LAW2480 Chap.3 Contract Formation: Offer, Acceptance and Consideration
Contract Formation: Offer, Acceptance and Consideration
Contract formation asks whether the parties reached an objectively ascertainable agreement supported by consideration and sufficient certainty. The analysis distinguishes offers from invitations to treat, tracks revocation and acceptance through communication rules, and tests whether the response mirrors the offer or operates as a counter-offer.
Consideration must be legally sufficient and bargained for, but need not be economically adequate. A chronological method is especially valuable because one message may terminate, vary or accept an earlier proposal.
What this chapter covers
- 01
Offer and invitation to treat
- 02
Revocation
- 03
Acceptance and communication
- 04
Counter-offer and inquiry
- 05
Consideration
- 06
Certainty and completeness
Worked example · free
Build a communication timeline before deciding formation
- +1Identify the Monday communication as an offer only if it shows commitment on acceptance.
- +2Record when and how the purported revocation was communicated to the buyer.
- +2Apply the correct acceptance rule to the buyer's email rather than assuming every dispatch rule is identical.
- +1Conclude by comparing the effective moments and checking certainty and consideration.
Key terms
- Offer
- An objectively expressed willingness to be bound on specified terms upon acceptance.
- Invitation to treat
- An invitation for others to make offers rather than an offer capable of immediate acceptance.
- Revocation
- Withdrawal of an offer before effective acceptance, ordinarily requiring communication.
- Counter-offer
- A response proposing different terms and rejecting the original offer.
- Consideration
- Legally sufficient value bargained for in exchange for the promise.
Contract Formation: Offer, Acceptance and Consideration FAQ
Can silence amount to acceptance?
An offeror cannot generally impose acceptance by silence. The question is whether the offeree objectively communicated assent through words or conduct, taking account of the dealings and the prescribed method without inventing agreement from inactivity alone.
Is an inquiry a counter-offer?
Not necessarily. A request for information may leave the offer alive, while a response that proposes acceptance only on different terms can reject it as a counter-offer. Read the language and commercial context closely.
Does consideration have to be fair in value?
It must be legally sufficient but need not be economically adequate. Courts generally do not reprice a bargain merely because one side did poorly, though other doctrines may respond to defective consent or unconscionable conduct.
What should the final formation conclusion contain?
State whether agreement formed, the moment it formed, the parties, the operative offer and acceptance, and the consideration supporting the exchange. If formation failed, identify the precise element rather than saying negotiations were incomplete. Where receipt timing, a counter-offer or an uncertain term is missing, provide the result on each plausible version.
This contract snapshot tests whether the communication timeline produced a coherent bargain. It also creates the foundation for later analysis of terms, breach and remedies, which cannot be addressed accurately without knowing what obligations were actually created.
Exam move
Practise formation by rewriting each problem as a dated communication log. Label each event offer, inquiry, counter-offer, revocation or acceptance only after quoting the operative words. Then test communication, certainty and consideration in that order. Create variants by changing the medium or arrival time. If your result changes, explain the rule causing the change.
This is more effective than memorising isolated case outcomes because it rehearses the factual distinctions that determine formation. Maintain a small bank of ambiguous messages and classify them without seeing the surrounding answer. For each one, identify whether it demonstrates commitment, asks for information, changes a term or merely reports an intention.
Add the consequence: offer created, offer remains open, original offer rejected, or agreement concluded. Then attach the communication rule and effective time. This prevents the common mistake of naming a doctrine without deciding which communication it governs. Review consideration through paired promises.
Write what each side requested and supplied, then ask whether the value moved as part of the bargain, whether it was already owed and whether the promise has real content. Treat adequacy as a separate question from sufficiency. For uncertain or incomplete terms, identify the precise gap and whether objective machinery, prior dealing or commercial context can resolve it.
In a timed answer, finish with one sentence that states when the contract formed, between whom and on which terms. If no contract formed, state the failed element rather than saying only that negotiations were incomplete.
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