Contractual Relationship in High Five Systems Case

1
Contents
Question...........................................................................................................................................2
Reference List..................................................................................................................................7

2
Question
The major issue that arises in the given problem is whether there is a contract established amid
High Five Systems with either of Jacob, Iris, Hamid and Ranbir?
In order to resolve the given issue, the relevant law that is required to be applied is the law of
contract. More specifically, the laws dealing with, offer, acceptance, counter offer, invitation to
treat, seeking information from the party.
Considering all the relevant issues that are raised above, it is important to understand some of the
basic aspects of the law of contract which includes, offer, acceptance, invitation to offer, counter
offer, revocation and queries.
A contract is a legally binding document which binds two private parties with an obligation to
comply with the contractual terms which are mutually decided by them. No contract can be made
without exchange of promises and thus the main elements that are needed for any formation of a
contract includes an offer, an acceptance, a consideration, legal intention, and capacity of the
parties. The presence of all the elements results in contract formation and is held in Carlill v
Carbolic Smoke Ball Co (1892). (Poole, 2012, p5)
On 25th November, High Five Systems has issued an advertisement in which the company is
willing to sell 10 sound systems for $2000 each. The system is of BS 100 model and is offered at
a price which is half the original price. The interested prates are to call High Five Systems or
visit the High Five Systems personally. Rhonda and Jimmy are the sales person of High Five
Systems.
Now, it is important to understand two main contractual principles, that is, an offer and an
advertisement.
The foremost element that is needed in the formation of a valid and enforceable contract is the
presence of an offer. When the offeror tries to communicate his desires in the form of a proposal
or statements, then, such transfer of the intention is called an offer in law and is validly evaluated
in Gibbsons v Proctor (1891). The offer communicates his intention and portrays that he is ready
to fulfill the terms of the offer provided the same is approved by the offeree. (Stone, 2003, p 20)

3
In Carlill v Carbolic Smoke Ball Co the offer has the choice to make an offer to any person,
world or group. But, the only requirement that is needed for the enforceability of an offer is that
the offer must reach the offeree. In R v Clarke (1927) the court held that if an offer is made and
the offeree is not aware of the same then such offer has no relevance in law. (Stone, 2003, p 20)
At times the offer is communicated to the offeree with the help of electronic machines. In such
cases, the offeree is considered to be in the knowledge of the offer when the same is heard by the
offeree and is held in N M Superannuation Pty Ltd v Baker (1992). (Laryea, 1998, p 55)
Further,
When a person does not want to make any offer, but, with the help of auctions, advertisement,
tenders, display of goods, tries to receive offers, then, such an act is an act of invitation to treat.
the inviter receives offers from people and when the inviter confirms to the offer, then, a contract
is made. An advertisement is not an offer but is an invitation and is held in Partridge v
Crittenden [1968]. (Latimer, 2012, p 37)
Considering the advertisement that is made by High Five Systems, it is stated that as per
Partridge v Crittenden the advertisement that was issued is not an offer. High Five Systems has
invited people to come forwards and make an offer for the sound system for $2000 as there are
only 10 sound systems that are available.
Now, considering the contract between High Five Systems and Jacob,
The advertisement issued by High Five Systems and a cal was made by Jacob to High Five
Systems which was received by Rhonda. Now Jacob should have made an offer to Rhonda. But,
on the other hand, there was no offer that was made, rather, an acceptance is made by Jacob.
Before Rhonda could explain anything, Jacob disconnected the cal. Now, Jacob has made an
acceptance against an invitation. This acceptance is invalid as High Five Systems has not made
any offer. Thus, the acceptance of Jacob has no relevance.
Also, considering the contract amid High Five Systems and Iris,
Iris made a cal to High Five Systems on 25th November. She wanted to buy the sound system.
However, the communication channel was not clear and thus a message was left by her on the