This is an essay that solves a problem question regarding contract law and how a contract becomes valid or invalid. It solves the issues for Lucy and Veronica regarding their contract relating to the advertisement.
Introduction
For a contract to be created, an offer must be made by one party and accepted by
the other party to whom the offer has been made to. 1 There are essential elements
for the contract to be legally binding; offer, acceptance, intention and consideration
to create legal relations.2
Smart-Tech Ltd
The Smart-Tech Ltd had advertised that 5 LG LED TVs were available at £250 each
till 1st April 12pm. This advertisement is a unilateral contract as the company intends
to sell the TVs to first five people who notify them of their intention to purchase. The
general rule regarding advertisements of a bilateral contract is that it cannot amount
to an offer but an ‘invitation to treat’ which is defined as a preliminary statement
expressing a willingness to receive offers’. 3 This means the buyers must make offers
to buy unlike in an offer where the offeror must complete his part of giving the offer
and leaving it on the offeree to accept or reject it. This is evident in the Partridge v
Crittenden case4. The court held that the advertisement was an invitation to treat and not an offer
due to its bilateral nature therefore, the defendant was not guilty.
Similarly, in Fisher v Bell,5 the issue of whether the display of an item constitutes an offer or an
invitation to treat was raised. The court held that the shopkeeper’s action constituted an invitation to
treat and not an offer. This is mainly because it is a bilateral contract and therefore it cannot be an
offer. Besides, the case Pharmaceutical Society of GB v Boots6 deals with a similar issue. In this
case, it is made clear that any goods on the shelf does not constitute an offer and therefore the
customers take items to the till to make an offer. The shop keeper then chooses whether he wants
to accept or reject the offer by the customer.
The principal reason for this rule is to protect the party who is placing an advert from making a
contract with every person who intends and is willing to buy the product at the stated price. For
example, even if the product has run out, the person placing the advertisement would be legally in
contract to anyone who accepts the offer which is commercially unviable unless conditions stated.
Here, Smart-Tech Ltd merely states the price at which the item is to be sold and
have stated the conditions. It is, therefore, an advertisement of unilateral nature and
hence an offer.
Lucy and Smart-Tech Ltd
Lucy misaddresses the letter of acceptance and therefore the company received the letter 2 days
after the last day to show interest in the advertisement. Here, the company is the offeror and Lucy
is the acceptor. The issue that needs to be addressed is whether she had a contract with Smart-
Tech Ltd and is there any liability on the company.
The contract between Lucy and the company does not exist. It is considered that the response is
communicated to the offeror as soon as the letter is posted by the offeree. However, conditions
such as posting to the right address and stamping the letter correctly are considered. This is the
postal rule which is a form of non-instantaneous communication between the offeror and the
1
McKendrick E, Contract Law (8th edn, Oxford University Press 2018) 44.
2
Finch E, and Fafinski S, Contract Law (5th edn, Pearson education 2018) 3.
3
Ibid 5.
4
Partridge v Crittenden [1968] 1 WLR 1204.
5
Fisher v Bell [1961] 1 QB 394.
6
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 Court of Appeal.
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