The Basics of Contract explained

The basics of contract law in England

Essentially a contract is an agreement reached between two or more parties which is legally enforceable when executed in accordance with specific requirements.

For there to be a valid contract the following should be present:

1. Offer

2. Acceptance

3. Consideration

4. Intention to create legal relations.

Offer and Acceptance

Acceptance of an offer occurs when there is an unqualified acceptance of all the offered terms. If new terms and conditions are introduced through negotiation this would amount to a series of counter offers to the original offer, therefore cancelling the terms of the original offer.


Consideration is the requirement of reciprocal obligations on the parties to a contract. Both parties must receive valuable consideration for performance of their side of the contract.

Communication of acceptance

A contract offer can only be accepted when the acceptance is brought to the attention of the offeror. This applies in the case of instantaneous communication, such as by telephone, where the party giving acceptance will often know at once if a communication is unsuccessful so will have the opportunity of making a proper communication. The exception to this rule is when the acceptance is posted. The offer is deemed to be accepted when the offeree posts their acceptance.

Please note silence does not constitute acceptance.

Terms of contract

Contracts can be in writing, made orally, or created through the acting’s of the parties. For clarity, most commercial contracts are in writing to maintain a proper record of the agreement. Oral contracts create a greater potential for disputes on the terms with the parties having problems evidencing their position.

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