<P> Whether the two parties have reached agreement on the terms or whether a valid offer has been made is an issue which is determined by the courts using criteria known as' the objective test' which was explained in the leading English case of Smith v. Hughes . In Smith v. Hughes, the court emphasised that the important thing in determining whether there has been a valid offer is not the party's own (subjective) intentions, but how a reasonable person would view the situation . </P> <P> Unless the offer included the key terms of the contract, it cannot be the basis of a binding contract . For example, as a minimum requirement for sale of goods contracts, a valid offer must include at least the following 4 terms: Delivery date, price, terms of payment that includes the date of payment and detail description of the item on offer including a fair description of the condition or type of service . Unless the minimum requirements are met, an offer of sale is not classified by the courts as a legal offer but is instead seen as an advertisement . </P> <P> A unilateral contract is created when someone offers to do something "in return for" the performance of the act stipulated in the offer . In this regard, acceptance does not have to be communicated and can be accepted through conduct by performing the act . Nonetheless, the person performing the act must do it in reliance on the offer . </P> <P> A unilateral contract can be contrasted with a bilateral contract, where there is an exchange of promises between two parties . For example, when (A) promises to sell her car and (B) promises to buy the car . </P>

When is an offer generally said to be effective