chapter
THE FORMATION OF A CONTRACT
Broadly, the law of contract can be divided into two parts. The first part deals with the formation of the obligation together with any obstacles and/or vitiating factors. The second part deals with performance, or indeed non- performance, of the contractual obligation. It is in the second part that one can look in some depth at the actual contents of the obligation, since contents
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Robert Goff LJ:… [T]here is, in our opinion, no general principle of law that fraud vitiates consent. Let us consider this proposition first with reference to the law of contract. In English law every valid contract presupposes an offer by one party which has been accepted by the offeree. Plainly there can be no such acceptance unless offer and acceptance correspond, so the offer can only be accepted by the offeree, the acceptance must relate to the same subject matter as the offer and must also be, in all material respects, in the same terms as the offer. But the test whether there has been correspondence between offer and acceptance is not subjective but objective. If there is objective agreement, there may be a binding contract, even if in his mind one party or another has not consented to it, a principle recently affirmed by the Court of Appeal in Centrovincial Estates plc v Merchant Investors Assurance Co Ltd (1983) The Times, 8 March. Furthermore putting on one side such matters as the ancient doctrine of non est factum and relief from mistake in equity, there is no principle of English law that any contract may be ‘avoided’, that is, not come into existence, by reason simply of a mistake, whether a mistake of one or both parties. The question is simply whether objective agreement has been reached and, if so, on what terms. If objective agreement has been reached, in

the sense we have described, then the parties will be bound, unless on a true construction the agreement was subject to a condition precedent, express or implied, failure of which has in the event prevented a contract from coming into existence.