Legal Issues in Australian Commercial Law

AUSTRALIAN COMMERCIAL LAW
STUDENT ID:

PART A
Question 1
Issue
In context of the advertisement released by Machine Express Pty Ltd for its product NewBean
Coffee machine, the core legal issue is to ascertain if this advertisement would be an offer on
only an invitation to treat.
Law
It is of utmost importance to differentiate a invitation to treat from a offer as acceptance would
lead to formation of an enforceable contract only in the case of latter and not the former. An
invitation to treat is essentially a promotional tool whereby the seller wants to solicit the bids of
interested buyers based on which contractual relationship may arise. With regards to
advertisement, the general understanding is that these are invitations to treat but not offer1. A key
legal precedent endorsing the above interpretation is Partridge v Crittenden2case. As per the
relevant facts, the defendant placed an advertisement for the sale of certain protected birds and
hence was convicted for being in breach of the underlying statute owing to involvement in sale.
However, the defendant argued that the advertisement merely constituted an invitation to treat
and not an offer for sale. This viewpoint was endorsed by the court which also classified the
advertisement as an invitation to treat and not an offer3.
However, it is noteworthy that an advertisement can also be considered as an offer which is
apparent from the verdict of Carlill v Carbolic Smoke Balls Company4.case. In this case, an
advertisement was put by company where it claimed that any person who would consume the
carbolic balls produced by the company in the prescribed manner would not get infected with
influenza and if that did get infected, then the company would pay £100. The company also
highlighted that it had deposited a £1,000 amount in the bank. In this case, it was indicated that
1 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 4th ed, 2014) 165
2 Partridge v Crittenden [1968] 1 WLR 1204
3 Andy Gibson & Douglas Fraser, Business Law (Pearson Publications., 8th ed, 2014) 152
4 Carlill v Carbolic Smoke Balls Company [1893] 1QB 256.

the advertisement was quite detailed and covered every aspect including the method of taking the
carbolic smoke balls. As a result, the advertisement was termed as an offer5.
Application
In the given case, an advertisement has been put up by Machine Express Pty Ltd with regards to
promotion of NewBean Coffee Machine. The advertisement focused on two main aspects
namely that the machine is available with the company and also the same is being sold at half
price. Clearly, the exact price is not highlighted in the advertisement. The objective of the
advertisement is to solicit interest from willing buyers who might like to purchase the underlying
coffee machine. Considering the verdict in Partridge v Crittenden case and the relevant facts of
the given scenario, it is apparent that the advertisement would constitute only an invitation to
treat. As a result, the company can potentially deny selling the machine to an interested buyer as
the buyer would be making an offer and not communicating acceptance.
Conclusion
The discussion carried in the previous section clearly highlights that the advertisement which the
company has put for the promotion of the coffee machine would be categorized as invitation to
treat and not an offer.
Question 2
Issue
Considering the standing offer given by the manager of Machine Express Pty Ltd in relation to
coffee machine sale, the key objective is to determine whether an enforceable contract was
enacted thereby leading to breach of contract since the manager sold the coffee machine to
another customer.
Law
5 Wayne Pendleton & Roger Vickery, , Australian business law: principles and applications, (Pearson
Publications, 5th ed., 2015) 109