FLK1 · Contract

Formation — offer & acceptance

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

CON.01 — Formation: Offer & Acceptance

A contract needs offer + acceptance + consideration + intention to create legal relations + certainty. This note covers offer and acceptance.

Offer

An offer is a clear statement of terms made with intention to be bound on acceptance. Test it objectively (Smith v Hughes): would a reasonable person think the offeror intended to be bound?

Distinguish an offer from an invitation to treat (a willingness to negotiate, not an offer):

Shop displays / goods on shelves — invitation to treat; offer is made by the customer at the till (Fisher v Bell; PSGB v Boots).
Advertisements — usually invitations to treat (Partridge v Crittenden), but a unilateral offer if a clear promise + condition (Carlill v Carbolic Smoke Ball Co — deposit of £1,000 showed intent).
Auctions — the bid is the offer; the auctioneer's request is an invitation to treat. Without reserve = unilateral offer to highest bidder (Barry v Davies).
Tenders — invitation to treat; the tender is the offer (but obligation to consider conforming bids).

Termination of an offer

Revocation — any time before acceptance, but must be communicated (Byrne v Van Tienhoven). Communication by a reliable third party suffices (Dickinson v Dodds). A unilateral offer cannot be revoked once performance has begun (Errington v Errington).
Rejection / counter-offer — a counter-offer kills the original (Hyde v Wrench). A mere request for information does not (Stevenson v McLean).
Lapse — of time, or death.

Acceptance

Unqualified assent to all terms. Key rules:

Must be communicated to the offeror; silence is not acceptance (Felthouse v Bindley).
Acceptance must match the offer (mirror image); "battle of the forms" usually decided by last set of terms (Butler Machine Tool).
Postal rule — acceptance is effective when posted, not received (Adams v Lindsell) — only if post was reasonable and not excluded; does not apply to instantaneous communication (Entores; Brinkibon).
Unilateral contracts — acceptance is by performing the act; no separate communication needed (Carlill).

Common SBAQ traps

Treating a shop display/advert as an offer.
Forgetting revocation must reach the offeree before acceptance.
Misapplying the postal rule to email/telex (instantaneous = receipt rule).
Counter-offer vs request for information.
Battle-of-the-forms: identify who fired the "last shot".

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In January, a doctor negotiating the sale of his medical practice tells the buyer, truthfully, that the practice generates around £2,000 a month in income. Contracts are not signed until May. Between January and May the doctor falls seriously ill, stops practising, and the patient list collapses, so that by the time of signing the practice earns almost nothing. The doctor says nothing about this change. The buyer, still relying on the January figure, completes the purchase and then discovers the true position.

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