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Offer and Acceptance

Discuss About The Australian Competition Consumer Legislation?

A contract is an agreement enforceable by law. An agreement is established between two parties known as an offeror and an offeree. When an offeror makes and offer to an offeree and the same is accepted by the offeree then an agreement is formed between two. For an agreement to be in category of a contract it is necessary that apart for the offer and its acceptance there must be intention of parties to contract, consideration and capacity of parties.(Stone, 2005)

An offer is an intent made by an offeror to an offeree to perform or not to perform certain tasks. It is the intention of the offeror which he communicates to an offeree and is held in Australian Woollen Mills Pty. Ltd. v. The Commonwealth [1954]. An offer is concluded when it is communicated to the person for whom the same is meant. An offer can be in written or an oral form. Offer may be for a specific person or for the world at large. The case law of Carlill v Carbolic Smoke Ball Company (1892) is based on concept of general and specific offers..

Now, an offer can be revoked by the offeror either expressly or by lapse of time. When the offeror gave a specific time duration within which the offeree must accept the offer and if the offeree does not accept the offer within such time frame then there is revocation of offer on the basis of lapse of time and is held  in Goldsbrough, Mort & Co Ltd v Quinn [1910].

An invitation to treat is a concept in contract law which is different from an offer. when the intended person wish to receive proposals from the public at large or specific persons and thus in order to do so he makes advertisements, holds auctions, tenders, display of goods etc and thus receives proposals (offer), then the intended person is an inviter and the act is an act of invitation to treat and is held in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953]. The proposal are received from the offeror and the inviter must act like an offeree who if accepts the offers so received results in a binding relationship amid the parties.

In the leading case of Harris v Nickerson (1873), it was held by the court that an advertisement is not an offer, rather, the same is construed as an invitation to treat and any person who is interested in the advertisement must make an offer to the advertiser.

Invitation to Treat

An acceptance is the second most important ingredient in contract law. An acceptance is the confirmation to the terms of the offer by the offeree and is held in Airways Corp of New Zealand v Geyserland Airways Ltd [1996].

An acceptance is the mirror image of the offer. If the acceptance is made with different terms that are part of an offer then the acceptance is not the mirror image of the offer and such an acceptance is not valid and is called counter offer and is held in Pars Technology Limited v City Link Transport Holdings Limited (1999). A counter offer revokes the original offer and must be regarded as new offer in law which is made by the offeree (new offeror) to the old offeror. The old offeror now becomes the new offeree and if he accepts the new offer then there is a bonding contract amid the parties.

But, mere request or communication of information’s cannot be regarded as an acceptance in law and is held in Stevenson, Jacques and Co v McLean (1880).

An acceptance is considered to be complete in law provided the offeror is aware of the same and is held in Latec Finance Pty Ltd v Knight [1969]. When an acceptance is made with the help of instant mode of communication, that is, with the help of telephone, fax, etc, then the communication of acceptance takes place when it comes in the awareness of the offeror. The same rule applies when an acceptance is made with the help of email. Till the time the email is not read by the offeror, the acceptance is not complete unless and until there is a considerable lapse of time has passed and is held in Entores Ltd v Miles Far East Corporation [1955]. But, the rule is not applicable when the acceptance is with the help of post and it was decided that the acceptance is considered to be over on the part of the offeree as soon as the letter is put into transit. There is no need that the same must come within the awareness of the offeror and is held in Adam v Lindsell [1818]. (HILL , 2001)

An acceptance must be revoked with a faster mode of communication so that the acceptance is revoked before it is completed as against the offeree, that is, before it comes within the knowledge of the offeror.

Lianne come through an advertisement of Mary wherein she is offering professional services for catering a party. Lianne is interested in throwing a party so she made an email to Mary on 10th June.

Acceptance

Since an advertisement is posted on the website by Mary so it is an invitation as per Harris v Nickerson and she must receive offers from public.

Lianne sent an email and submitted that she is interested in taking the services of Mary and thus requires the price information. Mary replied with service information which is liked by Lianne and she further provided with her party details. Then again an email is exchanged wherein Mary quoted that for the services she would like to charge $ 10,000.

