115211 Business Law

Question (a)

Issue

Whether Cassandra can insist on purchase of coat for $300, or not? Whether the answer would change with intervention of the manager post the assistant placing the coat in the bag, but before the EFTPOS transaction was accepted, or not?

Rule

In order to create a legally binding contract, the elements of offer and acceptance have to be shown to be present. In order for a contract to begin, one party has to offer certain terms to the another, which have to be accepted as it is by the party to which such an offer has been made. Any change would result in a counter offer being made. Before an offer is made, at times, an invitation to treat takes place. This denotes the pre-negotiation stage of the contract. The prime example of invitation to treat is the goods kept on shelf in a shop, or goods displayed on shop window as was held in Fisher v Bell [1961] 1 QB 394. This is deemed as an invitation to the possible consumers to enter the shop and make an offer to by the goods that have been displayed at the given price. Unless the offer to buy, as is made by the consumer, is accepted, a contract is not formed. This could include wiping the goods across the bar code reader.

In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 All ER 482, the concept of when an offer is made was elaborated. It was stated in this case that the goods on shelf are invitation to treat and cannot be deemed as an offer. When a consumer takes the goods to the shopkeeper, an offer is made. The shopkeeper can choose to accept or decline this offer.

Application

In the first scenario, what Cassandra saw as marked for sale, in the window of Priam’s Clothing Studio Ltd was an invitation to treat basis the concept that goods kept on shop window are invitation to treat, as per Fisher v Bell. When Cassandra takes the coat to the assistant to purchase it, that was the moment when an offer was made by her to the shop assistant as per the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd. To this offer, the manager of the shop intervened and highlighted that the contract could not be formed at the offered price of $300 and would instead be made at $3000. Hence, a counter offer was made.

In the second scenario, had Cassandra placed the coat in the bag, but before the EFTPOS transaction was made, the contract would have been created and only the payment would have been pending. This is because the shop assistant by that time had accepted the offer that was made by Cassandra.

Conclusion

Hence, basis the applicability of explained rules on the facts of the given case study, it is evident that in the first case, Cassandra cannot insist on buying the coat at $300 due to lack of acceptance. However, the same is possible in second instance as the acceptance had taken place.

Question (b)

Issue

Whether X has any remedies under the contract law based on the events that transpired between him and Y, or not?

Rule

In order to create a legally binding contract, the element of intention to create legal relations has to be present. In commercial contracts, this intention is deemed to be present. However, when it comes to social or domestic contracts, the general rule is that there is an absence of intention. In order to best decide upon the case, the court looks into the circumstances that were faced by the parties to judge the presence/ absence of intent element. This is particularly true when an agreement takes place between friends.

In the case of Welsh & Ors v Jess Noted in Recent Law [1976] 185, two friends had entered in a dishing contest. For doing so, they pooled their money and also agreed that they would share the winning money. Jess won but refused to share the prize money with Welsh. In this matter, the court stated that this was a social contract and usually such contracts are not legally enforceable. However, the scenario in this case was such that an objective bystander would have considered pooling of money as the intent to sharing prize money. The test of reasonability was thus given supremacy in social contract.

However, a different ruling was given in matter of Buckpitt Vs Oates (1968) 1 All ER 1145. In this matter, the plaintiff got injured while the defendant, his friend, was driving the car. The plaintiff claimed for injury but the court held that there was no contract in this case. The reason for this stemmed from the friendly agreement between two friends to go on a journey. Hence, for the injuries, under the common law, the plaintiff could not recover his injuries.

Application

In the present case, X and Y are two friends. Being friends means that whatever transpired between them would be put to question for presence/ absence of intention to be legally bound. Applying the reasonable bystander test given in Welsh & Ors v Jess, a reasonable bystander would have considered that the trip planned between X and Y, where X would arrange for accommodations and food, and Y would contribute towards the car, was just a friendly arrangement between the two. There was nothing to show that a legally binding contract was being created between X and Y. furthermore, applying the case of Welsh & Ors v Jess, this view is strengthened. This is because the two friends given in case study were just going on a friendly journey for which they had made certain arrangements. Again, this shows that the intention element is lacking in this matter.

Conclusion

Hence, basis the applicability of explained rules on the facts of the given case study, it is evident that X does not have any remedy under the contract law, as no contract was formed between him and Y for the lack of element of intention to be legally bound.

References

Buckpitt Vs Oates (1968) 1 All ER 1145

Fisher v Bell [1961] 1 QB 394

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 All ER 482

Welsh & Ors v Jess Noted in Recent Law [1976]

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