Legal Issues in Hairlines Advertisement

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Business and Corporate Law

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PART A
ISSUE
The legal issues presented in this scenario are a result of the advertisement posted by
Hairlines. The first issue is whether forty customers can claim a haircut for $10 and
whether similar rights are available for other ten customers that have not brought the
advertisement with them? Can Ming claim that he is not liable to give a haircut worth $60
for $10 since the payment is insufficient and the business has no obligations towards
those customers? Whether the advertisement has been cancelled when Ming put up the
sign on his shop?
RULE
While forming a contractual relationship, it is important that the parties of the contract must
fulfil certain elements. In case these elements are not present, then a contractual
relationship cannot be formed (Fitzpatrick et al., 2017). These elements include an offer,
acceptance, consideration, intention and capacity of parties. In Harvey v Facey (1893)
UKPC 1, the court provided relevant provisions regarding a valid offer. It was held that the
offer must have the intention to bind the offeror into a legal relationship. It is significant the
parties must differentiate an offer from an invitation to treat since a contractual relationship
cannot be constituted through an invitation to treat. Advertisements posted in newspapers
are generally considered as an invitation to treat since the parties lack the intention to
create a legal relationship as provided in the case of Grainger & Son v Gough (Surveyor of
Taxes) [1896] AC 325.
However, advertisements can come within the scope of a valid offer as provided by the
court in Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256. The court provided in this case
that an offer that is not made to a specific person or a group of people rather than which is
open for the world is considered as valid. This offer is closely related to an invitation to
treat; however, the key difference between them is related to the wording. In Carlill v
Carbolic Smoke Ball Co, an advert for medication was made by a company to treat
influenza, and it claimed a reward of £100 to anyone who caught the disease after using
the medication (Charman, 2013). Mrs Carlill purchased and used the medication; however,
she still caught the disease, and she claimed her reward. The leading judgement was
given by the Queen’s Bench in which it was held that the wording of the advert was
specific and people can give their acceptance by complying with the instructions based on

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which a valid contract was formed, and the company owes £100 to Mrs Carlill (Fitzpatrick
et al., 2017). Similarly, principles were recognised by the court in Mildura Office Equipment
& Supplies Pty Ltd v Canon Finance Australia Ltd [2006] VSC 42 in which the claim of the
plaintiff was rejected by the Supreme Court by stating that the instructions in the video
were not specific due to which a contract has not formed. The offer that is open for the
world is also called unilateral offer which can be revoked only by two ways: the
performance of the contract is not begun, or the performance is not finished within a
reasonable time (McKendrick, 2014). The acceptance is another crucial element to create
a contractual relationship which must be clear and communicated to the offeror as given in
Masters v Cameron (1954) 91 CLR 353. Consideration must be present in the contract
that defines the bargain of the contract; the rule of consideration provides that it can be
nominal and it did not have to be adequate as provided in the case of Thomas v Thomas
(1842) 2 QB 851. The parties of the contract must have the intention to create a legally
binding relationship.
APPLICATION
In order to give advice to Ming, it is important to understand the application of relevant
laws in the scenario. In order to determine the legal rights of the customers, it is important
to determine whether a contract is formed. Although advertisements did not consider as a
valid offer (Grainger & Son v Gough (Surveyor of Taxes)); however, this advertisement
comes within the scope of a unilateral offer since the wordings are specific. It is clearly
mentioned that a haircut of $10 will be given to those that bring a copy of the
advertisement with them. Thus, forty customers that followed the instructions can claim a
haircut based on the judgement of Carlill v Carbolic Smoke Ball Co. They give their
acceptance by complying with the instructions of the advert. The consideration in this
scenario was referred to the amount they pay for the hair ($10).
It cannot be claimed by Ming that $10 is not sufficient for a haircut of $60 since nominal
consideration is considered as valid, and it did not have to be adequate as provided in
Thomas v Thomas. The element of intention is also present in the case. Other ten
customers that did not bring the copy of the advert with them did not have the right to
legally enforce Ming for the haircut since a contract is not constructed with them ( Mildura
Office Equipment & Supplies Pty Ltd v Canon Finance Australia Ltd). Ming cannot cancel
the contract solely by putting a sign because a unilateral contract cannot only be revoked if
the performance has not started or if it is not finished within a reasonable timeframe. Thus,