BLO1105 Business Law Assignment: Offer, Acceptance, Consumer Rights

This business law assignment addresses the formation of a contract, focusing on the elements of offer and acceptance, and the application of the Electronic Transactions Act 1999. It examines whether a valid contract was created between two parties through email communications and analyzes the implications of counter-offers and revocation of acceptance. The assignment also explores the consumer rights of one of the parties under the Australian Consumer Law, specifically concerning misleading and deceptive conduct and false representations, as the services provided did not match the agreed terms. The second part of the assignment discusses the distinctions between an invitation to treat and an offer in advertising, providing examples such as newspaper advertisements and digital platforms, and highlighting the legal liabilities for businesses under contract law and the Australian Consumer Law if advertisements are misleading. It emphasizes the importance of careful wording in advertisements to avoid unintended legal consequences.

Business Law
BLO1105
19-Sep-17
(Student Details: )

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Question 1 (a)
Issue
Whether a contract was formed in this case, particularly on the basis of the offer and
acceptance elements, or not?
Rule
Contract contains a promise whereby part “A” promises to fulfil a particular undertaking
and party “B” pays party “A”, a consideration value, which is decided between “A” and “B”, for
undertaking the promise. In order to form a contract, which has legal validity, there is a need for
the presence of offer, acceptance, consideration, capacity and intent1.
The very first step, which leads to the formation of contract, is the presence of an offer. It
is essential to make a distinction between an offer and an invitation to treat. The offer shows that
the parties “A” and “B” want to create a contract, where as the invitation to treat shows that the
parties “A” and “B” just want to negotiate upon the terms of the contract. The newspaper
advertisements or commercials are deemed as an invitation to treat and not an offer2. In
Partridge v Crittenden3, the defendant’s conviction was quashed as the advert was deemed as an
invitation to treat. It is also important to demarcate between offer, invitation to treat and a request
for information, as was held by the court in Harvey v Facey4 where no separate offer was deemed
to have been made.
1 Jill Poole, Casebook on Contract Law (Oxford University Press, 2016)
2 Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
3 (1968) 2 All ER 421
4 [1893] AC 552

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Upon an offer being made in a successful manner, the acceptance has to be attained on
this offer. The acceptance has to be given by the party to which the offer had been made. So
where the offer was made by “A” to “B”, “B” has to accept the offer. The offer can be revoked
only till “B” does not accept it5. Also, there is a need to accept the offer in the manner in which it
had been made, and if the terms are altered in the slightest of manner, it would result in a counter
offer as was seen in Hyde v. Wrench6, which would render the original offer useless.
The acceptance date is taken to be such date when the acceptance communication is
obtained by the offering party7. Though, the postal rules to acceptance is the exception of this
rule as under this rule, the acceptance date is such date on which the letter containing the
acceptance is posted by the accepting party. The raison d'être behind this is that the postal office
is given the status of the agent of the offering party and due to the operation of agency law, the
acceptance by the postal office is to be considered as the acceptance by the offering party8. The
date on which this letter reaches the offering party remains irrelevant. Upon the electronic
communication, the Electronic Transaction Act, 19999 applies. The postal rules of acceptance are
linked to the requirements of section 14 of this act. As per this section, the date and time on
which the communication leaves the sender’s device, that is the date and time of the particular
communication and not the date on which the same reaches the receiver. This section is
applicable for offer and acceptance both.
Apart from these two elements, the formation of contract requires consideration as an
element under which the parties mutually decide the value which has to be paid for the
5 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
6 (1840) 3 Beav 334
7 Paul S Davies, JC Smith's the Law of Contract (Oxford University Press, 2016)
8 Michael Furmston and G.J. Tolhurst, Contract Formation: Law and Practice (Oxford University Press, 2010)
9 Electronic Transaction Act, 1999 (Cth)

