Albany Semester 2 2019 Business Law Case Study: Contract Law

This case study analyzes a contract law scenario involving a customer, Donald, and a store, Try and Save. The issues at hand revolve around whether the store is obligated to sell a kettle at a discounted price and if they have a legal obligation to provide a toaster advertised but out of stock. The solution delves into the principles of offer and acceptance, distinguishing between an invitation to offer and an actual offer, and examines the role of employees as agents, establishing vicarious liability. The analysis applies these rules to the specific events, concluding that the store is bound to honor the kettle's discounted price due to the manager's acceptance, but not obligated to provide the advertised toaster as the initial offer was rejected. The case references key legal precedents such as Smith vs. Hughes, Ermogenous vs. Greek Orthodox Community of SA Inc., and Bazley vs. Curry, supporting the legal arguments and conclusions.

Running Head: Case Study
LAW OF CONTRACTS
Name of the Student
Name of the University
Author’s Note

1CASE STUDY
Issue:
The first issue in the case is whether Try and Save is obliged to Donald to have the Kettle
at the discounted price.
The second issue in the case is whether the store has the legal obligation to find the stock
of the toaster they advertised and supply Donald with one of them.
Rules:
Offer and Acceptance is the most essential elements of a contract. Offer can be
explained as the willingness to establish the legal relationship with the other party and shall be
enforceable as soon as the terms are accepted by the other party. The intention to establish the
legal relation forms the founding test of the determination of offer and the same has been laid
down in Smith vs. Hughes (1871) LR 6 QB 597. It was subsequently applied in Ermogenous vs.
Greek Orthodox Community of SA Inc. [2002] HCA 8.
Acceptance is the describes as the consensus ad idem meaning the agreement to the
same thing (Baker 2000). It is an objective perspective which means that the other party freely
agrees to abide by the terms and conditions of the contract as offered by the offeror along with
the consideration. The acceptance should be at free will, clear and communicated to the other
party. Communication of acceptance holds a significant role (Powell vs. Lee (1908) 99 L.T. 284)
and thus, it has been established that silence is not a valid acceptance (Felthouse vs.
Bindley [1862] EWHC J35).

2CASE STUDY
Invitation to offer mean that the offer has not been made. It is only an invitation for the
offer to be made after which the offer would be made by the person and the same shall be
accepted by the other for the contract to exist (Harvey vs. Facey [1893] AC 552). It includes
invitation to treat, invitations, various advertisements, tenders, auctions and so on.
Employees as an agent to the store and vicarious liability: in Bazley vs. Curry
[1999] 2 SCR 534, the liability of the employer for the actions committed or omitted by their
employee and their relationship is that of an agency was established. In S vs. Attorney-General
[2003] 3 NZLR 450, the same was recognized and established.
Application:
When Donald saw the advertisement, it was invitation to offer. When Donald went to the
store and asked for the toaster, it was an offer. When the store manager explained that the toaster
was out of stock and hence, he cannot accept the offer, the offer was rejected.
When Donald saw the kettle in the store, it was invitation to offer. When Donald offered
to buy the kettle but at 5% additional discount, it was an offer and the same was accepted by the
manager enforcing the contract terms. When Donald went to check out, and the cashier requested
him to pay on full because such discount was not available, then Donald can enforce the term of
the contract between him and the manager. Because manager is an employee of the store, the
relationship of agent and principle existed between the manager and the employer store. Hence,
the store was liable for the contract entered into by the manager within his professional capacity
and in the course of employment.

3CASE STUDY
Conclusion:
It can be concluded that in the first issue, Try and Save is obliged to Donald to have the
Kettle at the discounted price.
It can be concluded that in the second issue, the store does not have any legal obligation
to find the stock of the toaster they advertised and supply Donald with one of them.

4CASE STUDY
REFERENCE:
Bazley vs. Curry [1999] 2 SCR 534
Ermogenous vs. Greek Orthodox Community of SA Inc. [2002] HCA 8
Felthouse vs. Bindley [1862] EWHC J35
Harvey vs. Facey [1893] AC 552
Powell vs. Lee (1908) 99 L.T. 284
R. Austen-Baker, "Gilmore and the Strange Case of the Failure of Contract to Die After All"
(2000) 18 Journal of Contract Law 1.
S vs. Attorney-General [2003] 3 NZLR 450
Smith vs. Hughes (1871) LR 6 QB 597