Contract Law and Universal Offers

This assignment explores a scenario where Keith finds a wallet and returns it to its owner after seeing an advertisement offering a reward. It delves into the concept of universal offers and how they can be legally claimed. The analysis is supported by relevant case laws such as Carlill v Carbolic Smoke Ball Company, Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd, and Godecke v Kirwan. The assignment provides a comprehensive understanding of contract law principles and their application in real-life scenarios.

Memorandum of
advice

Table of Contents
MEMORANDUM OF ADVICE.....................................................................................................3
(a) Determination of whether there was an agreement between Keith and Contractor A......3
(b) Determination of whether there was a Contract between Keith and Contractor A..........4
(c) Validity of extra payment made by Keith to Contractor C...............................................6
(d) Analysis of fact whether Keith can claim reward or not..................................................7
BIBLIOGRAPHY............................................................................................................................9

MEMORANDUM OF ADVICE
(a) Determination of whether there was an agreement between Keith and Contractor A
ISSUES: with a view to renovate Happy shopping mall the manager Keith, of Happy
shopping mall posted an advertisement in newspaper for as, looking for a contractor to renovate
the mall for AUD 500000, it was posted on 1st May 2018.
Upon reading this contracted A, contacted Keith on phone on 2nd May as gave an offer to
the task for AUD 550000. A letter of offer was posted by Contractor A on 3rd May with an offer
of AUD 450000, manager said that he need sometime to think of this offer. On 4th May, he again
called Keith on 4th May and requested him to ignore the offer in letter whenever received. On 12th
May offer letter of A reached to Keith.
RULING:
Offer:
 When an offer is made, offerer must have an intention to be bound.
 Advertisement is considered as invitation to treat but in certain cases it can be amount to
an offer.
Invitation to a treat
An offer is all together different from an invitation to treat1. An offer will result in a
binding contract when offer is accepted, while in case of invitation to treat there is no need of
acceptance, it is merely an offer in form of invitation.2
Acceptance:
With a valid acceptance parties enters into a valid binding contract, for a valid acceptance
there are three main rules which may be complied with, they are:
 acceptance must be communicated to offerer,
 term of acceptance must be exactly same as terms of offer,
 agreement must be certain
Counter offer:
1 Competition and Consumer Act 2010
2 Formation of Contract at Common Law

This is a situation where the offeree reply to an offer with change in terms of offer
actually made. This will have an effete of destroying of original offer so there is left no scope
for the offeree to accept
CASE LAW: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd
(1988) 14 NSWLR 527
In this case it was held that mere silence can not be considered as acceptance of an offer,
it must be communicated to the offers that offer has been accepted with all its terms.
APPLICATION: In the present case, an offer was made by Keith to renovates his mall
for amount AUD 500000, in newspaper3. This is considered as a valid offer as the offered had an
intention to be bound by it in case offer is accepted. So advertisement can not be considered as
mere invitation to treat. In this case Contractor A made a counter offer about the price quoted for
renovation work mall for AUD 550000. This act resulted in cancellation of original offer made
by Keith to contractors in Victoria. An acceptance was made by A thorough letter which he
revoked before reaching to Keith through telephonic communication.
CONCLUSION: B with application of above rulings in present case study it can be
concluded that there was not a valid agreement between Keith and Contractor A. as for an offer
of manger A made counter offer which destroyed the condition for a valid acceptance. So, it can
be concludes without a valid acceptance of an offer there is no agreement between Keith and
Contractor A.
(b) Determination of whether there was a Contract between Keith and Contractor A
Issues: Another contractor B, also contacted Keith through a letter, posted on 5th May
with an offer of AUD 520000. He mentioned that he will complete the work as deadline date and
will work as per specification on manager of mall. Upon reviving this letter Keith replied to
same with letter on 6th May, with an offer price of USD 510000. Letter was received by
contractor B on 14th May, and accepted the offer as he was happy with the pride offered in letter,
from Keith. But, on 15th May, Keith posted another letter to B, stating that he took back what he
said in letter dated 6th May, without knowing that letter was received by B.
Ruling:
For a valid contract the main requirements are:
3 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527

Offer and acceptance: a valid offer must me made with can be accepted with all its
terms and no terms shall be unfair in the offer made.
Intention to create legal relation: in case of social and domestic agreement parties do
not intend to create legal relations. In case of a commercial agreement it is a pre assumption by
law that parties intend to create legal boundation for enforceability of contract.
Consideration: this is another requirement for entering into a valid contact. This is
money value in return for providing a good or service.
Postal rule: In case of communication is taking place through post, a letter which is
properly stamped and addressed is posted to another party, the date when same is placed in post
box is considered as date of acceptance.
Termination of contract: an offer may be terminated through either revocation or
counter offer.
Revocation: this means the offerer revoked the offer at any time before acceptance by
the offeree. This means before communication of acceptance of offer have not been completed
and before that offerer took back the offer.
Counter offer: this is a situation in which terms and condition of offer are modified and
then accepted by the offeree, in case of counter offer there is no valid agreement.
CASE LAW: Godecke v Kirwan (1973) 129 CLR 629
In this case it was held that once a contract had been entered into there is no need to
execute further agreement between parties4.
APPLICATION: for entering into a valid contractual agreement there is required an
offer and acceptance. In this case a valid offer was made by Keith to contractors with an
intention to enter into legally bound contract. The consideration was amount which manger will
pay in return for renovation of shopping mall5. With a valid offer and acceptance postal rule may
have been applied in this case but a counter offer was made by contractor B, which lead to the
fact that there was no valid acceptance thus no contractual agreement existed between Keith, the
manager of mall and contractor B.
CONCLUSION: From the above ruling and case law it can be stated that, although all
elements of a valid contact was present in case of Keith and contractor B, still there was no
4 Godecke v Kirwan (1973) 129 CLR 629
5 Instruments Act 1958

