Assignment - BB103-Group case study : Carlill v Carbolic Smoke Ball.Co. Ltd PDF

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In this case law, Carlill (Plaintiff) followed the advertisement made by Carbolic Smoke Ball.Co. Ltd (Defendant), in which Carbolic Smoke Ball.Co. Ltd published advertisements in newspapers and the Pall Mall Gazette in the date of November 13, 1891, claiming that it would pay £100 which is almost £...

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ASSIGNMENT

Task 1 INSTRUCTION: This is a group research work. A group of 5-6 members are required to perform the following task. Case Law: 1) Carlill v Carbolic Smoke Ball.Co. Ltd [1893] 1 QB 256 2) Majumder v Attorney General of Sarawak (1967) 1 MLJ 101 3) Ayer Hitam Tin Dredging Malaysia Bhd v YC Chin Enterprises Sdn Bhd [1994] 2

MLJ 754 4) Mohori Bibee v Dharmodas Ghose [1903] 1 lr 30.col.539 5) MENAKA v LUM KUM CHUM - [1977] 1 MLJ 91

6) Hyde v Wrench [1840] 3 Beav 344-349 ER 132 7) Felthouse v Bindley [1862] 142 ER 1037 Case Law will be given to students. 1. Students need to find full case law based on the citation given. Students may find the case through law library, online, internet, etc. (Research). 2. Students need to read the facts of the case and write an report for the following case chosen. 3. Students need to answer the question below : 4. Four (4) elements that are essential to any useful brief are the following: (a) Facts (name of the case and its parties, what happened factually and procedure, and the judgment) (b) Issues (what is in dispute) (c) Holding (the applied rule of law) (d) Rationale (reasons for the holding)

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Assignment

BB103- Business Law

5. The students are required to write an report of the above requirement of elements. Support your research with the case law applied/ follow the decision of the case law that you choose.

Task 2 Answer the questions below. Your answer should be supported with relevant sections from Statute of law and Case Law Question 2: Logo plate Ltd design plates. Ten thousand dining plates with a ‘Le Chat Noir’ design on the side have produced. On 1 May at 9.00 a.m. Logo plate Ltd posts a note on their website indicating that ‘Le Chat Noir’ plates are for sale for RM1.00 per plate. Sebastian, the owner of Le Chat Noir restaurant, sees the advertisement. He emails Logo plate Ltd at 10.00 a.m. on 1 May asking to have 500 of the plates at RM1.00 per plate. Logo plate Ltd reply at 10.05 a.m. saying that they will sell 500 of the plates at RM1.00 per plate. Sebastian drafts an email at 11.30 a.m. confirming the order. When he presses ‘send’ he is not connected to the internet. As a result, his email stored in his outbox and sent the following morning, 2 May, at 10.30 a.m. The Black Swan Brewery Ltd wants the whole consignment of plates for the launch of their new ‘Le Chat Noir’ beer. They send a van to the premises of Logoplat Ltd with enough cash to pay at RM1 per plate. The van arrives at 4.00 p.m. on 1 May, and the plates are loaded and sent on their way by 4.30 p.m. At 4.54 p.m. Logo plate Ltd email Sebastian withdrawing their offer. Sebastian reads the email at 10.30 a.m. on 2 May when he logs back onto the internet. Advise Logoplat Ltd as Sebastian is claiming that the rules on offer and acceptance mean that an enforceable contract formed with him before the plates sold to the BlackSwan Brewery Ltd.

Answer plan ➜ Identify the website advertisement as an invitation to treat. ➜ Sebastian’s reply could be considered as an invitation to treat, as it is uncertain as to terms, or potentially two offers. ➜ Logo plate Ltd’s response is either an offer or a counter-offer, either of which is capable of acceptance. ➜ Applying the decision in Entores, does the acceptance of Logoplate Ltd’s offer take effect before or after the offer is withdrawn? ➜ An enforceable contract is formed with the Black Swan Brewery Ltd.

