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Question:
Define the Law of Contract for Westphalia Marts Pty Ltd.

 
Answer:

1:  on the basis of the facts that have been given for this question, the question arises if the advertisement that has been issued by Mojo Beverage can be enforced by the law and if the promise that was made by Mojo in the advertisement to give $100,000 to the person who catches Lord Harry, a fish tagged and released in the lake, can be enforced by Ben. The reason is that Ben caught the fish but later on he found that there was an error in the advertisement and the company had the intention of giving a prize of $1000.

For deciding the issue that has arisen in this case, it is required to be decided if the advertisement that was issued by Mojo Beverage can be treated as an offer or was it only an invitation to treat. The reason is that a significant difference is present between offer and an invitation to treat. According to this difference, when an offer is accepted, a legally enforceable contract is created between the parties. But an invitation to treat is not capable of being accepted by the other party for the formation of a contract. Usually, it has been seen that there is a lot of puffery in case of the advertisements (Brownsword, 2000). Generally, it is established to verify the claims that are made in the advertisements and the result is that they're not treated as offers under the contract law. But there was a significant change in this position after the decision given in Carlill v Carbolic Smokeball Company (1892). The company has issued an advertisement according to which, a reward of £100 will be paid to any person who contracted influenza even after using the smokeballs of the company. The company also deposited an amount of £1000 in the bank for the purpose of showing its seriousness. After reading about the offer, Mrs. Carlill used the smokeballs as directly by the company but she still contracted influenza. But then she made a claim for the prize money as mentioned by the company in its advertisement, the company refused. According to the defendant company, the advertisement issued by them was not an offer and therefore the plaintiff could not accept it resulting in a contract. The company claimed that the advertisement was only an invitation to treat. However this contention of the defendant was rejected by the court and it was decided that a contract has been formed. The court rejected the argument of the defendant according to which, it was a contract with the whole world and it is not possible to create a contract with the whole world. The court stated that the contract was not with the whole world, however the offer has been made to the whole world but the contract was formed only with the persons who satisfied the conditions of the offer.

When the above-mentioned case law is applied to the facts of this case, it can be decided that in the present case, the advertisement of Mojo Beverage can be treated as an offer although it has been made to the whole world. This offer provided that a contract will be formed within a person who was successful in catching a fish that has been tagged by the company. Ben was also aware of this offer. After some time of the issue of this advertisement, there were rumors that the company intended to give a prize of $1000 but erroneously, the amount has been mentioned as $100,000. The rumors regarding the prize money were true but before Ben could know regarding this mistake, he had already caught the fish, Lord Harry. The result is that the requirements I are necessary for the formation of a valid contract are completed. The offer has been made in the form of the advertisement issued by the company, although the offer has been made to the whole world. This offer can only be accepted by the person who was successful in catching the fish. Therefore, as Ben had been successful in fulfilling this condition, a legally enforceable contract has been created and Mojo Beverage has to pay the amount mentioned by them in the advertisement.

 


2:
The issue in this question is if the letter that was sent by Dorper Sheep Sellers Pty Ltd can be treated as an offer that could be accepted by Livestock Brokers and moreover, if Livestock Brokers can accept this offer after the expiry of six months.

Usually the formation of a contract is based on an offer and its acceptance. It is required that an offer should be made by one party and the same should be accepted by the party to whom the offer has been made. This results in the formation of a legally enforceable contract. But in this context, the difference that exists between an offer and invitation to treat is also very significant. According to the law of contract, for the purpose of being treated as an offer, it needs to be proved that the party that had made the offer, also had the intention of being bound by it (Burrows and Peel, eds. 2003). For example in Harvey v Facey (1893), Harvey wrote a telegram to Facey and asked if he was willing to sell Bumper Hall Pen. He was told to telegram the lowest cash price.  Facey send a telegram in reply and mentioned that the lowest cash price for Bumper Hall Pen will be £900. Harvey sent a reply and stated that they had accepted the price of £900. Facey claimed that no contract has been created between the parties. While deciding this case, the decision of the Privy Council was that there was no contract between the parties. The reason given in support of this decision was that Facey had not given a direct answer to the first question asked in the telegram if they were going to sell Bumper Hall Pen. The result was that the lowest price mentioned in the telegram was only in response to the request for information. Consequently, the court stated that it cannot be treated as an offer. There was no evidence that Facey had the intention that the reply sent by them was an offer.

Similarly, according to the law of contract, the party making the offer can withdraw it at any time, before the same has been accepted (Harris and Tallon, eds 1989). This was stated in Dickinson v Dodds (1876). In the same way, if a particular deadline has not been set for accepting the offer, the offer will not be available after a reasonable period has expired. For this purpose, the reasonable period within which the offer can be accepted depends on the subject matter of the contract.

