This document discusses the requirements for an enforceable contract and analyzes the case of Carlill v Carbolic Smoke Ball Co. It explores the application of unilateral offer in the scenario of Leila and Julie, and explains the legal obligations and rights of the parties involved.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
COMMERCIAL LAW STUDENT ID: [Pick the date]
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
COMMERCIAL LAW Question 1 Part A Introduction For the formation of an enforceable contract, there are various requirements that ought to be fulfilled. There needs to be valid offer and valid acceptance. However, communication of acceptance and its role may vary across bilateral and unilateral contracts. Further, mutual consideration ought to be present besides an intention to create legal relationships (Taylor & Taylor, 2015). Issue The issue is to determine whether there is an enforceable legal contract between Leila and Julie. Relevant Law The offeror needs to extend offer to the offeree and the respective offeree needs to communicate an unconditional acceptance to it to the offeror in order to form the contract. Further, it is essential to note that there are some instances where the offeror extends the offer to multiple offerees (Edlin, 2016). In such scenarios, there is waiver of acceptance in the sense that it does not need to be communicated as is the case in bilateral contracts. Any person who would complete/perform the action stated in the offer would extend acceptance leading to the formation of a binding contract (Andrews, 2014). Advertisement which offers reward for performing certain act would also be treated as unilateral offer and anyone who is aware about the advertisement and performs the act would be bounded by the contract. This is because performing the action stated in the advertisement is the indication of the valid acceptance of the offer (Carter, 2013). 2
COMMERCIAL LAW According toCarlill v Carbolic Smoke Ball Co(1893)1 QB 256 case, Carbolic Smoke Ball Co made an advertisement in the newspaper about one of its products i.e. smoke balls.The company claimed that it wouldpay £100 to anyone who got sick with influenza cold after consuming their product. They also mentioned that £1000 had been deposited in the Alliance Bank with respect to the fact that anyone who got influenza cold can take £100 from the bank(Peel, 2017). Louisa Carlill (plaintiff) used the smoke balls are per the prescribed manner but still got sick with influenza.Hence, plaintiff claimed £100 from the company. The companydeniedpaying£100toCarlillsayingthatitwasmereadvertisement.The honourable court delivered the verdict that advertisement was a unilateral offer and Carlill had accepted the offer by consuming the smoke balls along with good consideration. Further, depositing £1000 into bank account also indicated the seriousness of the intention of the company to make legal relations. Hence, an enforceable contract had been made between them and company was held liable to pay £100 to Carlill (McKendrick, 2014). Application In present case, Leila has put an advertisement for her lost gold chain &locket and also stated that she will provide a reward of $50 to anyone who would return the same. This indicates that advertisement is a unilateral offer extended to the world and hence, communication of the acceptance to Leila is not necessary. Further, as per the verdict given inCarlill v Carbolic Smoke Ball Co(1893)the given advertisement constitutes a unilateral offer which is extended to public for acceptance and anyone who returns the lost item to her would be said to have legally boundedcontract with Leila. Julie has read the advertisement and also found the locket & chain and hence, returned the same to Leila. It implies that Julie has performed the action stated in the unilateral offer and therefore, Julie and Leila are bounded with the obligations of the unilateral contract. Leila cannot refuse to provide $50 to Julie or else Julie has the legal rights to sue Leila for not discharging the contractual duty. 3
COMMERCIAL LAW Conclusion An enforceable contract has been made between Leila and Julie. Thus, Leila is liable to provide the reward amount $50 to Julie. Part B A key aspect of agreement which forms the basis of contract is that there ought to be offer for acceptance to occur. In the absence of any offer, acceptance cannot arise and hence no enforceable contract can be formed. As a result, in cases where the concerned person is not aware of the unilateral offer, indulgence in the underlying activity stated by the contract would not lead to contract formation (Carter, 2013). The above understanding related to the enacted contract between Julie and Leila would be different when Julie did not read the advertisement and returned the locket and chain. This is because Julie was not aware about the unilateral offer extended by offeror Leila and hence, her act of returning the locket and chain would not be termed as acceptance towards the offer. Therefore, no contract would be enacted between Julie and Leila and thus, Julie cannot claim the reward amount of $50. Question 2 Part A Introduction The key focus of the given problem is on the remedies available when there is breach of contract. Breach of contract happens when one of the contracting parties fail to fulfil contractual obligations. In such cases, the innocent party may demand damages for the losses 4
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
