Law of Contract - analysing a case.

Law of Contract

LAW G 1010

Semester one 2000/2001

David Clements

Rhonda Hammond Sharlot

The Problem in question here is whether James, Kate or both can bring legal action against Detox Ltd or not to claim the £500 that had been offered in compensation. With brake down of each section of the problem it should become quite clear as to what the proceedings in court would amount to. I will look at each part of the problem I consider would have an affect on the court case.

The first task however is to establish whether there is a legally binding contract here and who has actually entered into it. James first became aware of this product through an advertisement in an old issue of a weekly magazine. Most advertisements are classed as invitations to treat. For example in the case of Partridge v Crittenden [1968] 2 All ER 421; [1968] 1 WLR 1204. Here the appellant was accused of offering for sale a wild bird that was protected under the protection of birds act 1954 in a specialist magazine. Lord Parker CJ dismissed the case stating:

Lord Parker CJ

“I think that when one is dealing with advertisements and circulars, unless they indeed come from manufacturers, there is business sense in their being construed as invitations to treat and not offers for sale.”

Although the statement above is in obiter and not legally binding for other cases to follow as a precedent, it is still a strong argument. I assume that it would be looked at within other judgements in the future. I believe that this is definitely an offer to customers rather than an invitation to treat. This can be seen as Detox Ltd have backed up with what they have said by putting money aside to pay anyone that the “sure quit” smoking cure does not work for. This shows that they are making an offer rather than just an invitation to treat as they say in the advertisement “offer to pay you £500 to anyone who used it (according to the instructions) for a period of three months, and either failed to stop smoking or suffered any ill effects attributable to their product”. They are also a manufacturer rather than a private dealer and therefore can be seen to be able to make more than enough of their product to cope with demand. As stated in Lord Parker CJ’s Judgement in the Partridge case. This is why I see this as an offer. This case is akin to that of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. In this case Carbolic Smoke Ball Co were offering £100 to anyone who became ill with influenza after using their product. Further more they also put money aside to show that they would pay anyone who caught influenza after using it, similar to what Detox Ltd have done here. I further believe that this would be the major precedent used within this case for the claimants as it was found in favour of Carlill.

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I would also consider this offer to be a unilateral contract. This is because Detox Ltd is offering a reward (Giving up smoking or £500) for the action of using the drug as directed. To revoke a contract in this sense the offeror must revoke the offer before the offeree has started to perform the act. This was decided from the precedent of Errington v Errington [1952] KB 290; [1952] 1 All ER 149; [1952] 1 TLR 231. In this case a father had promised his son and daughter - in - law a house after his wife died if they kept up the repayments on the mortgage. The son left his wife and moved in with the sick mother. The daughter - in - law sued for possession of the house. It was held that once they had started the payments they must be allowed to finish. Here in the case against Detox Ltd the revocation of the offer came in August. James brought the product one week after reading the article in the magazine. There for we can assume that both he and Kate took up Detox Ltd’s offer no later than early July, at least one month before the revocation. They must therefore be given the opportunity to complete the action.

In this country’s legal system there has never been a precedent set regarding the revocation of a unilateral contract. In the American case of Shuey v US (1875) 92 US 73, It was decided that the communication of the revocation must appear in the same publication and with the same amount of publicity as the offer was originally given. Looking at the problem although Detox Ltd state that they did indeed revoke the offer in Fly Fishing Weekly there is no mention of revocation in other publications such as newspapers. If they only communicated this to the public through Fly Fishing weekly then this may also be in favour of the claimants. I believe however, as the claimants originally became aware of this through this medium I do not believe they could bring a case on just this. This is not to rule out others who had read advertisements in other publications taking legal action if Detox Ltd had not posted a revocation in the publications they had seen the original advertisement. We must also remember that although the British and United States legal systems are very similar this case could only be used as a persuasive argument to find in the favour of the claimants, as our courts are not bound by American precedents. When considering this we must also consider another aspect of the problem. It is only James who has seen the advertisement it Fly Fishing Weekly. Kate only found out about the offer through the knowledge of James. Fortunately for Kate, the offer states that she only need use the product to take up the offer. There is nothing stated in the text that suggests that she must buy the product to be eligible to claim the £500. However, as the communication of the offer to Kate was through James does this mean the communication of the revocation has to come from James also? As James is not acting as an agent for Detox Ltd I do not believe so. As Kate has not seen the advertisement the only way she has found out about it is through her husband. Looking at this Kate has not taken up the offer as stated in the magazine she is simple using a product her husband has brought. When considering this we must remember that Detox Ltd is a manufacturer. Therefore has made an offer to the whole world. As it has made an offer to the whole world as long as the claimant was aware of the offer she can claim. For example if we take a reward offered to find a missing cat. A person finds a cat with a collar and an address. They take the cat to the person’s house and tell them they found the cat and return it. They then leave. If at some future time the person sees a poster offering a reward to anyone who finds their cat and returns it. Are they entitled to return to the house and claim the reward? The answer here is no as they were never aware of the reward and had already performed the duty. This is called “past consideration” In the case of Re McArdle [1951] Ch 669; [1951] 1 All ER 905 Mr McArdle left his house for his five children to divide up after the death of their mother. One of the sons and his wife moved in. The wife refused to live there without some redecoration and repair work. She paid for the materials and labour that was done by her husband. Later, the five children came together and sighed a document stating that they would repay the costs of the repairs at a later date. When this date came they refused to pay. If was held that the contract was past consideration as the work had been done before the contract had been sighed. The children had also not asked the wife to pay for the work either. As Kate is aware of the reward she is entitled to claim.