contractual relationship between both of them. And with a counter offer the contract is demoded
to be revoked and same happened in the present case.
(c) Validity of extra payment made by Keith to Contractor C
ISSUES: Later, Keith signed contract with concreter C, with a price of AUD 50000. the
work was needed to be completed before 1st December to honour the lease contracts between
managers and shops. But renovation process was not in progressing as expected, on asking the
reason C said there is shortage of building material and work may get delay. On this Keith paid
AUD 30000 to C on his own with a hope that renovation can be completed on time.
RULING:
Consideration: this can be considered as performance of an act, refraining form doing an
act, or to do something in return. In a contract both parties must receive benefits, and this is
determined as consideration. This is something of value in the eyes of law.
 Consideration can must not be past.
 This must be sufficient but need not be adequate.
 This must move from the promisee.
 Existing public duty and contractual duty does not amount to valid consideration.
APPLICATION: in the present case, the consideration was sufficient but was not
adequate. As first Keith made an offer for renovation of his Mall for AUD 500000 and he
entered into a renovation contract with for just AUD 500006. though this as a very less amount
as compared to original offer but Keith must have entered in contract after taking into account all
speculations. So this can be said that consideration was sufficient but not adequate for carrying
out complete renovation work.
CONCLUSION: from application of above ruling this can be concluded that Keith was
not under obligation to give further amount nut that was necessary for completion of renovation
amount. this can be held that consideration amount of the contract can be advised as sufficient
but can be taken as adequate as there is huge difference between actual offer amount of AUD
500000 and consideration amount in contract of AUD 50000. so for completion of renovation
work there is a requirement to pay further amount of AUD 30000 in order to complete the
renovation work.
6 Competition and Consumer Act 2010, Volume_3 ,27 Standard form contracts.

(d) Analysis of fact whether Keith can claim reward or not
ISSUES: The last issue stated in this case study is that, Keith found a wallet laying on
road, on checking wallet he found out that wallet have a driving license in it. Keith posted the
wallet to its owner immediately. After few days he saw an advertisement in new paper from
wallet owner. It stated that whoever found and returned the wallet could have a reward of AUD
500.
RULING:
Formation of contract: For a valid contract, the first element is the agreement between
two parties. It will have two sections present in it, i.e, offer and acceptance. Offer is a type of
statement from one person to another in which it is showing the willingness to have contractual
agreement with that particular person. In acceptance, it is a statement in oral or written form
from the offeree about agreeing the offerer's offer. An agreement basically involves a specific
subject between two or more parties.
Offer: The offer has been put through newspaper advertisement which is purely valid
and universal.
Intention to create legal relations in social or domestic agreement: When there is an
agreement made in a social context, assumption are made by law that the parties are not intended
in creating legal relations with each other. By creating legal relationships, it helps to keep the
agreement outside the courts.
Case law: Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256
In this case law, The Carbolic Smoke Ball Co. has made a product named 'smoke ball' which
claimed that by using that ball for three times in a day for two weeks than they will not get
epidemic influenza colds or any other disease caused by taking cold. And this does not happen
they would pay £100 to that person who got sick with influenza after using their product as per
the given instructions mentioned in it 7. But there was a lady named Mrs. Louisa Elizabeth Carlill
who used this smoke ball as per the instructions but then also she got sick with influenza. She
claimed £100 from the Carbolic Smoke Ball Company. But company refuses to pay her the
amount. Then Mrs Carlill filed a case against the company. In order to protect themselves, they
told Mrs Carlill to come to their office and use that smoke ball each day in front of them and they
7 Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.

would check her. According to the judgement, it was a contract between the company and her for
which they had paid that amount to Mrs Carlill.
APPLICATION: In the present case, Keith has found a wallet on road. He checked it
and found a driving license. He immediately sends that wallet to its owner. After some days, he
found a newspaper advertisement which said that whoever found this wallet and returned it will
get a reward of AUD 500. In this case, as an offer has been made by the owner and there was no
notification of acceptance.
CONCLUSION: From the above case it can be concluded that Keith can legally claim
that reward which the owner of the wallet has posted in the newspaper. As per the law, Keith is
legally applicable to claim this reward as the offer made was universal and there is no intention
to create legal relations. So the owner has to pay him the reward amount of AUD 100 in case
Keith claims the same.

BIBLIOGRAPHY
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.
Instruments Act 1958
Formation of Contract at Common Law
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527
Competition and Consumer Act 2010
Godecke v Kirwan (1973) 129 CLR 629
Competition and Consumer Act 2010, Volume_3, 27 Standard form contracts.
http://www.e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-Co.php
http://netk.net.au/Contract/Empirnall.asp
http://e-lawresources.co.uk/Consideration.php
http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/LTObject_Store/ltobjst8.nsf/
DDE300B846EED9C7CA257616000A3571/496DE6ACEBD8097DCA257BC600053D3E/
$FILE/58-6279aa120%20authorised.pdf
https://www.uio.no/studier/emner/jus/jus/JUR5240/h10/undervisningsmateriale/Formation%20of
%20K%20at%20common%20law%20presentation_okt10.pdf
https://www.legislation.gov.au/Details/C2017C00375
https://griffith.rl.talis.com/items/3930B8D2-0E03-5EA1-DB97-D96353FF918D.html
https://www.legislation.gov.au/Details/C2017C00375/Html/Volume_3#_Toc499717716