Question 1: Mojo Beverage placed the following advertisement in a local newspaper on 25 January:
‘Come one, come all! Fishermen and women of Lake Tranquil. We are offering to pay $100,000 to any person who catches Lord Harry, a trout which we have tagged and released into the lake.’
The following day was the Australia Day holiday. Lake Tranquil was crowded with people fishing both from the bank and from boats. At about lunch time, a rumour spread among the people on the bank that there had been an error in the advertisement: that the true amount should have been $1,000 and that Mojo Beverage had announced that the prize would be the lower amount. The rumour was in fact true. Ben heard this rumour from the stranger fishing beside him, minutes before catching Lord Harry. A Mojo Beverage representative was on hand to certify the catch before Lord Harry was released back into the lake, but did not say anything about the amount of the prize.
Ben is claiming that Mojo Beverage owes him $100,000.
Advise Mojo Beverage, explaining applicable legal principles and citing relevant authorities.
Question 2: (a) Dorper Sheep Sellers Pty Ltd was negotiating the sale of a number of dorper sheep to a firm called Livestock Brokers, which intended to on-sell the sheep. On 1 June Dorper Sheep Sellers sent a letter to Livestock Brokers, setting out the number of sheep for sale and the price per head. It asked Livestock Brokers to reply within 14 days.
Livestock Brokers sent a letter by reply dated 6 June, inquiring whether the sale could be financed on the ‘usual terms’. Dorper Sheep Sellers did not reply.
On 14 June, at the opening of business, Livestock Brokers sent a fax stating: ‘We accept your offer of 1 June for the sale of sheep’. The same day Dorper Sheep Sellers faxed back, saying: ‘You’re too late. We’re just in the process of selling the stock to another purchaser. Formalities will be completed by tomorrow’.
Advise Livestock Brokers as to the rights and liabilities of the parties in the light of the commercial interactions taken place between them.
(b) Presume in (a) above Livestock Brokers sent the fax on 14 June but because of a transmission error Dorper Sheep Sellers did not receive it. Advise Livestock Brokers under these circumstances.
Issue: In the case law that is provided in this business law assignment the issue is whether Ben can claim the amount of $100,000 from Mojo Beverages or not?
Relevant rule: Offer and invitation to treat are two basic concepts of contract law. In the cases of invitation to treat, a person makes an offer inviting others to make a counter offer to him. This offer made by the other party is not finding in the initial stage. But the moment the invitation to offer is accepted, the opposite party makes another offer in response to which the initial offer is accepted or rejected. Once the other party accepts the offer it becomes a legal contract binding both the parties. Advertisements are invitation to treat and the offer is made when the buyer takes the item to the offer and acceptance is the moment the shop employee accepts that product. An offer can be made to a specific person or to a group of persons and it sometimes can also be made to the world at large.
The offer which has been used as an invitation should be communicated and made known to all the persons to whom it is addressed. The offer cannot be taken out if it has not come to the knowledge of that person.
Acceptance: According to the case given in this business law assignment Acceptance of the offer should be treated as an unequivocal statement and a compliance with the terms of the offer to give the presumption that the person has acted in response to the offer made. The rule of Communication of an offer was laid down in the case of R v Clarke1 . If it is found that the offeree was acting in a certain way in response to the offer, it shall be a sufficient ground for the offer to be binding.
Once there is an officer and a subsequent acceptance, the contract becomes binding. Contract is not valid unless there is a consideration.
In the case of Carlill v Carbolic Smoke Ball Co2 , the Court of Appeal held that an advertisement shall be an invitation to treat. It also held that if an advertisement had laid down all the terms of the contract with regards to the award that would be received it is the duty of the company to give the awards to the opposite party if we fulfill all the terms of the contract. Once there was an officer and a subsequent acceptance of that offer, legally binding contract would arise and this will make the contract binding.
Revocation: Verification will only exist in this case which is discussed in this business law assignment when the offer has officially withdrawn the offer and it has come to the knowledge of the offeree.
Pharmaceutical Society v Boots (1953)3 , court distinguished between an offer and an invitation to treat.
Application: : In the present case of business law contract assignment, an advertisement was placed in the local newspaper by Mojo Beverages offering to pay $100,000 to any person who would catch Lord Harry and then release it into the lake. On the next day, the Australian Day holiday, Lake Tranquil most crowded with people and everyone was fishing from both the banks. After sometime a human started to spread that there was an error in the advertisement and that the actual amount was $1000. The rumour also said that Mono Beverage has lowered the price amount. This rumour turned out to be true and Ben how did minutes before he could catch the fish. There was a Mojo Beverage representative who certified that Ben had got the trout and had there after release it back to the lake. The representative did not say anything about the price money.
