Offer as an Element of Contract Formation

Offer is one of the essential elements to the formation of a contract under Singapore law

Offer as an element of Contract Formation

It is settled law that offer and acceptance as concepts of contract formation constitute the objective manifestations of an intention to contract.

Justice Quentin Loh in Ong Hong Kiat v RIQ Pte Ltd

What is an offer?

It is simply an indication from one party ("Offeror") to another party ("Offeree") of his willingness to do something. If the offer is accepted by the Offeree, then a contract is formed provided that all the other elements are met.

Offers can be made verbally, in writing or conduct.

One should note the distinction between an offer and an invitation to treat. An invitation to treat is simply an invitation from a person to enter into negotiations which ultimately lead to an offer. Example of invitation to treat are advertisements to the world at large and auctions. Unless someone comes along to make an offer to buy the goods / services advertised which is then accepted by the merchant, no contract is formed.

Therefore, an acceptance of an advertisements does not usually lead to a contract.

In a similar vein, the display of goods and prices in a store is usually not considered an offer by the shopkeeper. An offer is said to arise when the customer brings the item to the cashier to pay which is the accepted by the shopkeeper when he accepts the money.

Filed under: Contract Law
Benjamin Li Yong Le

About the Author - Benjamin Li Yong Le

Benjamin Li Yong Le (“Ben”), is an Advocate & Solicitor of the Supreme Court of Singapore. Ben is currently running his own boutique corporate and commercial law firm under the name and style of L’Avocat Law.

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