Apr 15, 2025
Alternative Contract Formation: When the Contract Act's Offer-Acceptance Model is Insufficient
Norwegian contract law traditionally relies on the Contracts Act and its model of offer and acceptance. However, in many practical situations, this model provides insufficient guidance to determine if a binding agreement has been formed. This article explores various practical cases where agreements are made under rules and principles different from Chapter 1 of the Contracts Act.
Mass Contracts: The Parking Case and Self-Service Purchases
Parking and Parking Meters
When parking in a private parking lot with parking meters, it is challenging to identify what constitutes offer and acceptance. Is it the act of driving in, parking, inserting coins, or driving out that constitutes the binding element?
The legal determinant is primarily the act of placing money into the parking meter. From this moment, the driver has legitimate expectations to be able to use the space without reclaiming the money. At the same time, the driver is obliged to pay through the use of the space, especially when signage indicates that parking is not free.
Self-Service Purchases
Self-service purchases also illustrate how the contract model does not fit mass contracts. If the product display were considered an offer and the customer's placing of items in the shopping cart as acceptance, then both the store would be bound by the price (even in the case of mispricing) and the customer would be prevented from returning the product.
The realistic solution is that payment constitutes the binding element for both parties. After payment, the customer cannot change their mind, and the store cannot invoke mispricing.
Complex Contracts: Association Formation and Acquisition
Association Formation
An association is normally founded by decision at a constituent general meeting, where statutes are adopted and a board is elected. However, the association relationship may be established earlier through an agreement between the founders, especially if they have outwardly acted as an association, for example by making purchases on behalf of the union.
The contract model fits poorly here because:
There are multiple parties involved in the agreement
Party statements are often informal and difficult to identify
Conclusion of the agreement is usually formalized by signing the founding protocol
The result is the establishment of a new legal entity
Company Acquisition
In a company takeover, such as when Company A wishes to acquire Company B, the contracting typically occurs through several phases:
Initial information exchange
Principal agreement on acquisition
Detailed negotiations on price, acquisition time, warranties, etc.
Formal agreement signing
Possible board approval
The question becomes when does binding occur: at the first rudimentary agreement, at the signing of the final agreement, or only upon board approval? Alternatively, it might be that parties become gradually bound through negotiations.
This needs to be resolved concretely based on the parties' intentions, legitimate expectations, industry practice, and other relevant factors. For important agreements like company acquisition, binding typically does not occur until board consent is provided, pursuant to the Companies Act §§ 6-12 and 6-33.
Asymmetric Binding: The Holiday Travel Case
When booking holiday trips, a situation of asymmetric binding frequently arises. When Axel books a ski trip to Italy, pays a deposit and later the full amount, he becomes fully obligated upon final payment (assuming that standard terms are considered adopted).
The travel company, however, often becomes bound at a later point than the customer. Standard terms typically specify that the company is bound only a week after receiving payment, to protect against commitments if a flight cannot be fully booked. This unilateral binding is not consistent with the main rule of the Contracts Act but is accepted through the derogatory nature of Chapter 1 of the Contracts Act.
Implicit Consent: The Athlete Case
When a cross-country skier is required by the Norwegian Ski Federation to wear sponsor advertisements without having signed any contract or given verbal consent, the question arises whether the athlete is contractually bound to this.
One could argue that the athlete's registration for ski races and acceptance of national team selection serve as criteria binding him. This is particularly relevant when the federation has previously financed the athlete through payments for coaches, travel, and scholarships. In such cases, the federation has legitimate expectations that the athlete will partake in fulfilling the sponsorship agreements.
A separate question is how far this implicit consent extends: Does it include advertising products the athlete opposes, or how extensive is the duty to cooperate?
Passivity and Culpability Sanction: The Oil Order Case
When A contacts B by phone to discuss terms for buying gas oil, and B confirms the sale in writing, A’s passivity over several days can justify deeming the agreement as concluded, even without formal offer and acceptance.
Since B has legitimately considered the agreement as concluded, and A should have understood this, A should have complained immediately if he did not consider himself bound. Binding can thus arise as a sanction against unwanted behavior (culpable sanction). A can be deemed obligated to speak up to avoid binding, and the contractual obligation takes effect as a sort of sanction when this duty is not adhered to.
Tender Procedures and Their Special Rules
In tender processes, such as when a company invites construction firms to bid on a hotel building, the principles of the Contracts Act apply, but with important special rules related to the bidding procedure.
The bidder is not only bound to the inviter (per the promise principle) but also to other bidders not to make changes in the inviter's favor. Simultaneously, the inviter is relatively free to choose between the bids, even if it's not necessarily the lowest one.
Implicit Agreements in Family Relations: The Debt Responsibility Case
In family law, questions of debt responsibility can arise without explicit agreements. In joint ownership, including between spouses, a special basis of obligation is in principle required for one co-owner to become responsible for the other's debt.
However, jurisprudence has set modest requirements for what constitutes agreement between spouses. In Rt 1997 page 1226, the Supreme Court concluded that both spouses were responsible for a loan within the household, based on them having "pulled the load together" and shared finances, even though only one had signed the note of debt.
The Expectation Principle as a Common Foundation
This review shows that the criteria for dispositions are diverse and can vary depending on the case and circumstances. The contract model of offer and acceptance does not provide sufficient guidance in many practical situations.
Instead, other criteria relevant in different contexts must be considered: actions (such as putting money in a parking meter), omissions (passivity), participation (as in the athlete case), or culpable sanctions.
The expectation principle serves as a common foundation for assessments: The question becomes whether legitimate expectations have been established that give reasonable grounds to assume a contract has been formed. This is in line with principles of formality freedom and freedom of contract in Norwegian law.
Conclusion
The offer-acceptance model of the Contracts Act is a historical legacy from a time when contracts were typically concluded through correspondence. In today's diverse contract practice, we must recognize that binding can occur in many different ways. The concrete assessment of whether a contract has been concluded must be made based on the expectation principle and the legitimate expectations the parties have established in the specific situation.