Mojo beverage had made an invitation to treat by putting up the advertisement of offering $100,000 to the world at large. It applied to anybody who could catch the fish. Ben for the advertisement and acted on it. The fact that he caught the trout was certified by the representative. He acted on the invitation to offer and knowing that the amount was $100,000. The onus was on Mojo Beverages to correct the advertisement as the initial invitation to offer was taken into consideration by Ben.
There is a fine line between an offer and an invitation to treat. If from the words of the advertisement it is clear that the person making the advertisement has an intention to be bound by the contract once it is accepted by anyone, the advertisement becomes an offer. In cases of an offer, the party has to make it clear my words are actions that he is prepared to be bound by the offer the moment it is accepted by the person to whom the offer was made.
In the eyes of law, it is an invitation to treat because the advertisement is an offer to pay $100,000 to anyone who will accept the terms of the offer and perform as per the conditions of that acceptance of the offer.
It can be said in this business law contract assignment that Mojo Beverage had made an invitation to treat and they are bound by the original terms of the offer.
Issue: Issue that arises in this factual scenario of this business law contract assignment is weather a contract existed between Livestock Brokers and Dorper Sheep Sellers Pty Ltd or not?
Relevant rule: Postal rules of acceptance are exceptions to the general rules of offer and acceptance and they form part of the classes of contract formed by communication. Contract to be legally binding; it is essential that there is an offer and a subsequent acceptance of that offer. Once offer has been accepted, it becomes a binding contract.
For an acceptance to be effective and binding, it is important that the acceptance be communicated and this was held in the case of Adam v Lindsell 4. Mere mental decision to accept shall not be considered binding and it has to be expressed by words or orally. the acceptance of that offer has to be verbally communicated to the offer to make it a binding contract. As was held in the case of Felthouse V Bindley5 , the acceptance of an offer cannot be inferred from the fact that the offeree has been inactive or silent.
In cases of Postal acceptance rule, the letter of acceptance shall act as finality and it will be deemed that that's it is this complete as soon as the letter of acceptance has been posted. In cases where the postal acceptance rule applies, the person who has made the offer cannot revoke the offer as because one stop it has posted the letter of acceptance, the contract shall be said to be as creating a binding contract. As was held in the case of Brinkibon v Stahag Stahl6, acceptance shall be by the terms to be effective the moment it is communicated to the offer.
The Electronic Transactions Act 1999 has brought in ways to effectuate electric forms of communication. It also stated that the form of communication and acceptance shall be strictly accepted by the parties mutually.
Application: Dorper Sheep Sellers Pty Ltd was negotiating with Livestock Brokers first selling the sheeps. The agreement between the two parties was that a letter would be sent by Dorper Sheep Sellers Livestock good reply within 14 days regarding the terms of the acceptance. To this effect Livestock send a reply on June 6 whether the contract would be on the usual terms but he did not get any reply from Dorper Sellers.
The terms of the contract where clear and there was no ambiguity regarding the way it would be conducted. In terms of offer and acceptance, the acceptance of the offer should be communicated to the offeror, but in this case was no such communication to make the contract binding. Acceptance should not be inferred from The silence of the parties and therefore the fact that Dorper Sheep did not reply to the letter of Livestock should not be treated as acceptance. The terms of the contract were that the reply should be sent within 14 days.
In this case, Livestock could not send the mail on time because there was a transmission error and Dorper Sheep could not receive it as a result. Acceptance of the offer should be treated the movement the acceptance has been put on the way. Acceptance should be unconditional and it should also flow from the communication of the parties. In the present case, the postal rule applies which says that the acceptance will be deemed the moment it has been communicated rather than when it was received. The acceptance was posted by Livestock earlier what it could not reach on time because an error in transmission which was held in the case of NM Superannuation Pty Limited v Hughes 7
As per the “postal rules” acceptance discussed in this is made the moment it is posted and therefore Livestock Brokers cannot be said that the agreement is revoked.
1. R v Clarke HCA 47, 
2. Carlill v Carbolic Smoke Ball Co  QB 256
3. Pharmaceutical Society v Boots  1 All ER 482
4. Adam v Lindsell  1 B & Ald 681.
5. Felthouse V Bindley  11 Cb (NS) 869.
6. Brinkibon v Stahag Stahl  2 AC 34
7 NM Superannuation Pty Limited v Hughes  27 NSWLR 26