A contract is formed when the law recognises that the parties reached a sufficiently certain agreement intended to have legal effect.
In an ordinary consumer transaction, contract formation is usually analysed through offer and acceptance, consideration, intention to create legal relations, certainty of terms and the legal capacity of the parties. There is not always one signed sheet of paper called “the contract”. The agreement may be evidenced by a checkout flow, telephone call, email confirmation, terms shown before purchase, payment and later conduct.
The question is objective: what would a reasonable observer conclude from what the parties said and did? A business cannot necessarily undo an agreement merely by later giving it a different internal label.
Key points
- Offer and acceptance identify whether the parties objectively agreed the same bargain.
- Consideration is the exchange of value; in a normal purchase, money in return for goods/services will usually satisfy it.
- Commercial/consumer dealings are normally intended to have legal effect.
- Essential terms must be sufficiently certain for the court to know what was agreed.
- A signature can be powerful evidence, but many contracts do not require a handwritten signature to exist.
1. Offer: what exactly was being proposed?
An offer is a sufficiently definite promise to contract on stated terms if accepted. Not every advert or website listing is itself the legal offer; many retail displays are invitations for the customer to make an offer at checkout. The classification depends on the transaction. Focus on the point at which one party objectively committed to specified terms.
2. Acceptance, was that offer actually agreed?
Acceptance must correspond with the offer and be communicated in a legally effective way. In online transactions this can happen through an order-acceptance email, dispatch, an electronic-signature process or another step identified by the terms. An automatic “we received your order” email may be only acknowledgement, so read its wording rather than assuming.
3. Consideration and intention
Consideration is the value exchanged for the promise. A consumer paying a price and a trader promising goods or services is the obvious example. Intention is rarely controversial in commercial transactions because the context normally shows that both sides expected legal consequences.
4. Certainty and incorporation of terms
The agreement must be sufficiently certain. Separately, detailed terms only become part of the contract if incorporated by agreement or adequate notice at the relevant time. A trader cannot normally create a new obligation retrospectively by pointing to terms that were first supplied after the contract was concluded.
5. How online and telephone contracts are proved
Electronic agreements are still agreements. Useful evidence can include click records, timestamps, IP/session records, call recordings, adviser notes, order numbers, payment authorisation, confirmation emails, PDFs presented for signature and subsequent performance. If a trader says “no contract existed”, ask what document or process generated the order and what legal status it says that step had.
In practice
- Reconstruct the transaction chronologically rather than starting with the trader’s later description of it.
- Identify the exact acceptance event: signature, confirmation, dispatch, verbal assent or another step.
- Use the version of terms shown at the time, not a current web page.
- If one side behaved for months as though a contract existed, that conduct can be relevant evidence even if paperwork is incomplete.
What to do
A practical next-step plan
- Write a timeline from the first offer/quote through acceptance, payment and confirmation.
- Collect every document shown or sent at each stage.
- Identify the terms governing when acceptance occurred.
- Compare the trader’s later account with its records made at the time and subsequent conduct.
- If formation is disputed, ask the trader to identify precisely which legal element it says was missing and why.
Common traps
Things that often confuse the issue
- An order acknowledgement is not always acceptance.
- A signature is not always necessary, and a signature does not cure every other problem.
- A later internal note cannot automatically rewrite what the customer was told at the time.
- “The system declined it” is not a complete answer if other records show acceptance; the evidential conflict still has to be resolved.
Evidence worth keeping
Official sources
Check the rules behind this guide
Contract formation is largely based on common-law principles rather than one consumer statute. The official material below is included because it gives an accessible statement of the basic formation principles and, where relevant, the statutory consumer overlay.
These are official or primary sources for this topic. Rules, scheme terms and deadlines can change, so check the live source before relying on a formal time limit or procedure.