_____________________________ ALL THE BEST______________________________ Task 1, Case law: Carlill v Carbolic Smoke Ball.Co. Ltd [1893] 1 QB 256 BUSINESS LAW

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In this case law, Carlill (Plaintiff) followed the advertisement made by Carbolic Smoke Ball.Co. Ltd (Defendant), in which Carbolic Smoke Ball.Co. Ltd published advertisements in newspapers and the Pall Mall Gazette in the date of November 13, 1891, claiming that it would pay £100 which is almost £11,000 in our current time to anyone who got sick with influenza after using its product according to the instructions provided with it. Stating that anyone who uses their smoke ball product and catch flu will be given a hundred pounds. Carlill used the smoke ball but unfortunately still caught flu and raised a complaint against Carbolic Smoke Ball.Co. Ltd asking for the hundred pounds as what was announced in the advertisement. The issue is if there is a binding contract among both parties or not?

Carbolic Smoke Ball.Co. Ltd Advertisement posted during November 13, 1891: £100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter. During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball. One carbolic smoke ball will last a family several months, making it the cheapest remedy in the world at the price, 10s. post free. The ball can be refilled at a cost of 5s. Address: “Carbolic Smoke Ball Company”, 27, Princes Street, Hanover Square, London.

Carbolic Smoke Ball.Co. Ltd said that there is no binding contract as the terms were not specific or exact in addition and that a contract needs communication between both parties that shows intentions of acceptance the offer made. While Carlill said that the advertisement was an offer and Carbolic Smoke Ball.Co. Ltd is obligated to fulfill the promise mentioned in the advertisement because it was published and that the terms are not vague since consideration was stated. However, the court held was in the favor of Louise Carlill (Plaintiff) by rejecting Carbolic Smoke Ball.Co. Ltd claim that there is no binding contract. The held was made by three judges at that time and they shared these common reasons that supports their decision. The first reason is that the offer was made to a huge population and anyone who fulfills the conditions makes the contract binding. The 2nd reason was that Carbolic Smoke Ball.Co. Ltd deposit of a thousand pound in Alliance bank shows a serious commitment to the advertisement published. 3rd reason was that the simple conditions for using smoke ball is BUSINESS LAW

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presented as acceptance of the offer. The last reason was that the purchase and use of smoke ball presents consideration, and people purchase and use was based on the advertisement which showed commitment and attracted consumers.

Based on Section 10(1) of the Contract Act 1950, there are six elements need to exist to form a legal contract these elements are offer, acceptance, intention to create a legal relation, consideration, certainty and capacity. Therefore, as we can see from the case and the court held that all these elements were fulfilled which made the contract binding. Offer is defined by section 2(a), Contracts Act 1950 as a gesture of commitment to contract on such terms, made with the intention of making it binding as soon as the person to whom it is addressed agrees it. This can be applied to Carbolic Smoke Ball.Co. advertisement in which they have offered a hundred pounds to any person that catches flu after using the smoke ball. Acceptance is defined by Section 2(b), Contracts Act 1950 as When the person to whom the proposal has been made give or shows his/her consent to the offer, the offer then is accepted. This is applied to the case when consumers used the smoke ball, it presents acceptance to the offer in which a hundred pound is offered if some one catches flu after consuming the smoke ball. Intention to create legal relation means that the parties are ready to be fulfill their promises and bind in contract, this was presented by Carbolic Smoke Ball.Co. advertisement when it stated that a thousand pounds were deposited in Alliance Bank, this action means that the defendant shows intentions to create a legal relation. Consideration is defined by Section 2(d) Contracts Act 1950 as If the Promoter has done, or refuses to do, or makes, or promises to do, or refrains from doing, or performs, anything, any act, or such abstinence or commitment, at the wish of the Promoter, it is considered a concern for the Promise. This is applied to the case when consumers purchased the smoke ball and used it, based on the advertisement made by Carbolic Smoke Ball.Co. Certainty is refereed to once the bid and approval are deemed legitimate, a contract shall be concluded. The next requirement is to make the contract technically enforceable. If an arrangement is not known to be definite and thus lacks this condition, it would not be enforceable look at the case of Gunthing v Lynn. The two domains for checking the certainty of an arrangement should, over and over, be separated into two categories the vagueness of the agreement and the incompleteness of the agreement. Applying this to the case study Carbolic Smoke Ball.Co. advertisement was complete in terms of description and there was no vagueness at all as it had instructions of how to use the smoke ball and even the refilling prices. Section 11 of the Contracts Act 1950 defines Capacity as that “Every person is competent to contract, who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to BUSINESS LAW

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which he is subject”. By looking at both parties Carlill and Carbolic Smoke Ball.Co are sound of mind and qualified to create a contract with each other. As the offer was made to public anyone can accept it but not everyone is eligible to enter into a legal relation.

