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Contract Law (2)

Supposedly, a new era has dawned in Ireland for standard contracts in the public sector. See one new Construction contract HERE and another HERE.

The major change in these contracts is the shifting of risk from the public authority to the contractor. In general, these forms are intended to bring certainty and security to the State; whether they do so for the contractor is another matter.

That aside, these forms indicate an essential for all contracts; the formation and expression of agreement through offer and acceptance. Either side can make an offer which may be accepted by the other side. (Public servants are not free to accept offers which effectively vary the standard public authority terms but private persons, in their contracts, are completely free to do so). An offer which is met by a counter offer is declined, or not accepted.

Offers, and, by the same token, contracts, may be oral or written. It is common that they are both; the oral element may refer to substantial written terms as in “… I accept those terms”.

When the contract is complex (construction contracts are complex) the offer and the acceptance must refer to all the essential terms, and often all the terms, essential or not; otherwise there is no agreement.

For lawyers there are interesting rules about the time of the making of a contract. They relate to the receipt of offer and the receipt of acceptance. If a party tries to withdraw an offer it will be unable to do so after acceptance is communicated. (To withdraw the “offer” at that point is to breach the new agreement). Sometimes, due to delays in communications, a legitimate withdrawal of an offer (no acceptance having been communicated) becomes ineffective if the acceptance is delivered before your withdrawal is delivered.

Sam Goldwyn (of Metro-Goldwyn-Mayer, the US film producers) said of oral contracts, that they were not worth the paper they were written on. He was right, because of the lack of certainty they embody. Inevitably the two interlocutors making the “oral contract” will have differing recollections of the terms agreed. Litigation on such a contract is an unpredictable gamble.

Communication of offer and acceptance (ignoring EU regulation on the issue) can determine the place of the making of a contract. The place of the making of a contract (ignoring EU regulation on the issue) will determine the applicable law of the contract.