Business Law: Advertisement, Misrepresentation, Exclusion Clause, Tort of Negligence

BUSINESS LAW
STUDENT ID:
[Pick the date]
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ASSESSMENT NO.
Question 1
Issue
The key issue is to determine whether the advertisement regarding the sale of cutlery is
considered to be an offer or an invitation to treat.
Law
An offer in the contract is an invitation extended by offeror to the offeree in order to enact
contract by providing acceptance. The acceptance needs to be sent by offeree for binding
contractual liabilities on the parties. On the other hand, invitation to treat is an invitation for
other party’s offer for commencing negotiation with interested buyers (Andrews, 2015).
Advertisement in newspaper regarding the sale of a service/goods is not considered an offer,
but merely termed as an invitation to treat. It is evident from the verdict given in Partridge v
Crittenden [1968] 1 WLR 1204 case where the advertisement of the defendant in the
magazine regarding the sale of the protected birds was considered as invitation to treat and
not an offer (Byrne, 2013). When there is invitation to treat, then the party who made
advertisement has the legal rights to either accept or reject the offer of the other party.
Further, the other party who makes offer against the invitation to treat cannot force the party
to enact the contract because their acceptance regarding the advertisement was mere
invitation to treat (Peel, 2016). Further, there are some cases where the advertisement it self
contains the terms and price and intention of the party to form contract which implies that
advertisement is offer not an invitation to treat as evident from Carlill v Carbolic Smoke Ball
Company [1893] 1QB 256 where the defendant has directed offer through advertisement
under unilateral contracts (Taylor & Taylor, 2015).
Application
It is apparent from the case facts that Trotter’s Traders has placed an advertisement in Borneo
Bulletin regarding the sale of silver cutlery set. The advertisement did not contain any
information regarding the sale price or other information about cutlery. It implies that
Derek’s advertisement is not an offer in relation to unilateral contract rather it is an invitation
to treat. This is because company has invited the offers from interested party for negotiation.
Hence, Richard should make an offer against the advertisement because it is an invitation to
treat.
Conclusion
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ASSESSMENT NO.
It can be concluded based on the above that advertisement of Trotter’s Traders about the sale
of silver cutlery is mere invitation to treat not an offer because it does not contain any details
regarding the cutlery.
Question 2
Issue
The issue is to offer a legal advice to Richard upon whether he has the legal rights to sue
Derek for the misrepresentation made in relation to sell the silver cutlery set which is actually
lead based counterfeit.
Law
Representations are factual statements which are made in the negotiation period prior to
contract enactment between the contracting parties. As the name suggests when the party
misrepresents the factual statements to the other party in order to lure the other party into
contract formation, then it would be categorised as misrepresentation. There are three types
of misrepresentations based on the intent of the underlying seller i.e. negligent
misrepresentation innocent misrepresentation and fraudulent misrepresentation. In relation to
the present case, fraudulent misrepresentation is of interest. This type of misrepresentation is
established when the seller makes false statements which he knows are not true (McIntyre,
2013).
In this scenario, the purpose of the party to make fraudulent misrepresentation is just to affect
the other party to enact the contract. The relevant case is Derry v Peek (1889) 14 App Cas
337 case. This case highlighted three following conditions for fraudulent misrepresentation
(Andrews, 2015).
1) The statement should be factual in nature and not mere opinions.
2) The seller making the representation must be aware that the underlying representation
is false but makes the same to lure buyer into contractual relation.
3) The buyer must rely on this misrepresentation for formation of contract.
When it has been proven by the other party that the representor party has made fraudulent
misrepresentation so as to bring the party into contractual relationship, then he has the legal
rights to unwind the contract or/and claim for the damages. As per the verdict of Doyle v
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