An invitation to treat, however, is different from an offer.


Question1

 Applicable Legal Principles

Contract

A legal contract can be described as an agreement between entities involving a client and contractor(Lawteacher.net, 2016)”. Client outlines the project objectives for the contractor to carry out the work under required terms and deadlines.

Offer and acceptance in advertisements

An advertisement can be used as a tool to offer the loyal consumers and therefore, forming a form of contract between the client and the contractor. However, such a contract depends upon the terms or rules subject to the offer and the acceptance. Generally, considering an offer has been accepted and the acceptance has been communicated the offerer has to comply with whatever has been offered. The classic case examples are of Felthouse vs Bindley and Carlill vs Carbolic Smoke Ball Co.

Invitation to treat

An invitation to treat, however, is different from an offer. An invitation to treat presents an offerer with option of further negotiation. It can be argued that an invitation to treat provides a general public to make an offer and does not guarantee any promise.  An advertisement can be regarded either as an invitation to treat or as an offer, depending upon the intentions of the parties involved(Law Buddy, 2014)”.  The leading case example is of Pharmaceutical Society of Great Britian vs Boots.

Unilateral Contract

Unilateral contract is formed when a contractor offers to carry out the project in the offer.  In this particular scenario the acceptance does not need to be communicated and can be accepted through the completion of the project or the performance of the required act. For example, in the case of Carlill v Carbolic Smoke Ball Co and O’Brien v MGN Ltd.

Advice to Mojo Beverage

Ben (appellant) claims his rights against Mojo Beverage (respondent), that the advertisement is a unilateral offer. Therefore, an appellant can accept the offer and can claim that the respondent has revoked the offer wrongly before completing respondent acceptance. The appellant can argue that the advertisement is a unilateral offer and respondent published having an intention of a binding agreement. In the advertisement, the respondent has included the exact time, date and conditions. People can clearly identify by looking at the advertisement that the respondent had a serious intention of having a binding agreement. Considering Ben entered in the unilateral contract with Mojo Beverage and regarded advertisement of Mojo Beverage as an offer, therefore, he is eligible for reward after catching the Lord Harry.  This is similar to the case of Carlill vs Carbolic Smoke Ball Co (1893).  The wording of the advertisement clearly indicated the intention of Mojo Beverage to make an offer and be bound by it to anyone who catches Lord Harry. However, the contract will not be binding if the error in the advertisement was communicated to Ben. In such circumstances, Mojo Beverage is not obligatory to comply with the initial offer. As it is mentioned in the case that a Mojo Beverage representative was on hand to certify the catch but did not communicated the catch prize. Considering this, if Ben pursues the case, then it is a high possibility that the claim will be successful.


 

Question 2

Applicable Legal Principles

Bilateral Contract

A bilateral contract is one where a promise by one party is exchanged for a promise by the other. The exchange of promises is enough to render them both enforceable. Thus in a contract for the sale of goods, the buyer promises to pay the price and the seller promises to deliver the goods.

Offer

An offer can be regarded as a statement issued by an entity indicating willingness to enter into a contract on stated terms. Thus an offer has to be communicated to the other party for example, Taylor v Laird. There is a difference between an offer and an invitation to treat(Lawteacher.net, 2016)”. The difference is primarily based on intention, for instance, offer is an intention to be bounded by an acceptance of the offered terms without further negotiations, such as Gibson vs Manchester City of Council. Where as an invitation of treat can be regarded as a continued negotiation process.

Methods of terminating an Offer 

 An offer can be withdrawn before acceptance such as in the case Routledge v Grant. The withdrawn of the offer shall be regarded as revocation. However, under any such circumstances, the same must be communicated to the offered either directly or indirectly. For instance, in the case of Byrne v Van Tienhoven the withdrawal of the offer was treated as communicated after the telegram was received. However if before acceptance a counter offer can be made which can be regarded as a rejection of an offer, for example Hyde v Wrench. An offer can also be terminated with lapse of a provided or set time(Lawteacher.net, 2016)”, for example Ramsgate Victoria Hotel v Montefiore.  Particularly, as indicated by the case study of Routledge v Grant, offer can be withdrawn if communicated to be open for specific time period. An offer shall not be considered open if it lacks a promise of consideration after a certain time.

