English Law/Contract/Formation

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An English and a Frenchman shake hands on an agreement.

English Contract Law FORMATION

Introduction

There are three essential elements to determine whether a contract has been formed:

• Offer and acceptance
• Intention to create legal relations
• Consideration

The exact meaning of each of these concepts has been refined by courts through a series of cases, and this process is ongoing with the advent of new technology such as the internet and blockchain technology adding extra capabilities to contracts, and also adding in extra complication to some aspects of contracts.

A contract is any agreement which the law recognises as being enforceable. While subjectively it is not always clear when people have agreed, contract law takes the view that when one person objectively consents to a bargain, they will be bound.

However, not all agreements, even if they are relatively certain in subject matter, are considered enforceable. There is a rebuttable presumption that people do not wish to later have legal enforcement of agreements made socially or domestically.

The general rule is that contracts require no prescribed form, such as being in writing, except where statute requires it, usually for large deals like the sale of land.

In addition and in contrast to civil law systems, English common law carried a general requirement that all parties, in order to have standing to enforce an agreement, must have brought something of value, or "consideration" to the bargain. This old rule is full of exceptions, particularly where people wished to vary their agreements, through case law and the equitable doctrine of promissory estoppel.

Moreover, statutory reform in the Contracts (Rights of Third Parties) Act 1999 allows third parties to enforce the benefit of an agreement that they had not necessarily paid for so long as the original parties to a contract consented to them being able to do so.

Elements of formation

Following on from this page are the subpages about the elements needed for a contract to be formed:

• Offers
• Agreement
• Certainty
• Consideration
• Promissory estoppel
• Privity