Business Law - Jimmy and Massive Freak Co - Case Study Example

Business Law Name Institutional Affiliation DateTop of For Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Facts about the Case Jimmy, an 18-year-old, is an intelligent student at the university, who is not contented with his light body, which has been a laughing stock for a long time among his colleagues. Jimmy has accessed infomercial on televisions about a product that would be taken in place of the daily meals and which would help him gain up to twenty percent of weight in two weeks’ time. The infomercial stipulated that users, if they did not gain the stated weight within the limited time frame, would be paid a total of $5000. Jimmy was impressed by these statements about the Massive Freak Challenge, made a call to Massive Freak Co after accessing their contact from the screen and placed an order for Massive Freak. He took the product as prescribed but did not achieve weight gain. He, therefore, seeks legal advice in this matter. Legal basis of the Case Jimmy can successfully claim for damages suffered in this case based on a number of legal facts. For example, he must illustrate the existence of a legally binding contract and its subsequent breach. Further, he must express the damages suffered as a consequent of that breach. Illustrating the Existence of the Contract in the Case The first thing is determination of the existence of the contract as expressed in the facts of case summary. For a contract to exists, the following elements must be substantiated in the case1. The elements include the presence of an offer, acceptance of the offer, consideration, legality, formality and capacity. The compliance to these elements is discusses herein. Offer Massive Freak communicates about its offer through a Television advert in a manner that is unambiguous. Further, Jimmy accepts the offer as prescribed in the advert, and therefore, a show of interest in the contract. It is evident that Massive Freak presents an offer, which is presented through television as a medium, and it gains effectiveness when it reaches the intended offeree. The offer in this case is stated in clear terms and its void of ambiguity. This nature of expressing an offer by one party through an advertisement and the acceptance by other party results in a legally binding contract as illustrated in the precedent case of Carlill v. Carbonic Smoke Ball Co. In the Carlill v. Carbonic Smoke Ball Co.2, the latter manufactured Carbonic Smoke Ball, a drug which it conceived to be the ultimate cure source for cold, influenza and related complication due drinking of cold water. An advertisement was designed in a newspaper, which rewarded any person with $100 if they developed influenza or related complications after using Carbonic Smoke Balls, and further claimed to have made a show of sincerity through a deposit of $1000 with Bank of Alliance. Carlill thus sued the firm when she contracted influenza after taking the drug. The company denied her claim, arguing that the reward was a marketing strategy. However, the Court of Appeal stated in clear terms that the advertisement failed concise clarity on the reward restrictions thus the company was liable to pay the reward to Mrs. Carlill. Acceptance In offer has to be accepted for the contract to be binding. For this case, Jimmy expressed extrinsic approval of the offer, giving rise to mutual agreement between both parties. Jimmy accepts the offer through his conduct of seeking the telephone contacts of Massive Freak Co and calls to confirm and places an order for Massive Freak Drink. In the case Carlill v. Carbonic Smoke Ball Co, Carlill accepts the offer by purchasing and taking the drugs as prescribed. Therefore, this case also meets the test of acceptance as describe by precedent law. Capacity The parties to a contact must have what is called contractual capacities3. That implies they should be of sound mind, right age and not barred by any statute to contract. Jimmy qualifies to enter a legally binding contract with Massive Freak Co since he has the legal capability to get into a legal relation. He is of age to contract (18 years old). He is also intelligent, and that qualifies him to be of sound mind. Further, given that Massive Freak Co is a legal entity, the contract entered into by the two is enforceable by law. Formality The parties, that are Jimmy and Massive Freak Co, have observed the formality as expressed in the contract protocol. Legality The subject matter of the contract has to be legal. The two are transacting over a legal object which the law can to enforce. Consideration In this dealing, Jimmy offers to pay for what is offered by Massive Freak Co, and the pay is consideration. Summary as to Compliance with the elements of a contract Given the two parties complied with the elements of contract as to offer, acceptance, legally, capacity, formality and