Law of Contract - Modern Technology and Contract Formation (Part 1)


Although it may appear to be somewhat tedious, the exact moment a contract is formed is of utmost importance. Once there is a valid acceptance, the right of the offeror to withdraw the offer ends. It can also be of assistance in deciding which jurisdiction the contract should be within should a dispute arise. Furthermore, a valid acceptance may demonstrate where taxation liabilities lie.

The common law has established some fairly clear rules in relation to traditional forms of communication, for instance, the Postal rule and the instantaneous communication rule. (These were covered in Session one). The question to ask is whether (or how) these rules apply to newer forms of technology like email, the Internet and mobile phones. To date, there has been no case deciding definitively on this area, so we have to proceed by comparison.

Internet ‘Offers’

The Internet has opened a range of new possibilities to the consumer, who can buy virtually any item they want online. The first question to ask is that if a person goes to a website, for instance ‘’, are the goods displayed on ‘offer’ (merely requiring the offeree to accept), or an invitation to treat, as was seen in the case of Fisher v Bell (1974) and requiring the consumer to make the offer, which in turn the seller would accept.

In general, considering the usual set-up of a website, the context is said to be that of an invitation to treat, although this does not discount the possibility of an unilateral offer being made, as was the case in Carlill v Carbolic Smoke Ball Co. [1892], thus meaning that if accepted a contract would be in existence.
The Argos experience

The company Argos is a United Kingdom based catalogue company that has stores all around the country. In 1999, Argos advertised a television worth £299.99 for only £3.00. Needless to say, Argos received thousands of orders for this deal, the total value was reported to be worth over £1m. Once the error came to light, Argos refused to honour the agreement, saying that they had clearly not intended to sell the television at £3.00, and in any case the display of a product on a website does not amount to an offer, and is merely an invitation to treat. No legal action materialised from this, but it does demonstrate the somewhat uncertain context that the law within this area finds itself. 
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