Speedway Airways Pty Ltd - Case Study Example

Airline Case Study AYN 456 – Business and Corporate Law 
 Written Assignment Semester 2 
 Due: 9 Sept 5pm (via Assignment Minder) 
 WordLimit: 1500 (6 pages) Introduction [65 words] Comments about what Speedway should do is reflected below each portion of the problem question. Various bibliographical sources were consulted for this assignment, which can be found at the very end in the section entitled “Bibliography.” Each portion of the problem was broken up into chunks and answered accordingly in conjunction with the situation at hand—piece by piece until all the questions were answered. Speedway Airways Pty Ltd is an airline carrier. In the present economic climate its sales have fallen, in an attempt to boost sales it advertises a promotion in different forms of media. [50 words] As an airline carrier, Speedway Airways Pty. is a limited organization. This means that they only have limited liability. Their attempt to boost sales as related in this case study may become a boondoggle to the company in the end. In the end, Speedway left themselves open to great liability. Speedway’s promotion entailed bonus air miles being attached to being collected through domestic bookings. The advertisement stated that any
customer who collected 50000 miles could redeem them for an online code for the 
chance to win a great range of prizes, which included items on Speedways services. 
Further it said that: 
‘Reach 50,000 bonus miles and enter the online code for the chance to receive 
a winning confirmation email to Speedway’s head office and win the grand prize of an all expenses paid round the world holiday. But only for a limited 
time.’ 
[100 words]
 This is where the company went wrong. They made an offer that they stated ‘any customer who collected 50,000 miles’ could redeem them for an online code for the chance to win a range of prizes—including the possibility of receiving a winning confirmation email to go to Speedway’s head office in order to get an all-expenses paid ‘round the world’ holiday. Speedway should have specified the limited time for which the contest was sponsored. This could have made their job much easier when people came to the Speedway headquarters wanting to claim their prizes. So, Speedway left themselves liable. Jim Smith was surfing the Net when he came across Speedway’s Internet 
advertisement. Immediately he started booking flights for his next holidays and after 
collecting the bonus air miles he waited for his email confirmation. While he was 
waiting he collapses from the excitement at the prospect of winning an all expenses 
paid round the world trip. He was taken to hospital. 
[175 words] Speedway is not liable for the fact that Jim collapsed “in excitement” over the prospect of winning an all-expenses paid trip around the world. Basically, it could be argued that his collapse could have been caused by multiple factors—for example, poor health. If Jim had been working too hard lately, it’s possible that he might have been suffering from some type of exhaustion. It’s also possible that there were underlying factors in Jim’s health condition. For example, if he is at risk for being a heart patient, he might have to get a cardiac catheterization to see if he has a blockage of some type. There are several reasons why Jim might have had to go to the hospital—but his hospital stay should neither be reimbursed by nor paid for by Speedway, because the two incidents are not necessarily related (his excitation and his collapse). Speedway cannot be blamed or sued because the customer was excited about its grand prize. That’s just not logical. If Speedway was directly involved, that would be different. Willamina Brown, a student with an entrepreneurial major at university, collected 
50000 bonus miles very quickly through booking her friends and family tickets and collecting their points. She enters the online code on Speedway’s website and is 
happy when she receives the winning confirmation email. She drove straight to 
Speedway’s head office to claim her prize. [130 words] First of all, Willamina is in a very interesting situation. She did receive the winning confirmation email, which could be a great source of headaches for Speedway. However, on the other hand, Willamina booked other people tickets and then took their miles. This might be seen as a breach of contract which might help Speedway get out of the necessity of having to award Willamina with the round the world trip which they stated was the prize for having received the winning confirmation email. So, in essence, Speedway may have some liability which may implicate them in having to award Willamina with the grand prize. However, since the email was a mistake, Speedway might be able to feasibly use that as an excuse for not giving Willamina the grand prize. She was shown to a seat in the reception room, by the receptionist. While Willamina was patiently waiting, another 2 Speedway employees appear and post a notice on the door. She then strolls over 
and reads the notice: 
‘Due to an information technology error, faulty email confirmations were 
included in the Speedway promotion. As a result of this error, Speedway Airlines regrets to advise that all email confirmations are null and void. 
Consequently it will not be honouring any prize claims. Speedway apologises 
for any inconvenience and thanks you for your loyalty and custom. We expect 
to announce a new competition with exciting prizes shortly.’ 
