Introduction: offer is needed, as is an

Introduction: In this essay I will be drawing on academic opinion and relevant case law to illustrate the current state of the traditional, objective approach with regards to establishing an agreement. I will define what the traditional approach involves and also identify potential alternative approaches. Overall, I will discern to what extent I believe the traditional approach to be artificial and inflexible, in order to do highlight this, I shall illustrate both the strengths and the shortfalls of the approach. I will focus on the existence of unilateral offers and acceptance via the mode of performance in order to demonstrate such issues. Furthermore, I will examine how the approach functions in operation and indicate any problems or issues this may cause lawyers and judges as a result. Lastly, I will compile all of my findings and ascertain to what extent the traditional approach of requiring the objective evidence of both a matching offer and acceptance is inflexible and artificial.  Defining the traditional approach regarding establishing agreement: Traditionally, an offer can be defined as “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it accepted by the person to whom it is addressed.”1 An offer is needed, as is an acceptance, in order to create a legally binding agreement. An acceptance on the other hand, can be defined as “a final expression of assent to the terms of the offer and must be made in response to that offer.”2 There is a myriad of requirements which must be satisfied in order to constitute a valid acceptance. One is the mirror image rule (Hyde v Wrench)3, which states that an offer must be accepted with no modifications. Another is the fact that it must be made by the offeree (Boulton v Jones)4. Another requirement is that an acceptance must be in response to an offer (R v Clarke). In addition, the motive for acceptance is irrelevant (Williams v Cowardine)5. Lastly, it must be communicated (Felthouse v Bindley6). These are the general requirements of an acceptance, according to the traditional approach.  The current approach to establishing agreement is known as the objective approach, in that the courts interpret the conduct with regards to what it would cause a reasonable person to believe. There is a split in academic opinion on this approach as whilst there is certainly criticism of this approach, the traditional viewpoint certainly has some academic support. An example of such support is evident when academic Morgan stated “Objectivity denies strength to any secret reservations that the parties might have”7. In this comment Morgan is referring to how adopting such an objective approach protects both parties when establishing an agreement, as it effectively prevents either party from any agendas. Moreover, such protection might not be as guaranteed if a more subjective approach was adopted. Lastly, it could be argued that this addresses the criticism that the approach is inflexible, as it is this inflexibility which provides both parties with sufficient protection when establishing an agreement and is thus necessary. Criticism surrounding the inflexibility and artificiality of the traditional approach: Despite the aforementioned general rules surrounding offer and acceptance, there are scenarios in which there is an exception to some of these general rules; in particular the rule that it must be communicated, as there are incidences in which contracts are formed through performance of prescribed acts. These are known as unilateral offers. There are two types of unilateral offers, one type is where the offer may be made to an individual and the other type is where the offer can be made to the public at large. Ultimately, “The special feature of a unilateral contract is that it arises without the offeree`s having communicated any counter-promise to perform the act or forbearance required by the offer.”8 The very fact that a contract can be made in absence of the traditional requirements is indicative that the traditional requirements that constitute a valid offer and acceptance are potentially outdated and artificial. An example of a unilateral offer, addressed to the public at large, can be found in the case of Carlill v Carbolic Smoke Company9. In this case, an acceptance was said to an occur once a person had completed all the prescribed acts in the advert. Thus, in relation to the statement, this is an instance in which the “courts found agreement in absence of traditional criteria”10 and is indicative of how performance can be a valid mode of acceptance. In turn, this highlights how the traditional criteria for establishing acceptance is to an extent inflexible.  Such a viewpoint is underlined by Steyn LJ comments in the case of Trentham Ltd v Archital Luxfer Ltd (1993). In this case, the plaintiff sued the defendant, who was a works contractor, for a delay. Consequently, the defendant argued there was no objective contract and thus he was not liable. Despite this being correct under the current objective approach to establishing an agreement, Steyn stated it would “unrealistic to argue there was no intention to createw` legal relations” and subsequently void an agreement whereby a party has accepted via performance as opposed to accepting it in the traditional manner. Thus, Steyn is proposing the concept of unilateral offers make logical sense and should be able to constitute as part of a legally binding agreement; such an approach is ultimately challenging the inflexibility of the traditional approach.  A case which supports this approach is the case of Great Northern Railway Co. V Wiltham?11. This case is an example of the other type of unilateral contract in that it is addressed to an identified individual. In this case, the defendant made the argument that a unilateral offer cannot result in a legally binding agreement due to the fact there is no reciprocity in regards to the promise. Consequently, this argument was “roundly rejected by the court, which saw such offers as a matter of everyday practice.”12 This only further underlines that the traditional approach of requiring objective evidence in order to establishing agreement is artificial, as in practice it does not encompass all the differing situations in which contract formation occurs. In addition, not only does this highlight artificiality, it also points to a long-lasting inflexibility as this decision was held in 1873. The fact that a decision was made over a century ago, to accept performance as a valid mode of acceptance in the absence of traditional criteria, really indicates the inflexibility of the traditional approach. Furthermore, the Supreme Court case of RTS Flexible Systems Ltd v Molkerei Alois Müller Gmbh13 is yet another instance which illustrates just how artificial the traditional approach to establishing agreement really is, as “the judgement delivered on behalf of the courts analyses