The issue of enforceability of Mojo Beverages Ltd. advertisement

1.Advise Mojo Beverage, explaining applicable legal principles and citing relevant authorities.

2.Advise Livestock Brokers as to the rights and liabilities of the parties in the light of the Commercial Interactions taken place between them.  

3.Presume Livestock Brokers sent the fax on 14 June but because of a transmission error Dorper Sheep Sellers did not receive it. Advise Livestock Brokers in this circumstances.   

4.Advise Stuart, with reference to the relevant principles.  

1.In this part of the assignment, the issue that arises on the basis of the facts given in the first question is if the advertisement issued by Mojo Beverages Ltd. is enforceable under the law against the company, keeping in view the rules of contract law and if Ben can enforce this promise against the company. This issue arises due to the fact that a promise had been made by Mojo Beverages Ltd. According to this promise, the company stated that it will give a price of $100,000 to any person who catches the fish named Lord Harry. This fish was tagged and released in the lake by the company. When this fish was caught by Ben, he wanted to claim the prize. However, the company told Ben that the amount of the price had been erroneously mentioned as $100,000, while actually the company meant $1000 as prize money.

To sort out the issue mentioned above, it needs to be seen if the advertisement of the company was an offer under the contract law or if it was merely an invitation to treat. According to the principles of contract law, a significant difference exists between an offer an invitation to treat (Atiyah, 2000). It is provided under the contract law that when the offer is accepted by the other party, it results in the formation of a legally enforceable contract. On the other hand, generally the companies engage in a lot of puffery in their advertisements. Therefore, in case of the claims mentioned in advertisements, it is not easy to point out responsibility (Beatson, Burrows and Cartwright, 2010). Therefore, usually advertisements are not treated as offers by the contract law. However in Carlill v Carbolic Smokeball Co. (1892) a different conclusion was made by the court. In this case, the issue was that an advertisement had been issued by the company. According to this advertisement, a reward of £100 was announced if anybody contracted influenza even after using these smoke balls. In order to establish the serious intention of the company, £1000 were deposited in the bank. Mrs. Carlill also read the regarding this offer, made in the advertisement. She used the smoke balls according to the instructions given by the company still she contracted influenza. Therefore, she claimed the reward of £100. The company refused to pay the prize money. In its defense, the company claimed that the advertisement cannot be treated as an offer, but it was merely an invitation to treat. However, the court did not accept this argument. Therefore, it held that a valid contract existed between the parties. Regarding the argument of the defendant company that the contract was greeted with the whole world and therefore it was not possible to enter into a contract with the whole world, the court expressed the opinion that the contract was not formed with the whole world but only the offer has been made to the whole world. The contract would only be created with the persons who fulfill the requirements declared in the offer.

Difference between an offer and an invitation to treat

In view of the rules of contract law that have been discussed above, in the present isssue also it can be concluded that the advertisement issued by Mojo Beverages Ltd. can be treated as an offer that has been made to the world at large. However, the contract will only be created with the person who succeeds in catching the fish, Lord Harry. Ben knew regarding the offer made by the company. Although there were certain rumors that the prize, stated in the advertisement, was mistakenly stated as $100,000, while in reality, the company had the intention of paying $1000. Even if the rumors were correct and the company indeed wanted to pay $1000 only as reward, but before Ben could know the reality, he had caught. The fish and claimed the prize money. In this way, Ben had completed all the requirements mentioned in the advertisement. As a result, a legally enforceable contract is formed between Ben and the company. Even if the advertisement amounted to the offer to the world at large, the contract would be produced only with the person who fulfills the stipulation stated in the advertisement. In this case, Ben fulfilled these conditions as he succeeded in catching the fish, Lord Harry. As a result, it can be stated that a valid contract is present between Ben and Mojo Beverages Ltd. Therefore, the company is bound to pay $100,000 to Ben.

2.In the second question, after considering the given facts, the issue arises if the letter of Dorper Sheep Sellers Pty Ltd was an offer. Similarly, it also needs to be decided if the rules of contract law allow Livestock Brokers to agree to this offer after six months.

Generally, the issue of the formation of a contract between the parties is analyzed on the basis of offer and acceptance. Hence, a party makes an offer, and the other needs to accept the offer. This results in a legally binding contract between the parties. If the other essentials that are considered necessary for this purpose are present. In the same way, a significant role is played by the difference existing between offered an invitation to treat (Atiyah, 1990). To be treated as an offer, it has to be wnshoed that the party had the intention of being bound by the terms of the offer. The relevant case in this regard is that of Harvey v Facey (1893). Hence the facts of this case need to be discussed briefly. Harvey sent a telegram to Facey in which it was asked, “Will you sell Bumper Hall Pen? Telegram lowest cash price”. It’s reply, Facey stated that the lowest price for Bumper Hall Pen is going to be £900. Harvey stated that they were ready to buy Bumper Hall Pen at this price. The issue was if a contract has been formed between the parties. The Privy Council decided that a valid contract was not formed. Reason given by the court in favor of its verdict was that a direct answer was not given to the first question by Facey, in which it was asked if he was ready to sell. Therefore the court stated that the lowest price mentioned in the reply was the answer to requests for information. Hence it was not an offer. No evidence was presented to suggest that Facey intented its reply to be an offer.

