Liability of Ming and Types of Company - Business and Corporations Law

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Business and Corporations Law

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PART A
ISSUE
The issues raised in this case are regarding the liability to Ming which is raised by the
advertisement. Did a contract is formed based on the advertisement with forty
customers? Did a contractual obligation is established for other ten customers?
Whether a valid contract can be formed based on the advertisement? Did the offer is
revoked by putting the sign in the shop?
RULE
The parties who have formed a valid contract are bind by its terms. They can be
enforced by the court in case the terms of the contract are not fulfilled by them. While
forming a contract, a party is required to make an offer. The offer can be made for doing
or not doing a certain act. It is important that the party making the offer must want to
bind by its terms. In Harvey v Facey (1893) UKPC 1 case, the court defined this principle
clearly. In this case, the court provided that a contract is not constituted between the
parties. The statement made by the party was not a valid offer since the offeror did not
want to bind by its terms (McKendrick, 2014). It is important that parties differentiate
between a valid offer and a request which is made by the party for gathering
information regarding the product or service (Fitzpatrick et al., 2017). An invitation to
treat is also a concept which is necessary to differentiate from an offer. As the name
implies, an invitation to treat is an invitation which is given by the party to others. This
invitation cannot be accepted by them to form a contract. It invites them to make an
offer to the party who sends the invitation. In Partridge v Crittenden (1968) 2 All ER
425case, the court defined whether advertisement is an offer or not.
It was held that the parties who posted an advertisement regarding their products or
services to information other parties, it is considered as an invitation to treat (Twigg-
Flesner, 2017). This rule did not apply in all cases as given in Carlill v Carbolic Smoke
Ball Co (1893) 1 QB 256. The advertisement can be considered as an offer which
depends on the facts of the case. As per the facts of this case, a product was advertised

2 | P a g e
by Carbolic Smoke Ball Co through a newspaper. The advertisement reads that the
smoke ball can be used by people who have influenza. Many instructions were included
in the advertisement for customers regarding how to use the ball. The company also
claimed that the person who uses this product would not get influenza again. The
company offered £100 to people who get sick ever after using the ball. The company
also deposited £1000 in the bank account. This was done to show their sincerity to the
customers. After seeing this advert, Mrs Carlill bought and used the ball as per given
instructions (Suff, 2013). However, she caught influenza even after using the product.
She claimed her £100 from the company but her requested by rejected. She filed a suit
against the firm to recover the damages. The defendant provided that arguments in the
case that the claim is not valid since a contract is not formed between the parties.
The advert was a sales puff which cannot be taken seriously. An offer is not made, and
no acceptance is communicated either. The element of consideration is missing as well.
It is also not possible that an offer can be open for the entire world. The court evaluated
the case and rejected these arguments. It was held that the advert was not a mere sales
puff. The sincerity to form a contract was displayed by the company when the money
was deposited in the bank (Bakan, 2016). The court provided that a unilateral offer can
be made by a party which remains open for the entire world. The acceptance of this
offer is not required to be communicated. When the parties comply with the
instructions, it is considered that they have given their acceptance. By considering all
these factors, the court provided that a contract is formed between the parties.
Therefore, the company has to comply with its terms and pay £100 to Mrs Carlill as
promised. The unilateral offer made by a part can be terminated if the performance for
such contract is not started (Fitzpatrick et al., 2017). It can also be terminated if the
performance which is started by a party did not finish within a reasonable time.
APPLICATION
The advertisement posted by Ming was a unilateral offer. It was made by him to attract
more customers. This offer was open for the whole world as discussed in Carlill v
Carbolic Smoke Ball Co case. The acceptance of this offer can be given by the parties by
complying with its instructions. The instructions were clear that whoever brought the
advertisement with them will get a haircut for $10. Since the forty customers complied