This case law issue can be supported with other several cases that are similar to it, one of the most common cases regarding Contracts is the case of Pharmaceutical Society of Great Britain v Boots Cash Chemist Ltd. In this case Boots Cash Chemist Ltd implemented the shelf service to their customers allowing customers to choose their products or medicines then head to the cash till to perform the payment. The Pharmaceutical Society said that this system is dangerous and should not be applied as in where some poisonous products might be presented on the shelves and should be only sold by the presence of a pharmacist. The court held was in favor of Boots Cash Chemist Ltd, where for a contract or agreement to be made an acceptance must be made, and that will be after the cash payment is accepted at the cash till. When two of customers went to do the payment the cash till worker rejected to accept it and therefore the products were not sold and no acceptance was made. Another common case is the case of Partridge v Crittenden, in this case Partridge posted an advertisement on a magazine stating sale of Bramble finch hens for twenty-five shillings for each hen, Crittenden used birds Protection of Birds Act 1954 claiming that is an abuse of wild animals’ life. The defendant Partridge stated that the advertisement is just an invitation to treat and not an offer. However, the court held was in favor of Partridge supporting that the advertisement was just an invitation to treat and no contract was made between the parties as it lacks most of the contract elements. A final case supporting the case of Carlill v Carbolic Smoke Ball.Co. Ltd [1893] 1 QB 256 is the case of Fisher V Bell, in this case Mr. Bell the defendant has a shop and a flick knife was displayed in the shop, Fisher the plaintiff raised a complain using Restriction of Offensive Weapons Act 1959. However, Mr. Bell defended his position with saying it is an invitation to treat and not an offer. The court held was in favor of Mr. Bell stating that display of goods is definitely an invitation to treat and not an offer therefore Mr. Bell was not held guilty.

Therefore, the judges agreed on the following terms: The commercial is in effect a worldwide deal and the terms of the advertising will cover specifically those that used the smoke ball before the advertisement. The public designing a commercial as if one was using the smoke ball as directed by the Carbolic Smoke Ball.Co in their advertisement, he/she would be rewarded a prize of hundred pounds. The time for defense, which refers to that the protection should take place during the timeframe where the carbolic smoke ball is sold. There is no way for the defendant (Carbolic Smoke Ball. Co) to verify if Carlill really has done as the BUSINESS LAW

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BB103- Business Law

instructions mentioned in the advertisement told. There can be no way that confirm the defendant can do so. While notification of acceptance is expected for the good of the individual making the bid, notification of acceptance in this case is not mandatory, and acceptance itself may be the fulfillment of the requirement. The selling of a carbohydrate smoke ball might be encouraged if the advertising is effective, which might be interpreted as consideration.

In conclusion, the case of Carlill v Carbolic Smoke Ball.Co. Ltd the court held was that the contract is binding in which it met all of the contract elements, where an offer was made by offering a hundred pound for any person that catches flu after consuming the smoke ball product. Acceptance and consideration were made when consumers purchased and consumed the smoke ball. Intention to create a legal relation was obvious and referred to by depositing a thousand pound in Alliance bank which shows a type of commitment toward the offer made. By looking at other cases we can identify the difference between invitation to treat, display of goods and an offer. Where definitely Carbolic Smoke Ball.Co. Ltd advertisement presented an offer to the public and met all elements of contract leading to a binded agreement between both parties.