The decision in Carlill v Carbolic Smokeball Co. case

The contract law also states that once an offer has been made, such party can withdraw the offer at any time before its acceptance (Dickinson v Dodds, 1876). In case a particular deadline has not been decided by the parties to accept the offer, the law provides that the offer will be treated as being no longer available after the expiry of reasonable time. What can be treated as reasonable time depends on the contract’s subject matter.

After considering the rules mentioned above, in this case also Livestock Brokers informed that they are going to accept the offer. On the other hand, by this time Dorper Sheep Sellers had already sold the sheep to another party. Therefore, in this case, in view of the applicable rules, it can be stated that the letter of Dorper was an offer. But Livestock failed to accept the offer within reasonable time. In place of accepting the offer through mail, they sought more information when they sent a fax asking if the sale was to be completed on general terms. Such letter cannot be considered as the acceptance of offer. Therefore, when Livestock decided that it was going to accept the offer, the flock of sheep had already been sold to another party. As in this case, there was no contract created between the parties, Dorper cannot be prevented from selling the sheep to another party.

3.If it is assumed that Livestock Brokers have accepted the offer on 14th of June, and a fax was sent by them to Dorper by the facts could not be received by Dorper as a result of transmission fault, it needs to be stated in this case that the postal rule of acceptance does not apply in a case where instantaneous mode of communication has been used by the parties (Collins, 2003). In this situation, it is provided by the postal rule that the acceptance will be considered as complete when the letter of acceptance is placed in mailbox. However in this case, this rule cannot be applied and as a result, the general rule has to be applied. According to the general rule, the offer is considered to be accepted only when acceptance is conveyed to the other party. On these grounds, it can be concluded in this question that a contract was not present between livestock Brokers and Dorper.

4.It has to be seen in this question, if a part payment of debt can become good consideration in support of the promise of relinquishing the remainder sum.

Validity of contract between Ben and Mojo Beverages Ltd.

The relevant rule in this context is mentioned in Pinnel’s case (1602). According to this rule, the part payment of debt cannot be treated as good consideration for the promise according to which the remaining sum is given up. This rule can be explained with the help of following example.  If owes $50 to B, and a promise is made by B to accept $25 as the complete satisfaction of debt on due date, in such a case, B is not prevented by the law to claim the rest of the amount later on. Reason behind this rule is that A has not provided any consideration to support the promise made by B. Hence, A was already under contract to pay the full amount. A similar decision has been given by the court in Stilk v Myrick (1809). Another purpose behind this rule is to guard the creditors against economic duress on part of the debtors. The brief facts of this case are that Cole was in debt of £8.50 to Pinnel, which had to be paid on 11 number. On a request by Pinnel, an amount of £5.11 was paid to Cole. It was mentioned by Pinnel that this money was going to be the complete satisfaction of the debt. But later on Pinnel sued Cole for the balance amount. After going through the facts, it was decided by the court that the part payment made by Cole was not consideration. Hence, it was stated by the court that the agreement to accept part payment will be binding for the parties only if the debtor had supplied fresh consideration at creditor’s request.

A relevant case is that of  Foakes v Beer (1884). In this case, a judgment was obtained by Mrs. Beers against Dr. Foakes. Therefore, a request was made by Dr. Foakes, seeking some time to pay the amount. Under these circumstances, a promise was made by Beers. According to this promise, she assured that she was not take action if Foakes paid £500 at once and became ready to pay the rest of the amount in £150 installments. Foakes agreed and did the same. However, interest is also payable on judgment debts. Therefore, Mrs. Beers decided to claim interest. In this case, the House of Lords concluded that Mrs. Beers cannot be refrained from claiming interest. The reason given by the court in support of this decision was that consideration has not been provided by Foakes to support the promise made by Beers. Hence, it was decided that the promise could not be enforced against Beers.

In view of the rules discussed above, it can be concluded that in the present case, the promise made by Westphalia Marts Pty Ltd. that it will accept reduced rent of $700 is not supported by any consideration. Hence, it can be concluded that Westphalia can claim the deficit of $300 from Stuart. Similarly the supermarket can also ask Stuart to pay rent at the rate of $1000 per week. Therefore, the advice is that the promise made by Westphalia, cannot be enforced against the supermarket because there is no consideration for supporting the promise.

References

Atiyah, P.S. (1990) Essays on Contract, Oxford University Press, New York

Atiyah,P.S.(2000)An Introduction to the Law of Contract, Clarendon

Beatson, J.  Burrows A. and Cartwright, J.(2010) Anson’s Law of Contract, 29th edn OUP

Collins,H. (2003)Contract Law in Context4th Ed. CUP

Case Law

Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1

Harvey v Facey [1893] UKPC 1

Foakes v Beer (1884) 9 App Cas 605

Stilk v Myrick [1809] EWHC KB J58

Pinnel’s Case (1602) 5 CoRep 117a

Dickinson v Dodds (1876) 2 Ch. D. 46