Major Issues on the Law of Contract - Case Study Example

Business Law James notices a gold watch with a price tag of 25 in a shop window of a store. When he walked into the store, he was attended by Elizabeth, the store person when he offered to make payment for the gold watch. Elizabeth came back shortly and announced to James that they would not sell the gold watch at 25 for they had made a mistake with the price. Elizabeth explained to James that the correct price for the watch was supposed to be 250 and not 25 as indicated by the price tag. This issue concerns invitation to treat under the law of contract. Marked prices of goods displayed in shop windows or catalogue mentioning prices of goods do not, as a rule constitute an offer as to compel the store person to sell those goods at the marked prices. The prospective buyer, by offering that price is himself the offeror and his offer, if accepted, create a binding contract. 1 For this case, James just noticed a gold watch with a price tag of 25 hence it neither does nor compels the store person to sell the gold watch at that particular price. The price tag with the gold watch was just inviting others to make an offer of their own on how much they are to buy the watch. A binding contract would have been created when the store person (Elizabeth) would have accepted the offer made by James since the price with the gold watch was just inviting customers to make their offer. Normally, invitation to a treat is used to request expression of interest from the customers. For this case, any product with a price tag does not compel the store person to sell his product at that price but requests, an expression of interest from the customer to make their offer and binding contract of sale would occur when he agrees to sell at that price. 2 Invitation to treat must be distinguished from an offer. This is because, invitation to a treat invites for people with to make on an offer whereas, in a offer, the offeror make in an offer and just wait for people to accept that offer. In order for a contract to be enforceable, it must fulfill certain basic requirements. There must be an agreement based upon genuine consent of the parties, supported by a consideration and made for a lawful object between competent parties. A relevant case studied in the issue of invitation to treat is that of: Pharmaceutical Society of Britain v. Boots Chemists of 1953 Goods were sold in Boots Chemist shop under the self-service system. Customers selected their purchases from the shelves, put them into baskets supplied by Boots Chemists and took them to the cash desk where they paid the price. It was held that the customer made the offer when he presented them at the cash desk, and not when he removed them from the shelves.3 The price tag with the gold watch was merely inviting James to make his offer on the price he would like to buy the gold watch at and does not compel him to sell at that price. For this case, a contract would have been made when James collects the watch from the shelves and place it on the counter if Elizabeth agrees to sell it at that price. But since the 25 price with the gold watch was merely inviting customers to make an offer but not sell it at that price. By taking the money from James, it would mean that Elizabeth had agreed to sell the gold watch at that price. For this case, it would be immaterial for James to state that he has a right to purchase a gold watch at 25 as indicated on the price tag. He would not succeed in any court of law for him to be sold the gold watch at 25. Another case studied on invitation to treat was that of:- Fisher v. Bell of 1961 On this case, Bell a shopkeeper, displayed a flick knife priced at four shilling in his shop window. He was charged with offering for sale an offensive weapon contrary to the restriction of offensive weapon act. It was held that a mere display of the goods in a shop window is not by itself an offer for sale. Bell was not bound to sell the knife to any one entering his shop and offering to him four shillings. 4 A mere display of a gold watch at 25 does not compel the store person, Elizabeth to sell the watch at that price. They are can not sell the watch to anyone who enter the store and offer to them 25. For this case, Elizabeth will not be compelled to sell the gold watch at 25 as indicated in the price tag. This was a mistake where the watch was supposed to have been displayed with a price tag of 250. The price tag of 25 with the gold watch was merely an invitation to treat hence will not compel the store owner to sell at that price. The store owner was merely inviting an offer for anyone who would have an interest of a gold watch to come and make his offer. It was after making an offer will the store agree to sell the gold watch at the agreed price. On the case where James noticed a notice on a lamppost saying (Black cat missing, with tag on neck, please return to address on other side3 of tag and a reward of 60 will be given). James saw the cat and returned it to the owner and he was just given 30 by the Arun (Owner) instead of 60. James insisted that he be given the full amount indicate on the notice but Arun told him "take it or leave it". On this case, Arun made an advertisement for a reward for anyone who finds his missing cat to be given a reward amounting to 60. A notice that was placed on a lamppost by Arun was an advertisement that was inviting anyone who finds his missing cat to get a reward of 60. This is an invitation to a treat to any one who comes across his missing cat, the contract become binding. An offer may be made to a specific person or to any member of a group of persons or to the world at large, but it cannot form the basis of a contract until it has been accepted by an ascertained person or group of persons. If A makes an offer to B, it is a specific offer and B is the only person who can accept it. But in many cases, it is immaterial to whom the offer is made. Offers made by advertisement are the commonest form of offers made to the world at large, and can be accepted by anyone just by acting on them. 5 A relevant case studied on an advertisement that was made to the world at large is that of: Carlill v. Carbolic Smoke Bal Co. of 1893 The defendants offered a reward of 100 to anyone who contracted influenza after using the smoke ball for a fortnight. The plaintiff, relying on the advertisement, bought the smoke ball and used it as prescribed, but still contracted influenza. She sued for the advertised reward. It was held that the advertisement was a true offer, and not a mere advertisement puff and the defendants were held liable to pay the reward.6 Similarly, for the case of Arun, he made an advertisement in a notice that he would give a reward of 60 to anyone who came across his missing cat. This advertisement was meant for the whole world in general since it did not specify who should be entitled to a reward. The notice indicated that anyone who came across came across Arun missing cat was entitled to a reward of 60. This was itself an offer which if accepted becomes binding between the offeror and the offeree. For this case, Arun made an offer about a price of 60 would be rewarded to anyone who came across his missing cat. Therefore, a contract between James and Arun became binding when James found Arun's missing cat. This contract become binding since the offer was communicated and Arun was even aware of the reward. Every offer must be communicated for a contract to become binding. For a contract to become binding, two parties must be of the same mind, and so it cannot be accepted by a person who does not know that it has been made. This applies to both specific and general offers. Thus where A, without knowing that a reward is offered, finds B's lost dog and brings it to B, he cannot recover the reward if he learns of the reward if he learns of the reward after returning the dog. This followed after a case was decided in 1927 between R and Clarke. R v. Clarke of 1927 A reward was advertised for information leading to the arrest of the murderers of two police officers, and a free pardon if the person giving the information was an accomplice. Clerk gave the information and it was held that he was not entitled to a government reward because at the time the information was given by him he had forgotten all about the reward. 7 For this case, James was entitled to the full amount of the reward of 60 for coming across Arun missing cat since the offer for a reward had been communicated and James had full knowledge of the reward when he found and returned the cat. The contract became binding immediately he found and delivered the cat to Arun. It is very unfair for Arun to ask James to "take of leave" the 30. James should sue Arun for full amount of reward as he had indicated in the notice. Bibliography Emanuel, S. L, (2004): Fundamental of Business Law, 4th Edn, Educational Publisher, Sydney Emerson, R. W. (2003): Business Law, 5th, Educational Publisher, Sydney Jertz, A, Miller L. R, (2004), Fundamentals of Business Law, 3rd Edn, Macmillan Publisher, London Penrose, R. (2005): Road to Reality: A Complete Guide to the Laws of the Universe, Longman Publisher, Sydney Read More