Agreement Is Binding On The Parties

Unless the contract is in a document, some kind of payment or value must be made by both parties. There is a growing sense that the economy experienced a turnaround in 2009 and that there could be real signs of recovery in 2010, with a recovery in most sectors and a corresponding increase in M&A activity. It is understandable that this optimism is characterized by a degree of caution that will be reflected in the way the parties negotiate. Two of the best-known textbooks on the art of negotiation are “Getting Past No” (William Ury – The Bantam Dell Publishing Group) and “Getting to Yes”. (Roger Fisher, William Ury, Bruce Patton, 2nd Ed Penguin) However, the parties often find themselves between these two measures: although they do not openly contradict each other on one point, they ask themselves whether they agree or not and, if so, what their agreement is. You agree to accept, or at least not oppose. They are, so to speak, “fixed to perhaps”. This is, of course, a practical commercial solution to the problem. However, from a legal point of view, the uncertainty inherent in these agreements can pose serious problems if the agreement is ever implemented.

An exception arises when advertising makes a unilateral promise, such as the offer of a reward, as in the famous case of Carlill v Carbolic Smoke Ball Co,[18] decided in nineteenth-century England. The company, a pharmaceutical manufacturer, promoted a smoke bullet that, if sniffed “three times a day for two weeks,” would prevent users from catching the flu. If the smoke bullet could not prevent the flu, the company promised that they would pay £100 to the user, adding that they had “deposited £1,000 at Alliance Bank to show our sincerity in this matter”. When Ms. Carlill complained about the money, the company argued that the announcement should not be considered a serious and legally binding offer; Instead, it was a “simple train”; but the Court of Appeal decided that it seemed to a reasonable man that Carbolic had made a serious offer and found that the reward was a contractual promise.