chapter  2
Offer and Acceptance
Pages 19

The fi rst requirement of a binding contract is that the parties should have reached agreement (a ‘ consensus ad idem ’). Normally, an agreement is made when one party (the ‘offeror’) makes an offer to another (the ‘offeree’) which the offeree accepts. For example, if R says to E in the presence of witnesses: ‘Will you buy my Suzuki car reg no XF 2244 for $10,000?’, and E replies, ‘Yes, I will’, a contract comes into being. In such a simple example, there is no diffi culty in identifying the offer and the acceptance, but where the alleged agreement is preceded by protracted negotiations conducted in lengthy correspondence, it may be diffi cult to discover a precise offer and acceptance. In such a case, it would be necessary for the court to scrutinise the correspondence carefully in order to decide whether or not there was a concluded agreement. 1

An offer has been described as ‘an expression of willingness to contract on certain terms made with the intention (actual or apparent) that it shall become binding as soon as it is accepted by the person to whom it is addressed’. 2

An offer may be made to a particular individual or corporation, or to the world at large. In the above example, the offer to sell a Suzuki car was clearly addressed to an individual person, E, whereas an instance of an offer addressed to the world at large is the well-known case of Carlill v Carbolic Smoke Ball Co, 3 where the defendants offered by advertisement to pay £100 to any person who, having used their ‘smoke ball’ in the prescribed manner, nevertheless caught infl uenza.