Business Law 9: Assessment 1 Report - Contractual Liability Analysis

This report provides a comprehensive analysis of a business law case concerning contractual liabilities. It examines the legal implications of an advertisement published by Top Ticket Ltd in the Sunday Echo newspaper. The report delves into the key elements of contract formation, including offer, acceptance, and the distinction between an offer and an invitation to treat. It analyzes the specific scenarios involving three customers: Bethany, Shaun, and Maya, evaluating whether Top Ticket Ltd incurred any contractual obligations to them. The analysis references relevant case law, such as Partridge v Crittenden and Carlill v Carbolic Smoke Ball Co, to support its arguments. The report concludes that, based on the presented facts and legal principles, Top Ticket Ltd did not incur contractual liabilities towards any of the three customers, emphasizing the importance of proper contract formation and the revocation of offers before acceptance. The report also discusses the application of the postal rule and the intention of the parties to be bound by the contract.

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Table of Contents
Abstract............................................................................................................................................3
Introduction......................................................................................................................................4
Analysis of Case..............................................................................................................................4
Issue.............................................................................................................................................4
Rule..............................................................................................................................................4
Application..................................................................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Abstract
Contract is a term, which is commonly used in the daily lives of people, and even where the term
is not explicitly used at certain instances, a contract is formed very commonly. Be it purchasing
grocery from a supermarket or parking a car in the car lot, a contract is formed. A contract is
formed owing to the use of wordings. This is the reason why the newspaper advertisements could
result in a contract being formed. This discussion is focused on one of such scenarios where the
newspaper advert published by the company had the capability of resulting in contractual
liabilities for it. Though, owing to the lack of proper contract formation, the company was saved
from these liabilities.

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Introduction
Contract law is a common law, which is applicable over all of the contracts which are formed. A
contract is basically an agreement having legal validity, due to which it binds all the parties to
the contract, to the terms of the contract. A contract can be formed by exchanging the terms of
the contract in a verbal manner, resulting in a verbal contract; and it can be formed in a written
manner also where it is deemed as a written contract, as the terms on which the entire contract is
based, are covered on a document and are signed by the parties to the contract. The formation of
any contract requires certain key elements to be present, which are offer, acceptance,
consideration, intent, legality and capacity (Nelson, 2018).
The following parts cover the analysis of the given case study in context of the two key elements
of contract formation, i.e., offer and acceptance, and the resulting contractual liabilities.
Analysis of Case
Issue
Whether any contractual liabilities were born for Top Ticket Ltd owing to the incidents which
took place, in context of the three customers, i.e., Bethany, Shaun and Maya, or not?
Rule
As has been stated in the introductory segment, the formation of contract requires the element of
offer to be present. The offer is the terms which are offered by one party to the other, which

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clearly provide what is being offered and at what terms. An offer is quite different from an
invitation to treat, and it becomes important for a distinction to be attained between the two. The
key point of differentiation in between the two terms is that an offer has the intention of being
bound by the contract. However, when it comes to invitation to treat, it simply covers the
intention of getting in negotiations for a contract which may or may not take place (E-Law
Resources, 2018a).
The difference in between the two concepts can further be clarified with the help of case law.
The advertisements which are put in the newspapers are considered as invitation to treat
(McKendrick, 2017, p. 31). An example of this can be found in Partridge v Crittenden (1968) 2
All ER 421. In this case the court held that the advert in the classified section was an invitation to
treat and not an offer (Andrews, 2015, p. 40). Only when the advertisements cover a unilateral
offer, as was seen in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, can an advert be
deemed as an offer, instead of an invitation to treat. This is because in cases of unilateral offers,
acceptance can be given by simply performing the task stated in the advert (Stone and Devenney,
2017, p. 44).
There is also a need to distinguish when an offer is made once the invitation to treat is made. For
this purpose, the case of Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 is of
help. In this case, the Court of Appeal gave clarity on when an offer is made. They stated that as
long as the goods are kept on the shelf of a shop, it is an invitation to treat. The offer is made
when the consumer takes the product from the shelf and to the shop assistant for billing of the
product. The shop assistant than has the choice of accepting or not accepting the offer. Thus, the

