Whether an Advertisement on the Notice Board Is Binding on the Offeror - Assignment Example

Business Law Assignment Question One (i) Introduction Vladimir advertises on his shopping complex’s notice board, the availability of a shop on lease. He offers to include the electricity charges in the lease amount. Sasha meets Vladimir on the 1st of June, and he informs her that the lease amount will be $1,000 per week and the term of the lease 12 months. In addition, Vladimir informs Sasha that she has to pay all the outgoings, including the electricity charges. Sasha draws attention to his advertisement, but Vladimir insists upon these terms. It is required to determine whether Sasha can successfully claim that Vladimir should be bound by his advertisement on the notice board. Issue Whether an advertisement on the notice board is binding on the offeror? Rule of Law An invitation to treat is not an offer, as held in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd Application An invitation to treat does not constitute an offer, and hence it cannot be accepted. As such, it is merely an indication of willingness to commence the offer and acceptance process, which could over time be transformed into an offer and acceptance. In such cases, the offer is made by the party that responds to the invitation to treat. Instances of invitations to treat, include auctions, advertisement of tenders, goods displayed in shops, goods or services advertised in newspapers, television or Internet, price lists, circulars and catalogues[Gib131]. For instance, in Carlill v Carbolic Smokeball Co, the defendants advertised that they would pay £100 to any person who became infected with influenza after using their product in the prescribed manner. Carlill complied with these instructions, but became infected with influenza. The defendants refused to pay her the amount, contending that there was no contract. [Car921]. However, the court held that an offer made to the world at large, could become a contract with a person who fulfilled its condition. Similarly, in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd, the court ruled that the display of goods was merely an invitation to treat and not an offer. Somervell LJ stated in his ruling that a contract was completed only when the customer indicated the articles that he required and the shopkeeper or salesperson accepted that offer[Pha53]. With this case, the rule that invitation does not constitute an offer was established. As such, the advertisement placed on the notice board by Vladimir is merely an invitation to treat. It is not an offer as per the above case law. Invitation to treat becomes an offer, only when an individual relies on it and changes her position. In our present scenario, no such reliance can be established. Conclusion An invitation to treat is only an indication of willingness to commence with the offer and acceptance process. Hence, no binding agreement has been formed between Vladimir and Sasha. Consequently, Sasha cannot claim successfully that Vladimir should be bound by the invitation to treat, since, it is not an offer, and it cannot be accepted by her. {Word Count: 526}. (ii) Introduction On the 6th of June, Vladimir made an offer to Milo, a fellow member of his rugby club, regarding one of his vacant shops. He offered to lease it out for $1,000 a week. Milo accepted this immediately. As such, a contract was formed between Vladimir and Milo. On the 7th of June, Vladimir received Sasha’s acceptance letter with respect to his original offer to her. It is required to determine whether Sasha’s letter constitutes a valid acceptance of Vladimir’s original offer. The following discussion has been taken up for this purpose. Issue Whether an acceptance of the offer after rejection of the original offer is valid? Rule of Law A counter offer negates the original offer, as held in Hyde v Wrench. The termination of an offer can be achieved in several ways, such as, revocation, rejection, failure to accept on time, death, and failure of a condition. In general, an offer can be terminated prior to its acceptance, and this holds good even when the offeror had agreed to keep the offer open until some specific date. A revocation is effective, only when it is communicated directly or indirectly. In this context, any manner of conduct or words conveying the intention to discontinue being bound by the offer is deemed to be adequate[Cla121]. Application An offer, upon being rejected by the offeree, cannot be accepted. Rejection can assume the form of a counter offer or refusal. As such, the counter offer constitutes a rejection of the original offer and the making of a new offer. Thus, it is of great importance to differentiate between mere requests for further information and counter offers. A rejection is effective, only upon being communicated. Moreover, the postal rule does not apply to rejection[Cla121]. For example, the interplay of offer and counteroffer is vividly illustrated in Hyde v Wrench. In this case, Wrench offered to sell his estate for £1,000 to Hyde, which the latter refused to accept. On the other hand, Hyde offered to purchase the property for £950. Wrench replied that he would convey his decision, in this regard, within two weeks. Subsequently, Wrench rejected Hyde’s offer, to which the latter replied that he would accept Wrench’s previous offer of £1,000. When Wrench refused to sell for this amount, Hyde sued for breach of contract and sought specific performance. The court rejected Hyde’s suit and declared that a counteroffer had the effect of nullifying the original offer[McK14]. Thus, a counter offer negates the original offer. As