Counteroffer/mere inquiry

Counter offer shall be considered as an offeree’s intention to the acceptance of the offer with possible changes in the terms of the offer.  When an offeree makes a counter offer, he forgoes his power of acceptance unless there is an evident intention of the offeror to ask for the counter offer. The dissimilarity between a counteroffer and an enquiry is; a counteroffer  withdraws or revoke the original contract by introducing new terms, however, a mere inquiry would be just request for the different terms  such as in case of Moss vs Old Colony Trust and Routledge v Grant. The classic case of Hyde v Wrench offers a detailed insight on the traditional offer and acceptance problem. The law regards the acceptance of an offer final and legally binding only when the acceptance matches the offer and the offeree agrees to comply with all terms of the offer.

Posting rule

The postal acceptance rule is effective since 1818. The rule was established during the Adams v Lindsell study. The offeree (plaintiff) failed to communicate the acceptance of offer on time and the goods were, therefore, sold to another party by the offeror (defendant). The defendant was charged with the breach of contract on the basis that acceptance was effective at the time of posting.  However, the instantaneous means of communication are treated differently in the postal rule and do not favor the consumer because it regards the modern means as acknowledged. According to Australian law a contract is not legally completed unless an acceptance is communicated to the offeror. The acceptance shall be in any form and it is not essential that a posting of a letter of acceptance is required, unless offeror specify it or intends it(Lawteacher.net, 2016)”.  The classic example is the case study of Tallerman & Co Pty Ltd v Nathan’s Merchandise.

Advice to Livestock Brokers

 Electronic acceptances and negotiations have become commonplace and all the critical aspects of contract formation and validity is applicable. In this particular case, it can be argued that Liveststock Brokers perhaps benefit from postal rule because telex, or fax are excluded from postal rule as they are considered as instantaneous modes of communication rather than an email or in this particular case a reply letter, which is subjected to marginal delays. Hence, there is a possibility that rejection of an offer on the grounds time lapse may not stand valid.

 Moreover, in this particular scenario the Livestock Brokers in its reply letter put up a mere inquiry and hence must not be regarded as a counteroffer. Considering that reply letter was not a counteroffer, therefore the offer of the original contract shall not be terminated.

Presuming that livestock Brokers sent the fax on June 14 but Dorper Sheep Sellers do not receive it may perhaps not benefit from the postal rule as telex and faxes are excluded from the postal rule. In this case particular case Dorper Sheep Seller’s claim of Livestock Brokers late response of an acceptance of the offer has a possibility of being successful.


 

Question 3

Applicable Legal Principles

Leases (Commercial and Retail) Act 2001

According to the Australian law a lease shall be considered as a commercial or retail lease if the premises is permitted to be used for the commercial business or the retail business and is treated as being entered into after the execution of an offer and acceptance of an offer among the involved parties.

The parole Evidence Rule

The parole evidence rule preserves integrity of a written document. The rule protects the terms of contract and prevents entities to change the terms through oral declarations that are not stated in the original contract or document. The classic example is the case of Henderson v Arthur where the plaintiff was the seller and the defendant was the tenant and the agreement promised to pay the certain amount at certain time.  Also in the case Hutton v Warren the rule is to provide a notice period.

Consideration

Consideration can be considered as a price of a promise.  It is not an important aspect of a contract however, according to the law the payment must be provided to make the agreement binding(Consideration. Parol Evidence to Show True Consideration in Deed, 1924)”. However, gratuitous promises or considerations are not to be regarded as enforceable.

Consideration must not be past

According to the rule a consideration is not regarded as consideration if it is voluntary, in such a case the consideration is regarded as in the past and shall not be enforceable “(Australiancontractlaw.com, 2016)”. For example in Roscola v Thomas the promise was not binding. However, an exception can be seen in the case of Pao On v Lau Yiu Long, where the past consideration can be regarded as good consideration provided it was done at the request of the promisor.

Existing Duty Rule in the Consideration

The Stilk v Myrick case shed light on the existing duty rule. According to the existing duty rule a new promise is not binding unless it varies from the original promise offered by the offeree. This law shall weaken the claim of the promisee until the promise varies to a large extent from the original binding promise Therefore, the new promises that are not different from old promises will stand invalid under law.