[246 words] This notice posted on the Speedway office door basically nullifies the entire contest. This will make Speedway’s credibility level dramatically and drastically reduced in the eyes of the public. Of course, it’s true—mistakes are made sometimes, and people are only human. But to rescind the availability of the grand prize just because they’re having some kind of difficulty with a faulty winning confirmation email or emails having been sent out is a bogus excuse to end the competition. Further, if they really are ending the competition due to this glitch, they should clearly state that no one is going to receive the grand prize—and then remain true to their word. The award given to someone after the contest was shut down is morally and ethically lax—because now that is not fair to all the people who received winning confirmation emails. So, it is advised that Speedway completely discontinue the contest and rescind the award, or else they will be liable for having to give all these people who received the faulty emails the round the world trip. Of course, this is not practical. Therefore, any contest rules which were devised which would be built-in failsafes for such an occurrence happening should be activated. Usually contests have rules in fine print that accompany the entire contest. It would be advisable for Speedway to have a lawyer draft contest rules to accompany the actual contest so such a debacle can be avoided in the future. Jim Smith was listening to the radio after his release from the hospital, however after his favourite song ended, he changed channels. Just as this happened, an 
announcement from Speedways’ official representative was heard which said that 
there was an IT error and instead of only one winning email confirmation in the 
promotion, there was one in five winning emails. Speedway immediately declared 
their promotion null and void and would not be honouring any prize claims. This 
was the first of a number of occasions that the announcement appeared in different 
media. [200 words] Speedway has got a major problem. One of the issues that it has is that it is not being consistent if it is publicly stating that the contest is null and void, while on the other hand it is awarding the grand prize to one customer. This is not only not fair to everyone else participating in the contest who was sent a faulty winning confirmation email—but what is also troubling is what were the criteria that were followed in order to award the grand prize winner with the prize. If Speedway is truly not honouring its commitment to the contest, then its actions should be consistent with its advertising. Otherwise, this may be misconstrued as false advertising. As such, Speedway could come under fire for having misled the public, which is very serious and is considered a breach of contract as well as a breach of a quasi-contract (also known as an implied contract). Legally speaking, Speedway must clear up the miscommunication and misinformation as soon as possible or risk being sued by various people for not having been given the proper information about what was going on with this entire contest. Speedway must make amends very quickly. When Jim arrived to Speedway’s head office there was a large crowd of rioting customers around the notice board, which hid it from Jim’s vision. Jim, excited to claim his prize skips to the reception and presents his ticket to the receptionist. [279 words] Speedway could be charged with inciting a riot for having rescinded the grand prize and saying that the winning confirmation emails that were sent out were faulty. That could really not only damage the company’s reputation, but, in order to quell the public, something drastic must be done. A PR (public relations) blitz needs to be started in order to repair the company’s image and clarify what exactly their intentions were with the whole contest. Speedway, otherwise, is going to have a lot of difficulty dealing with the public and there is going to be a major trust deficit there. Future contests might not be heeded due to Speedway’s unreliability. Basically, it would be advisable if Speedway could have someone come out of the back office to confront the people and tell them what their united stance or policy is on the contest. They also must have their representative explain (for the good of the company) that they are going to rescind the prize that was awarded to someone—otherwise that will only make the crowd angrier if they find out that one prize was awarded. Jim will not be receiving any award. Basically, this debacle was caused by a lack of clarity on the part of the organization. If Speedway wants to remain a competitive airline, they should do what they said they are going to do. If they can’t follow through with their promises, they should not make a contest which is going to fall flat on its face simply because there is a lack of clarity about what the contest consists of, and how people can win and then receive a prize in a legitimate manner. 
Unknown to Willamina and Jim, another customer’s claim had been honoured by 
Speedway Airlines as it already purchased the all expenses paid round the world 
holiday, which was meant to be given away as the grand prize. 
[235 words] This represents a major problem for Speedway. Since they honoured one customer’s claim, basically they are liable for having to explain why they awarded one customer the grand prize when their notice on the door of their office explicitly stated that the grand prize would not be awarded. So, Speedway has some explaining to do. Obviously, Speedway is not about to give everyone—including Willamina and Jim—tickets for a round the world trip. What Speedway must do is realize that giving out the prize when they said they would not is false advertising, as well as their original post for the contest. Unless Speedway has clauses stating that basically various conditions apply and the contest is at the discretion of Speedway—this company will either have to justify why the person was given the grand prize, or rescind the grand prize, taking it away from the person to whom they originally rewarded it. Speedway lied by saying that they would not award the grand prize to their customers due to the faulty winning confirmation emails sent out. So Speedway either has to: a) clarify their rules; or b) rescind their grand prize; or c) award the prize to everyone who qualified for it. Probably, the easiest options would be Option A, or even easier Option B. Option C would be a last resort and probably not a good option for Speedway to pursue, realistically. Advise Speedways whether they are obliged to provide Willamina and Jim with the 
round the world holiday that they are claiming. 
In your answer do not consider mistakes. [75 words] Basically, Willamina and Jim do not need to be considered for the world holiday that they are claiming. There are both valid reasons which disqualify them for receiving the prize. Willamina may have more of a valid complaint than Jim does, however—and the company might consider awarding her a round the world holiday. This is only because she did have the correct amount of mileage and received one of the faulty “winning confirmation” emails. BIBLIOGRAPHY Birks P (2005). Unjust enrichment, 2nd ed. London: Oxford University Press. Brazier M (1993). Street on torts, 1st edition. London: Butterworth Heinnemann. Burrows AA (2002). The law of restitution. UK: Butterworths. Burrows, AA (202). Remedies for torts and breach of contract, 3rd ed. London: Oxford University Press. Hedley S (2001). Restitution: its division and ordering. UK: Sweet and Maxwell. Molan T (2000). Criminal law, 1st edition. London: Old Bailey Press. Mullis A and Oliphant K (1997). Torts, 1st edition. London: Macmillan Press. Pettit PH (2006). Equity and the law of trusts, 10th ed. UK: Butterworths. Virgo G (2006). The principles of the law of restitution, 2nd ed. London: Oxford University Press. Read More