Bilateral Contract Case Study

Phillip wanted to create a bilateral contract with a buyer for the sale of his yacht. However, due to conversing and dealing with many potential buyers he is now left confused as to what is occurring. Bilateral contracts are where parties make promises to each other. The contract produced gives obligations upon both parties and gives rights to each party should anything go wrong. In order to produce a contact, some sort of agreement must be made. Agreement is not a mental state, but an act so the parties are judged not by what is in their minds, but by what they have said, written or done.

Phillip put up an advert on Monday, in which his yacht was listed for sale at the price of £2m. Adverts are generally invitations to treat but have exceptions. It is an invitation to treat because it falls short of being an offer, it is an invitation to negotiate, an invitation to the other party to make an offer.
The following day, Roman, who is a potential customer of Phillip made him an offer for his yacht of £1.4m.
“An offer is capable of being converted into an agreement by acceptance. It must consist of a definite promise to be bound, provided that certain specified terms are accepted”
Michael Furmston, Cheshire, Fifoot and Furmston 's Law of Contract (16th edn, OUP 2012)

It is also clear, definite and made with an intention to be bound if accepted. Acceptance is an unconditional acceptance of the terms of the offer which can be expressed orally or in writing. It can also be inferred or implied through conduct. The offeree must be aware of the offer and the acceptance must be in response to the offer which must be communicated to the offeror. In the case of Entores v Miles Far East Corporation [1955], the decision of the case was that a contract is created when acceptance is communicated by the