the formation of a contract … without any reference to offer and acceptance.”14 The fact that the highest court in the country is willing to abandon the traditional criteria of establishing agreement through a matching offer and acceptance is indicative that the traditional criteria is perhaps both artificial and to an extent outdated. That being said, the “Court of Appeal continued to demonstrate the strength of orthodox analysis.”15 An example of this is the case of Tekdata Interconnections Ltd v Amphenol Ltd16. In this case, there was a battle of forms and the traditional approach was followed in relation to contract formation. Thus, to an extent, this gives the traditional approach credibility as in the majority of instances it is generally applicable. In addition, a case such as this is a perfect example of when objective evidence is absolutely imperative for discerning the outcome of the case. However, even in a case which supports the traditional view Pill LJ states that “It is not possible to lay down a general rule in all cases.”17 This only serves to underline the inflexibility of the traditional approach, as even though Pill LJ upheld the traditional approach in this instance, he recognises that it simply does not accommodate all situations in real life. Thus, in order for the law to be applied correctly in all scenarios it is inevitable that the traditional approach must be departed from to some degree.  Moreover, Lord Denning had perhaps the most infamous dissenting commentary surrounding the traditional criteria for establishing agreement, and ultimately contract formation. In the case of Gibson v Manchester City Counci 197818 he argued that “It is a mistake to think that all contracts can be analysed into the form of offer and acceptance…there is no need to look for a strict offer and acceptance…you should look at the correspondence as a whole and at the conduct of the parties…”19. Denning is evidently pointing out the artificiality of the traditional criteria, as he believes it is simply a “mistake”20 to assess all contracts through the traditional lens. Furthermore, Denning also proposes that the law in this area should be made more flexible, when he insists that correspondence should be looked at in its entirety. This approach appears to be significant in that, as previously stated, unilateral offers are now generally accepted as valid in establishing a legally binding agreement. This only serves to underline the concept that the traditional criteria of a matching offer and acceptance is inflexible and artificial.  Extent to which the orthodox approach is not merely artificial and inflexible Despite the criticism of inflexibility and artificiality regarding the orthodox approach to establishing agreement; many academics and members of the judiciary are of the opinion that the traditional approach holds great importance in the development of contract law and is imperative to discerning the outcome of cases. As previously quoted, academic Morgan is of the opinion that objectivity is imperative to the establishment of an agreement as it protect both parties from the “secret reservations”21 of the other party. In addition, there is recent relevant case law which could potentially address the criticism that the traditional approach is inflexible. In the case of Arnold v Britton22 Lord Neuberger states that “When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd 2009 UKHL 38, 2009 1 AC 1101 , para 14. And it does so by focusing on the meaning of the relevant words…the natural and ordinary meaning of the clause…commercial common sense…”23. First of all, Lord Neuberger begins to state all the criteria the court is concerned with in relation to the objective approach. Upon the initial reading, it appeared to be a normal objective approach. However, Lord Neuberger includes phrases such as “commercial common sense”24 and “the natural and ordinary meaning of the clause”25. Such phrases are not indicative of a depart from the traditional objective approach, however they are suggestive of a more flexible approach whilst remaining consistent with the traditional criteria of an objective approach. Thus, it can be argued that within the modern climate, the traditional approach to establishing agreement is to an extent becoming more flexible and adapting to the needs of society. Therefore, in relation to the statement, this is perhaps an instance in which the traditional approach is the opposite of “traditional and artificial”26.      Conclusion: Overall, there are certainly instances in which the traditional approach was justifiably upheld and there is no doubt that it is required as the basis of how the courts approach the establishment of an agreement due to the fact in the majority of instances, with the exception of unilateral offers, it has good applicability. Furthermore, there are recent signs of development within the constraints of the traditional objective approach which could be viewed as a form of flexibility. However, I believe that this is a rarity and that overall the approach remains not only inflexible and artificial, but is also starting to become outdated. In addition, there is a growing academic criticism of the approach, which only serves to strengthen this viewpoint. It is evident that in the numerous occasions mentioned the traditional approach simply does not encompass all the real-life situations in which the formation of a contract occurs, with the main example of this being the existence of unilateral offers and acceptance through performance. Moreover, the rigidity of the orthodox approach poses problematic practical issues. For example, such rigidity is “an issue for judges determining disputes, but also for lawyers advising parties…”27 The existence of such a dual approach to a singular issue breeds unpredictability in terms of the law that is likely to applied. For example, a lawyer may be found trying to advise his clients and have to effectively make an educated guess as to which approach the courts will adopt; and as Morgan states “lawyers have been found to fear the inherent uncertainty of the approach.”28 This lack of clarity in the law highlights not only the inflexibility, but also the artificiality of the traditional approach, as in the current legal climate it is evident it is not sufficient. I am not concluding that the traditional approach is entirely outdated, as it still provides a solid basis for understanding how the majority of agreements are established. However, it simply must adapt in order to include principles such as the unilateral offer, as its inflexibility is damaging to the advancement of contract law as it creates a cloud of uncertainty which is certainly undesirable. Therefore, with reference to the statement I conclude that the traditional approach to establishing agreement is to a large extent inflexible and artificial.    


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