SP School of Business BA0400 AY2020

BUSINESS LAW
Tutorial 3 – Formation of Contract

Instructions to Students

Before Tutorial 3 (Week 2)

1. Watch all the flipped lecture videos on Chapter 2 Formation of Contract

on Blackboard and fill in the blanks in your lecture notes.

2. P i ac f he S de Checkli Formation of Contract and

complete the list of tasks.

3. Email your Tutor your answers to the Tutorial 3 practice questions tthe day
before your timetabled Tutorial 3 class.

4. You are to possess the case headnotes for the Carlill case and bring it
to the Tutorial 3 class.

5. This will be taken into consideration under the Preparation component of

your class participation marks (PM).

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Practice Questions

Prepare your own answers to these questions before coming for Tutorial 3.
You should make reference to your lecture notes where necessary.

1. Read the case of Carlill v Carbolic Smoke Ball Company [1893] 1 QB

256 and answer the following questions. You are required to use your
legal research skills (which you learnt in Tutorial 1) to find this case (using
SP Library Resources). Download a pdf copy of the full case and print
out only the case headnotes.

a) In what situation would an offer to the public at large be a binding offer

and in what situation would an offer to the public be an invitation to
treat?
An offer to the public at large will be a binding offer when the offeree accepts the offer without any modifications,

an example of this can be seen from the Carlill v Carbolic Smoke Ball Company, where the woman accepted

the offer which was made to the public at large by following all terms and conditions such as following the instructions

when using the smoke ball but still caught a flu and went on to accept the offer made by the company to receive

$100.

An offer to the public would be considered an invitation to treat, if it is an invitation to commence negotiation. The

seller does not make the offer to sell, instead, he gives an invitation to offer. A situation of invitation to treat would

be an auction, when the auctioneer requests for bids from the participants, it is an invitation to treat.

b) How can an offer be revoked? In what way could the offer to the public
at large be revoked?
Offers can be revoked via revocation, it is known as the withdrawal of an offer. Revocation needs to be communicated

to the offeree, before the offeree accepts the offer. In order for revocation to be a success, the offerees has to be

notified of the revocation. The news on the revocation does not have to come from the offeror directly, it can come via

trusted and reliable 3rd party, like the offeror’s managing agent. An offer made to the public at large can be revoked

in the same fashion that the offer was published. These kinds of publication terminates the power of acceptance,

even for people who might have seen the offer but did not see the revocation.

(b) part on revoking an offer made to the public was referenced @

https://lawshelf.com/coursewarecontentview/termination-of-the-power-of-acceptance/
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c) Why do you think the court ejec ed he defe da a g e ha

the offer was too vague, it was a e e ad e i i g ff a d he e
was no intention to create legal intentions and ruled otherwise?
It was rejected because firstly, the company deposited $1000 to the bank to show their “sincerity”, this demonstrated

to us that there was intent and it was not a mere advertising “puff”. Secondly, the defendant said that an offer cannot

be made to the public at large, this is false because you can. Thirdly, in unilateral contracts (a contract made to the

world at large), acceptance is made through full performance, hence there was no need for the woman to communicate

her intent of accepting the offer. Ambiguity can be resolved through a reasonable time limit/ confining the terms to those

who caught the flu while using the smoke ball.

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In-Class Exercise
Anthony offers his hoverboard to Mabel for $350. Mabel is interested in
A h hoverboard. However, Mabel requests for flashing neon pink
lights to be attached to the hoverboard before payment and delivery.
Anthony subsequently changes his mind and sells the hoverboard to
his neighbour, Adam. Mabel now insists that Anthony is legally bound
to sell the hoverboard to her.
Do you agree with Mabel that Anthony is legally bound to sell the
hoverboard to her?
(Law)
- .

No, I do not think that Anthony is legally bound to sell the hoverboard to her.
.

Firstly, the termination of a contract can be because the offer was subjected to conditions. When Anthony offered

to sell Mabel the hoverboard, the flashing neon pink lights were not part of the offer, a counteroffer terminates the original offer.

Secondly, it is presumed that in a domestic and social agreement, there is no intention to be legally bound. As

Anthony and Mabel are (seemingly) not in a commercial nor business agreement, they are presumed to be not legally

bounded by the agreement. Hence, I don’t agree with Mabel.

(Application)

(Conclusion)