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Contract Law Exam Notes 2021/2022 Update
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Contract Law Exam Notes 2021/2022 Update
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Contract Law Exam Notes 2021/2022 UpdateOffer:
An offer is an expression to another of a willingness to be bound by the stated terms
Australian Woollen Mills Pty Ltd v The Commonwealth
Bilateral Contracts
Under Bilateral Contracts each party undertakes to the other party to do or to refrain
from doing something, and in the event of his/her failure to perform his/her
undertaking, the law provides the other party with a remedy.
United Dominions Trust Ltd v Eagle Aircraft Services Ltd
Unilateral Contracts
Under unilateral contracts the promisor undertakes to do or to refrain from doing
something if another party, the promisee, does or refrains from doing something, but
the promisee does not at the time of the offer undertake to do or to refrain from doing
that thing.
United Dominions Trust Ltd v Eagle Aircraft Services Ltd
The position in such cases is simply that the consideration on the part of the offeree
on the part of the offeree is completely executed by the doing of the very thing that
constitutes acceptance of the offer.
Australian Woollen Mills Pty Ltd v The Commonwealth
Offers to the Public at Large
An offer can be made to the public at large.
Carlill v Carbollic Smoke Ball Company
The defendant (the company) was the manufacturer of a product called the Carbolic
Smoke Ball, which was designed to prevent the user of the smoke ball from
contracting the flu. To promote its product, the Company advertised in a newspaper
to pay 100 pounds to any person who contracted the flu after using one of their
smoke balls in the specified manner for a specified period. The plantiff relied on the
advertisement, purchased one of the smoke balls, and used it in the prescribed period.
The plantiff contracted the flu and sued the Company to recover 100 pounds.
The English Court of Appeal held that the plantiff was entitled to recover the money
from the Company. The court rejected the Company’s argument that the promise was
not binding because it was not made with anyone in particular. As stated by lindley
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, LJ, ‘in point of law this advertisement is an offer to pay 100 pounds to anybody who
will perform these conditions, and the performance of the conditions is the
acceptance of the offer’
In Carlill’s case the offer made to the world at large formed the basis of a unilaterial
contract. This will not always be the case. Depending on the terms of the
advertisement to the general public, the advertisement may constitute an offer which,
if accepted, forms a bilateral contract.
Offers made through the Internet
In recent times, there has been an enormous increase in the extent to which commerce
is transacted through the Internet. The expansion of electric commerce has also
highlighted a number of difficulties, particularly in relation to issues of contract
formation. Given the transnational transactions and processes difficult legal problems
can arise- such as establishing the place and time of contract formation, and the
appropriate legal regime to govern the transaction. Some of the traditional contractual
concepts will continue to be relevant. For example offers made to the public at large
still abide by the principals set about in Carlill’s case.
What is not an Offer?
Mere Puff
Sometimes statements can be regarded only as ‘mere puffery’- the claims are made
only for advertising purposes and mean nothing. In years gone by, it is particularly
common practise to make exaggerated or perhaps unsustainable claims about
products.
Carlill v Carbollic Smoke Ball Company
Not all statements made in advertising, however, can be dismissed so lightly.
The case of Carlill provides such an example. In that case, it was held that the
statement was more than mere puffery.
The deposit of £1,000 in the bank was an indication of the manufacturer’s
intention that the offer was genuine.
Supply of Information
The supply of information is not an offer.
A request for information must be discerned from a contractual offer. A clearer
indication of a preparedness to enter into a contract, than merely providing terms or
information upon which a party maybe prepared to enter into such a contract, is
needed.
Harvey v Facey
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, One party was anxious to purchase property of another, the property being
known as ‘Bumper Hall Pen’. The prospective purchasers sent a telegram to
the owners in the following terms: Will you sell us Bumper Hall Pen?
Telegraph lowest cash price.’ The owners responded: ‘Lowest price for
Bumper Hall Pen £900’. The final communication was by the purchasers to
say: ‘We agree to buy Bumper Hall for £900 asked by you...’ The purchasers
later brought an action for specific performance when the owners refused to
complete the purchase.
The Privy Council did not grant the relief sought because a contract had not
been formed. The plaintiff made two enquiries of the owners: Whether they
were willing to sell; and what the lowest price of the sale would be. The
owners responded only to the second question by supplying the information. It
could not be implied that they responded to the first question by agreeing to
sell.
Invitation to Treat
An invitation to treat is an indicator of a party’s willingness to negotiate entry into a
contract. It is a technique used by a party who desire another party to make an offer
and cannot be construed or the terms be accepted as if it were a valid legal offer in
itself.
Carlill v Carbollic Smoke Ball Company
Bowen LJ described an invitation to treat in the following terms:
Cases in which you offer to negotiate, or you issue advertisements that you
have got a stock of books to sell, or houses to let, in which case there is no
offer to be bound by any contract. Such advertisements are offers to negotiate-
offers to receive offers- offers to chaffer, as, I think, some learned judge in
one of the cases has said.
Bowen LJ pointed out that advertisements for sale, such as those appearing in
advertisements or display of goods on shelves will generally be regarded as an
invitation to treat.
They are not offers by themselves, but ‘offers to receive offers’. They are
designed to generate offers by others. Therefore an invitation to treat cannot
be accepted by the other person and bind the person who advertised the
product.
The display of goods in a store is an invitation to treat.
Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd
Pharmaceutical Society GB v Boots Cash Chemists appellant argued display
of drugs in pharmacy (with prices attached) infringed a statute prohibiting sale
of drugs except where registered pharmacist in attendance. Did display
constituted an offer so contract of sale at the moment that the customer
selected drug when pharmacist not in attendance?
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, Court of Appeal held display was an invitation to treat; the customer made an
offer at check-out and offer accepted by ringing up on cash register in
presence pharmacist.
Does this make sense? Right not to sell floor stock/window display stock?
Fisher v Bell shopkeeper displayed a flick-knife in window with price ticket.
Charged with offering for sale flick-knife contrary to statute
Held ” display of an article with a price on it in a shop window is merely an
invitation to treat. It is in no sense an offer for sale the acceptance of which
constitutes a contract.” Lord Parker
An advertisement that gives information about goods for sale and their price will
generally be an invitation to treat rather than an offer.
Partridge v Crittenden
Appellant charged with statutory offence of unlawfully offering for sale wild
live bird (a "Bramblefinch hen") in a periodical.
Held advert an invitation to treat not “offering for sale” in statute.
"when one is dealing with advertisements and circulars, unless they indeed
come from manufacturers, there is business sense in their being construed as
invitations to treat and not offers for sale.” per Lord Parker CJ.
Categorizing Transactions
Advertisements
Most advertisements are considered invitations to treat but some may be regarded as
offers depending on language used in the advertisement and other relevant factors.
a) Advertisements in a catalogue or in a curricular.
Circulars, which provide information about items for sale and their prices, are
regarded as invitations to treat. If it were regarded as an offer and the manufacturer
ran out of stock, they would be in breach of contract for anyone who accepted such an
offer as they could not provide stock
However common legislation also regulates the sale of certain types of products such
as fauna and flora that may be offered for sale. The advertising material must be an
offer for the legislation to apply but not if it is an invitation to treat.
Grainger v Gough
b) Advertisements in Newspapers and Magazines.
These are also considered invitations to treat unless the advertisement is couched
in terms which indicate the retailers willingness to be bound if the specified
terms are accepted (eg. there is a promise (Carlill) rather than a mere invitation
(Partridge v Crittenden).
c) Advertisements appearing on the Internet.
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