Whether there was an offer
A contract is an agreement entered into between two or more persons which is binding on the parties and is capable of enforcement before a court of law. The formation of a legally binding contract is procedural and has to encompass all the essential requirements for it to obtain a legally binding status. The essential elements for the creation of a valid and enforceable contract therefore include; offer, acceptance, consideration, intention, capacity and illegality.
A contract begins with the making of an offer; which if accepted leads to an agreement.
Whether there was an offer
The display of items/menu on the screen by ChunkyChicken restaurant is not an offer. It is referred to as invitation to treat in contract law. Rachel made an offer by selecting a product object on the screen which ChunkyChicken restaurant had the choice to accept or reject. This practice by ChunkyChicken restaurant can be equated to the display of goods in supermarkets and shop windows as well as advertisements which courts have ruled to be invitation to treat and not an offer.
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd, it was held that displaying goods on shelves amounted to an invitation to treat and not an offer. A similar finding was arrived at when goods were displayed on a store window in the case of Fisher v Bell. The offer was therefore made by Rachel since the items/food displayed on the screen was an invitation to treat.
Whether there was acceptance
The offer was made to ChunkyChicken Restaurant. The person who makes the offer is referred to as the offeror while to whom the offer is made is known as the offeree. Acceptance of the offer happens at the point where a receipt is printed containing the order number and the amount to be paid by the customer. The rules of acceptance have to be complied with i.e acceptance must be communicated to the offerror within reasonable time and it should be clear and unambiguous. Acceptance of an offer is what creates an agreement between the contracting parties.
A contract will only be enforceable where all the parties to the contract were willing to be bound and developed the necessary intention to enter into the contract. Intention of the parties to contract can be ascertained by use of presumptions; for instance, in a commercial or business transaction, courts presume that the parties had the intention to create legally binding relationship.
In Carlill v Carbolic Smoke Ball Co, the defendant argued that the cash offered as a reward in a newspaper advert for the promotion of sales amounted to an advertising stunt and that no intention existed to create a binding and enforceable contract in the circumstances. The court held that such advert created an intention and therefore a contract existed, being a commercial or business transaction. ChunkyChicken restaurant being a business establishment, there is presumption that the parties had intended to be bound by the terms of the contract between them.
Whether there was acceptance
There are certain categories of individuals who are incapacitated and do not qualify to enter into contracts. Contracts entered into by children, insane persons and those who have been adjudged bankrupt are not binding. However, a contract entered into by a minor for necessaries is binding and enforceable. Rachel is of majority age and ChunkyChicken Restaurant being a business entity in the normal cause of business, both parties had the capacity to enter into a valid and legally enforceable contract.
Was the contract legal?
ChunkyChicken has been operating and selling foodstuff. There is a presumption that it has obtained all the required licenses to enable it carry such a business. The restaurant sells food which is not an illegal substance. Therefore, there is no illegality emanating from the facts of this case and the contract between the parties is legal from the circumstances.
Was there consideration
Consideration is the agreed price in a contract between parties. Consideration is an essential element in a contract especially for simple contracts which must be supported with consideration to be legally binding and enforceable. In this case, the consideration is the price paid by Rachel for the gourmet chicken burger and hand cut chips.
What were the terms of the contract?
A contractual term is what the parties have agreed on. A term can either be a condition or a warranty. Conditions are the essential and mandatory terms without which there is no contract. A warranty on the other hand are those terms that are ancillary to the contract; they do not go to the root oof the contract but lure parties during negotiations to enter into the contract.
The contract between Rachel and ChunkyChicken restaurant is an electronic type of contract which also qualifies as a standard form contract. The terms are not agreed to between parties but are determined unilaterally by one party. The other party has no choice but to accept the terms. These terms are normally printed out in small fonts and parties do not bother to read and understand them before entering into the contract. By clicking okay tab on the touch screen where there was display, Rachel accepted the terms of the contract even though she did not take time to read.
The main issue for determination in this case scenario is whether ChunkyChicken can rely on the exclusion clause contained in the electronic terms and conditions in order to avoid being liable for the injury caused to Rachel.
Exclusion clauses refer to terms contained in a contract document that seeks to limit or exclude the liability of a party who is in breach of the contract. Exclusion clauses are common in written contracts. There are rules that have been developed to determine the applicability of exclusion clauses and circumstances when they apply to protect the guilty party from incurring liability for breach of contract. The validity of such clauses therefore depends on whether they appear on signs, unsigned documents or signed documents.
Where the document has been signed, the person signing the document will be bound by the terms contained therein. It is irrelevant whether such person read or did not read the contents of the document. This is the signature rule established in the case of L’Estrange v Graucob Ltd.The person signing the document can avoid being bound only if there was fraud, misrepresentation or he can claim non est factum.
Intention to create legally binding obligations
Where the document sought to be relied upon is unsigned the court has to determine whether the clause sought to be relied upon is a term of the contract. Where the clause is a contractual term, the party at fault will escape liability but where it is not a term of the contract, it will not bind the innocent party.
There are two tests that the courts apply in this circumstance:
- Nature of the document test; and
- Reasonable Notice test.
Where the document is contractual, there is a duty on the part of the person seeking to rely on the exclusion clause to give reasonable notice to the other party of the existence of such clause prior to or at the time of entering into the contract. This issue was considered in the case of Thornton v Shoe Lane Parking Co where, the claimant sustained injuries in a car park. The claimant had been given a ticket after putting money in a machine. A clause at the back of the ticked excluded liability on the part of the car park for injury sustained in the car park. The court held that the clause was not incorporated into the contract and the defendant could not rely on it to avoid liability.
The terms and conditions sought to be relied upon by ChunkyChicken restaurant popped up on the screen after Rachel had selected what to buy. Such terms had not been brought to the notice of Rachel prior to contract formation. The clause further does not constitute a contractual term and therefore it had not been incorporated into the contract. This was the opinion of the court in the case of Thornton v Shoe Lane Parking Co.Rachel learnt of the clause so late in the day after she had suffered injury. Being a standard form contract, courts will apply the exclusion clause against the party seeking to rely on it.
Conclusion
In conclusion therefore, ChunkyChicken restaurant cannot rely on the exclusion clause contained in the electronic terms and conditions in order to avoid being liable for the injury caused to Rachel. This clause was not brought to the attention of Rachel at the time of forming the contract. Further, the clause is not a contractual term and as a result, it cannot be relied upon to exclude liability for the injury suffered in the circumstances.
Andrews, Neil. Contract law (Cambridge University Press, 2015)
Anson, William Reynell, Jack Beatson, Andrew S. Burrows, and John Cartwright Anson’s law of contract (Oxford University Press, 2010)
Chen-Wishart, Mindy Contract law (Oxford University Press, 2012)
Coffee Jr, John C., Hillary Sale, and M. Todd Henderson “Securities regulation: Cases and materials.” (2015).
Furmston, Michael Philip, Geoffrey Chevalier Cheshire, and Cecil Herbert Stuart Fifoot Cheshire, Fifoot and Furmston’s law of contract (Oxford University Press, 2012)
Hogg, Martin. Promises and Contract Law: comparative perspectives (Cambridge University Press, 2011)
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince Problems in Contract Law: cases and materials (Wolters Kluwer Law & Business, 2016)
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) 2 QB 795
Fisher v Bell (1961) 1 QB 394
Carlill v Carbolic Smoke Ball Co [1892] EWCA Civ 1
L’Estrange v Graucob Ltd (1934) 2 KB 394
Thornton v Shoe Lane Parking Co (1971)4 CLR 379
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