Scenario – Analysing Contract Formation
- Invitation to treat
- Offer
- Counter offer
- Rejection of offer and counter offer
- Rejection of offer
- Offer
- Rejection of offer
- Offer
- Request for information and supply of information
- Acceptance
- Rejection of offer
- Rejection of offer (Not valid since contract has been formed)
Whether a contract exists between Jane and Tarzan?
Offer and acceptance are essential elements of a contract. An offer is made by an offeror to offeree, and the offeror must have the intention to bind him by the terms of the offer. In Harvey v Facey [1893] UKPC 1 case, the court provided that an offer must be such that bound the offeror into its terms as soon as the offeree accepts it. However, an offer is different from an invitation to treat (Turner 2013). A contract cannot be formed based on mere acceptance of an invitation to treat given by a party. Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 case is a helpful regarding this context. In this case, a company introduced a self-service system in the shop in which customers can pick up goods and bring them to the counter to pay. A suit was filed by the Pharmaceutical Society of Great Britain in which it argued that the law provides that pharmaceutical products are required to be sold by a company when a pharmacist is present in the shop. In its judgement, the court considered the products on the shelves as an invitation to treat, and customers have to bring them to the counter to purchase which was considered as an offer which could either accepted or rejected by the shop assistant (Samuel 2016).
Key facts
- Price of two chests are swapped, and the antique (normally $4,000) is swapped with $200
- Jane bought the antique chest to the shop owner to purchase it for $200
- Tarzan realised the mistake and insisted that it should be sold for $4000
As discussed in Pharmaceutical Society of Great Britain v Boots case, the goods displayed on the counter are considered as an invitation to treat rather than an offer. Thus, Tarzan can decline to sell the chest for $200 since no contract has formed.
Conclusion
In conclusion, a contract did not exist between Jane and Tarzan.
- The defendant of the case is Carbolic Smoke Ball Company which placed an advertisement in the paper on 13thNovember 1891. The advertisement was about the ‘Carbolic Smoke Ball’ which is developed by the company to prevent colds and influenza. Instructions were given to use the ball which include three times daily and for two weeks straight. The company also made an offer in the advertisement that it will offer £100 to anyone who would catch influenza after using the product. In order to show sincerity, the corporation deposited £1000 in the bank. Lilli Carlill is the plaintiff in the case who purchased a smoke ball for personal use (Gordon 2014, p. 3). Carlill used the smoke ball three times in a day; she continued to use it for two weeks straight as per instructions. Several weeks later she caught the flu and demanded £100. The company rejected her claim by stating that no contract has formed between the parties.
- Following arguments were made by Carbolic Smoke Ball Co.:
- The advert was a mere sales puff, and not intention was present
- Not possible to make an offer to the world
- Acceptance was not communicated
- Wording was too vague
- Consideration was not present
- The court constitutes the advertisement as an offer on following grounds:
- The company deposited £1000 in the bank to show sincerity, thus, the advert cannot be considered as a mere sales puff
- The court provided that an offer can be open for the entire world
- Communication of acceptance is not required in the case of a unilateral offer
- While there was ambiguity in the wordings however it can be determined based on a reasonable time that people using the ball have caught the flu
- Carbolic receives value because people were purchasing its products which were its consideration (Bender & Do 2014)
- In Partridge v Crittenden (1968) 2 All ER 421 case, the court provided that generally advertisements are considered as invitations to treat (Bender & Do 2014).
- People can make a unilateral offer which is open to the world, and it is not necessary that people communicate the acceptance to the party. The offer can be accepted by them by complying with the instructions given in the offer. It is possible to make a unilateral offer through the internet.
- The advertisement was open for the world, and people who use the smoke ball as per the instructions given in the advertisement can accept the offer.
- Mrs Carlill complied with the instructions given in the advertisement to accept the offer.
- Acceptance must be communicated by the offeree. It is also necessary that the offeror receives it within an appropriate time as provided by the court in the judgement of Entores v Miles Far East [1955] 2 QB 327 (Monaghan & Monaghan 2013).
- In Errington v Errington Woods [1952] 1 KB 290 case, Lord Denning provided that since the acceptance of unilateral contract is given only after the full performance, it cannot be revoked by the party (Monaghan & Monaghan 2013). Thus, a unilateral offer cannot be revoked once performance has begun by a party except if the performance is not completed within a reasonable period of time.
- The court used an objective test in the case.
- Formation of a unilateral contract means a party (promisor) makes an offer to another party (promisee) to pay certain consideration if in return the party performance an act. Unilateral contract enables a person to make a promise or agreement.
Whether a contract exists between Jane and Mary?
In Entores v Miles Far East [1955] 2 QB 327 case, it was held that in order to constitute as a valid acceptance, the general rule has to follow. It provides that offeree must communicate the acceptance, and the offeror must receive it within appropriate time to avoid it being ineffective (Monaghan and Monaghan, 2013). Following are essential elements of acceptance:
- Acceptance must be communicated
- Terms must not change
- Certainty
However, while sending an acceptance through the post, ‘the postal rule’ applies. The rule provides that if parties are communicating through the post, then the acceptance took place when letter which is addressed and stamped is placed by the offeree in the post box. Adams v Lindsell (1818) 106 ER 250 is a relevant case in this context. An offer was made through post in this case for selling of wool. Due to the postal issue, the letter was delayed. Although even after the delay, the acceptance was sent on the same day by the claimant, but, the defendant sold the wool. A leading judgement was given by the court based on the postal rule which held that contract was formed on the day the acceptance was put in the post box (McKendrick & Liu 2015).
Key facts
- Jane made an offer to Mary to sell his car through letter on 5thJuly
- Mary received letter on 8thJuly
- Mary accepted the offer and posted it on 9thJuly, however, the letter reached on 11th July
- Jane sold her car to Elliot
As discussed in Adams v Lindsell case, the postal rule provides that acceptance is made when properly addressed and stamped letter is placed in the post box. Thus, a contract has formed between Jane and Mary on 9th July.
Conclusion
In conclusion, a contract exists between Jane and Mary.
References
Adams v Lindsell (1818) 106 ER 250
Bender, M & Do, C 2014, How to Pass Business Law, CCH Australia Limited, NSW.
Entores v Miles Far East [1955] 2 QB 327
Entores v Miles Far East [1955] 2 QB 327
Errington v Errington Woods [1952] 1 KB 290
Gordon, B 2014, ‘Acceptance by conduct in ecommerce transactions in Australia’, Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia, vol. 28, no. 2, p.3.
Harvey v Facey [1893] UKPC 1
McKendrick, E & Liu, Q 2015, Contract Law: Australian Edition, Palgrave Macmillan, Basingstoke.
Monaghan, C & Monaghan, N 2013, Beginning Contract Law. Routledge, Abingdon.
Partridge v Crittenden (1968) 2 All ER 421
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Samuel, G 2016, Epistemology and method in law. Routledge, Abingdon.
Turner, C 2013, Contract law. Routledge, Abingdon.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
