The Spot market and chaotic contract formation – a few reflections on a challenge to modern legal systems

Is classic contract theory compatible with modern methods of contract making? In many markets for commodities, shipping and - perhaps ironically - insurance, contract formation takes place at a great distance, between parties who have not previously met or done business and who are in a hurry to fix the deal, while happy to dispense with lawyers and detailed consideration of agreements. Contract making also takes place by an extended process of offers, counter-offers, exchanges of standard terms and more or less vaguely worded acceptances. Notoriously, the common law does not include subsequent conduct among the facts indicating whether a contract was in fact concluded – it is only indicative of whether that party thought a contract had been concluded. How can one party therefore be sure that a contract has been put in place and how is it to dare act in reliance thereupon, perhaps incurring expenses and liabilities in so doing?