such, when a person responds to an offer by making an alternative offer, it will usually be regarded as a counter offer. For instance, offering a lesser amount than the amount stated by the offeror will constitute a counter offer[Mol15]. In our present scenario, during the meeting on 5th June, Vladimir made an original offer regarding the lease of the shop room to Sasha. At that juncture, Sasha argued with Vladimir claiming that the advertisement had stipulated that electric charges would be included in the rental amount. Thus, Sasha had not made an acceptance of Vladimir’s offer, and it constitutes a counter offer. As such, in our present scenario, Sasha made a counter offer to the original offer made by Vladimir regarding the lease of the shop. Counter offer results in the rejection of the original offer. Hence, Sasha cannot accept the original offer, as it has been negated. Moreover, on the 6th of June, Vladimir formed a contract with his rugby colleague for leasing the same shop. As such, the contract was concluded on 6th June. Conclusion Hence, Sasha’s letter of assent of 6the June constitutes nothing more than an offer, which was rejected by Vladimir on 7th over telephone. In addition, the original offer made by Vladimir expired, with the completion of the binding contract on the 6th of June. {Word Count: 648}. (iii) Introduction Vladimir offered to lease Roberto a shop for this purpose, and they reached an agreement, whereby Roberto was to pay a rent of $1,000 per week to Vladimir for the shop. Subsequently, Roberto noticed that the business of several other shops in the complex, including his own, was deteriorating. Thus, Roberto asked Vladimir to reduce the rent to $500 per week, which the later agreed to orally. Roberto paid the reduced rent for 20 weeks. At that juncture, Vladimir sued Roberto for rent arrears of $10,000. It is required to advise Roberto regarding his legal position. Issue Whether Vladimir can claim rent arrears from Roberto. Rule of Law In Birmingham & District Land Co v London & NW Railway, the court held that a period of time specified in a contract would not apply, if the construction had been discontinued, and there had been an understanding to this effect between the parties. Application For instance, in Hughes v Metropolitan Railway Co, the House of Lords held that an implied undertaking could alter contractual rights. In this case, a tenant of property had been served with a notice. This required him to rectify some specified defects within six months. The tenant arrived at the conclusion that it would be more beneficial to sell the remainder of their interest to the landlord, instead of undertaking the repairs[Hug771]. An agreement to sell the interest was not concluded between these parties. Their Lordships ruled that during the period when negotiations were in progress, there was an implied understanding that the notice period would be kept at abeyance [Hug771]. Consequently, the action for ejectment initiated by the landlord for failure to make the repairs within six months was unsuccessful. Moreover, in Birmingham & District Land Co v London & NW Railway, the court held that a period of time specified in a contract did not apply. This was on the grounds that there had been an implied understanding that the period would be suspended if the building operations were discontinued. The court adopted a particular view regarding persons with contractual rights against others. If such individuals induced those over whom they exercised such rights, to believe that these rights would not be enforced or would be kept at abeyance for a particular period of time, then they would not be permitted to enforce these rights[Bir88]. Such rights could be enforced only after that particular period of time had passed by. In Central London Property Trust v High Trees House Ltd, the rent on a block of flats was reduced by their landlord, during World War II. After the War came to an end, the landlord served a notice upon the tenants that he would charge the normal rent for the future. This was upheld by the court. Although, the landlord did not clam the enhanced rent for the period during the World War II[Cen471]. According to the above case law and discussion, Vladimir cannot sue for arrears of rent from Roberto. He had agreed with Roberto, to reduce the rental amount to $500, as the latter’s business was deteriorating. As the situation did not improve, there was an implied understanding between the parties regarding the reduction of the rental amount. Conclusion As demonstrated in cases, such as Birmingham & District Land Co v London & NW Railway, Vladimir cannot make a successful claim, for the arrears of rent of $10, 000, from Roberto, since the situation had not improved. {Word Count: 607}. Question Two 2. False. 3. False. 4. False. 5. False. 6. True. 7. False. 8. False. 9. False. 10. True. 11. True. References Birmingham & District Land Co v London & NW Railway (1888) 40 Ch D 268. Carlill v Carbolic Smoke Ball Company (1892) EWCA Civ 1 . Central London Property Trust v High Trees House Ltd (1947) KB 130. Clarke, J., 2012. Agreement. [online] Available at: [Accessed 2 May 2015]. Gibson, A. & Fraser, D., 2013. Business Law 2014. Frenchs Forest NSW, Australia: Pearson Higher Education AU. Hughes v Metropolitan Railway Co (1876-77) LR 2 App Cas 439 UKHL 1. Hyde v Wrench (1840) 49 ER 132. McKendrick, E., 2014. Contract Law: Text, Cases, and Materials. 6th ed. Oxford, UK: Oxford University Press. Moles, R. N., n.d. Termination of an offer. [online] Available at: [Accessed 2 May 2015]. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953) All ER 482. Read More