Michelle contacts Hannah and asks her if she would be interested in purchasing her car for £2000. Hannah immediately takes £2000 to Michelle and says…

A legally binding contract requires a clear offer and an unequivocal acceptance. Michelle's question, "if she would be interested," is not a definite promise to be bound but rather an invitation to treat—an invitation for Hannah to make an offer. Hannah's action of bringing £2000 and stating her desire to buy the car constitutes a formal offer. By refusing to proceed, Michelle rejected Hannah's offer. Since there was no acceptance of the offer, the essential elements for contract formation are incomplete, and no contract has been made.

B. While legal capacity is a necessary element for a valid contract, it is not sufficient on its own; offer and acceptance must also be present.

C. This is incorrect because Michelle's initial statement was an invitation to treat, not an offer. Therefore, Hannah's action was an offer, not an acceptance.

D. Hannah's action was an initial offer, not a counter-offer. A counter-offer can only exist in response to a prior offer, which was not made by Michelle.

1. University of London. (2022). Contract law Study Guide (LA1040). Chapter 2: Agreement: Offer and Acceptance

Section 2.2.1 'Offers and invitations to treat'. The guide distinguishes an offer from an invitation to treat

noting that an invitation to treat is an "expression of willingness to enter into negotiations." Michelle's phrasing falls into this category

making Hannah's response the offer.

2. McKendrick

E. (2020). Contract Law: Text

Cases

and Materials (9th ed.). Oxford University Press. Chapter 3

'Offer and Acceptance'

Section 3.3 'Invitations to treat'

explains that preliminary statements inviting negotiation

such as in Gibson v Manchester City Council [1979] where the council stated it "may be prepared to sell

" do not constitute a formal offer.

3. CIPS. (2018). Commercial Contracting L4M3 Study Guide. Profex Publishing. Chapter 1

'The legal formation of a contract'

pp. 12-15. The guide clarifies that for a contract to be formed

there must be a clear offer which is then accepted. It distinguishes this from an invitation to treat

which is a preliminary step in negotiations and not a binding offer.