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1. Advise Mojo Beverage, explaining applicable legal principles and citing relevant authorities
Be sure that needs to be decided in this case is related with the liability of Mojo Beverage under the advertisement issued by the company in which it was promised that any person who catches the fish bag by the company will be given a reward of $100,000. As the fish, named Lord Harry has been caught by Ben, it needs to be seen if this promise can be enforced by Ben, particularly in view of the fact that it has been erroneously mentioned in the advertisement that the amount of the prize will be $100,000 while in reality, the intention of the company was to give $1000 as a prize.
In order to deal with the above-mentioned issue, it has to be considered if the advertisement that has been placed by Mojo Beverage was an offer or if it was only an invitation to treat. This is very important as an offer is completely different from an invitation to treat.[1] While the acceptance of the offer results in a valid contract between the parties, the same is not the case with an invitation to treat. Therefore, the acceptance of an invitation to treat cannot result in the formation of a valid contract between the parties. It has also been seen that in case of a number of advertisements, there is a lot of puffery. In the same way, it is also not very easy to verify the claims mentioned in the advertisements.[2] Due to this situation, generally advertisements are not considered as offers but they are treated as merely invitation to treat. However, a significant change took place after the court delivered its decision in Carlill v Carbolic Smokeball Co.[3] The brief facts of this case are that an advertisement was placed by the company according to which the company was going to be a reward of £100 if any person use the smoke balls of the company as directed and still contracted influenza. In order to show his seriousness regarding the offer made by it, and amount of £1000 was deposited by the company in a bank. Mrs Carlill also read this advertisement and use the smoke balls of the company as directly but still she contracted influenza. Therefore, she claimed the award of £100 as mentioned in the advertisement. However the company declined to pay this amount. In its defense, it was claimed by the company that the advertisement did not amount to an offer. As a result, it could not be accepted by the other party. Mojo Beverage argued that the advertisement issued by it was merely an invitation to treat. The company also claimed that as a result of this advertisement, an offer would have been made to the whole world and a contract cannot be created with the whole world.[4] But the court did not accept this argument of the company. According to the court, in this case, the contract has not been created with the whole world but only an offer was made. The contract will be created only with the persons who fulfill the conditions mentioned in the offer.
In view of the legal position mentioned above, in this case also it can be said that the advertisement placed by Mojo Beverage was not an invitation to treat but it was an offer. According to this offer of the company, the contract will be created with the person who succeeded in catching Lord Harry, the fish that has been tagged and released in the late by the company. Although, there were certain rumors that the prize money has been mentioned as $100,000 by mistake and in reality, the intention was to give a prize of $1000. But ben was not aware of this fact before he had bought the fish. In this way, a valid content was created between Mojo beverage and Ben as soon as he caught the fish.
After studying the facts that have been mentioned in this question, the issue arises if a legally enforceable contract has been created between Dorper Sheep Sellers and Livestock Brokers and if an offer has been made by Dorper Sheep Sellers and if the same could be accepted by Livestock Brokers after six months of the letter.
Among other elements that are needed for the establishment of a contract between the parties, it is also require that one party should make an offer which should be accepted by the other.[5] Therefore in such a case, a legally enforceable contract is formed. However it needs to be noted in this regard that a significant difference is present between offer and invitation to treat.[6] The law contract provides that in order to be considered as an offer, it has to be established that the party making the statement should intend to be bound by it. For instances, a telegram was written by Harvey in which he asked Facey did he was interested to sell Buper Hall Pen.[7] It was mentioned in the telegram that the lowest cash price should be mentioned in the reply. Therefore, a telegram was sent in reply by Facey. In this telling him it was mentioned that the lowest cash price was £900. In return, I reply was sent by Harvey and they claim to have accepted the offer made by Facey and were ready to purchase Bumper Hall Pen at the price mentioned by Facey. However, Facey argued that a contract has not been created between them. The case went up to the Privy Council where it was the decision of the court that a contract has not been created between them. In support of this decision, the reason given by the court was that a direct answer was not given by Facey to the first question in which it has been asked if he wanted to sell Bumper Hall Pen. As a result, lowest price mentioned by them was only an answer to the request for information. The result is that this letter cannot be treated as an offer that would have been accepted by the other party, resulting in the formation of a valid contract. The law also provides that before an offer has been accepted, it can be withdrawn at any time.[8]
2. (a) As a result, if no particular deadline has been mentioned to accept the offer, the offer can only be accepted within a reasonable period. In this regard, the reasonable period within which the offer can be accepted, can be decided on the grounds of the subject of the agreement.
