GEG 502
FORMATION OF
CONTRACT
Dr Ihuoma Ilobinso
Faculty of Law
Lecture Notes for Engineering Students
Elements of a Valid Contract
INTENTIONS TO
OFFER ACCEPTANCE CONSIDERATION
CONTRACT
Consensus ad idem
Mutual Agreement
Offer
Acceptance
Consideration
OFFER
Offer Offer
General Public
Express:
Carlill v Carbolic
Spoken or
Written Words Smoke Ball.
Implied:
Specific Person
Conduct
Offer/Invitation to Treat
Foran indication of interest to be considered an offer, it
must be
clear complete definite
lackof intention to be bound without further negotiation
= invitation to treat
An invitation to treat is stage in which a party invites the
other to make an offer- invitation for offers.
Display of
Advertisements Auction
Goods in Shop
By the buyer or
Offer is made seller
Each bid
when the buyer
constitutes an
takes the goods Depending on offer
to the counter the type of
Advert
By the buyer or
sellers Acceptance-
Acceptance is
When the
when the seller
Depending on auctioneers
accepts payment
the type of hammer falls
advert
Acceptance
Acceptance is the final and unqualified assent to
the terms of an offer.
Invalid acceptances
• Counter offer
• silence or inactivity
• merely acknowledges
• Request for further information
• Conditional acceptance
Mode of acceptance
Where the offeror prescribes a particular mode by
which acceptance may be communicated then the
prescribed mode must be followed else the
acceptance is invalid.
Where no particular method of acceptance is
prescribed- acceptance may be given by the same
mode of communication or by a method equally as
fast as the method used in making the offer.
Communication of acceptance
The general rule is that, acceptance becomes effective only
when it has been communicated/received by the offeror.
Until an acceptance is received by the offeror, the offer may
be revoked.
Exceptions to this general rule-
• Acceptance by Post- Adams v Lindsay
Termination of Offer
An offer may be terminated before acceptance by
any of these following ways:
• Revocation/withdrawal
• Rejection
• Lapse of time
• Failure of a condition
• Death of the offeree or offeror
• Death of the offeror
Consideration
Consideration is a promise by the promissor to give
something of value to the promisee in exchange for a thing of
value.
So if you seek to enforce someone else’s promise to you, you
must prove that you gave something in return for that
promise.
Consideration
Consideration is a promise by the promissor to give something
of value to the promisee in exchange for a thing of value.
Rules of Consideration
1. Consideration must have some value but need not be
adequate.
2. Consideration must move from the promisee
3. Consideration may be Executory or executed, but not past
4. Consideration must not be illegal
5. A promise to fulfil an existing obligation is not consideration
Intention to Create legal relations
For the contract to be valid, the parties must have the intention
to create legal relations.
In other to determine whether intention to contract exists or not,
the courts classify agreements into:
• Social or domestic agreements – There is a rebuttable
presumption that the parties did not have the intention to be
bound
• Commercial agreements- There is a rebuttable presumption
that the parties intended to be bound