Against the quotation that is submitted by Mary to Lianne, Lianne decided to make an offer to Mary and submitted that she would like to take the services of Mary at the reduced price of $ 9,500. Now, this is the first time that against the invitation of Mary, it was Lianne who made an offer of $ 9,500.

It is now upon Mary to either accept the offer or reject the same. It is found that Mary decided to accept the offer of Lianne at $ 9,500 but when she made the acceptance she submitted that she requires 10% of the non-refundable deposit and that she will accept the offer only when the same is received within seven days.

Now, the acceptance of Mary is not as per the rule of acceptances and her acceptance was not the mirror image of the offer of Lianne. She made variations and thus this variation in the acceptance has made the acceptance into counter offer.

So, the counter offer of Mary cancels the offer of Lianne. The only offer that is now valid is the counter offer of Mary at a price of $ 9,500 with 10% non-refundable deposit within seven days.

No response is received from Lianne for ten days. Thus, the counter offer (new offer) of Mary is already revoked as per Butler Machine Tool Co Ltd v Ex-Cell-O Corp Ltd [1977]. Thus, when on 20th June, Lianne sent an email of her acceptance, such acceptance has no validity in law. There is no obligation on Mary to abide by such acceptance.

But, against the mail of Lianne on 20th June, Mary against submitted that she will now gave the service for $ 10,000. Now, this statement is a new offer which is now made by Mary to Lianne.

This new offer of Mary was approved by Lianne  by sending an email which was not read by Mary for next five hours, also, within next half an hour Lianne also send an email of revocation which is also read by Mary after five hours.

Application in Practice

Now, a presumption is drawn here and it is assumed that the revocation email is read by Mary prior to the acceptance email. So, the acceptance was revoked by Lianne before it is complete a against Mary.

So, there is no acceptance by Lianne to the offer of Mary and thus there is no contract.

Based on the assumption made, it is submitted that since the revocation email is read by Mary prior to the acceptance email, thus, there is no concluding contract amid the parties.

The Australian Consumer Law (ACL) is the enactments which aims at safeguarding the interest of the consumers and imposes strict guarantees that must be cater by the manufacturers and suppliers of the goods and services.

Now, the most important question is who the consumer is? The ACL has submitted in its section 3 that any person who is purchasing the goods worth up to $ 40,000 is a consumer. However, if the worth of the goods exceeds $ 40,000 still the person is considered to be a consumer provided the goods so purchase is for personal consumption or domestic use.  (Australia, 2011)

Once a person is regarded as a consumer as per section 3 of ACL then the manufacturer, supplier, imported is imposed with few obligations that must be comply with by them in each and every situation. Firstly, as per section 18 of ACL, no act must be carried out which deceive or mislead the consumer; secondly, no representation must be made which is misleading or false in nature, as per section 29 of ACL; thirdly, if the goods are not of acceptable quality then there is violation of section 54 of ACL and is held in Grant v Australian Knitting Mills (1935); fourthly, if the specific usage of the good is communicated to the supplier then the goods so supplied must match the goods so supplied (Section 55) (David Jones v Willis (1934); fifthly,  if the goods are sold as per description, then the good so supplied must match the description (section 56 of ACL) (Beale v Taylor (1967).

As per the facts of the case, it is assumed that there is a valid contract that is made out between Lianne and Mary for a contractual amount of $ 9,500. Now, as per section 3, Lianne is a consumer because the services supplied by Mary are not more than $ 40,000. So, the guarantees that are established under ACL is applicable upon Mary to be furnished in order to avoid liabilities.

It is found that most of the requirements that is desired by Lianne was not met by Mary. Thus, there is breach of several consumer guarantees, that is:

When the services are supplied by Mary to Lianne, then, Lianne specifically told to Mary that she is interested in a party which must be based on Malaysian theme. She also specified that the music must be Zapin and Joget with ethinic foods and drinks of high quality. She also required a dancing room on board. But, it is submitted that these requirements of Lianne was not met by Mary. This is because the food so supplied was not Malaysians, rather, Russian food was provided. The dancing room was not provided and the boat was not adequate to fit in the entire guest.