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undertaken promise. There is a need for the consideration to have economic value for the
contract to be valid10. The next requirement is to have the intention of forming legal relations.
The parties also need to have the contractual capacity to create legal relations in terms of
majority age and soundness of mind11.
Application
The facts of this case study are majorly concentrated upon the elements of offer and
acceptance. The advert which Lianne saw in the newspaper, on the basis of Partridge v
Crittenden, would be deemed as an invitation to treat as it invited quotes from the parties who
wanted a party to be hosted. Section 14 of the Electronic Transaction Act and the postal rules of
acceptance also play a crucial role in this case study. As the emails were exchanged in this case,
on the basis of this section, the date of the communication would be the date on which it was sent
and the date on which the receiver read it, would remain irrelevant.
The email which was sent on 10 Jun, the very first one in the chain of emails, would be
considered as a request for information on the basis of Harvey v Facey since Lianne only
requested information under it. The reply to this email was also not an offer as only information
was being swapped under this. The three hour afterwards email was the point where the offer
was made. On this, a counter offer was made with reduced amount as there was a change in the
terms of the original offer. Again, a counter offer was made with particular conditions and the
higher consideration amount and this offer was valid for a specified time period only. The offer
was made on 10 Jun so, it expired after seven day period on 17 Jun. Hence, it was not valid on 20
Jun when Mary stated that the price had changed. The communication of Lianne on 20 Jun
would not be an acceptance.
10 Catherine Elliott and Frances Quinn, Contract Law (Pearson Education Limited, 9th ed, 2013)
11 Ewan McKendrick, Contract Law (Pearson Education Limited, 11th ed, 2015)

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When Mary quoted $10,000 on 20 Jun that was when the new offer was made. And the
acceptance was attained on this as Lianne sent an email regarding the same. However, later on
she sent an email to revoke this acceptance, which would not be valid as the offer ahs to be
revoked before acceptance is given. The reading or non-reading of the emails would remain
irrelevant on the basis of postal rules of acceptance and section 14 of the Electronic Transaction
Act. The value of consideration has already been established and the other elements of contract
have been assumed as being present as the contrary to prove this is not present. This means that a
contract had been created between the two parties.
Conclusion
To conclude, indeed a valid contract had been created between Lianne and Mary.
Question 1(b)
Issue
Whether Lianne has any rights under the Australian Consumer Law, or not?
Rule
The Competition and Consumer Act, 2010 was an act brought out in the nation, for
protecting the consumers and for ensuring that the competition is properly followed in the nation.
Under schedule 2 of this act, is the Australian Consumer law, which is the key legislation for
safeguarding the consumers. A consumer is such a person, as per section 3 of ACL, who takes
services or purchases goods to the value of $40,000 in the nation, for their own use or
consumption. Through section 18, the businesses are prevented from indulging in misleading and

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deceptive conduct. And through section 29, the same restriction has been placed with regards to
false or misleading representation.
Application
The facts of this case study show that Lianne is a consumer as she undertook the services
of Mary and entered into a contract with her for a value of $9,500. These services were used for
her personal party. And so, as per section 3, Lianne is a consumer. By not fulfilling the terms
which were promised, Lianne was misled and deceived by Mary as she was provided with a
different cuisine, instead of what was promised. Further, the space in the boat was falsely
represented. This would mean that both sections 18 and 29 were contravened by Mary.
Conclusion
To conclude, Lianne is a consumer in this case, who had rights to sue Mary for breaching
section 18 and 29 of the ACL.
Question 2
The invitation to treat and an offer are two terms which cause a lot of confusion in the
daily lives of people. The confusion is due to the fact that at particular instances, the particular
communication can be taken as one thing and at other instances, it could be deemed as the other
one. This confusion can lead to certain liabilities for the businesses who give such adverts
through the different mediums. In this discussion, the points have been put in favour of the care
which needs to be undertaken by the businesses while creating the adverts to be published in
hard copy and soft copy.

