Contract Law

What Makes a Contract Valid?

Forms of Agreement

Every time you buy or sell something, this is a contract in action. If buying over the counter, by taking an item of stock to the counter, the customer is making an offer to buy, and the taking of payment is the seller’s acceptance of that offer. In Pharmaceutical Society of Great Britain v Boots Cash Chemists[1], a pharmacy in 1950’s Britain came up with the super-radical idea of offering some of their merchandise in shelves for customers to select independently as in a normal shop. The Pharmaceutical Society did not like this and sued...

 

The court ruled that the display of goods for sale is not a contractual offer to sell, and picking an item up is not acceptance of the offer. By indicating a wish to purchase, the customer offers to buy. The sale is effected when the sales staff accept the customer’s offer to buy at the agreed price. If the display of goods was an offer to sell, then where no price is marked, a customer could force a shop to sell at a loss and sue if they refuse.

 

Effects of Conduct

Contracts can be implied by conduct. If two parties engage in a course of conduct where they both do something for each other, a contract implied by conduct emerges from their commitments to ongoing cooperation.

 

Written Contracts can be altered by conduct. If a contract is written, then the strict meaning of the document takes precedence over any other factor. If it becomes customary between the parties to do things differently, evidence is required to prove that the change became customary and was agreed to by consent of both parties.

 

 

Advertising

Contracts are distinguished from what lawyers call Invitations to Treat. These include advertisements and display of goods for sale (as in Boots Cash, above).

 

Without this distinction, every advertisement and every display of products would constitute an offer of a contract and any action merely looking like acceptance by the customer would bind the seller and customer. The customer would be able to force a sale and would be unable to change their mind even if they realise they could not afford the purchase. Some advertisements are not strictly true, and would create massive liabilities for the seller unless they were totally honest in their marketing.

 

 

[1]Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Limited [1953] 1 QB 401.