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LAW40303 Business Law
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LAW40303 Business Law
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Course Code: LAW40303
University: Taylor’s University
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Country: Malaysia
Question:
Individual Assignment
Emily bought ‘Zap-Clean’, a new brand of stain remover. Emily had seen an advertisement by the manufacturer, Kleencare Sdn Bhd, which stated: ‘Zap-Clean will remove all ink stains. GUARANTEED TO WORK. RM 500 will be paid to you if Zap-Clean fails to work’.
Emily used Zap-Clean according to instructions but it did not remove the ink stains from her blouse.
Advise Emily whether she has a legal claim to the RM500 from Kleencare Sdn Bhd. Advise Emily in the light of the elements of invitation to treat, offer, acceptance and intention to create legal relation.
Support your answer with relevant cases, as well as sections of the Contracts Act, 1950, if any.
Answer:
Introduction
A complete agreement is reached whenever the offeree accepts the offer made by the offeror. There a difference between an invitation to treat and an offer but at sometimes, an invitation to treat can amount to an offer. In explaining this rationale, this paper will a case scenario of Emily who bought ‘Zap-Clean through an advertisement placed by the manufacturer, which stated: ‘Zap-Clean will remove all ink stains. GUARANTEED TO WORK. RM 500 will be paid to you if Zap-Clean fails to work’.
Rule of law
In Malaysia contract law, an offer is referred to as a proposal. In (Contracts Act, 1950)section 2(b), a contract is reached only after there have been an acceptance of the proposal. The general rule is that an agreement is formed only after when an offer is accepted by the offeree, and this offer must have definite terms, consideration, and intention to be legally bound. An advertisement is held as an invitation to treat. An invitation to treat is usually held as an inducement to invite the other party to come and make the offer (Stone and Devenney, 2017, p. 37). However, the common law holds any invitation that clearly states the terms, consideration, and intention to be legally bound as a complete offer.
Application
In the law of contract, advertisements are supposed to be treated as a mere invitation to come and make an offer but they are not to be construed as an offer. However, advertisements which clearly provides definite terms of acceptance such as the price, or intention to be legally bound may be interpreted as an offer especially in unilateral contracts. This rationale is provided in section 2(a) of the contract law where the law states that when one party demonstrates to the other its willingness to perform or abstain from performing anything with the intention of gaining the assent of the other party, such statement would be interpreted as an offer (Contracts Act, 1950).
In (Eckhardt Marine GMBH v Sheriff, High Court of Malaya, Seremban & Ors, 1974), the court found that the letter made by the appellant was an offer instead of an invitation to treat. In this case, the appellant’s letter was a response from the defendant’s advertisement, but the defendant had acted upon the letter that was provided by the appellant. The ruling followed the common law principles of unilateral and bilateral contract. The principle was explained in the case of (Partridge v. Crittenden, 1968) where the conviction of the defendant had resulted from an advertisement of a sale of bramble finches. The two reasons why an invitation to treat in a bilateral contract cannot amount to an offer is because the invitation leaves room for further bargain. Secondly, the offeror needs to ensure that the offeree can afford to raise enough money for the price before contracting. Additionally, the case of (Grainger & Son v. Gough, 1896) provided that advertisements in bilateral contracts cannot create an offer since it would have meant that the defendant would have been obliged to provide unlimited quantities of wine whenever anyone from anywhere accepted the order. The case of Emily and Zap clean manufactures would not fit as these two situations as it is a unilateral contract.
The advertisements in unilateral contracts where they provide the price, intention to be bound, and consideration are regarded as offers instead of invitations to treat. An example of such a ruling was held in (Carlill v. Carbolic Smoke Ball Company, 1892). In this case, the defendant advertised a device claiming that it was effective in preventing someone from contracting influenza. The defendant had gone ahead to state that there was to be an award to anyone who contracted the flu having used the device. However, the claimant contracted the flu yet she had used the device in the right way. The court estopped the defendant from asserting that the advertisement was an invitation to treat.
The similar situation applies to the case of Emily and the Zap Clean company. This was unilateral offer. There was an intention to be bound by the promise as the Zap Clean manufacturers had provided a guarantee that there would be a reward in case the device failed. There was also a consideration of RM 500 which shows that the defendant was indeed providing an offer, and the terms were clear that there was no indication of a requirement for further negotiation. The situation cannot be termed as a bilateral contract since the offer is made to the entire world. Therefore, any person from anywhere can accept the offer.
Conclusion
The action by Emily would succeed. The Zap Clean company made a unilateral offer where all the terms are clear, and the intention to be bound was also clear.
Reference
Carlill v. Carbolic Smoke Ball Company (1892) EWCA Civ.
Contracts Act (1950).
Eckhardt Marine GMBH v Sheriff, High Court of Malaya, Seremban & Ors (1974) 2 MLJ 114.
Grainger & Son v. Gough (1896) AC.
Partridge v. Crittenden (1968) WLR 1.
Stone, R. and Devenney, J. (2017) The Modern Law of Contract. Taylor & Francis.
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