COMMERCIAL LAW incurred. Also, specific performance and injunction are other remedies which may be awarded by the court (Davenport & Parker,2014). Issue The issue is to offer a legal advice to Adam with respect to the available remedies on account of breach of contract by Edwin. Relevant Law When one of the contractual parties fails to fulfil their contractual duties then this situation is termed as breach of contract. The law has provided three main remedies to protect the rights of the plaintiff and to cover the potential losses, which are highlighted below. Damages When one of contractual party has suffered losses or injuries because of the breach of contract then damages would be provided to the plaintiff as compensation. In other words, the losses incurred on the account of breach of contract would be compensated in the monetary terms (Gibson & Fraser, 2014). Specific Performance In this type of remedy, the compensation of the breach of contract would not be provided in the monetary term. It means when the monetary compensation is inadequate to the plaintiff for losses then specific performance would be used (Davenport & Parker, 2014). The plaintiff would rather request the honourable court to force the respective defendant party to perform the contractual duties as per the terms of the contract.This remedy is considered to be a discretionaryandforcedactionwhichmeanswhenthedamageseemsinadequateor undefined then specific performance would be enforceable on the other party to perform the actions of contract (Taylor& Taylor, 2015). 5
COMMERCIAL LAW Injunction Injunction is the equitable remedy in which the court forces the defendant party to stop performing action which is related to the breach of contract. There are three types of injunction which are used under injunction remedy (Carter, 2013). Interlocutory injunction (Stop the work from being performed) Mandatory injunction (Court would force party to perform some action) Prohibitory injunction (Prohibit the party to sign contract with other party) Application Adam agreed to purchase a Rolls Royce from Edwin for a consideration of $500,000. Both the parties enacted a contract for the sale of car at this mutually agreed price. However, Edwin found a new deal to sell the vehicle for $700,000 to an Arabian Sheik and hence, breached the contract with Adam. It is apparent that Edwin has breached contract by not selling the Rolls Royce to Adam. In this case, the most appropriate remedy would be specific performance because the damages incurred by purchaser Adam are undefined and also, monetary compensation is inadequate. The plaintiff Adam would request the court to force Edwin to complete the contractual liability and sell Rolls Royce for $500,000. Further, injunction will also be available to Adam so as to resist Edwin to form other contract with Sheik for Rolls Royce. However, based on the current circumstances, specific performance remedy would be most suitable. Conclusion Edwin has breached the contract of sale of car and hence, the best remedy would be specific performance. Hence, Edwin would be bounded to perform the contractual duties which is sell the car for the consideration of $500,000 to Adam only. 6
COMMERCIAL LAW Part B Any special circumstances which are rationally foreseeable at the time of enactment of the contract only would be taken into consideration. Also, both the parties must discuss these special circumstances at the time of contract formation. If the contract is breached which does not incorporate the special circumstances then the plaintiff would not be able to get any award for the lost profit (Andrews, 2014). According toHadley v Baxendale(1854) case, Hadley owned and run a mill. He enacted a contract with Baxendale to deliver shaft on a specified date. However, at the time of contract enactment, Hadley did not inform Baxendale the special circumstance that the mill would be in-operational until the shaft replacement. The delivery was delayed and hence, Hadley’s mill was in-operational and caused loss of profit which indicates that damages would not be recoverable by Handley because the special circumstance was not reasonably foreseeable (Edlin, 2016). Further, there is unliquidated damages which has not been estimated by the parties at the time of contract formation and would be payable if the contractual term is breached (Peel, 2017). If the motor vehicle was a late model Mercedes Benz, the advice to Adam would not be the same as stated in the above case. It is because unliquidated damages would be used as the contract made between Adam and Edwin is for the Rolls Royce which is the term for the contract. Also, Edwin does not inform Adam about the possibility of change of the vehicle. Hence, the unforeseeable damages borne by Adam would be recovered from Edwin. 7
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
COMMERCIAL LAW References Andrews, N. (2014).Contract Law(3rded.). Cambridge: Cambridge University Press. Carter, J. (2013).Contract Act in Australia(3rded.). Sydney: LexisNexis Publications. Davenport,S.&Parker,D.(2014).BusinessandLawinAustralia(2nded.). Sydney:LexisNexis Publications. Edlin, D. (2016).Common law theory(4thed.). Cambridge: University Press Cambridge. Gibson, A. & Fraser, D. (2014).Business Law(8thed.). Sydney: Pearson Publications. McKendrick, E. (2014).Contract Law(5thed.).Basingstoke:Palgrave. Peel, E.(2017).The Law of Contract(7thed.). London: Thompson. Taylor, R. & Taylor, D. (2015).Contract Law(5thed.). London: Oxford University Press. 8