People get nervous when they hear the word ‘contract.’ They visualise lengthy documents with technical jargon put together by lawyers. It connotes trouble, one way or another, and people like to avoid contracts by all means.
In reality, we enter into several contracts in our everyday interactions with the world. These interactions have all the elements of a valid contract, but they are not written down and do not go through the formal process that some documented contracts must go through.
What is a contract? The rough and dirty definition is that a contract is an agreement between two or more parties. The agreement is made up of an offer on clear terms, which is accepted in exchange for something of value (consideration). So if I say to my son, ‘I will give you five hundred naira if you wash my car every Saturday,’ and he accepts my offer, then we have an agreement. He gets his five hundred naira and I get a washed car every Saturday. But what happens when either of us decides that we are tired of this agreement? Well, we will just have to suck it up because our agreement lacks the final ingredient of a contract, which is the intention to create legal relations.
When I was making the offer for his car-washing services, I did not intend that he would take me to court for breach of contract if my pocket ran dry one Saturday and I could not pay him. Likewise, he probably would not expect to be dragged to court if one fine Saturday morning he prefers to go and see a movie over washing my car.
Generally, the presumption is that agreements between family and friends are not meant to bind in law but this presumption can be rebutted with clear evidence of the contrary.
There are some factors that indicate that a contract exists and the parties intended it to bind them legally. One factor is that the terms must be clear, there must be agreement on all material terms and the willingness to be bound by the agreement must be objectively clear, that is, a reasonable person would agree, from the conduct or words of both parties, that they were willing to be bound by the agreement.
So, most of us have to get to work everyday. Some people have a private arrangement to get to work, others use public transportation services. For public buses, ferries etc, usually, at least in Lagos, the bus conductor makes the offer with the express terms being the destination of the bus and the price. When a passenger steps on the bus or ferry, they accept the offer and the contract is formed. There are also implied terms – that the bus or ferry is in good working order and will get the passengers to their destination; and that the driver handle the vehicle with due skill, care and diligence. If any of these terms are breached, then the contract comes to an end and the injured party is entitled to a remedy.
The remedy is usually sorted out immediately; no need to get lawyers or the courts involved, the passengers represent themselves, argue their case and in most circumstances get a refund of the moneys they have paid. For those who use taxis, there is some negotiation between passenger and driver before terms are agreed – the formation process might be different but the broad terms are about the same.
What about advertisements? For the purpose of contract formation, advertisements are not ‘offers,’ but there are exceptions. The famous case of Carlill v Carbolic Smoke Ball Company,  1 QB 256, which I have written about in this column is one of those exceptions. It falls into the category of unilateral contracts, where one party makes an offer to the world, and accepts it and acts on it, without informing the offerror of their acceptance. In Carlill, the offer was a reward of a sum of money to anyone who used the Carbolic Smoke Ball as prescribed and still fell ill with influenza. There, “the advertisement was an offer intended to be acted upon, and when accepted and the conditions performed constituted a binding promise on which an action would lie…” (Smith LJ., Carlill).
When we make a purchase in a store, we enter into contract with the store, but what point is the contract formed? Is the display of goods an offer for sale in the sense that it can be accepted to form a contract? The courts have said, no. The display of goods is merely an expression of a willingness to sell.
The offer is made when the buyer takes the goods they want to the till and the sales agent accepts the offer (the sales attendant could reject the offer, for instance, if an underage person is trying to buy alcohol or cigarettes).
In Pharmaceutical Society v Boots,  1 QB 401, the Pharmaceutical Society was of the view that the goods on display in a store were on offer, and when the customer put the goods into their basket, the purchase contract was complete, and therefore the sales agent at the till could not refuse to accept the customer’s money.
The formation of the contract was important in this case because of the requirement that certain substances be sold under the supervision of a pharmacist. The court disagreed, saying, “in the case of the ordinary shop, although goods are displayed and it is intended that customers should go and choose what they want, the contract is not completed until, the customer having indicated the articles which he needs, the shop-keeper or someone on his behalf accepts that offer. Then the contract is completed” (Somervelle LJ, Pharmaceutical Society).
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Francisca has over 10+ years of writing experience in press releases, feature articles, promotions, copywriting for small businesses and manufacturers in various industries. She brings a wealth of experience and is the "calmer" when these is a storm. She loves to travel and read.View More Articles