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contract is formed only when the offer is accepted by the shop assistant. So, the shop keeper is
not bound to sell the displayed products at the advertised price (Latimer, 2012, p. 317).
The offer once is made, can be revoked only before such offer is accepted by the other party. In
other words, so long as the acceptance on the offer is pending, the offer can be revoked. It is
crucial that revocation is clearly communicated to the accepting party. Where the revocation
comes after acceptance has been made, it would not be valid (Blum, 2007, p. 66). In Dickinson v
Dodds (1876) 2 Ch D 463, the action for specific performance was denied by the court as they
stated that the offer had been effectively revoked, when the defendant had asked the plaintiff’s
friend to inform about the offer having being withdrawn (Poole, 2016, p. 74).
The next step in the formation of contract is acceptance. A valid acceptance is crucial for the
contract to be binding. There are three rules when it comes to acceptance. The first one is that the
acceptance has to be communicated in a clear manner to the offering party. The second condition
is that the terms of acceptance have to be exactly the same as the terms covered in the offer. And
the last condition is that the agreement has to be certain. It is also important that the acceptance
is given within the time period for which the offer had been open (E-Law Resources, 2018a). An
important aspect about acceptance is the date of acceptance. This date is deemed as the date on
which the party sending the offer receives the acceptance sent by the accepting party. However,
when it comes to the postal rules of acceptance, they act as an exception to the rule stated above.
In such cases, the date of acceptance is taken to be the date on which the letter of acceptance is
posted. When it comes to the emails, or other electronic transactions, the postal rules of
acceptance become applicable (Abbott, Pendlebury and Wardman, 2007, p. 104).

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The other elements which have to be present for the purpose of creating a contract include
consideration, which is basically the sum paid for undertaking the contractual promise, in terms
of the task performed. The consideration amount needs to have an economic value in order for
the consideration to be deemed as valid consideration. The consideration has to be present not
past; and also it has to be sufficient instead of being adequate. It can be mutually decided
between the parties, and the contract remains invalid without a valid consideration (Mulcahy,
2008, p. 86). The next element in the process of creating a contract is for the parties to have the
intention of getting in the contract (E-Law Resources, 2018b). There is a need for the parties to
clearly have the intention of being bound by the terms of the contract, which include taking on
the rights and liabilities arising from the contract. The parties also need to have the contractual
capacity which shows that the parties can enter into the contract in a legal manner. For this, there
is a need for the parties to have sane mind, capable of making sound decisions, and to hold the
legal age of getting in a contract (Beatty and Samuelson, 2007, p. 237). The last element is for
the parties to have clarity on terms on which the contract is formed to steer clear of any
ambiguities, which could result in disputes amongst the parties and for the terms to be legal
(Nelson, 2008).
Application
In the given case study, Top Tickets Ltd had published an advertisement in the Sunday Echo
newspaper. A careful analysis of this advertisement shows that certain tickets were offered at a
certain price. The advertisement was placed on two places, one was the website and the other
was newspaper. Nevertheless, it was an advertisement and would be treated in the same manner.
However, the intention of creating a contract in this advertisement was absent. This is due to the

