welcome to the first lesson in the contract law module in this lesson we will discuss what constitutes an offer an offer is an expression by one party normally referred to as the offer or that they will agree to certain definitive terms provided that the other party normally referred to as the offeree also agrees to those same terms an offer therefore looks forward to an agreement to mutual acceptance of those same terms by the other party in order for an expression to constitute an offer it must have exclusive terms this means it must include all the terms that are necessary to form the agreement it must be an outward expression made by the offer or to the offeree and it must be viewed objectively this means you assess the terms of the offer by what the offeror says and does not by what the offer or intended to say or do a question that sometimes arises is whether an advertisement to sell goods or display of goods with a price tag is an offer that creates a contract when it is accepted by a person who wants to purchase the goods this question is important because it deals with the issue of whether a store that has advertised goods for sale can refuse to sell those goods this question was answered by the court in pharmaceutical societies of great britain and boots cash chemists in that case boots allowed customers to take certain regulated drugs off the shelf and pay for them at the cashier the society argued that boots was in breach of section 18 of the pharmacy and poisons act because the drugs were sold without the supervision of a pharmacist boots argued that a display of items with prices was not an offer but an invitation for the customer to make an offer to purchase the item by bringing it to the cashier who was under the supervision of the pharmacist if this was the case the sale took place under the supervision of a pharmacist since at that point the cashier could choose to accept or reject the offer to purchase made by the customer the society argued that the sale of the item did not take place under the supervision of a pharmacist this was because the display of items with a price tag was an offer that the customer accepted when they put the item in their shopping basket the court held that the display of items with a price tag was an invitation which turned into an offer and acceptance at the cashiers area any other interpretation would be absurd because it would mean that the customer could not change their mind and return the item to the shelf once it had been placed in their shopping basket it is often said that in contract law you look to the intention of the parties in determining if they have formed a contract but how do we determine if a party intended to contract do you rely on what the person says was their intention generally this is not useful since when two parties are in disagreement about whether a contract between them exists relying on the subjective intention of each party will never resolve the issue for this reason the courts look to objective criteria in assessing the intention of the parties and determining the existence of a contract in other words in determining the intention of the parties the court looks at what the parties said and did not what they intended to say or do this approach is highlighted in storer and manchester in that case a city council adopted a policy of selling its community housing and offered the houses to the tenants who were living in the buildings the city council had written to mr storer informing him that it might be willing to sell the house he was living in mr storer filled in an application to buy the house the city council sent a letter to mr storer that set out the terms of the agreement mr store signed the letter and returned it to the city council before the final contract could be sent out there was a change of local government and the new city council decided it did not want to sell the council homes the council decided that since the final agreement had not been exchanged with mr storer there was no legally binding contract and the council was not obligated to sell him the council home mr stores sued the city council and the court held that the city council did have a contract with mr store in reaching this conclusion lord denning stated that in contract law you do not look into the actual intent in a person's mind you look to what the person said and did a contract is formed when there is to all outward appearances a contract a person cannot get out of a contract by saying i did not intend to contract if by their very words that is exactly what they did as such the fact the council argued it did not intend to form a contract with mr storer was not relevant in applying the rules of contract formation it is important to understand that there are two different forms of contract a bilateral contract and a unilateral contract a bilateral contract is one where there are mutual promises made in exchange for each other by each of two contracting parties in a bilateral contract both parties are promisors and promises and the contract creates mutual rights and obligations a bilateral contract can also exist prior to the performance by either party for example a bilateral contract is formed where an offer or promises to sell their horse tomorrow for one thousand dollars and the offeree agrees to buy the offerors horse tomorrow for one thousand dollars in this case both parties are under a legal obligation to perform their promises tomorrow neither party has performed their obligations but a contract still exists a unilateral contract is created when a promise is made by only one of the contracting parties who we will call the offer or in a unilateral contract the offer or is the only party under an enforceable legal duty the other party who we will call the offeree is the only party who has an enforceable legal right basically a unilateral contract is an agreement to pay in exchange for performance if the offeree chooses to act however the offeree is never under any legal obligation to perform the act requested by the offeror for example assume that an offeror says that she will pay the offeree 100 if the offeree mows the offroad's lawn by noon on friday if the offeree does nothing then no contract is formed and the offeror has no claim against the offeree for not mowing her lawn if however the offeree chooses to mow the offeror's lawn before noon on friday the offer or is now obligated to pay the offeree 100 at the moment this unilateral contract comes into existence only the offeror has an obligation namely the obligation to pay 100 and only the offeree has a right namely the right to enforce payment of the 100 unilateral contracts give rise to certain issues in relation to offer and acceptance in particular where a person offers a reward to anyone who performs a certain act it is not clear that such a statement constitutes a legal offer this is because an offer is normally made to a specific identified person the very reason why most advertisements are not offers is because it is not possible to identify who the offeree is as we will see in the carbolic smoke ball case the courts have recognized certain exceptions to the rules of offer and acceptance in circumstances where a person offers a reward to anyone who performs a requested act in the carbolic smoke ball case the carbolic smoke ball company issued an advertisement offering a 100 pound reward to anyone who used its smoke ball and still managed to catch the flu miss carlisle used the smoke ball according to its instructions but still caught the flu the carbolic smoke ball company refused to pay the hundred pound reward and miss carlisle sued the carbolic smoke ball company argued that the advertisement was not an offer because it was too vague and because you cannot make an offer to the world furthermore even if it was an offer the carbolic smoke ball company claimed that miss carlisle never accepted the offer in finding that miss carlyle was entitled to the reward the court concluded that in the context of a unilateral contract it is permissible to make an offer to the world furthermore where the offer indicates performance of the requested act can constitute acceptance of the offer and in this case the use of the smoke ball by miss carlyle constituted acceptance of the offer for the reward we will discuss the requirements for acceptance in more detail in the next lesson this concludes the lesson on offer thank you for listening in the next lesson we will discuss what constitutes acceptance of an offer make sure to answer the knowledge check questions at the end of this lesson before moving on to lesson two if you have any questions please post them to the owl discussion forum your questions may be answered in writing on the discussion forum or during the weekly question and answer session