According to the Duhaime law dictionary, in
contract law, the legal definition of a contract can be defined as an “explicit
proposal to contract which, if accepted, completes the contract and binds both
the person that made the offer and the person accepting the offer to the terms
of the contract”. “The underlying theory is that a contract is the outcome of
consenting minds. However, parties are judged by what they have said, written
or done, rather than by what they were actually thinking”. Whatever, you
exchange in a contract it has to be worth something. Things like thoughts,
feelings, emotions etc you can’t have a contract on those terms.
First stage to any contract is offer and
acceptance; combine the two and you’ve got an agreement. (Offer + Acceptance
= Agreement). Another element that makes a legal binding contract is
consideration. Consideration means that parties exchange promises with one
another, but you’ve got to gain and lose something at the same time. In this case,
a transaction, losing a piano and receiving money in return. Moreover, the
parties must have an intention to create legal relations between themselves.
There are two types of contracts:
Bilateral contract, which is 2 sided – parties
exchange promises. Most contracts we enter into are bilateral.
And the other is a unilateral contract, where
one party promises to be bound if the other party performs some specified act.
In the case of the piano, we can say it’s a unilateral contract.
In order to advise Kelly, it is essential to consider the law regarding
offer and acceptance. The first issue to be considered is whether it’s an offer
or invitation to treat.
An invitation to treat is “where a party is initiating negotiations
they are said to have made an invitation to treat. An invitation to treat
cannot be accepted to form a binding contract”. For example, if an individual
place an advertisement its automatically an invitation to treat because once
they run out that’s it as they don’t have a supplier or a manufacturer. On the
other hand, if it it’s a company who places an advertisement it will be treated
as an offer because they are a lot more powerful, they have more money and
resources. (fisher v bell 1961), (Partridge vs Crittenden 1968), (Carlil vs
the carbolic smoke ball company 1893), Gibson v Manchester city council 1979),
(Storer v Manchester city council 1974).
Whereas, an offer is a “definite and unequivocal statement of
willingness to do or refrain from doing something that is capable of being
converted by acceptance into a legally binding contract. It is made by an
offeror to an offeree and is capable of acceptance only by an offeree who knows
of its existence (Taylor v Allon 1966).”
To be valid:
§ “It has to be communicated in oral terms”
§ “Has to be clear and certain then you
have got a legally binding offer”
§ “It can be communicated by conduct