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Sub-section (1).-- Definition and Essentials of a

Contract. A contract is an agreement enforceable at law. The term “ agreement,” although frequently used as synonymous with the term “contract," is really an expression of greater width of meaning and less technicality. Every contract is an agreement, but not every agreement is a contract. In its colloquial sense, the term “agreement would include any arrangement between two or more persons intended to affect their relations (whether legal or otherwise) to each other. An accepted invitation to dinner, for example, would be an agreement in this sense ; but it would not be a contract, because it would neither be intended to create nor would it in fact create any legal obligation between the parties to it. It is sometimes even said, that an agreement which is intended to affect the leyal relations of the parties does not necessarily amount to a contract in the strict sense of the term. For instance, a conveyance of land or a deed of gift of a chattel necessarily involves an agreement between the parties to it ; but its primary legal operation is to effect a transfer of property. Similarly, the marriage ceremony constitutes an agreement between the parties to it ; but its only direct legal result is to create the status of husband and wife. In cases of this kind, however, contractual obligations are almost always incidentally or consequentially created either by implication of law or otherwise ; so that it is perhaps somewhat pedantic to regard them otherwise than as contracts for all practical purposes. They appear sufficiently to possess the distinguishing features of a contract, i.e., (1) an agreement, and (2) legal enforceability.

The following are the essential conditions of a valid contract in English law : (1.) There must be an offer by one party to another

accepted by that other.

(2.) There must be an intention to affect the legal relations

of the parties. (3.) Either there must be valuable consideration on both

sides, or else the contract must be embodied in a

deed, (4.) In certain cases, for purposes of evidence or other

vise, certain common law or statutory requirements as to form or otherwise must be complied with, in

order to render the contract enforceable. (5.) The parties must possess legal capacity to contract. (6.) The subject matter of the contract must be lawful. (7.) There must be real consensus between the parties.

In the following sub-sections we propose separately to consider each of these conditions in some detail, and to examine the chief rules affecting each.

Sub-section (2).— Offer und Acceptance. Offer.--An cffer may be made by one person to another in any manner either by writing, words, or conduct ; but it is essential that it should

be communicated in some way to such other person. Usually, of course, it is made by express words or writing, and such cases involve little difficulty. But it is equally effectual if deducible from some unequivocal act or conduct of a person (6); for instance, if a cabman plying for hire takes up a passenger, no word need be spoken on either side, yet there is a complete offer and acceptance implied from the conduct of the parties. Again, an offer need not be addressed to any specific individual ; for instance, it may be contained in a general advertisement in a newspaper (c).

Acceptance.-As regards acceptance, this also may take place by express words or writing, or by implication from conduct. For instance, in the illustration above referred to, the fact of the passenger calling a cab and giving the


Hunter (1887),

(6) Crears 19 Q. B. D. 341.

(c) Carlill v. Carbolic Smoke Ball Co., [1893] 1 Q. B, 269.

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usual directions as to his destination would be a sufficient acceptance of the cabman's implied offer. Again, if a tradesman sends goods on approval to the house of a person who retains and uses the goods, there is an implied acceptance of the goods and a corresponding liability to pay the price specified, if any, or, if none, a reasonable price (d). Difficult questions as to the limits of implied acceptance often arise in connection with what may, for convenience sake, be called “ ticket cases.” Very many contracts at the present day, such as those with railway and similar companies, are made by the delivery by one party to another of a ticket or document in a common form embodying certain terms and conditions. The delivery of such a ticket really constitutes the offer of the party delivering it, and the other party by taking the ticket implicitly accepts such offer. If the latter party is aware of the nature of the terms and conditions stated on the ticket, and they are not fraudulently misleading, or even if he knows of their existence, although he may be ignorant of their exact effect, he is, in most cases, held to be bound by them on the ground of implied acceptance (e).

A more anomalous class of cases is that of advertisements, by which something is promised by the advertiser in return for some act.

It is clear that any person performing the act, with knowledge of the advertisement and an intention to take advantage of it, will be deemed implicitly to have accepted the promise contained in it (f). And there has been held to be a binding contract in such cases, even though the act is done without the motive of complying with the advertisement.

A contract is complete as soon as the acceptance is communicated ; and in this connection special mention must be made of acceptances through the post. It is now

(d) Hart v. Vills (1846), 15 M. & W. 87.

