Offer and Acceptance in Contract Law

Certainty in offer and acceptance

Even though the parties may have appeared to make an agreement by the exchange of a matching offer and acceptance, the courts may refuse to enforce it if there appears to be uncertainty about what has been agreed, or if some important aspect of the agreement if left open to be decided later. In Scammell v Ouston, for example, the parties had agreed to the supply of a lorry on ‘hire purchase terms.’ The House of Lords held that in the absence of any other evidence of the details of the hire purchase agreement this was too vague to be enforceable, and there was therefore no contract.

This does not necessarily mean that all details of a contract must be finally settled in advance. It is not uncommon, for example, in relation to contracts for the supply of services for the precise amount to be paid to be left unspecified at the time of the agreement. This approach now has statutory force by virtue of s 15 of the Supply of Goods and Services Act 1982, which states that:

  1. Where…the consideration for a service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting will pay a reasonable charge.
  2. What is a reasonable charge is a question of fact.

The same rule also operates in relation to goods by virtue of the similar provision contained in s 8(2) and (3) of the Sale of Goods Act 1979.

Meaningless phrases

The decision in Scammell v Ouston might be thought to open the door to an unscrupulous party to include some meaningless phrase in an agreement, which would then allow him to escape from the contract if he wished on the basis of uncertainty. To have such an effect, however, the phrase must relate to some significant aspect of the contract. If it can be deleted and still leave a perfectly workable agreement, the courts will ignore it. This was the position in Nicolene v Simmonds, where the contractual documentation contained the statement ‘we are in agreement that the usual conditions of acceptance apply.’ Since there were no ‘usual conditions,’ it was held that that this was simply a meaningless phrase, which could be ignored. There was nothing left open which needed to be determined.

Incomplete agreements

If an agreement leaves undecided, and undeterminable, some important aspect of the contract, then the courts will not enforce it. This can arise where perfectly clear words are used, bout the meaning of which there is no dispute, but which do not settle some significant part of the contractual terms. In May and Butcher v R, for example, the agreement provided that the price, and the date of payment, under a contract of sale, was to be ‘agreed upon from time to time.’ The House of Lords held that there was no contract in this case.

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  • Obligations distinguished from ‘machinery’