Contract Law Issues and Promotional Offers

Part A (3:175)
Issue The issues presented in this scenario are relating to contract law.
Whether the advertisement published has the capacity to form a
contractual relationship? Did the forty customers that have come
to the shop can claim their haircut for $10? Did the same rights
are available for other ten customers as well? Whether the
advertisement can create a legal relationship and whether such
relationship can be eliminated by putting a sign on the shop to
terminate the offer?
Law The provisions regarding contract law recognises rights of parties
and it allow them to enforce their terms through legal mediums.
As per these provisions, parties have to make sure that they
make a differentiation between an offer and an invitation to treat.1
A contract cannot be constructed between parties through an
invitation to treat as given in Harvey v Facey2 since it did not
fulfils a basic element of a valid offer which provides that the
parties must have the intention to create a legal relationship once
acceptance is received on offer. The parties did not have the
intention to create a legal relationship, and they just wanted to
invite another party to make an offer through an invitation to treat
which is usually the case with advertisements as provided in the
case of Partridge v Crittenden.3 Thus, parties cannot form
contractual relationships through an invitation to treat; however,
exception is recognised in Carlill v Carbolic Smoke Ball Co.4 As
per new principles highlighted in this ruling, promotional offers
can formed legal relationships.
The court provided the concept of the unilateral offer, which can
be made by a party, and it can be open for the entire world.5 In
this case, an advertisement was published by a company in the
newspaper while promoting their medication. A promise was
made in the advert for giving a reward to those that used the
product yet still suffered the injury.6 Despite using the medicine,
Mrs Carlill become ill; she used it as per the instructions of the
advert. Despite the fact that she used the medication, she
contacted influenced, and she made a claim for her reward; her
claim was rejected by stating that no contractual obligation is
given. |While providing the judgement, it was held by the court
that it was a unilateral offer since the wordings and the actions of
the company to put money in the bank shows the sincerity of the
company to form a contract.7 The company claimed that an offer
could not be open for the world, but the court provided that it was
a unilateral offer that can be accepted by anyone.8 The
communication of acceptance is made by parties when they
1 J Fitzpatrick, C Symes, A Velijanovski and D Parker, Business and Corporations Law, LexisNexis
Butterworths Australia, Chatswood, NSW, 2017, p. 121.
2 (1893) UKPC 1
3 (1968) 2 All ER 425
4 [1893] 1 QB 256
5 Fitzpatrick et al., Business and Corporations Law, p. 85.

1
Issue The issues presented in this scenario are relating to contract law.
Whether the advertisement published has the capacity to form a
contractual relationship? Did the forty customers that have come
to the shop can claim their haircut for $10? Did the same rights
are available for other ten customers as well? Whether the
advertisement can create a legal relationship and whether such
relationship can be eliminated by putting a sign on the shop to
terminate the offer?
Law The provisions regarding contract law recognises rights of parties
and it allow them to enforce their terms through legal mediums.
As per these provisions, parties have to make sure that they
make a differentiation between an offer and an invitation to treat.1
A contract cannot be constructed between parties through an
invitation to treat as given in Harvey v Facey2 since it did not
fulfils a basic element of a valid offer which provides that the
parties must have the intention to create a legal relationship once
acceptance is received on offer. The parties did not have the
intention to create a legal relationship, and they just wanted to
invite another party to make an offer through an invitation to treat
which is usually the case with advertisements as provided in the
case of Partridge v Crittenden.3 Thus, parties cannot form
contractual relationships through an invitation to treat; however,
exception is recognised in Carlill v Carbolic Smoke Ball Co.4 As
per new principles highlighted in this ruling, promotional offers
can formed legal relationships.
The court provided the concept of the unilateral offer, which can
be made by a party, and it can be open for the entire world.5 In
this case, an advertisement was published by a company in the
newspaper while promoting their medication. A promise was
made in the advert for giving a reward to those that used the
product yet still suffered the injury.6 Despite using the medicine,
Mrs Carlill become ill; she used it as per the instructions of the
advert. Despite the fact that she used the medication, she
contacted influenced, and she made a claim for her reward; her
claim was rejected by stating that no contractual obligation is
given. |While providing the judgement, it was held by the court
that it was a unilateral offer since the wordings and the actions of
the company to put money in the bank shows the sincerity of the
company to form a contract.7 The company claimed that an offer
could not be open for the world, but the court provided that it was
a unilateral offer that can be accepted by anyone.8 The
communication of acceptance is made by parties when they
1 J Fitzpatrick, C Symes, A Velijanovski and D Parker, Business and Corporations Law, LexisNexis
Butterworths Australia, Chatswood, NSW, 2017, p. 121.
2 (1893) UKPC 1
3 (1968) 2 All ER 425
4 [1893] 1 QB 256
5 Fitzpatrick et al., Business and Corporations Law, p. 85.
6 J Poole, Casebook on Contract Law, Oxford University Press, Oxford, p. 4.
7 Poole, Casebook on Contract Law, p. 14.
8 Fitzpatrick et al., Business and Corporations Law, p. 91.

2
comply with the instructions which are included in the
advertisement as held in Carlill v Carbolic Smoke Ball Co.
Consideration must have certain value as given in Thomas v
Thomas.9 The value of the medicine was the consideration in this
case. It was considered that parties are in a legal relationship
and they are bound by their promises. In the case of Chappell Â
Co Ltd v Nestle Co Ltd10 relevant provision for consideration was
given. Even when the amount is not adequate for the product or
service, it is considered as valid. Furthermore, the unilateral offer
cannot be terminated by parties just like a normal offer. There
are two scenarios in which the unilateral offer can be terminated.
When performance is not started or when it is not finished in
reasonable time.
9 (1842) 2 QB 851
10 [1960] AC 87

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Application a) The legal rights of the customers are the issue of this
case. The promotional offer stated for the haircut with the
advert in the newspaper has raised many legal concerns
relating to the rules given in Carlill v Carbolic Smoke Ball
Co.11 Due to this promotional offer, compliance with the
guidelines leads to creation of legal relationships. The
seriousness of the owner shows that this is not an
invitation to treat. Due to its legal capacity, parties are
bound by its legal provisions and they form contract after
availability of specific terms. Thus, all those who comply
with the guidelines can avail the benefits of the
promotional offer which include forty customers.
b) The fact that the amount highlighted in the offer is too low
is not relevant as per Chappell  Co Ltd v Nestle Co Ltd.12
As long as a value is given, it is considered appropriate.
Thus, customers that brought the advert with them can
claim the offer even if the cost or the offer is considerably
low.
c) This rule did not apply for those that have not followed the
guidelines. Failure to ensure that instructions are fulfilled
is considered as failure to give acceptance. Due to lack of
compliance with the terms, ten customers did not give
valid acceptance; thus, they cannot take advantage of the
offer.
d) Simply putting put the sign will not solve the problem of
the owner. It is not enough to terminate the offer that is
made open through the promotional offer. Thus, as long
as compliance with the instructions of the offer is made, it
will continue to create legal relationship. This issue can be
resolved in case a time limit is set for customers. Thus, a
time limit should be specified for parties that will allow
them to take benefit of the promotional offer with a specific
time that will led to its termination after the time period if
finished.
Conclusion The above analyse recognised the rights of parties involved in
the scenario and their legal rights. All those that followed the
guidelines of the promotional offer can claim their haircut
whereas others cannot avail those benefits. The sign in the shop
did not terminate the ability of the promotional offer to create
legal relations.
Bibliography
Books
11 Fitzpatrick et al., Business and Corporations Law, p. 90.
12 Fitzpatrick et al., Business and Corporations Law, p. 157.