business law case study

Case Study 2

Issue

The issue in the present case is to determine whether there is a contract formed on the account of unilateral offer extended by offeror Alan or not. Further, the next aim is to determine the contractual liabilities of Alan for the given situations.

Law

For the enactment of a contract, a valid offer and acceptance is required. When the offeror has extended an offer to multiple offerees, then it would be termed as unilateral offer. In this case, it is not imperative for the enactment of the contract that the offeree communicates acceptance to the offeror by any mode of communication. Any person or individuals who perform the activity or task mentioned in the offer on or before the specified time communicates acceptance leasing to the formation of an enforceable contract between the parties (Paterson, 2015). The O’Brien v MGN Ltd [2001] EWCA Civ 1279 case is the witness of this aspect.

Further, if the offeror wants to terminate the offer then it is essential that it must be done before the offeree or offerees have communicated acceptance by fulfilling the necessary condition. It means if the offerees have accepted the offer, then revocation of offer cannot happen. Because, the offer on behalf of the offeror is conditional promise and offerees has legal acceptance which result in the enforceability of contractual relation (Andrews, 2011). In this regards, Carlill v Carbolic Smoke Ball Co [1892] EWCA Civ 1 case is of particular significance. In this case, the defendant made an advertisement to public which was a unilateral offer and accepted by several offerees. However, the offeror decided to revoke the offer made in the advertisement after the offeree had performed the activity highlighted in the advertisement (Richard, 2003) . According to the decision made in this case, offeror was bound to perform the contractual duties because an enforceable contract was already enacted (Carter, 2012).

Further, it is noteworthy that when the offeror party has made unilateral offer by selecting any particular mode of communication such as newspaper advertisement, poster or others then it is essential that the offeror must select the same mode for revoking the offer or else it would not be considered a valid revocation. It is essential that consideration must be present between the offeror and offeree then only the contract would be termed as enforceable (McKedrick, 2003). Additionally, the adequacy of consideration amount is not important as highlighted in the verdict of Chapple v Nestle [1960] AC 87 case.

Application

Alan the offeror runs a beauty salon named Tender Treats. He has made a unilateral offer by advertising in the local newspaper that Tender Treats would offer the manicure/pedicure at a discounted price of $15. When the advertisement was published in the newspaper, then many offerees accepted the offer and in order to gain the offer they arrived to Tender Treats. However, after seeing lots of people, Alan decided to revoke the offer. In this scenario, following cases are required to be discussed.

1. 40 customers who mainly produced the advertisement before the notice and goes up in the window of Tender Treats are legally entered into the enforceable contract with Alan. Because, there is a legal offer made on behalf of Alan by posting the advertisement in the local news-paper and when the offerees have performed the action of arriving the salon then the acceptance towards the offer has become enforceable on Alan. Hence, Alan is liable to complete the contractual liabilities and if Alan denies fulfilling the liabilities, then the customers have the legal rights to sue Alan for breaching the contract or claim for the damages. Further, the act of Alan of posting a sign on the window of Tender Treats regarding the revocation of offer does not affect the contract because as per common law, when the offeree has accepted the offer, then the offeror cannot terminate the offer.

2. No, 20 customers who do not have advertisement would not be able to avail the offer as it was a vital condition to be fulfilled as part of the offer that they had to carry the advertisement. Thus, without the advertisement, the acceptance of the customer is not deemed to take place and hence the Alan does not have an enforceable contract with the 20 customers not carrying advertisement.

3. No, it cannot be demanded on behalf of the Alan because at the time of extending unilateral offer, Alan decided a consideration amount of $15 for manicure/pedicure irrespective of the fact that the normal charge of manicure/pedicure was $60. Alan has made offer with intention of promotion of salon and not to earn profit which he was aware of at the time of putting the advertisement. It is because adequacy of consideration amount is not imperative and it can be viewed in the leading Chapple v Nestle [1960] AC 87 case where a chocolate wrapper was considered a legal consideration.

4. No, it is not correct because he made the offer and same has been accepted by the offerees and if he wants to revoke the offer, then he should use the same medium of communicating to the offerees i.e. he should place a newspaper advertisement regarding the revocation of promotional offer.

5. In this case also, a unilateral offer is extended on behalf of Alan through making an advertisement in the newspaper and it comprises the fact that anyone who gets the manicure/pedicure from Tender Treats would surely get a date within a week. If it would not happen then Salon would do a free haircut for that person. After seeing the advertisement Jill gets the manicure/pedicure from Alan and does not get a date in one week. It is apparent the parties have entered into a contract on the account of valid unilateral offer and valid acceptance and thus, Alan has to do free haircut to Jill or else she can claim for damages.

Conclusion

It is apparent from the above discussion that Alan is liable to complete the contractual liabilities in all cases except when customers are not having the advertisement or else the innocent parties can sue him or claim for the damages under the provision of common law for breaching contract.

Reference

Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law. 5th edn. Sydney: Thomson Reuters.

Andrews, N. (2011) Contract Law. 3rd edn. Cambridge: Cambridge University Press.

Carter, J. (2012) Contract Act in Australia. 3rd edn. Sydney: LexisNexis Publications.

McKendrick, E. (2003) Contract Law. 5th edn. Basingstoke: Palgrave.

Richard, S. (2003) The Modern Law of Contract. 5thedn. London: Cavendish.