Full Graphics | Accessibility

How do I know if I’ve got a contract?

There are four basic building blocks needed for a contract and if they're not all there, there won't be a contract.

1. Making an Offer

The first step towards creating a contract is for someone to make an offer - to mend a boiler, buy a car, give you a job, and so on.Making an offer
The offer needs to be clear, firm and final. It won't be a proper offer if it is too vague or if important information, like the price, is missing.

2. Accepting an Offer

The next step is for someone to accept the offer. This is the moment when the contract is created. Usually it's obvious when this has happened. But sometimes it can be difficult to work out exactly when the contract is made. This matters because as soon as there is a contract, you can't get out of it or change it, unless the other person agrees.

"I wanted to get a conservatory built at the back of my house and was shopping around for the best deal. One glazing firm sent over a couple of builders to have a proper look at my house and measure up. After a couple of hours they gave me a written estimate of £12,500. This was the best quote I'd had and I liked the firm, so I rang up the next day to tell them to go ahead on the basis of their estimate. Just before building started they rang me and said that they were going to have to charge me £15,000 because the company supplying their materials had put its prices up. I took some legal advice and was told that I had a contract with the glazing firm for them to build the conservatory for £12,500. Their written estimate was an offer, which I had accepted, and it was too late for them to change their minds. When my solicitor wrote to the firm about it they said they would to do the work for £12,500 as agreed".
Ahmed, Solihull

Price tag myth

If you walk into a posh shop and see a designer jacket with a £5 price tag you might think your luck's in and the shop has to sell you the jacket at the marked price, even though it's obviously a mistake. In fact they don't have to - if the shop assistant realises the mistake before you pay, they can refuse to sell it at that price. This is because, legally speaking, you are offering to buy the jacket for £5 and the shop is free to accept or reject that offer. Sometimes this happens because a shop makes an innocent mistake with its labelling. But if you find that a shop is doing this regularly it might be a deliberate con and you could report them to Trading Standards (see Links to other websites at right of the page).

3. Price

An agreement won't be a legally binding contract unless both the person offering and the person accepting have to pay something. This is the 'price' paid under the contract. Lawyers sometimes call it the 'consideration'. The price doesn't have to be money, although it often is. So for example, in an employment contract, the 'price' paid by the employer to the employee is wages and the 'price' paid by the employee back to the employer is the work he or she does. The price might be a promise to do something for the other person in the future. For example, if you book tickets to see your favourite pop star in concert, you pay money to the ticket agency and in return they promise you will be let in to the concert.

If someone gives you something for nothing, or promises to, it's not a contract because only one person benefits. For example, if I promise you that I'll give you my old mobile phone, and then I give it to someone else instead, you will be pretty upset. But you don't have any legal right to the phone because I wasn't going to get anything from you in return (gratitude doesn't count!). If you agreed to pay me for it, no matter how little the amount, it would have been a contract.

4. Intentions

Lastly, the people making the contract have to intend it to be legally binding. - This means that they would want the right to take the other person to court if they don't keep their side of the bargain.. This is why many of the everyday agreements we make with our families and friends aren't contracts, even if the other ingredients are there. You might agree with your friend in the pub "you buy this round and I'll get the next". Your friend might be pretty fed up if you go home without buying your round, but he wouldn't want to be able to take you to court over it!

If you are under 18 or have mental health problems at the time you entered into a contract and you change your mind about it, you may be able to get out of it. If you are in this position, see a legal adviser at your local advice centre or Citizen's Advice Bureau (see Links to further information on the right).

Updated March 2011

Get advice

Need help with a problem? Find advice services and solicitors near you who can help you solve your problem. Many people are able to get free help and advice.

Tell us about yourself!

Tell us about you

We want to know a bit more about the people who use our site, to help us improve it. Can you spare a few minutes to tell us a bit about yourself in complete confidence? Take the survey here:Tell us about yourself!

Please rate this article:

In this section

Have you ever signed a contract that you didn't fully understand?

Download and print our related guides

Links to other websites

Get Adobe Reader

Get Adobe ReaderSome documents require Adobe Acrobat Reader to view them. Download it here.

Problems Downloading? Download help