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<p>For a contract to be enforceable in UK law, it must be founded upon six key elements: offer, acceptance, consideration, intention, capacity and legality. If just one of these key elements fails to apply, the contract risks being void and unenforceable.</p>
<p>We provide an overview of these elements below.</p>
<h3>Offer</h3>
<p>Every contract involves an agreement. But before one party can agree to anything, the other party needs to make an offer. This offer must demonstrate an exchange of value (see Consideration below) and outline the terms of the agreement.</p>
<p>An offer must express a willingness to enter into a contract on certain terms, with the implicit understanding that as soon as that offer is accepted, it is binding. The offeree can respond with a counteroffer if they wish to alter the original terms, but a counteroffer invalidates the initial offer.</p>
<p>We enter into contracts every time we do a food shop at the supermarket. This may seem unusual for several reasons: people rarely, if ever, try to haggle at the supermarket, and cashiers rarely, if ever, refuse to sell the shop’s items to a customer. But technically, both haggling at the supermarket and refusing to sell to customers are legally viable options. The reason neither of these things tends to happen is due to logistics and bargaining power, rather than the law.</p>
<p>One area of legal debate over what constitutes an offer in previous years has been the display of goods on shelves. Does listing a loaf of bread at £1.58 constitute an offer by the retailer?</p>
<p>In <em>Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953]</em>, this was debated, and Lord Goddard CJ came to the conclusion that the display of goods on shelves did not constitute an offer, but was rather an ‘invitation to treat’, for the following reasons:</p>
<ul>
<li>It would invalidate the customer’s ability to change their mind, as taking it off the shelf would mean acceptance of the offer</li>
<li>It would remove the shopkeeper’s freedom to bargain</li>
<li>It would oblige the shopkeeper to sell to every person who accepted such an ‘offer’ (an example used was a book on a shelf that another customer had already reserved)</li>
</ul>
<h4>Difference between an offer and an invitation to treat</h4>
<p>An invitation to treat is an expression of willingness to enter into negotiations – it’s an invitation for others to make offers. An offer, on the other hand, is a promise to be bound on certain terms, which becomes legally binding upon acceptance.</p>
<p><a href="https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php" target="_blank" rel="noopener"><em>Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256</em></a> is a classic example illustrating this distinction. In that case, the company advertised that it would pay £100 to any person who used their product (a supposed cure for influenza) and subsequently caught flu. The company claimed to have deposited £1,000 in a bank as a sign of their sincerity.</p>
<p>The court found that this did not constitute an invitation to treat but was a legitimate offer. When Mrs Carlill used the smoke ball as instructed and still fell ill, the company were legally bound to pay her as advertised. Crucially, it was the deposit of £1,000 alongside the specificity of the terms that converted what otherwise be considered marketing language into a legally enforceable offer.</p>
<h3>Acceptance</h3>
<p>Once an offer has been made, the offeree may accept or reject that offer, or make a counter offer as we mention above. Communication of acceptance can be made verbally or in writing – or via conduct. In the above example of buying food at a supermarket, acceptance is when the cashier scans the goods and the final payment is made.</p>
<p>For the acceptance of an offer to be valid, the following applies:</p>
<ul>
<li>The offer must still be open – an offer that has been retracted cannot be accepted</li>
<li>The offeree must accept the offer on its terms, and cannot vary these terms – doing so would constitute a counteroffer</li>
<li>The offer must be unequivocal (there can be no doubt that it was accepted) and unconditional (with no further conditions attached)</li>
<li>The acceptance must comply with the conditions of the offer (for example, if the offer states that acceptance requires an e-signature, an e-signature is required for the acceptance to be valid)</li>
<li>The acceptance of the offer must be clearly communicated with the offeror</li>
</ul>
<h4>Implied acceptance of a contract</h4>
<p>It’s worth emphasising the last note mentioned above: silence or inaction rarely constitutes acceptance of an offer. This principle dates back to a 19th-century legal precedent in the UK (<em>Felthouse v Bindley (1862)</em>), where a man offered to buy a horse, stating that he’d assume acceptance if the seller didn’t respond. The court ruled that this was invalid.</p>
<h3>Consideration</h3>
<p>Together, the offer and acceptance form the agreement in a contract. Consideration is the principal means by which the courts decide whether that agreement should be legally enforceable. Generally, it refers to the fact that something of value is being exchanged between the contracting parties. This could be monetary value, but it could also be services, goods or promises of future actions. Importantly, consideration must be provided by both parties – it is not sufficient for only one party to give something of value.</p>
<p>The value of the consideration is not relevant: it doesn’t need to be adequate or even fair. But it does need to be sufficient. In other words, the consideration must hold some value in the eyes of the law.</p>
<h3>Intention</h3>
<p>Every contract begins with some element of intention: the offeror makes their offer with the intention that the agreement is binding upon acceptance. But there is another kind of intention – the intention to create legal relations – that elevates an agreement into a legally binding contract. Frequently there are situations between friends or family where an agreement is made (e.g. A will do the dishes if B will clean the toilet), but it’s rarely anticipated that such agreements will lead to legal action if breached.</p>
<p>The intention to create legal relations relies on both parties knowingly intending to create a<em> legally </em>binding agreement. In the commercial context, courts will usually assume that this intention was there upon an agreement being made, and it’s difficult for parties to prove following express agreement that there was no intention to be legally bound.</p>
<h3>Capacity</h3>
<p>Capacity pertains to the legal ability of parties to enter into contracts. Individuals must be of legal age (18 or over in the UK), mentally competent and not under the influence of substances impairing their judgement. Contracts made by minors, individuals with significant mental impairments, or those significantly impaired by drugs or alcohol at the time of agreement, may be voidable or invalid.</p>
<p>A contract becomes invalid if one party is coerced, tricked or lacks full awareness of what they are agreeing to. For instance, agreements entered into under duress or through fraudulent misrepresentation will typically be declared unenforceable.</p>
<h3>Legality</h3>
<p>Finally, contracts must operate within the confines of the law. An agreement involving illegal activities is inherently unenforceable.</p>
<h3>Need help drafting a legally enforceable contract?</h3>
<p>Whether you are drafting a business agreement, entering into a new partnership or reviewing an existing contract, our team at Linnear Legal is here to support you. We ensure that every element of your agreement meets legal standards, giving you confidence and security in every transaction. <a href="https://linnearcms.wpenginepowered.com/get-in-touch/" target="_blank" rel="noopener">Contact one of our commercial law specialists</a> today to ensure your agreements are enforceable and future-proof.</p>


The six key elements of a legally enforceable contract

Learn the six elements every UK contract must include to be enforceable. Understand offer, acceptance, consideration and more in plain terms.

The six key elements of a legally enforceable contract | Linnear Legal

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