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In the first part of this discussion, Lianne reads a newspaper advertisement which was
taken to be an invitation to treat based on a quoted case. The reason for holding this as an
invitation to treat was because the judge in the case of Partridge v Crittenden had analysed the
wordings of the advertisement and applied statutory rules of interpretation for taking out its
meaning, which was ultimately deemed as an invitation to treat, instead of an offer12. Where a
case of invitation to treat is established, there is no need for the parties to complete the sale and
no liabilities are attracted on them as was seen in Pharmaceutical Society of Great Britain v
Boots13. However, this is not the case with every advertisement.
To make a demarcation between a particular advert being an invitation to treat and it
being an offer, the wordings of such advert have to be considered. Unlike Partridge v Crittenden,
in Carlill v Carbolic Smoke Ball Company14 the court deemed that the advertisement was an
offer. The difference between the two could be established in the context of the placed
advertisement15. In the case of Carlill v Carbolic Smoke Ball Company, the company had given
an advertisement in the newspaper where it promised to award the person who got the disease
even when they had used the smoke ball produced by the company. The award money was £100.
Carlill used this smoke ball and still got influenza so she went to the money and claimed the
award money of £100. The company denied the claim on the basis that this was an invitation to
treat. However, the court agreed with the plaintiff as they stated that the newspaper advert
wordings were such where the offer could be accepted by simply acting upon it. And so, the
court ordered the plaintiff to be paid the promised award money16.
12 James Marson and Katy Ferris, Business Law Concentrate: Law Revision and Study Guide (Oxford University
Press, 3rd ed, 2016)
13 [1953] 1 QB 401
14 [1892] EWCA Civ 1
15 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
16 Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)

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The advertisements are placed in newspapers and in this growing digital age, they are
found more than often across the digital platforms. The adverts also include the one posted on
billboards and on the buses. So, at every place where the businesses post their advertisements,
they have to take care in printing their adverts. Whatever promises or offers they made under the
advertisements, have to be drafted in a manner that they remain an invitation to treat and do no
become an offer. In case an offer is made through such advertisements, liability would be
attracted for the businesses as they would have to go forward with the contract when the offer is
acted upon by the other party17.
Apart from the liabilities which can be raised for the businesses for posting their
advertisements under the contract law, the businesses can also be made liable for the adverts on
the basis of the Australian Consumer Law. Australian Competition and Consumer Commission v
TPG Internet Pty Ltd18 is a leading example of this in which TPG had advertised a price for their
product. However, this price was deemed as misleading and a breach of section 18 was
established as the adverts did not disclose fully that the consumers had to pay additional sum at
later stage as this additional sum was hidden from the published advertisement.
To conclude the discussion which had been carried on till now, it becomes very clear that
the businesses have to take special care when they place any advertisement through the different
mediums. This is because these adverts can result in a contract, where this advert is an offer,
instead of an invitation to treat. And in such cases, the businesses become bound by the contract
and have to fulfil the obligations covered under the contract. Apart from this, the businesses also
become liable under the other laws including the Australian Consumer Law. Hence, as was
17 At 15
18 [2013] FCAFC 37

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stated at the outset of this discussion, it is crucial that businesses take care while placing any
advert, or would attract liabilities upon them.

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Bibliography
A. Articles/ Books/ Reports
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Davies PS, JC Smith's the Law of Contract (Oxford University Press, 2016)
Elliott C, and Quinn F, Contract Law (Pearson Education Limited, 9th ed, 2013)
Furmston M, and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press,
2010)
Gibson A, and Fraser D, Business Law (Pearson Higher Education AU, 2013)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Marson J, and Ferris K, Business Law Concentrate: Law Revision and Study Guide (Oxford
University Press, 3rd ed, 2016)
McKendrick E, Contract Law (Pearson Education Limited, 11th ed, 2015)
Poole J, Casebook on Contract Law (Oxford University Press, 2016)
Stone R and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
B. Cases
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] FCAFC 37
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1

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Harvey v Facey [1893] AC 552
Hyde v. Wrench (1840) 3 Beav 334
Partridge v Crittenden (1968) 2 All ER 421
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
C. Legislations
Competition and Consumer Act, 2010 (Cth)
Electronic Transaction Act, 1999 (Cth)