Contract Act Case Study

This case study explores the legality and validity of a contract under the Contract Act. It examines the issues of offer acceptance, revocation, and performance as they relate to the contract between Joe and InventorPlus. The conclusion determines that Joe is eligible for a refund based on the agreed-upon terms and conditions.

Running Head: Contract Act
Contract Act
Case Study
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Contract Act
Table of Contents
Issue............................................................................................................................................2
Rule............................................................................................................................................2
Rule for sub-issue 1................................................................................................................2
Rule for sub-issue 2................................................................................................................2
Rule for sub-issue 3................................................................................................................2
Application.................................................................................................................................2
Conclusion..................................................................................................................................4
Bibliography...............................................................................................................................5
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Issue
Whether Joe and InventorPlus had a contract that can authorise Joe for refund.
The issue gives rise to several sub-issues-
Sub-Issue 1- Whether the offer is acceptable by conduct.
Sub-Issue 2- Whether Joe accepted the offer through conduct.
Sub-issue 3- Whether revocation of previous offer can be done through the advertisement.
Rule
Rule for sub-issue 1
For determining the legality and validity of offer, the court should decide upon the
fact that what a reasonable and normal person would do in that situation. In Carlill v.
Carbolic Smokeball (Carlill v Carbolic Smoke Ball Company, 1892), the test of objectivity
which determines the way in which a rational and normal human would reciprocate according
to the situations and circumstances surrounding the situation.
Rule for sub-issue 2
The common rule is that the if offeree has accepted the offer then the acceptance
should be informed to the offeror. It was held in Powell v Lee (Powell v Lee, 1908). Again,
in Carlill v Carbolic Smokeball, it was ruled that in circumstances where there is presence of
single contract and the terms and conditions of offers needs the conduct of an act then that
conduct will be treated as acceptance.
Rule for sub-issue 3
In Goldborough Mort Ltd v Quinn (Goldborough Mort Ltd v Quinn, 1910), it was
ruled that revocation of offer could be done before the acceptance of that offer and once the
offeree accepts then it cannot be revoked. In the matter of revocation, the revocation should
be brought in the mind of the offeror as ruled in Dickenson v Dodds (Dickenson v Dodds,
1875).
Application
For determination of acceptance through performance, the court will have to take into
consideration that what a normal and rational person will act in given circumstances as ruled
in Carlill v Carbolic Smokeball. This is also known as test of reasonableness. If the court
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think that the offer can be accepted through performance so court will have to act
accordingly.
In Partridge v Crittenden (Partridge v Crittenden, 1968), where the defendant puts an
advertisement in the newspaper for the sale of some birds. The sale of these birds were an
offence according to Section 6 of the Protection of Birds Act 1954. He was then arrested on
the charges under section 6. He was acquitted because the advertisement is treated as an
invitation to offer. The divisional court ruled that generally, the advertisement is an invitation
to offer. Here, the advertisement by investor plus is the offer for Joe via magazine
advertisement. In this case, the invitation to offer as the offer of guaranteed $5000 pay out or
30% profit.
In Powell vs Lee, Powell applied for the job in school as a headmaster and the
administrators of the school agreed to select and appoint him but one of them was acting
without authority and that person told Powell that he has been selected as a headmaster. Later
it was decided by the real managers of the school that he will not be selected. Powell sued
them for breach of contract for employment (Luk, 2019). The common rule is that the
acceptance should be informed to the offeror of that offer as rules in Powell v Lee. In present
case, it can be inferred that when Joe started the account, the communication of acceptance
was given to offeror. Investor plus was well known about Joe as their new customer and it
can be inferred that the acceptance of an offer was clear and not vague.
The Court of Appeal ruled in Carlill v Carbolic Smokeball that Mrs Carlill was
eligible for the reward because the advertisement incorporated an unilateral contract which
were accepted by her though the prescribed mode of acceptance. In Carlill case, there was
advertisement in the newspaper by the company that reward of 1000 pounds will be given to
any individual who will use the balls three times for two weeks and gets influenza. Mrs.
Carlill bought some of the balls and used them as per the instructions and caught flu. The
court in this case held that whenever there is unilateral contract and the acceptance can only
be validated through the prescribed mode of acceptance as performance. In this case, when
Joe started his account, the act can be considered as acceptance of the preliminary offer.
The offer can be called off at any time before the acceptance as decided in
Goldsborough Mort Ltd v Quinn. Nevertheless, in this case, the offer has been accepted
before the revocation made. It can be inferred that revocation made after the acceptance of
offer is irrelevant. In Dickenson v Dodds, the court ruled that in the latest offer should be
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brought into the eyes of offeree and here in this case the revocation has not been brought into
the eyes of the offeree. Only preliminary offer was known by Joe and so the investor plus
cannot revoke the initial offer because this offer was not properly informed by them to Joe.
Conclusion
In this case, the advertisement is an offer which has been accepted by Joe through
performance. Joe agreed with the offer via conduct and performance, the starting of his
account is an answer to the advertisement and it can be assumed that the conditions of the
advertisement and been agreed by consensus ad idem and hence it is enforceable. The recent
advertisement by Investor Plus for revocation of offer is not legal and invalid because the
terms and condition to the contract has already been agreed upon and Investor Plus did not
communicated the new conditions and revocation to Joe. Joe is eligible for refund and a
payout because these were some of the terms and conditions of the contract which were
agreed by both when they were entering into the contract.
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Bibliography
Carlill v Carbolic Smoke Ball Company, 1 (Court of Appeal 1892).
Dickenson v Dodds, 2 (ChD 1875).
Goldborough Mort Ltd v Quinn, 10 (HCA 1910).
Luk, J. (2019). Powell v Lee (1908). Retrieved from Contract Law:
https://contractlawjl.weebly.com/acceptance1.html
Partridge v Crittenden, 1 (Divisional Court April 5, 1968).
Powell v Lee, 99 (LT 1908).
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