Promissory Estoppel

This doctrine states that promisor is inequitable if it fails to hold to the promise“(Australiancontractlaw.com, 2016)”. The Promissory Estoppel is only applicable in the case of pre-existence of a contractual relationship between the entities involved. The law of Promissory Estoppel affirms to assert offeror with their offer or promises.  The case of Legione v Hateley led to the inclusion of the doctrine of Promissory Estoppel in the Australian law. It also includes preconditions that the defendant must provide a promise. The doctrine was developed in the case study of Central London v High Trees. The concept of Estoppel is based on the concept of consistency. This means that in the court a person has to be careful regarding his statements and must not under any circumstances make claims that are inconsistent with the previous claims or statements. Thus in Australian law the doctrine still presents challenges and is subjected to variations.

Advice to Stuart

Considering Stuart entered in a written lease of 5 year to provide $1000 per week; the lease is legally binding upon him till the end of 2015. The parole evidence rule will make the written document binding and will protect the terms of the written document.  Moreover, considering that Westphalia Marts Pty Ltd reduced the lease as a voluntary consideration, hence an oral promise of a reduced lease is not enforceable upon the Westphalia Marts. However, a claim under implied terms to issue a notice period may be possible. It is not clear from the scenario whether any prior notice on behalf of Westphalia Marts was issued or not. Furthermore, several cases such as Wigen v Edwards and Watkins & son v Carrig recognized the existence of existing duty rule and ruled off any claims on the grounds of validity of new promises. Considering the case of Stuart, the new promise to pay reduced lease until the improvement in business does not vary from the original promise to pay the said amount. If Stuart pursues a claim against Westphalia Marts there is a possibility that the claim may not be successful.

References

Australiancontractlaw.com. (2016). Australian Contract Law | Julie Clarke. [online] Available at: http://www.australiancontractlaw.com/law/formation-consideration.html [Accessed 9 Aug. 2016].

Consideration. Parol Evidence to Show True Consideration in Deed. (1924). Columbia Law Review, 24(2), p.202.

 Contract. Offer. Invitation to Treat. (1925). Columbia Law Review, 25(6), p.838.

Contracts. Offer and Acceptance. Revocation of an Offer to A Unilateral Contract. (1928).Harvard Law Review, 42(1), p.128.

Dowler, W. and Miles, C. (2008). A guide to business law. Pyrmont, N.S.W.: Lawbook.

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LANSING, P. (1980). BUSINESS LAW. American Business Law Journal, 18(1), pp.131-134.

Law Buddy.(2014). Advertising in Australia | Toowoomba Lawyers. [online] Available at:http://www.lawbuddy.com.au/knowledge-base/advertising-australia/ [Accessed 9 Aug. 2016].

Lawteacher.net. (2016). Advertisement was an invitation to treat, not an offer to sell | Law Teacher. [online] Available at: http://www.lawteacher.net/free-law-essays/contract-law/advertisement-was-an-invitation-to-treat-not-an-offer-to-sell-contract-law-essay.php [Accessed 9 Aug. 2016].

Lawteacher.net. (2016). Consideration Lecture Notes | Contract Law | Law Teacher. [online] Available at: http://www.lawteacher.net/lecture-notes/contract-law/consideration-lecture.php [Accessed 9 Aug. 2016].

Lawteacher.net. (2016). Offer v Invitation to Treat | Law Teacher. [online] Available at: http://www.lawteacher.net/free-law-essays/contract-law/offer-vs-invitation-to-treat-contract-law-essay.php [Accessed 9 Aug. 2016].

Lawteacher.net. (2016). Terms of The Contract Cases | Contract Law. [online] Available at: http://www.lawteacher.net/cases/contract-law/terms-cases.php [Accessed 9 Aug. 2016].

Lucadou-Wells, R. and Bourke, J. (2015). Teaching Business Law: Some Ethical Dimensions from Australia. Procedia - Social and Behavioral Sciences, 209, pp.102-108.

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Slorach, J. and Ellis, J. (2007). Business law. Oxford: Oxford University Press.

Turner, P. (2014). INADEQUACY IN EQUITY OF COMMON LAW RELIEF: THE RELEVANCE OF CONTRACTUAL TERMS. C.L.J., 73(03), pp.493-496.


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