Advising Quark with Regard to its Legal Position
An “offer” in the context of contract law has been described as “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the “offeree.3”
The “expression4” may take different forms and in light of the fact that the heads of agreement are stated to legally binding with immediate effect would appear to satisfy this requirement, particularly with regard to determining sufficient intention to create legal relations. The intention element is an objective consideration and the case of Smith v Hughes 5emphasised the relevant consideration as being a focus on how a reasonable person would view the situation. Seddon et al further assert that the “test for the existence and the scope for an agreement is that of an objective manner. When a test is an objective, it takes account of what the parties actually did say in order to make an offer and agreement”. Moreover, in the case of Storer v Manchester City Council6 it was asserted by Lord Denning that “A man cannot get out of a contract by saying: I did not intend to contract” if by his words he has done so”7.
Furthermore, in the case of Acme Grain Co. v Wenaus 8it was asserted: “to constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. A mere statement of a person’s intention or a declaration of his willingness to enter into negotiations is not an offer and cannot be accepted so as to form a valid contract9”.
If we apply this to the current scenario, both parties intended to enter into a formal agreement, which has never been formalised. Nevertheless, both Quark and Protoys signed the Heads of Agreement, which was clearly expressed to govern the legal relationship between the parties pending finalisation of the formal agreement. .