We can also see from the problem that both James and Kate can claim the £500 offered by Detox Ltd. James as he is suffering ill affect due to the use of the sure quit smoking cure. It also states that it can be “any” ill affect what so ever. It does not specify any particular illnesses. This has been confirmed by a qualified member of the medical profession who has stated that not only that it could be attributable to the "Sure Quit" smoking cure but that it is. Therefore following the literal wording of Detox Ltd’s offer we can see that James can claim as long it is found that there was an offer to take up in the first place. Kate has suffered no ill affects but has failed to give up smoking after a three month period. The fact that she now smokes more seems to show the cure does not work very well but we are more concerned with the wording of Detox Ltd’s offer which states “Failed to stop smoking” which she has. The offer clearly states that anyone can claim £500 from the company if they either suffer ill affects or fail to quit smoking. Kate has failed on the latter of these therefore she can claim the money offered.

Detox Ltd could argue that the offer has lapsed. From the text we can see that Detox placed several advertisements for their product in January. We notice further on that James reads the offer in an old issue of Fly Fishing Weekly. Could the offer have lapsed by now? In the case of Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109 Montefiore wanted to buy shares in Ramsgate. Several months passed after the original offer to buy the shares had been communicated. Montefiore no longer wanted the shares. In court it was held that a too greater time period had passed for Ramsgate to sell the shares if Montefiore no longer wanted them. In this case I still believe the offer was open, as the offer was not revoked until August. It could be argued just as well that Detox were not going to accept anymore offers due to the time lapse and that it had just not communicated the information. Montefiore no longer wanted the shares yet he did not communicate it to the company until they contacted him.

After both James and Kate wrote to Detox Ltd independently they received letters stating the offered had been withdrawn. In general the withdrawal of an offer must be brought to the notice of the offeree. Neither James nor Kate saw the notice of revocation in the magazine but does this mean that they cannot sue? I believe that they still could bring to court the proceedings due to the fact that the revocation occurred after the start of the required task

In conclusion I would state that both James and Kate have a very good case against Detox Ltd. I believe that they would win a court case. There are many precedents that have been set in previous case that would work very well in favour for both James and Kate. This case also has some very similar elements to other cases that have already been decided in the past. So I would suggest to both James and Kate to go ahead with legal proceedings to claim the £500 that they are entitled to if the company fail to pay them after a further letter threatening court action.

As for the matter of whether my advice would change or not if the notice of revocation had appeared in May rather than August I have written as follows. I believe if this were the case then neither James nor Kate would be able to bring a case against Detox Ltd, as the notice of revocation would have been broadcast before the claimants had taken up the offer. As long as the revocation was noted in the same communication channel and with the same publicity as the original offer then the offer has been revoked. This is still the case regardless of whether or not either James or Kate saw the advertisement in the publication in question. Also if the revocation of the offer had appeared in the publication in May, James and Kate would not have started the prescribed course as this was started in June. As I have come to the conclusion that this is a unilateral contract because the claimants would not have taken up the offer they cannot claim due to the fact that they had not started to perform the act required of them to claim before the revocation of the offer.