(e) Richardson & Co. v. Roin.

tree, [1894] A. C. 217; Watkins v. Rymill (1883), 10 Q. B. D. 178.

() Carlill v. Carbolic Smoke Ball Co., [1893] 1 Q. B. 269.

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a well established rule of law, that an acceptance by letter is deemed to be communicated immediately it is posted, and similarly an acceptance by telegram would be complete as soon as the telegram was handed in for dispatch (9). It is, therefore, too late to revoke an offer if a letter of acceptance has been posted, even if the notice of revocation should in fact reach the offeree before the letter of acceptance reaches the offergr. And a posted acceptance makes a binding contract, even though it may be delayed or lost in the post (h). Po

Piceri irina Gran As regards the manner of and time for acceptance of an offer, the offeror may of course prescribe special conditions ; if he does not do so, an acceptance made within a reasonable time by any ordinary and reasonable means of communication is sufficient and effectual (i).

Revocation of an offer.—An offer is implicitly revoked if not accepted within the time specified by the offeror, or, in any case, within a reasonable time. It may also always be revoked if, at any time before acceptance, the offeror communicates to the offeree notice of revocation. And it has been held, that even notice received from a third party of the revocation, or of circumstances clearly negativing the continued subsistence of the offer, is sufficient revocation to preclude subsequent acceptance (k). There are, however, three cases in which an offer cannot be revoked, i.l., (1) after a valid acceptance (I); (2) where the offer was made by a deed under seal ; and (3) where there is an express agreement for valuable consideration to keep the offer open for a specified time. The last of these cases is what is commonly known as “an agreement for an option," and is a familiar incident in modern business

(g) Henthorn v. Fraser, [1892] 2Ch.27; Couanv. O'Connor (1888), 20 Q. B. D. 640; In re London and Vorthern Bank, [1900] 1 Ch. 220.

(h) Household Fire Insurance Co. v. Grant (1879), 4 Ex. D. 216.

(i) Adams v. Linisell (1817), 1 B. & Ald. 681.

(k) Dickinson v. Dodds (1876), 2 Ch. D. 463.

(l) Xenos v. Wickham (1866), L. R.2 H. L. 296. [It may well be doubted whether the construction which has been put upon this decision is a correct one.-E. J.]


life. It is to be observed that such an option does not without consideration (or a deed) bind the offeror to keep the offer open ; because it would lack the third essential condition of a valid contract above mentioned (m).

Identity of terms.—Finally, as regards the acceptance, it is important to remember, that the acceptance, to be effective, must be identical with the terms of the offer, and must be absolute. To take a simple illustration ; if A. says to B., “ I will sell you my horse for 1001.," and B. replies, “I accept, and will give you 901. for it,” there is no consensus ad idem, and therefore no contract (n). Again, if B. accepts the offer at the price mentioned by A., but upon some condition not referred to by A., there is no contract (o). Very difficult cases on this point frequently arise, where the acceptance of an offer refers to a formal document being prepared, or to the approval of the contract by the acceptor's solicitor. It is impossible here adequately to discuss this class of cases; but the general test applicable is, whether or not the acceptance is intended not to be final, but conditional on some further event. If it is made expressly “subject to” some further event, it is primâ facie a conditional acceptance, and there is no binding contract. But an agreement to embody the terms agreed upon in a more formal document, is not necessarily inconsistent with there being a complete and concluded contract (2).

Sub-section (3).--Intention to Create Legal Relations.

This is so obvious an essential that it requires little comment. There are very many engagements made in

(m) Cook v. Oxley (1790), 3 T. R. 653 ; Henthorn v. Fraser, supra ; Sutcliffe v. Warille (1890),63 L. T. 329.

(n) Hyde v. Wrench (1840), 3 Beav. 334.

(0) Cf. Hutchinson v. Bowker (1839), 5 M. & W. 535 ; Jones v. Daniel, (1894] 2 Ch. 332.

(p) See generally, Fry's Specific Performance, 3rd ed. $ 511; Winn v. Bull (1878), 7 Ch. D., at p. 32 ; Rossitter v. Miller (1878), L. R. 3 App. Ca. 1124 ; Chipperfield v. Carter(1895), 72 L. T. 487 ; Page v. Norfolk (1894), 70 L. T. 781: Simp801 v. Hughes (1897), 76 L. T. 237; Filby v. Hounsell, [1896] 2 Ch. 737.

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