8.2.1 A contract is essentially an agreement between two or more parties, the terms of which affect their respective rights and obligations which are enforceable at law. Whether the parties have reached agreement, or a meeting of the minds, is objectively ascertained from the facts. The concepts of offer and acceptance provide in many, albeit not all, cases the starting point for analysing whether agreement has been reached.
8.2.2 An offer is a promise, or other expression of willingness, by the ‘offeror’ to be bound on certain specified terms upon the unqualified acceptance of these terms by the person to whom the offer is made (the ‘offeree’). Provided the other formation elements (ie consideration and intention to create legal relations) are present, the acceptance of an offer results in a valid contract.
8.2.3 Whether any particular statement amounts to an offer depends on the intention with which it is made. An offer must be made with the intention to be bound. On the other hand, if a person is merely soliciting offers or requesting for information, without any intention to be bound, at best, he or she would be making an invitation to treat. Under the objective test, a person may be said to have made an offer if his or her statement (or conduct) induces a reasonable person to believe that the person making the offer intends to be bound by the acceptance of the alleged offer, even if that person in fact had no such intention.
Termination of Offer
8.2.4 An offer may be terminated by withdrawal at any time prior to its acceptance, provided there is communication, of the withdrawal to the offeree, whether by the offeror or through some reliable source. Rejection of an offer, which includes the making of a counter-offer or a variation of the original terms, terminates the offer. In the absence of an express stipulation as to time, an offer will lapse after a reasonable time. What this amounts to depends on the particular facts of the case. Death of the offeror, if known to the offeree, would render the offer incapable of being accepted by the offeree. Even in the absence of such knowledge, death of either party terminates any offer which has a personal element.
8.2.5 An offer is accepted by the unconditional and unqualified assent to its terms by the offeree. This assent may be expressed through words or conduct, but cannot be inferred from mere silence save in very exceptional circumstances.
8.2.6 As a general rule, acceptance must be communicated to the offeror, although a limited exception exists where the acceptance is sent by post and this method of communication is either expressly or impliedly authorised. This exception, known as the ‘postal acceptance rule’, stipulates that acceptance takes place at the point when the letter of acceptance is posted, whether or not it was in fact received by the offeror.
8.2.7 Before the agreement may be enforced as a contract, its terms must be sufficiently certain. At the least, the essential terms of the agreement should be specified. Beyond this, the courts may resolve apparent vagueness or uncertainty by reference to the acts of the parties, a previous course of dealing between the parties, trade practice or to a standard of reasonableness. On occasion, statutory provision of contractual details may fill the gaps. For more on implication of terms, see Paragraphs 8.5.5 to 8.5.8 below.
8.2.8 An incomplete agreement also cannot amount to an enforceable contract. Agreements made ‘subject to contract’ may be considered incomplete if the intention of the parties, as determined from the facts, was not to be legally bound until the execution of a formal document or until further agreement is reached.
Electronic Transactions Act
8.2.9 The Electronic Transactions Act (Cap 88, 1999 Rev Ed) (‘ETA’) clarifies that, except with respect to the requirement of writing or signatures in wills, negotiable instruments, indentures, declarations of trust or powers of attorney, contracts involving immovable property and documents of title (s 4(1)), electronic records may be used in expressing an offer or acceptance of an offer in contract formation (s 11). A declaration of intent between contracting parties may also be made in the form of an electronic record (s 12). The ETA also clarifies when an electronic record may be attributed to a particular person (s 13) and how the time and place of despatch and receipt of an electronic record are to be determined (s 15).