Livestock Brokers did not accept the offer made by Dorper Sheep Sellers. Therefore instead of accepting this offer, they make further inquiries if the sale was to be financed as the usual terms. But in reply to this letter, Dorper Sheep Sellers did not send any communication. Therefore after nearly 6 months, Livestock Brokers send telegram in which they claim to have accepted the offer made by Dorper Sheep. But by this time, the company has already sold its flock to another buyer. Therefore applying the principles of contract law as mentioned above, it can be said that first of all it is not established that the letter written by Dorper Sheep can be considered as an offer. Similarly, even if it is considered as an offer, Livestock Brokers have not accepted the offer within a reasonable time. Instead of accepting the offer, they made further inquiries regarding the terms of the sale. This cannot be treated as valid acceptance (The law also provides that before an offer has been accepted, it can be withdrawn at any time.[9] But six months later, they send a fax in which they claim to accept the offer. Therefore in this case, it can be said that there is no contract between the parties.
(Part b) If the fax containing the acceptance of the offer would have been sent by Livestock Brokers on 14 June but as a result of a transmission error, the fax was not received by Dorper, the issue is if the contract has been created between them or not. In this context, it is worth mentioning that the postal rule of acceptance according to which the acceptance is complete when the letter containing acceptance is put in the mailbox, does not apply to instantaneous communication. The result is that in this case, as per the general rule of acceptance, the acceptance will be considered to be effective only when it has been deceived by the other party. Therefore in this case also, there is no contract between livestock brokers and Dorper Sheep Sellers.
3. After studying the effects of this question, the issue arises if the part payment of a debt can be treated as a valid consideration for supporting the promise according to which the rest of the amount will be relinquished by the party.
This issue can be properly decided in view of the rule provided by the court in Pinnel's case.[10] In this case, the court has provided a basic rule of the law of contract according to which, the part payment of a debt cannot act as a good consideration in return of the promise to forgo the rest. As a result of this rule, for instance, if A owes $100 to B and it has been agreed by B that he will accept $50 as the complete satisfaction of the debt on the day it becomes due, B is not prevented by the law from claiming the balance at a later date. According to the law, in this case, no consideration has been provided by A to support the promise made by B that he will accept the part payment as the full satisfaction of the debt. A contractual duty was already present on part of A to pay the full amount under the agreement.[11] This rule has been introduced by the court with a view to protect the creditors from any economic duress on part of the borrowers.
In view of this rule, it can be said that according to the law contract, in such a case, consideration can be treated as being present if the creditor has agreed to take part payment on an earlier date or to accept chattel instead of money or to accept the part payment at a changed place. In all other cases, it will be considered that consideration is not present. Although, there are many who believe that the rule provided in Pinnel's case is somewhat harsh but it needs to be noted that the this rule is currently applicable. In the same way, there is another case that also deals with the issue in the present question. In Foakes v Beer (1884), Mrs. Beer was successful in getting a judgment from the court against Dr. Foakes. But Dr. Foakes made a request to give some more time. Under these circumstances, it was decided between the parties that further action will not be taken by Mrs. Beer if Dr. Foakes immediately paid an amount of £500 and the rest of the amount was to be paid in installments of £150. The agreement was duly performed by Dr. Foakes but an issue arose regarding the payment of interest on this amount. The House of Lords decided the case that the amount of £360 can be recovered by Mrs. Beers as interest. The decision of the court was based on the fact that no consideration has been provided by Foakes to support the promise made by Mrs. Beer that she will not take any further action regarding this amount.
On these grounds, it can be said that a promise was made by Westphalia Marts Pty Ltd according to which the company accepted the reduced rent of $700 per week but there is no consideration supplied by Stewart in the term of this promise. The result is that Westphalia Marts Pty Ltd can claim the shortfall of $300 per week and they can also ask Stewart to pay for rent in future. In this way, the promise made by Westphalia Marts Pty Ltd to accept reduced rent is not legally enforceable.
Atiyah, P.S., 1995, Introduction to the Law of Contract, 5th Edition, Oxford University Press Press, Oxford
Beatson, J, 2002, Anson’s Law of Contract, 28th Edition, Oxford University Press, London
Benson, Peter (ed) 2001, The Theory of Contract Law: New Essays Cambridge University Press, Cambridge
Brownsword, R, 2000, Contract Law: Themes for the Twenty-First Century, Butterworths
Burrows, A. and Peel, E eds. 2003, Commercial Remedies: Current Issues & Problems, OUP
Harris, D. and Tallon, D. eds 1989, Contract Law Today: Anglo-French Comparisons Clarendon
Case Law
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Harvey v Facey [1893] UKPC 1
Foakes v Beer (1884) 9 App Cas 605
Stilk v Myrick [1809] EWHC KB J58
Pinnel's Case (1602) 5 CoRep 117a
Dickinson v Dodds (1876) 2 Ch. D. 463
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