Task 2 BUSINESS LAW

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BB103- Business Law

Contract is defined as a voluntary, deliberate and legally binding agreement between two or more competent parties. The law of contract has been stated under Contract Act 1950. According to Section 2 (h) of the Contract Act 1950, contract is an agreement which is legally binding between two parties to fulfil an obligation in exchange for something value. It also enforceable by law. Under the cases of Song Bok Yoong v Ho Kim Poui, the court allow to use any common law application if there is not any provision stated in the Contract Act 1950. Besides, the provisions of the Contract Act 1950 must prevail where the Contracts Act makes certain provisions which difference from English Law. In order to see whether Logoplat Ltd have legally contract with buyers, Logoplat Ltd need to fulfil all the elements of contract. Based on Section 10(1) of the Contract Act 1950, there are six elements need to be fulfilled to form a valid contract, which are offer, acceptance, intention to create legal relations, consideration, certainty and capacity. Offer is the first element to begin the contract and it can be oral and written. Offer refer to an invitation to enter into a contract on certain terms. After making a binding offer, the next stage in formulating an effective contract is to accept the offer. Acceptance is a person who accepted the offer by words or conduct. The third element is intention to create legal relations. Intention to create legal relations refer to both parties intend to establish a legal relationship. If one party does not agree, the agreement is not a binding contract. Consideration is an important element in a contract. It refers to the exchange of mutual interest between the involved parties such as one party gives money to another party in exchange for doing something. Another element is certainty. Certainty refer to the terms and conditions for entering into the contract should be clearly stated, completeness and understood by the parties of the contract. If there is an uncertainty in the agreement, the agreement is invalid. Capacity is the last element need to be fulfilled. Capacity refer to the parties must have legal capacity such as the involve parties must at the age of majority, sound of mind, is not disqualified from contracting by any law to which he is subject and ability to fully understand the terms and obligations of a contract when entering into a contract.

An offer must be approved before an enforceable legal contract is concluded. Any removal and revocation of the offer, to check if Sebastian has made an agreement with Logoplat Ltd had sold the products before they claimed to withdraw their offer, we must look at the rules and the elements that leads to the formation of a contract. Even though the elements and laws of contract were created before such technology and emails were created, yet they can be applied to such cases. To determine if the advertisement made on the website is an invitation to treat or an offer to be accepted, we must look at how each are defined. Usually advertisements, display BUSINESS LAW

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of goods, catalogues, magazines are taken as invitation to treat and not an offer. Logoplat Ltd website advertisement shows the price and that there are plates for sale but no quantity or quality is mentioned. Which makes it too vague to become an offer, but is purposed to attract interest of customers or buyers such as Sebastian. This can be supported by the case of Fisher V Bell in this case Mr. Bell the defendant has a shop and a flick knife was displayed in the shop, Fisher the plaintiff raised a complain using Restriction of Offensive Weapons Act 1959. However, Mr. Bell defended his position with saying it is an invitation to treat and not an offer. The court held was in favor of Mr. Bell stating that display of goods is definitely an invitation to treat and not an offer therefore Mr. Bell was not held guilty. Another case similar to this is the case of Partridge v Crittenden, in this case Partridge posted an advertisement on a magazine stating sale of Bramble finch hens for twenty-five shillings for each hen, Crittenden used birds Protection of Birds Act 1954 claiming that is an abuse of wild animals’ life. The defendant Partridge stated that the advertisement is just an invitation to treat and not an offer. However, the court held was in favor of Partridge supporting that the advertisement was just an invitation to treat and no contract was made between the parties as it lacks most of the contract elements. By looking at the similar cases mentioned above we should realize that website advertising is just about a seller inviting customers to make an offer but no acceptance and a deal is made yet, so in the website advertisement we can conclude websites advertisement is invitation to treats to create an offer and not an offer.

Regarding about how can we define that reply of Sebastian in the first email could be considered as an invitation to treat, as it is uncertain as to terms, or potentially two offers. Sebastian first email sent can be considered as an invitation to treat, because Sebastian email content is only about Sebastian asking if he can buy the plates with the quantity and the price mentioned or not so it just an enquiry email and not a confirm or acceptance email so the first email of Sebastian is definitely an invitation to treat and not an offer. This can be supported by the case of Harvey v Facey [1893] AC 552, where Harvey sent a message to Facey using telegram asking if Facey can sell them Bump...