In this case, the offer was not accepted by Livestock Brokers within a reasonable time. Similarly, instead of accepting the offer, Livestock Brokers asked if the sale can be financed according to the usual terms. But to this letter, no reply was given by Dorper Sheep Sellers Pty Ltd. But later on, after six months, Livestock Brokers sent a telegram to Dorper Sheep Sellers and mentioned their acceptance of the offer. However by that time, Dorper Sheep had already sold the flock of sheep to some other buyer.

The result is that in this case, it has not been established that the letter written by Dorper Sheep was not an offer. On the other hand, Livestock Brokers had not sent their acceptance. In its place, they asked if the sale can be completed on usual terms. This does not amount to a valid acceptance. Moreover, after six months they have decided to accept the offer. Consequently, it can be decided that in this case, a contract has not been formed between Livestock Brokers and Dorper Sheep Sellers. The reason is that in this case, the elements that are required for the formation of a valid contract, offer and acceptance are not present.

(b) On the other hand if it is assumed that Livestock had accepted the offer on 14 June and they also sent the fax containing the acceptance but due to some transmission error, this fax was not received by Dorper. But it needs to be noted that the postal rule of acceptance does not apply to the communications sent to instantaneous modes of communication. While the postal rule provides that when post is contemplated as the means of communicating acceptance, it is complete as soon as the letter is placed in the mailbox. But in this case this rule is not applicable. Therefore, the general rule applies according to which in order to be effective, acceptance has to be communicated to the other party.

3: The facts of this question suggests that the issue that has to be decided is if the part payment of a debt can act as a consideration to support the promise relinquished the rest of the amount.

For deciding this issue, the role that was mentioned by the court in Pinnel's Case (1602) has to be applied. This rule provides that the part payment of debt is not a good consideration to support the promise to forgo the balance (Atiyah, 1990). For example if A owes $50 to B and B decided to accept $25 as the full satisfaction of the debt on the due date, the law does not prevent B from claiming the rest of the amount later on. The reason is that in this case, A has not provided any consideration in return of the promise made by B. On the other hand, A was already bound to pay the full amount as per the contract between the parties (Stilk v Myrick, 1809). The reason behind this rule is to protect the creditors from economic duress by the debtors.

The facts of Pinnel's Case also need to be discussed briefly. In this case, Cole owed £8.50 to Pinnel and this amount had to be paid on 11 November. But on a demand made by Pinnel, Cole paid £5.11 and Pinnel accepted this amount as the complete satisfaction of the debt. But Pinnel sued Cole for the remaining amount later on. The decision of the court was that the part payment made by Cole was not sufficient consideration. According to the court, the agreement between the parties to accept the part payment as complete will be binding if some fresh consideration has been supplied by the debtor.

Therefore the position under the law contract is that in such a case, consideration may be supplied in case the creditor agreed to accept part payment on an earlier date, chattel instead of the money or the part payment to be given at a different place (Beatson, 2002). Even if the rule described by the court in Pinnel's case has been criticized as being somewhat harsh, however it represents the current law. Another case dealing with this issue is that of Foakes v Beer (1884). Mrs. Beers got a judgment from the courts against Dr. Foakes. He requested for some more time and it was decided that Mrs. Beers will not take any action if an amount of £500 was immediately paid by Foakes and the rest in installments of £150. Dr. Foakes during followed the agreement but the judgment debts also carried interest. Regarding interest on this amount, the decision of the House of Lords was that Mrs. Beers can recover the amount of £360 as interest. The court said that Foakes had not provided any consideration in return of the promise made by Mrs. Beers to refrain from taking any further action. As a result, consideration was not present and the promise was not enforceable.

In this case, Westphalia Marts Pty Ltd had made a promise that they will accept a reduced rent of $700 per week but in return for this promise, Stewart had not supplied any consideration. Therefore, Westphalia Marts Pty Ltd cannot be prevented from demanding the shortfall of $300 per week and also the whole rent in future. Therefore the promise of Westphalia Marts to accept reduced rental is not the enforceable for the lack of consideration.

 
References

Atiyah, P.S. 1990, Essays on Contract, Oxford University Press, New York

Atiyah, P.S., 1995, Introduction to the Law of Contract, 5th Edition, Oxford University Press

Beatson, J, 2002, Anson’s Law of Contract, 28th Edition, Oxford University Press

Benson, Peter (ed) 2001, The Theory of Contract Law: New Essays (Cambridge University

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 Press, Oxford

London

Press, Cambridge

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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