex p Bruce [1988] ICR 649, [1989] ICR
171; McLaren v Home Office [1990] ICR 84; R v Lord Chancellor’s
Department, ex p Nangle [1991] ICR 743; Trade Union and Labour
Relations (Consolidation) Act 1992, ss 62(7) and 245.
268Orion Insurance Co plc v Sphere Drake Insurance plc [1992] 1 Lloyd’s

Rep 239.
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2. The Agreement
269Vaughan v Vaughan [1953] 1 QB 762, 765; Kleinwort Benson Ltd v

Malaysia Mining Corp Bdh [1988] 1 WLR 799, [1989] 1 WLR 379, above,
p 70.
270 Edwards v Skyways Ltd [1964] 1 WLR 349, 355; Esso Petroleum Co
Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1 (World Cup
coins given to purchasers of petrol held to be given under a contractual
obligation—because of an intention to create legal relations—and not as a
gift); Orion Insurance Co plc v Sphere Drake Insurance plc [1992] 1
Lloyd’s Rep 239, 263, 292.
271Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 WLR 1195,

1202; Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ
274, [2002] 1 All ER (Comm) 737 at [62]; Assuranceforeningen Gard
Gjensidig v The International Oil Pollution Compensation Fund [2014]
EWHC 3369 (Comm) at [89]–[103].
272Attrill v Dresdner Kleinwort Ltd [2013] EWCA Civ 394, [2013] 3 All ER
607.
273Balfour v Balfour [1919] 2 KB 571, 578; Buckpitt v Oates [1968] 1 All

ER 1145; Jones v Padavatton [1969] 1 WLR 328.
274 [1960] 1 WLR 286. Cf Re Goodchild [1997] 1 WLR 1216.
275 Pettitt v Pettitt [1970] AC 777, 806, 816.
276Ferris v Weaven [1952] 2 All ER 233; Merritt v Merritt [1970] 1 WLR

1121; Eves v Eves [1975] 1 WLR 1338 (cohabitation); Re Windle [1975] 1
WLR 1628; Tanner v Tanner [1975] 1 WLR 1346 (cohabitation). Cf
Vaughan v Vaughan [1953] 1 QB 762; Spellman v Spellman [1961] 1 WLR
921; Morris v Tarrant [1971] 2 QB 143; Horrocks v Forray [1976] 1 WLR
230 (cohabitation). See generally Freeman, in Halson (ed), Exploring the
Boundaries of Contract (1996) 68.
277 [2010] UKSC 42, [2011] 1 AC 534, at [52] (Lord Mance and Baroness
Hale dissented on this point). But such agreements cannot oust the
jurisdiction of the Courts (below, p 409) to make orders about the parties’
financial arrangements: see analogously the Matrimonial Causes Act
1973, s 34 (maintenance agreements).
278 Simkins v Pays [1955] 1 WLR 975.
279Heilbut Symons & Co v Buckleton [1913] AC 30, 51; Oscar Chess Ltd v
Williams [1957] 1 WLR 370, 374. See below, pp 140–2.
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2.

Anson's Law of Contract (31st edn)

Publisher: Oxford University Press Print Publication Date: May 2020

Chapter: (p. 31) 2. The Agreement

Author(s): Jack Beatson, Andrew Burrows, and John Cartwright

A contract consists of an actionable promise or promises. Every such

It has been previously pointed out1 that this outward expression of a

This chapter considers the establishing of an agreement by offer and

(a) Offer and Acceptance

To determine whether an agreement has actually been concluded, it is

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Subscriber: City University of London; date: 18 May 2021

(i) Offer and acceptance in unilateral and bilateral contracts

(1) In the offer of a promise for an act:5 as when a person offers a

(ii) Promises in deeds

In one exceptional situation, however, it is clear that a contract can come

(iii) Inferences from conduct

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Subscriber: City University of London; date: 18 May 2021

inferred from conduct alone; the intention of the parties is a matter of

Sometimes the inference from conduct is not so clear, because the

The effect of their entering for the race, and undertaking to be

Similar principles mean that in the case of a company or other corporate

(b) The Test of Intention

In common with most European legal systems,15 the test of a person’s

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An offer is an intimation, by words or conduct, of a willingness

(a) Offers And Invitations To Treat

It is sometimes difficult to distinguish statements of intention which

As the classification of any particular act or statement as being either an

A statement of fact made merely to supply information cannot be treated

A telegraphed to B ‘Will you sell us Bumper Hall Pen? Telegraph

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Subscriber: City University of London; date: 18 May 2021

plot of land, and A claimed that this exchange of telegrams

In Gibson v Manchester City Council:21

The city council adopted a policy of selling council houses to its

(i) Advertisements and displays of goods for sale

Generally speaking advertisements in newspapers or periodicals that the

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Subscriber: City University of London; date: 18 May 2021

(ii) Transactions by machine

Different considerations apply where the transaction is effected through a

(iii) Carriage of persons

(p. 38) (iv) Tenders

An announcement inviting tenders is not normally an offer; unless

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Subscriber: City University of London; date: 18 May 2021

An auctioneer advertised a brown mare for sale by auction ‘without

A majority of the Court of Exchequer Chamber considered that the

However, the Court’s conclusion that the claimant in Warlow v Harrison

But while there is a certain artificiality in treating the bidder as having

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Subscriber: City University of London; date: 18 May 2021

The Court of Appeal, applying the majority’s view in Warlow v Harrison,

(b) General Offers

An offer need not be made to an ascertained person,49 but no contract

(p. 40) This proposition is best understood by an illustration:

An insurance company offers a reward to any person who finds and