Thus, the services that are sought by Lianne were already described by her but the services that are provided do not match the purpose for which the services are required. Thus, there is clear breach of section 55 of ACL.

Also, when the advertisement laws posted on the website by Mary then she declared that they are professional and stylish, they are represented that they are professional for holding boat parties. However, these representations were found to be false and the boat that was provided was congested and could not hold all the guests. Also, they were not professionals in their conduct. Thus, there was clear violation of section 18 and cession 29 of ACL.

‘Advertisements published by businesses appear in various media such as television, radio, print, or internet. In Australia, as elsewhere, advertisements are designed to have a certain impact or effect on those who see, read or hear them. The business advertiser needs to be careful about statements made in its advertisements given that they are subject to legal rules developed by the courts as well as by parliament’.

The statement made above seems to be justified in nature.  considering the number of legal framework that are developed in Australia, it is justified in submitted that the business advertiser needs to be careful about statements made in its advertisements given that they are subject to legal rules developed by the courts as well as by parliament’. (Horvath et al, 2009)

In order to authenticate the statements made above it is now important to lay down some of the legislations that are enacted by the government of Australia which are binding upon the advertisers and must be followed in order to avoid consequences.


Firstly, any misleading or deceptive advertisement is not permitted as per section 18 of ACL. Bait advertisements are violation of section 18. Also, those advertisements which cannot be understood, read or interpret by the public are bait in nature. if the advertisement does not disclose the true information or provides inadequate or no information then it is nothing but a misleading action on the part of the advertiser; secondly, the advertisements that misleads or make false information in the advertisements is misleading and is considered to be violation of section 29 of the law. If any claim is made regarding the origin or the good or quality or style or false testimonial or false claim that repair services will be provided or false characteristics, sponsorship, accessories or a false claim that the goods are novel or false declaration of rebates, prizes etc are volition of section 29 of ACL; thirdly, when the advertiser on the basis of his stronger position take undue advantage to itself at the cost of the relying party then it is an act of unconsiousable conduct and is prohibited under section 20 of the ACL; fifthly,  AANA Code of Ethics is established which lay downs guidelines which are applicable upon the marketing and advertising of the products which must be cater by the advertiser; sixthly, many codes and enactments are made which imposes strict obligations of the advertisers which includes, Food and Beverage Industry, ABAC Responsible Alcohol Marketing Code, Australia Food and Grocery Council Responsible Children’s Marketing Initiative of the Australian; Weight Management Industry Code of Practice 2015, Therapeutic Goods Advertising Code 2015.

Thus, it is submitted that the role of the advertiser is very crucial and there are several representations and information’s that are provided by the advertiser which are relied upon the consumer. Thus, it is the paramount duty of the advertiser to provide such information and indulge in such actions which ado not misguide or harm the consumer in any manner whatsoever.

Reference List

Australia (2011) Australian Competition and Consumer Legislation 2011, CCH Australia Limited.

HILL, S (2001) Email contracts –When is the contract formed?, JlLawInfoSci 4.

Horvath et al et al, (2009) Consumer Protection Law Developments, American Bar Association.

Stone R (2005) The Modern Law of Contract, The Modern Law of Contract.

Adam v Lindsell [1818].

Airways Corp of New Zealand v Geyserland Airways Ltd [1996].

Australian Woollen Mills Pty. Ltd. v. The Commonwealth [1954].

Beale v Taylor (1967).

Butler Machine Tool Co Ltd v Ex-Cell-O Corp Ltd [1977].

Carlill v Carbolic Smoke Ball Company (1892).

David Jones v Willis (1934).

Entores Ltd v Miles Far East Corporation [1955].

Grant v Australian Knitting Mills (1935).

Goldsbrough, Mort & Co Ltd v Quinn [1910].

Harris v Nickerson (1873).

Latec Finance Pty Ltd v Knight [1969].

Pars Technology Limited v City Link Transport Holdings Limited (1999).

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953].

Stevenson, Jacques and Co v McLean (1880).

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