LAWS1100 - SuperNatural & Gaia: In-depth Analysis of Contract Law

This case study examines a potential contract dispute between Gaia, a retiree, and SuperNatural, a herbal medicine business. SuperNatural advertised a tablet, "Flu-Defeat", promising a refund and a trip if users over 65 who followed the instructions still contracted the NeuroToxiaflu. Gaia, a 70-ye...Read More

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Issues
The issue is whether a contact exists between SuperNatural and Gaia. We also need to determine
first whether there is offer and acceptance to determine whether a contract exists.
Law
For a valid contract to exist, parties must reach an agreement after one gives an offer and the
other party accepts the offer without a counter-offer. For contract to exist, there has to be a
meeting of the minds, and this is construed depending on the circumstances. Offer shows the
willingness to enter into a contact, and if accepted, a valid contract will exist. An offer is like a
promise to do something. Offers can be made to particular people and sometimes to the world as
seen in AGC Limited v Mchhirter. Acceptance involves the offeree, agreeing to what has been
offered. This can be done through conduct, a valid statement or when a person whom the offer is
being directed to agree to the offer. It is usually sufficient when an offeree acts in a particular
way based on the offer. Acceptance does not require any particular conduct. The capacity of the
parties entering into a contract also matters. Capacity includes legal age, sound mindedness and
ability to understand the contractual terms (Bix, 2012, pg. 20).
In general, courts do not consider advertisements as offers. They are instead invitations to begin
the process of negotiations. Most public advertisements are invitations to treat and do not
constitute offers. In Patridge v Crittenden (1968); in this case, the defendant was selling
Bramblefinch hens, wild hens. He advertised the burds, the amount and the number, it was
unlawful to sell such wild birds, and he was sued. In court, the issue was whether an
advertisement was an invitation to treat- (which will make him blameless for the offense), or an

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offer which will (make him guilty). The court held that the defendant was not guilty because an
advertisement is an invitation to treat and not an offer. Such advertisements have an exception in
the cases of rewards because rewards require certain requirements to be fulfilled so that a person
is entitled to the reward. In Giting v Lynn (1831) when an offer is too vague, it cannot be
considered a valid offer. In this case, there was an offer that after purchasing a horse there was a
promise to pay "$5 more if the horse was lucky". The court considered this offer to be too vague
(Smits, 2017 pg 45).
Carlill Vs. Carbolic Smoke Ball case shows a unilateral offer scenario. In this case, an
advertisement was placed stating that anyone who used the smoke ball as per the directions and
still contracted influenza, was entitled to $100 reward. In this case, the instructions required a
person to use the smoke balls for three weeks and three times every day. Mrs. Carlill purchased
the smoke balls, and after following the instructions, she still contracted influenza. She sought to
claim the $100 reward. In this case, issues as on the communication of Carlill's acceptance were
raised. The court decided that although there was an offer to the world at large, Carlill took the
necessary steps to fulfill the requirements hence a valid contract existed. Although she did not
communicate about her acceptance, she fulfilled the terms as required. This shows how such
unilateral offers can waiver the need for communication from parties (Blum, 2017 pg.57).
Application
The case of Guia and SuperNatural is a classical case of a unilateral contract such as the one of
Carliill vs. Carbolic Smoke Ball case. In this case, an advertisement is placed with instructions
to use, and it guarantees that the user will have immunity to "NeuroToxiaflu." It further states
that if a person of the prescribed age (over 65), and follows the given instructions complies and

