Firstly, it is worth being aware that most contracts take a written form however it is also possible to form a contract verbally. As long as all of the relevant 'ingredients' are in place (which will be discussed below) a verbal contract can become legally binding in just the same manner as a written contract. Of course trying to prove that a verbal contract exists is far more difficult that a written contract by the very nature of no written evidence. You may have heard the term ‘a verbal contract is not worth the paper it is written on’, which really demonstrates the difficulty that will be encountered for anyone who wants to take any form of action on the basis of a verbal contract. Other evidence such as recordings may be used however there is no substitute for a written contract in the event of a disagreement or a dispute (although written contracts can often be poorly drafted, resulting in disagreement in interpretation).
In order to form a legally binding contract there are four elements necessary. These are; Agreement (which consists of both an offer and an acceptance), Consideration (something of value, which is not necessarily financial), an Intention to create legal relations and a Legal capacity to make the contract.
There a number of examples which demonstrate the distinction between an offer and an invitation to treat within case law, none more so than Fisher v Bell (1961). This case relates to the display of a flick knife in a shop window. The wording of the Restriction of Offensive Weapons Act 1959, section 1(1), stated: ‘it was illegal to manufacture, sell, hire, or offer for sale or hire, or lend to any other person, amongst other things, any knife which has a blade which opens automatically by hand pressure……..’ The shopkeeper argued that he was not offering the flick knife for sale by displaying it in his window, merely inviting people to treat themselves. The court found in favour of the shopkeeper who was therefore deemed not guilty of the offence. An Invitation to treat leaves both parties free to change their minds, so a shopkeeper can decide to refuse to sell to a customer who he does not want to (for example, somebody who is under age or drunk). Also, a customer who puts something into their basket has the option to put it back or change their mind before proceeding to the checkout
Law of contract is a well developed area of UK law which has evolved over many hundreds of years. Therefore, there is no shortage of case law to refer back to in respect of both the formation of contracts as well how a contract may be brought to an end. There are also many books and other literature that are available on the subject which discuss contract law in great detail. In such a short article I can only really scratch the surface of this area of law and provide an introduction to the subject however, it is well worth researching contract law in more detail to help develop a greater understanding. I always tell my students that the most effective way of understanding the main principles of any area of law, in addition to reading the legislation and/or previous cases themselves, is to refer to the details and decisions of these previous cases. Whereas some of the legal principles may seem at first to be rather complicated and confusing, they often become much clearer when the details of the case and the rationale for the decision are understood.
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