Business Law Counter Offer Essay

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BUSINESS LAW

YOGESH v COSMIC COMPUTERS (2006)

Counter Offer


Yogesh (the Plaintiff) saw an advertisement in his local paper on Friday:

‘Cosmic Computers: Special Offer: Banana computers at bargain price of £500 (normal price £900) to the first five customers to call on Monday’

On Monday Yogesh was the first customer to arrive at Cosmic Computers (Defendant). He said to the manager: ‘I will give you £450 for a Banana Computer.’ The manager declined that offer explaining that £500 was a bargain price and he could not go any lower. Yogesh said that he needed a few minutes to think about it. The manager said ‘OK. I will give you ten minutes’.

During the next two minutes five more customers arrived at the shop and each bought a Banana computer for £500. A couple of minutes later Yogesh returned a said to the manager: ‘OK I will buy the computer for £500’. The manager said that he had sold out of Banana computers.

Advise Yogesh, who wants to know if he has a contract with Cosmic Computers for a Banana computer.


The Law of Contract is a set of doctrines and principals concerned with answering 3 questions. Firstly, whether there is a binding and how such a binding promise is made, secondly, is it a promise that should be legally recognized or enforced and thirdly, what remedies are available to an injured party when a contract has been breached. As defined by Sir Guenter Treitel “a contract is an agreement giving rise to obligations which are enforced or recognized by law. What distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties”.

The material facts of the question raise the following issues:

  1. Was the advertisement a unilateral offer or a mere invitation to treat, if so, did Yogesh make a counter offer by proposing to purchase the computer at £450
  2. In agreeing to give Yogesh “10 minutes” to rethink the offer, did this statement become a basis for a binding agreement between Yogesh and the manager?
  3. If this statement is found to be part of a binding agreement, did the shop manager breach the contract when he sold the computer to another customer before the “10 minutes” period had lapsed. See Ramsgate Victoria Hotel v Montefiore (1866), and Dickinson v Dodds (1876).

These issues will be addressed in turn using the objective tests applied in English Law and with the view of suggesting a suitable remedy.

With regards to the first issue as to whether there existed a unilateral offer or an invitation to treat, it is generally held as a rule that an advertisement printed in a newspaper or other medium is merely an invitation to treat whereby the customer is expected to respond to this invitation by making the offer. As illustrated in the case of Partridge v Crittenden (1968), it was held that the advertisement was an invitation for offers, not an invitation for sale. However, courts have held in certain cases that where an offer in an advertisement is clear, definite, explicit and not open for negotiation, the advertisement is an offer and not an invitation to treat.

        In view of this, the nature of the facts in the case of Lefkowitz v Great Minneapolis Surplus Stores Inc. (1957), are strikingly similar to that of the case at hand. The defendant advertised in a newspaper, fur coats to be sold for $1 to customers on a first-come first-serve basis. As the first customer, the plaintiff was told that there was a ‘house rule’ that only permitted women to receive this bargain. However, the court held that as the plaintiff had successfully met the conditions of the offer by providing the required sum needed to purchase the offer, he was entitled to performance on the part of the defendant. Secondly, as this ‘house rule’ was not communicated as a restriction or as the ‘terms and conditions’ of the offer in the advert, it could not be presented as a condition after acceptance has already occurred. Thus, the court ruled in favour of the plaintiff.

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        Similarly, the advertisement by cosmic Computers was a unilateral offer as it was to the world at large, not to one specific person; also, stated that performance would be given to the first 5 customers to present £500. Despite being the first customer to respond to this offer, Yogesh failed to provide the satisfactory requirement. In fact, Yogesh offered to accept the offer at of £450, which clearly was not a term of the offer in the advertisement.

        As the offer advertised was clearly not negotiable (assuming it would have stated if other wise), by making an offer on ...

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