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still contracts the disease, they entitled to a refund and a trip with two other members. The
advertisement states further that supernatural has made arrangements with Sunshine Coast Resort
for the trip to show their sincerity. Guia is a 7-year-old retiree who has suffered the Neuro Toxia
Virus since she was 65. When she sees the advertisement in a flyer, he rushes to the nearest
Pharma-Shed and purchases the 100 tablet pack. She takes the tablets as prescribed and she is
diagnosed with her worst strain of Neuro Toxia.
She then contacts Roxane and Alexander to get the refund. Roxane and Alexander claim that it
was a gimmick advertisement and there was no agreement between Gaia and Supernatural. They
further tell Gaia they had no intentions of entering a legally valid contract. Firstly we see an
advertisement where Gaia responds and fully adhere to the requirements. There is a unilateral
offer, where it requires the parties to respond by fulfilling the requirements. We see Gauia
sticking to the two months plan, and she does not get the results. In Carlill vs. Carbolic smoke
balls, the court states that the parties need not communicate acceptance. Fulfillment of the
conditions is sufficient. Empirical holding vs. Machon Pau atates that acceptance can take any
form, which includes signaling the offerer that the offer has been accepted (Smits, 2017 pg, 45-
60).
We also see that once the contract has commenced, and the offeror has not withdrawn the offer,
the offeror cannot revoke the contract because there is commencement. There is an implied
promise, hence irrevocable. This was held as such in Errington V Errington (Oughton, 2006,
pg. 56). In this case, a father promised the son and his daughter in law a house if they paid the
full installments of the mortgage. In this case, they both proceeded as agreed but the wife of the
father inherited the house after the father passed away. When the mother tried to revoke the

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offer, she was estopped because a collateral contract existed which was supposed to remain open
until the agreed conditions were fulfilled (Wood, 2010 pg. 58).
For an offer to be valid, the offeree also must know. We see this in Gibson V Proctor that even
when information is from a third party, the claimant is entitled to the reward by virtue of
knowledge that it exists. Sometimes acceptance requires a party to notify another person as held
in Felthouse v Binley. However, in unilateral contracts acceptance need not be communicated.
Some of the defendant's arguments in the Carlill's case were that the advertisement lacked intent
hence the offer was not there. The other argument was that there was no notification of
acceptance and that it is impossible to make an offer to the world. The defendant also tried to
argue that the offer was too vague and that there was no consideration. The court countered these
arguments stating that depositing $1000 in the bank to show sincerity, showed intent (Stone &
Devenney,2017 pg. 20). In the case of Gaia, when Roxane and Alexander went ahead to arrange
with Noose Resort, shows intent to contract. The court also stated that in unilateral contracts,
acceptance is through full performance and there is no need to communicate intent. In the case of
Gaia, she is seen as accepting the offer when she fully performs the requirements and sticks to
the prescription given in the advertisement. The court also held that the defendants would benefit
when people use their balls and even if the balls are not directly purchased from them. In the
case of Roxane and Alexander, they cannot claim the advertisement was a Gimmick because
they already benefited from it. Given this, a valid contract exists, and Gaia is entitled to a refund
and the holiday with two people of her choice.
Generally, a consideration in any contract is always given with a paid the price. In unilateral
contracts, consideration is the execution of the requirements. The promise made by the offeror

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can be enforced once the requirements are fulfilled. Consideration cannot be past and can only be
used to claim a promise. In Routledge v Grant, revocation can take place any time as long as the
time limit which was given has not expired (Schulze, 2007 pg. 175).
Conclusion
Many courts look at the intent of the advertiser when looking at the validity of the contract in
such advertisements. This means that the courts look at whether a by-stander would look at the
advertisement and assume that a contract was created (McNeil, 2017 p.287). Advertisers are
required by law to shun from putting misleading information or do false advertisement. The
court will also consider the circumstances surrounding every case because the circumstances are
usually unique. Sometimes the courts look at whether the offer was accepted by the complainant.
In general, an offer can be revoked unless an advertiser has already received the benefit or action
has been taken in reliance on the offer as seen in Errington v Errington. Therefore, in the case of
Neurotoxia and Guaia, a contract is formed, and NeuroToxia cannot purport to revoke the
contract since Guaia has already fulfilled his part of the deal. Also, contracts of a unilateral
nature require only that the requirements are fulfilled, and communication is not necessary.

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Bibliography
Stone R. and Devenney,J., 2017. The modern law of Contract. Routledge
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Press.
Blum, B.A., 2007. Contracts: examples & explanations. Aspen Publishers Online
Macneil, I.R., 2017. Contracts: adjustment of long-term economic relations under classical,
neoclassical, and relational contract law. Nw. UL Rev., 72, p.854.
Mulcahy, L., 2008. Contract law in perspective. Routledge-Cavendish
Oughton, D.W. and Davis, M., 1996. Sourcebook on contract law. Cavendish.
Schulze, R., 2007. New features in contract law. Walter de Gruyter.
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