OAU BLW17 Case Study: Contract Law Principles and Analysis

This case study analyzes three contract law scenarios. The first question examines whether a restaurant is obligated to sell t-shirts at a marked-down price, considering the principles of offer and invitation to treat, and the role of acceptance. The second question focuses on whether fridges were sold according to electronic records, analyzing the concepts of counter-offer, revocation, and the postal rule in the context of email communication. The final question investigates whether an employee is bound by a restraint clause in their employment contract, examining the validity of such clauses based on legitimate interests and reasonableness regarding time and geographical area. The analysis applies relevant case law and legal principles to each scenario, providing reasoned conclusions.

Running Head: CASE STUDY
CASE STUDY
Name Of the Student
Name Of the University
Author’s Note

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CASE STUDY
Table of Contents
Question 1:.......................................................................................................................................1
Issue:............................................................................................................................................1
Rule:.............................................................................................................................................1
Application:.................................................................................................................................2
Conclusion:..................................................................................................................................2
Question 2:.......................................................................................................................................2
Issue:............................................................................................................................................2
Rule:.............................................................................................................................................3
Application:.................................................................................................................................4
Conclusion:..................................................................................................................................5
Question 3:.......................................................................................................................................5
Issue:............................................................................................................................................5
Rules:...........................................................................................................................................5
Application:.................................................................................................................................6
Conclusion:..................................................................................................................................6
BIBLIOGRAPHY:..........................................................................................................................7
Case Laws:...................................................................................................................................7
Journals and Scholars:.................................................................................................................8

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Question 1:
Issue:
The issue in the case is whether Britney is obliged to sell the t-shirts at $5.00 to Amy.
Rule:
Offer: it is the first and an essential element for the formation of the contract wherein the one
party proposes the other party an offer with the set of terms and conditions along with the consideration
against the contractual obligation laid down in the agreement and same shall be binding upon both the
parties if the other party freely accepts the offer.
Invitation to offer: it has been explained as the invitation or the willing ness of the party to negotiate the
terms and conditions of the contract which shall be subject to the offer being made by the party accepting
the invitation and proposing their terms and conditions for the formation of contract. As laid down in the
Boots case1, it can be explained that the controversy with respect to the display of items in a supermarket
being an offer or an invitation to offer is under huge speculation. It has been explained that the sale in a
supermarket is made under the supervision of the shopkeeper and when the contract is complete, the
essence lies that it is the shopkeeper who provides the bill against the goods sold. Hence, the offer is
made by the customer which is then accepted by the shopkeeper against which the bill is provided
forming the contract upon the payment of money and delivery of goods from the shop to the customer.
Thus, it can be stated that display of goods in a supermarket is invitation to offer and not an offer. It has
further been affirmed in Patridge vs. Crittenden2 and Fisher vs. Bell3. However, the critics have further
explained that the advertisements where the invitation itself seems as an offer which can be accepted by
1 Pharmaceutical Society of GreatBritain vs. Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401
2 Patridge vs. Crittenden [1968] 1 WLR 1204
3 Fisher vs. Bell [1961] 1 QB 394

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performance without any scope for negotiation shall be deemed as an offer and performance of which
would form a valid contract4.
Application:
Applying the theory of critics, it can be explained that sale would be complete by performance
alone which paves scope for negotiation according to which, contract would complete only if Amy offers
to buy the t-shirts at the price and Britney agrees to sell the t-shirts to Amy. Hence, applying the ruling of
Boots Case, it can be explained that the display at the restaurant is an invitation to offer upon which Amy
offered to buy 10 t-shirts at $5.00 each. However, Britney may agree or refuse to sell the t-shirts at the
price offered.
Conclusion:
It can be concluded that Britney is not obliged to sell t-shirts at $5.00 to Amy.
Question 2:
Issue:
The issue in the case is whether the fridges have been sold according to the electronic records.
Rule:
Counter offer is the offer made by the other party countering or bargaining the terms offered by
the party for the formation of the contract5. Such bargaining in the form of counter offer would render the
4 Carlill vs. Carbolic Smoke Ball Company [1893] 1 QB 256
5 Kolvart, Merit, Margus Poola, and Addi Rull. "Smart contracts." The Future of Law and etechnologies. Springer,
Cham, 2016. 133-147.

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original offer as void and would place the counter offer as the applicable offer to which the acceptance
would lead to the formation of the contract6.
Revocation of an offer: an offer can be revoked either within the reasonable time from the date of
proposing the offer or before the acceptance of the offer by the offeree7. It has then been held by the court
that although the acceptance is deemed from the time of posting if the acceptance, the same postal rule
does not apply in case of revocation8. Revocation is valid only when the same has been communicated to
the offeree.
The rule of Postal acceptance is that the offer shall be deemed to have been accepted from the
time the communication of acceptance has been established by the party9. In other words, an offer shall be
deemed to have been accepted the moment at which the letter is posted10. The term “posted” establishes
the time at which the letter is handed over in control of the post office 11. However, in case of e-mails as
the instantaneous communication, it can be explained that the applicability of postal rule would depend
upon the characteristic of the communication based on its spontaneity. It has been held by the court that
the postal rule would not apply to the e-mails as the instantaneousness of the communication established
through e-mail is not recognised12. Thus, it can be explained that in case of e-mails the general rule of
6 Hyde vs. Wrench [1840] 3 Beav 334
7 Smits, Jan M., ed. Contract law: a comparative introduction. Edward Elgar Publishing, 2017.
8 Byrne & Co vs. Leon Van Tien Hoven & Co [1880] 5 CPD 344
9 Mclver vs. Richardson [1813] 1 M & S 557
10 Holwell Securities Ltd vs. Hughes [1974] 1 WLR 155
11 Brinkibon Ltd vs. Stahag Stahl and Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34, 41
12 David Baxter Edward Thomas and Peter Sandford Gander vs. BPE Solicitors (a firm) [2010] EWHC 306 (Ch)

