Remedies for Breach of Contract: Legal Advice for Adam vs Edwin

COMMERCIAL LAW
STUDENT ID:
[Pick the date]
1

COMMERCIAL LAW
Question 1
PART A
Issue
The primary issue is to find whether Leila and Julie have entered into a legally binding
contract or not. The secondary issues which are pivotal in the scenario presented relate to
whether valid offer and valid acceptance were present or not.
Premise
There are some pivotal elements that need to be present in order to enact a valid contract
between the two parties. These elements are shown below (Carter, 2016).
 Lawful offer extended by the offeror
 Lawful acceptance by the offeree
 Valid consideration
 Capacity of the parties to enter into contractual relations
 Intention to form legal relations
When these elements are present between the parties, then a legal contract would be enacted
and both the parties would have to discharge their contractual obligations
Usually on offer is directed to a particular party by the offeror. The acceptance without any
further conditions needs to be communicated to the offeror in order to validate the acceptance
to form a legally binding bilateral contract. However, there are instances when the offer is not
directed to a specific individual but to a large audience. An example of this is through
advertisement. In such cases, the question arises as to whether the content of the
advertisement can be considered as offer or an invitation to treat (Gibson & Fraser, 2014).
This question is imperative as invitation to treat does not amount to offer and thereby
acceptance granted to an invitation to treat does not lead to formation of a valid contract.
However, acceptance to an offer does lead to formation of contract. The legal precedents in
this regard highlight advertisement as a unilateral contract (Andrews, 2016).
Further, when the offeror directs an offer to the world (multiple offerees) then the
communication of the acceptance to the offeror would not be required. Instead anyone who
has knowledge about the offer and would perform the task stated in the offer would

COMMERCIAL LAW
automatically enter into a binding agreement with the offeror. In such cases, the formed
contract would be termed as unilateral contract. Performing the task of the offer is the clear
representation of the valid acceptance on the part of the offeree to enter into contractual
relationship with the offeror (Taylor & Taylor, 2015).
Authority
A landmark case highlighting the waiver of traditional communication of acceptance in
unilateral contract is Carlill v Carbolic Smoke Ball Co(1893)1 QB 256 case. In this case, the
company (i.e. Carbolic Smoke Ball Co) had put an advertisement in the local newspaper
regarding their new product ‘smoke balls.’ They clearly indicated that anyone who would use
their new product smoke balls and still got sick with cold influenza would be able to get
£100. To demonstrate their seriousness, the company had put a sum amount of £1000 in the
bank account. Louisa Carlill consumed the smoke balls and still got influenza and cold and as
a result, the plaintiff made a claim for £100 from the company. Company refused to provide
£100 to Carlill and stated that it was not an offer and was mere advertisement. The
honourable court announced the judgement that advertisement of the company was unilateral
offer which was accepted by Carlill as he had consumed the smoke balls. Also, deposition of
£1000 by company was clear representation of intention of the company to create legal
relationship with the consumers of the smoke balls who got sick after its usage. Based on the
facts, the court declared that company and Carlill had bounded with legal unilateral contract
obligations and £100 must be given to Carlill (Peel, 2018).
Another relevant case which highlights the formation of a binding contract by performance is
Gibbons v Proctor [1891] 64 LT 594. In this case, the police floated an advertisement where
a reward of £25 would be given to any person who gave relevant information to the police. A
policeman came forward with the relevant information and was held as entitled for the reward
as a binding contract has been formed (Lindgren, 2015). Yet another case highlighting the
waiver of communication with regards to unilateral contract relates to R v Clarke( 1927) 40
CLR 227 where an advertisement was put by the police on reward for information regarding
a particular case. This advertisement was considered a valid unilateral offer and indulgence of
Clarke in providing the relevant information acted as valid acceptance leading to the
formation of a binding contract (McKendrick, 2013). Another relevant case which
highlighted that acceptance in unilateral contract is indicated by performance is O’Brien v
MGN Ltd [2002] CLC 33 where scratch cards were issued in newspaper with potential for

COMMERCIAL LAW
rewards. The company was liable to make payment for the rewards even though by mistake it
sent more gift cards than it intended to (Pendleton & Vickery, 2015).
Arguments/claim
Leila is the concerned party who has advertised in the newspaper about lost gold chain and
locket. She has clearly mentioned in the advertisement that who so ever would return her lost
gold chain and locket would get $50 as a reward. There are some noteworthy points that
indicate that advertisement of Leila is unilateral offer. These points are listed below.
 Mentioning the reward amount of $50 is indication of the consideration amount for the
work.
 It has been published in the newspaper which indicates that she has directed the offer
directly to the public (many offerees).
 She does not ask for communication of acceptance rather represented that anyone who
would return the lost items would be liable to get reward.
 Also, the offer is precise and does not offer any scope of ambiguity
This unilateral offer was opened for public and available for acceptance. Further, Julie is one
of the offerees who has read the advertisement. She has found the lost items and as per the
offer, she has reached to Leila’s residential place highlighted in the advertisement and
returned the items. This act of Julie represents that she has accepted the offer extended by
Leila and hence, has returned the items to her. Therefore, the unilateral contract has been
enacted between Julie and Leila and thus, contractual liabilities would be applicable on them.
Hence, as per the advertisement, Leila has to give the reward of $50 to Julie. Further, if Leila
refuses to perform the contractual liability by not giving $50 to Julie, then in such case Julie
has the legal right to sue offeror Leila for not performance of contractual liability and also
claim for damages.
Counter argument
One of the key counter arguments by Leila would be that the advertisement did not meant an
offer and was only an invitation to treat. However, this argument is unlikely to hold any legal
grounds considering the contents and the legal precedents for distinguishing between
invitation to treat and offer with regards to advertisement. Some exceptions available to the
argument is if Julie was not aware of the offer and had simply found the lost item on her way
and returned the same. Additional situation where the argument would not hold if the act of