consideration, the contract entered into is enforceable in a court of law. This means that, Jimmy, can successfully sue for the damages he suffers due to breach of contract. Legal Basis upon which Jimmy can Base his Claim Breach of Contract Jimmy can base his legal argument on the axiom that the nature of breach goes to the root of the contract, which is a breach of condition. In a situation where a party breaches a condition, it entitles the injured party to treat the contract as repudiated and claim for damages. The offeree can sufficiently make his claim on the provisions of breach of condition as provided for in the Australian Consumer Law (ACL) 2010. According to s. 55 of ACL4, the goods provided by the seller have to be reasonably fit for purpose for which the buyer, implicitly or expressly communicated to the seller before executing the contract. This assumption is based on the general fact that the seller has to either implicitly or expressly make known the intention of the good to be sold or that the buyer should express the reason for which he wants to buy the goods. Therefore, Jimmy can base his claim on lack of fitness for purpose, as Massive Freak Drink failed to yield effectively the purpose it was intended for as told by the seller. In s. 56 of ACL, consumer guarantee is provided for in the sense that the goods sold by prescription must perform as per the description5. The law, further, asserts that non-compliance of the goods to their description amounts to breach of condition (Coorey, 2014). Thus, given the Massive Freak product has the description of adding weight and is taken as prescribed, the lack of performance of the product entitles Jimmy to treat the contract as repudiated and claim for damages. Revocation and Fraudulent Misrepresentation What is more, the case can be strengthened by the rules revocation and the existence of fraudulent misrepresentation in subject matter of the contract. Where the company argues that it had revoked the offer before the other side of the bargain, the argument can be treated immaterial in the sense that it comes after Jimmy had accepted the offer. The rule is that, an offer can only be revoked before acceptance. Thus, Jimmy can sue Massive Freak Co for revocation of a binding contact, as the company withdraws the offer of contract after acceptance. Jimmy can sue Massive Freak for termination of the contract that has fully been accepted, as held in the case of Paybe v. Cave6. Revocation occurs after successful communication through notice to the offeree before acceptance. It is, therefore, not necessary that the communication be effected by the offeror, as a third part can adequately communicate the notice. Revocation cannot occur after acceptance. Jimmy can also base his legal argument on the existence of fraudulent misrepresentation. Massive Freak Drink Co makes fraudulent misrepresentation in their message with regard to advertisement. They say their advert was a marketing strategy and was not supposed to be taken serious. This statement means they are aware of the falsity of the challenge and it acts recklessly in the design and presentation of the advert. In Andrew v. Mockford7 case, defendant made statements whose truth could not be justified. The falsity in the whole prospectus led to the plaintiff suing Mockford for fraudulent misrepresentation which apparently the defendants were well aware of, making them liable and the offeree could be entitled for restoration to his state before the contract. Damages Jimmy is Entitle to in this Case As stipulated by law and through consideration of the facts presented about the case, Massive Freak is liable for breach of contract and damages related to rescission of the binding contract. Jimmy should also be compensated a total of $299 for the rescission of the binding contract into which he had entered with Massive Freak Co and further, claim $5000 to cater for the damages caused as a result of deceit of intention of the offer by Massive Freak Co. The offeror could also be liable to punitive and liquidation damages. In summary, there is a breach of contract and the injured party, Jimmy, is entitled to claim for liquidated damages cutting across rescission and compensatory damages. The nature of Jimmy’s claim is enforceable in a court of law. Bibliography Primary Sources Cases Andrew v. Mockford [1896] 1-QB-372 Carlill v. Carbonic Smoke Ball Co.,[1892] EWCA Civ Paybe v. Cave [1789] 3 TR 148 Statutes and Statutory Instruments The Australian Consumer Law (ACL) 2010 Secondary Sources Books Coorey, A. (2014). Australian consumer law. Websites Julie Clarke. 2014. Australian Contract Law [ONLINE] Available at: http://www.australiancontractlaw.com/law/scope-terms.html. [Accessed 12 December 2014]. Online Journal Articles Harland, D. 1995. Consumer guarantees. The relevance for Europe of theAustralian experience? CONSUMER LAW JOURNAL. 3, 153-166. Read More