Contract Analysis: ABC Ltd's Dilemma with Richard's Purchase Essay

Question 1:
ABC Ltd (the company) is a wholesaler of hygiene and cleaning products. When the company wants to establish a long-term supply relationship with a retailer, it usually forwards two documents to the retailer. One is headed “Terms and Conditions”, and the other “Application Form”. The “Terms and Conditions” document consists of five pages in small print. It has all the essential terms necessary for a contract of this type, including the details of the goods carried by the company, price and method of payment, delivery time and place and so on.

Richard is the owner and operator of a mini-supermarket in Auckland. In response to his query, the company, on Day 1, sends him an email with the two documents attached. The email says:

“Please read the two attached documents carefully. We’d like to emphasise a few points already made in the documents. (1) There will be an agreement for us to supply you only after we approve your application. (2) All orders from our customers will be filled while stocks last. (3) If a customer trades with us on cash terms (pay when ordering goods), the price will be 10% lower than if they trade with us on credit terms (pay three months after goods are delivered.)”

Around this time (which is early March 2020), the media are full of news of lock downs and panic buying overseas.

On Day 2, Richard emails the company a long list of goods he wants to buy (the total cash purchase price is $60,000), and asks if the company has enough stocks to supply him.

On Day 3, the company replies by email: “Yes. We have the stocks for now. But please do as requested in our email on Day 1.”

On Day 4, Richard emails the company: “I completely accept all the terms and conditions in your Day 1 email. Please supply the goods listed in my Day 2 email to you. I’m going to pay you right now (after this email). I will finish the paperwork referred to in your Day 1 email later.” After sending the email, Richard immediately pays the company $60,000 through internet banking.

On Day 5, Richard is headline news for price gouging in relation to hygiene and cleaning products.

ABC Ltd, being socially responsible, would like to refuse to supply the goods to Richard, but is not sure about the legal position.

Analyse the stages of this transaction and advise the company whether there is a contract under which it must supply Richard with the goods he has ordered and paid for.



Question 2:
Do you agree with the following statement, and why? Refer to decided cases where appropriate:
“An offeror is free to revoke the offer before the offer is accepted, and an offeree is free to deal with the offer as they wish: to accept, reject, ignore or otherwise deal with the offer. However, an offeror or offeree may sometimes enter into a contract that places a limit on their respective freedoms.”