Legal Issues in Business Law and Company Structure in Australia

0
Business Law Assignment

1
Part-A
Issue
There are different legal issues raised in this case. Firstly, whether the advertisement
formed a contractual liability of Ming? Whether a contractual obligation exists towards the
forty customers, who have brought the advertisement with them? Whether the contractual
relationship is formed between other ten customers based on the advertisement? Is it
possible to form a contract by posting an advertisement? If yes, then whether such
advertisement is revoked based on the sign which is put in the shop?
Rule
The contractual obligations are constructed between parties if the sign a valid contract. The
valid contract is defined based on certain elements which are necessary to be present. One
of such element is related to the offer for compliance with the contractual terms. However,
not all offers which are made to a party constitutes as valid (Fitzpatrick et al., 2017). A valid
offer must have the authority to bind the party. This concept is defined under a landmark
judgement of Harvey v Facey (1893) UKPC 1 case. To form a contractual obligation, the offer
to do or not do something must bind the offer into its terms after acceptance is received by
the offeree. While determining the elements of a valid offer, the court differentiates it from
the concept of an invitation to treat (Obioha, 2018). A request which is made regarding the
information or details of the products or services is not considered as a valid offer rather it is
defined as an invitation to treat. The parties who receive this invitation can further make an
offer to form a valid contract. Generally, the promotional offers or advertisement which are
displayed or posted by companies to boost their sales are considered as an invitation rather
than an offer.
This concept was established by the court in the landmark judgement of Partridge v
Crittenden (1968) 2 All ER 425 case. However, this is not an absolute rule when it comes to
determining whether an offer is made or not. The concept of the unilateral offer is an
exception to this rule. The court further explained this concept in Carlill v Carbolic Smoke
Ball Co (1893) 1 QB 256 case. This is a leading case in which the court defined how an advert
can be considered as an offer. A product was developed by Carbolic Smoke Ball Co which

2
was promoted by the company in a newspaper. The company guaranteed in the advert that
this product will fix the issue of influenza and not body will suffer from it again after using
the product while complying with given instructions (Stuff, 2013). The corporation was
persistent regarding its product; therefore, £1000 was deposited by it in a bank. This
amount was deposited to in a bank account, and a promise was made to give a sum of £100
to anyone who suffered from influenza even after this product is used as per instruction.
Mrs Carlill did the same but caught influenza nevertheless based on which she claimed
£100.
However, the company rejected the claim after which a lawsuit was instituted against the
corporation. In the defence, the company provided that the advert was a mere sales puff
and it is not possible for a party to make an offer to the entire world. The consideration was
not available, and acceptance was not communicated. It was held that a unilateral offer was
made in the advert which can be made to entire world. The company was sincere since it
deposited the money due to which it cannot be considered a mere sales puff. The
acceptance is not necessary to be communicated as long as parties are complying with the
instructions given in the advert (Bender and Do, 2014). Thus, contractual obligations
imposed by the court on the company based on which the claim of Mrs Carlill is accepted.
Moreover, if a unilateral offer is made, then the party cannot simply terminate it whenever
it decides. It can only be terminated if the performance for the offer is not begun by the
parties to whom such offer is made. Moreover, it can also be terminated if the performance
which is started is not completed within a reasonable time (Fitzpatrick et al., 2017).
Application
The provisions discussed above are applicable in this case. A promotional offer is posted by
Ming for his shop. The offer provides that customers will get a chance to get a haircut of $60
for just $10. This chance is available to them if they bring the copy of the advert with them.
This advert was a unilateral offer as discussed in the case of Carlill v Carbolic Smoke Ball Co.
The parties which comply with its instructions give their acceptance to the offer. Thus, Ming
has contractual obligation towards forty customers since they have given their acceptance.
However, no contractual obligation is present in the case of other ten customers since they
have failed to give a valid acceptance by complying with terms. Since contractual obligations
are formed, liability is imposed on Ming under which the contract can be enforced by the