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acceptance shall be applied stating that the offer would be deemed to have been accepted when the
acceptance has been communicated to the offeror13.
Acceptance by email can only be complete and be determined in following ways14:
 The time the email has been sent.
 The specific period after the email has been sent.
 The time shown on the delivery receipt received by the sender.
Application:
In the given scenario, it can be explained that when Damien had countered Adam’s Offer for the
sale of fridges from 3000$ to 2500$, the original offer was immediately killed and hence, the original
offer would be rendered as void. When Adam accepts the offer of 2500$ as the selling price of the fridge
at 9.00 am, the contract was formed. However, at the same time when Damien sent the e-mail to revoke
the counter offer, and was ready to purchase the fridge at 3000$, it is again an original offer which is
subject to the acceptance of Adam. Analysing the emails of both the parties, the elements for the
acceptance by email can be applied stating that although both the mails were sent at the same time, it is
the Damien’s mail which was received by Adam earlier at 9.30 am. Therefore, the offer of Damien
willing to pay 3000$ for the fridge would be applicable and the contract would only be formed upon the
acceptance of the offer by Adam.
Conclusion:
It can be concluded that the fridges have not been sold according to the electronic records.
13 Thomas vs. BPE Solicitors [2010] EWHC 306 (Ch)
14 Che Hashim, Rosmawani. "Postal rule in acceptance via email." Commonwealth Law Bulletin 44.1
(2018): 111-127.

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Question 3:
Issue:
The issue in the case is whether Edward is bound by the restraint clause in the letter.
Rules:
Restraint clause: it is a common law doctrine which curbs the freedom of a party to conduct
business or trade in order to protect the interest of the other party who is restraining the freedom.
However, freedom to trade is the basic right of a human being but the same can be waived by the way of
contractual clause preventing one party from engaging in similar business within a specified geographical
area. It is validated on the ground to protect the interest of the party restraining the freedom with respect
to trade secrets or proprietary information15. However, the essential element of the clause to be valid is
base don its reasonability with respect to specified time and geographical area in which the restraint
clause is applicable16. Therefore, it can be explained that restraining clauses in employment contracts can
be held valid if:
 There is an existence of legitimate interest which is required to be protected.
 The reasonability of restraint can be validated.
Application:
In the given scenario, it can be explained that, Edward Smith had signed an employment contract
with Gourmet Table containing a restraint clause stating that he would not engage in business within the
radius of 5 kilometres for a period of not more than 24 months. Applying the elements for the validation
of restraint clause, it can be explained that the interest which requires to be protected is the trade secret or
15 Dyer’s Case [1414] 2 Hen. V, fol. 5, pl. 26
16 Nordenfelt vs. Maxim, Nordenfelt Guns and Ammunitions Co [1894] AC 535

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the skill of the chef which is an essential essence of a restaurant. Secondly the reasonability of the clause
can be determined by the analysis of two factors:
 The period of 24 months is not long and is sufficient to establish the business with a new chef
without losing customers who are used to the skills of Edward who may join the rival restaurants.
 The radius of five kilometres is not too big to lose out on his trade or other scope of employment.
Conclusion:
It can be concluded that Edward is bound by the restraint clause in the letter.

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BIBLIOGRAPHY:
Case Laws:
Brinkibon Ltd vs. Stahag Stahl and Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34, 41
Byrne & Co vs. Leon Van Tien Hoven & Co [1880] 5 CPD 344
Carlill vs. Carbolic Smoke Ball Company [1893] 1 QB 256
David Baxter Edward Thomas and Peter Sandford Gander vs. BPE Solicitors (a firm) [2010]
EWHC 306 (Ch)
Dyer’s Case [1414] 2 Hen. V, fol. 5, pl. 26
Fisher vs. Bell [1961] 1 QB 394
Holwell Securities Ltd vs. Hughes [1974] 1 WLR 155
Hyde vs. Wrench [1840] 3 Beav 334
Mclver vs. Richardson [1813] 1 M & S 557
Nordenfelt vs. Maxim, Nordenfelt Guns and Ammunitions Co [1894] AC 535
Patridge vs. Crittenden [1968] 1 WLR 1204
Pharmaceutical Society of GreatBritain vs. Boots Cash Chemists (Southern) Ltd [1953] 1 QB
401
Thomas vs. BPE Solicitors [2010] EWHC 306 (Ch)

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Journals and Scholars:
Che Hashim, Rosmawani. "Postal rule in acceptance via email." Commonwealth Law
Bulletin 44.1 (2018): 111-127.
Kolvart, Merit, Margus Poola, and Addi Rull. "Smart contracts." The Future of Law and
etechnologies. Springer, Cham, 2016. 133-147.
Smits, Jan M., ed. Contract law: a comparative introduction. Edward Elgar Publishing, 2017.