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fact that the advertisement provided that those who were interested in buying the ticket could
buy it from external site or by contacting them at the box office. Unlike the case of Carlill v
Carbolic Smoke Ball Co, here there was an absence of a unilateral term which could be accepted
by merely acting upon the offer. Also, based on the general rule given in Partridge v Crittenden,
this advert would be deemed as an invitation to treat.
For the question on when an offer is raised in these cases, reliance has to be placed on the case of
Pharmaceutical Society of Great Britain v Boots. Based on this case and the given facts of the
case study, the offer would be made by the contracting parties, to Top Tickets Ltd, when they
open the external link to buy the tickets. The offer would also take place when they contact the
box office. At this time, Top Tickets Ltd would have the option of giving the ticket to the
offering parties or not giving the ticket to them. This view is further strengthened by the fact that
the tickets were available for only the first twenty five customers, which was again a proof of
Top Tickets Ltd accepting the offer or not. In the case where the advert is deemed as invitation to
treat, Top Tickets Ltd is not bound to sell the products at the prices at which the ticket was
advertised.
This newspaper advertisement, where is considered as a unilateral offer, owing to the possibility
of the unilateral offer being accepted merely by purchasing the ticket from the portal or by
contacting the company at the box office, would also not be of much help. This is because this
offer was revoked on 06th August itself, which was the day of making the offer. Richard had sent
the revocation and the revocation had been published in the newspaper. So, even before the offer
had been accepted by any of the parties, considering the newspaper advertisement as an offer, the
offer had been effectively revoked. The mode of offer and revocation was same; thus, it can be

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stated that the revocation had been communicated properly. So, in both the scenarios where the
newspaper advertisement is deemed as an invitation to treat or an offer, the advertisement cannot
be accepted. This is because the invitation to treat is not an offer, open for accepting, and where
it is deemed as an offer, it was revoked.
Applying this analysis to the case of each of the three parties, Bethany cannot accept an offer
which has been revoked. Again, where the advertisement is deemed as an invitation to treat, Top
Tickets Ltd has the option of accepting or rejected the cheque. Till the time this is done, a
contract was not formed. For Shaun, he had read the website advertisement and this
advertisement was not revoked; but as this was an invitation to treat, it could not be accepted. He
left the message, which was an offer in this case, which was not accepted, and so no contract was
formed. For Maya also, no contract was formed as she was clearly aware of the revocation of
advertisement, and her email would be deemed as an offer by her to the company to buy the two
tickets, which the company can choose to accept or decline.
Conclusion
Thus, from the undertaken decision in the preceding parts, no contractual liability is raised for
Top Tickets Ltd for any of the three customers. This is true when the advertisement is deemed as
an invitation to treat, as none of the offers sent by the three were accepted by the company. Also,
where the advertisement is taken as an offer, the offer was effectively revoked before the
acceptance was given by any of the three parties. As a result of which, no contract was formed,
resulting in no contractual liabilities.

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References
Abbott, K., Pendlebury, N., and Wardman, K. (2007) Business Law. 8th ed. London: Thomson.
Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press.
Beatty, J., and Samuelson, S. (2007) Legal Environment. 3rd ed. Mason, OH: Thomson Higher
Education.
Blum, B.A. (2007) Contracts: Examples & Explanations. 4th ed. New York: Aspen Publishers.
E-Law Resources. (2018a) Contractual agreement - offer and acceptance. [Online] E-Law
Resources. Available from: http://e-lawresources.co.uk/Offer-and-acceptance-contract.php
[Accessed on: 11/01/18]
E-Law Resources. (2018b) Intention to create legal relations. [Online] E-Law Resources.
Available from: http://e-lawresources.co.uk/Intention-to-create-legal-relations.php [Accessed on:
11/01/18]
Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia
Limited.
McKendrick, E. (2017) Contract Law: Text, Cases, and Materials. 12th ed. Oxford: Oxford
University Press.
Mulcahy, L. (2008) Contract Law in Perspective. 5th ed. Oxon: Routledge.

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Nelson. (2018) The Law of Contracts. [Online] Nelson. Available from:
http://www.longchamps3e.nelson.com/instructor/03Ch03.pdf [Accessed on: 11/01/18]
Poole, J. (2016) Textbook on Contract Law. 13th ed. Oxford: Oxford University Press.
Stone, R., and Devenney, J. (2017) The Modern Law of Contract. 12th ed. Oxon: Routledge.