Assessment 2 – Hannah Whitaker, s4656240

Fancy bakery v Simon – Memorandum of advice

Does Simon have a contract with Fancy Bakery?
Offer
To establish whether there is a contract, the first issue involves determining whether an offer
has occurred between Simon and Fancy Bakery.
Within contract law, invitation to treat was established to create a clear understanding of
when the offer actually occurs. Invitation to treat refers to one party providing another party
with the opportunity to make an offer (McNamara, 2023). For example, when a product is
placed on a shelf this is known as an invitation to treat. This rule was established in
Pharmaceutical Society of Great Britain v Boots Cash Chemists (1952), where Boots was
allowing his customers to pick drugs from off the shelves and pay for them at the counter
under the supervision of a pharmacist. The Pharmaceutical Society believed Boots to be in
breach of the Pharmacy and Poisons Act 1933 (ACT) and argued that the display of goods is
an offer and a customer placing the drug into their shopping basket results in acceptance of
the offer. Held: Boots was not in breach of the Act as it was determined that the offer only
occurs once the customer brings the drugs to the counter. Therefore, offer can be defined as a
person, known as the offeror, expressing a willingness to enter into a contract with the offeree
(James, 2021). An offer can be expressed through verbal or written communication, or it can
be implied from behaviour, but it must be clear (McNamara, 2023).
When applying the rule to the case of Simon v Fancy Bakery, the initial invitation to treat
arose when Simon saw the pie advertised at his regularly bakery. He then approached Fancy
Bakery with an offer when he requested to buy two wagyu pies, which allows the bakery with
the ability to accept or reject his offer.
In conclusion, the action of approaching the counter and asking for the pies illustrates that
Simon has expressed a verbal and clear offer to Fancy Bakery.
Acceptance
The next issue to consider is whether the offer presented by Simon was accepted by Fancy
Bakery.
The law implements certain rules around acceptance of an offer to ensure there is no
ambiguity to whether acceptance has occurred. One of the rules states that acceptance must
be clear to guarantee that there is an undoubted assent to the offer (Elliott & Quinn, 2019).
Another rule highlights that the offeree is obligated to meet the requirements stipulated by the
offeror, which indicates that the offer cannot be altered when acceptance is given (Parker &
Box, 2013). If the offeree modifies the terms identified in the offer this is known as a counter
offer, which extinguishes the original offer, and is not a form of acceptance (James, 2021).
Additionally, if the offeror specifies how the acceptance is to be made than the offeree must
comply to that condition for acceptance to be valid (Andrews, 2011). It is also important to
note that any request for information to further understand what the offer entails is neither a
form of acceptance nor a counter offer (Parker & Box, 2013).
These rules can be applied to Simon v Fancy Bakery by highlighting that acceptance arose
when fancy bakery took the payment of $25 from Simon in order to purchase the pies and in
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return gave him what was advertised as the wagyu pie. Before taking Simons payment, Fancy
Bakery did not present a counter offer to give him a lamb minced meat pie instead of a wagyu
pie. Therefore, the form of Fancy Bakery accepting payment for the agreed upon order of two
wagyu pies creates an undoubted assent to Simons offer.
In conclusion, the action of taking payment from Simon after he presents the bakery with an
offer showcases Fancy Bakery’s undoubted willingness to accept the offer and therefore
establishes a clear form of acceptance.
Consideration
The third issue revolves around determining whether either Simon or Fancy Bakery provided
consideration.
Consideration can be defined as a valuable transaction of something a person will do
currently or in the future (Parker & Box, 2013). When implementing considerations it is
important to know the rule that it cannot have occurred in the past, and therefore must be a
current or future consideration to be accepted (Elliott & Quinn, 2019). This rule can be
understood through outlining the case of Roscorla vs Thomas (1842), which involved
Roscorla entering into a contract with Thomas to purchase a horse from him. After the
contract was finalised, Roscorla asked Thomas to confirm that the horse was well-tempered.
Thomas stated that the horse was free from vice, but it was later discovered that the horse was
vicious, which lead Roscorla to pursue legal action for breach of contract. Held: The
confirmation of the horses temperament was not part of the contract, due to the assurance
being given after the contract was finalised and was not supported by any new consideration
to change the terms of the previous contract.
By applying this rule of consideration to Simon v Fancy Bakery, it can be understood that
there was an original consideration applied through payment and in return Simon receives his
pies. However, after that payment was given and the contract has been completed, there was
no new consideration added by either party. Therefore Fancy bakery would be bound by the
previous contract of giving wagyu pies to Simon and would need to have added new
consideration to change what the pie may have contained. Simon could have also added new
consideration and then asked to confirm he had the right meat in his pies.
In conclusion, there was no new consideration added and therefore both Simon and Fancy
Bakery are bound by the conditions of the contract.
Intention
The last issue focuses on whether Simon and Fancy Bakery intended to create a legal
relationship with one another.
When dealing with intention the law outlines two forms of presumptions that relate to the
nature of the relationship held between the parties. The first form of intention is domestic or
family arrangements and the second form is commercial arrangements. In domestic
arrangements the law presumes that there is no intention to create legal relationships,
therefore the party rebutting this presumption will need to prove there was an intention to be
legally binding (Parker & Box, 2013). In contrast, commercial arrangements begin with the
presumption that there is an intention to create legal relationships, therefore the party that
wishes to rebut this will have the onus of establishing that there was not an intent to create a
 Assessment 2 – Hannah Whitaker, s4656240

legal relationship (Parker & Box, 2013). An example of a commercial arrangement is present
in the case of Carlill v Carbolic Smoke Ball Co (1893). In this case the Carbolic Smoke Ball
company advertised their product as a method to prevent contracting influenza and claimed
that they would pay 100 pounds if any person was to contract the flu after using the ball as
directed. Carlill saw this advertisement and decided to purchase the ball, shortly after using
the ball as directed she still caught the flu. After bringing this to the companies attention, they
refused to pay Carlill on they basis that they did not intent to create a legal relationship with
Carlill. Held: Carlill was entitled to a reward as the Carbolic Smoke Ball company created an
intention to be legally binding by producing the offer and placing money in a separate bank
account for potential reward payments. Therefore, the presumption was not rebutted
successfully.
This law applies to Simon and Fancy Bakery through a commercial arrangement as it is a
business to consumer relationship between the parties. Therefore it is presumed that the
parties had intention to enter into a legal relationship. This presumption would place Fancy
Bakery in the position of having to prove there was not an intention to be legally binding.
In conclusion, the existing presumption that a commercial arrangement would intend to
create legal relationships makes it difficult for Fancy Bakery to prove otherwise. Therefore,
the contract is likely to be enforceable between Simon and Fancy Bakery.
Conclusion
Based on the information provided above Fancy Bakery and Simon have formed all the steps
necessary to create a contract. Therefore, Tony should be informed that there is in fact a
contract in place and that this provides Simon with the opportunity to bring forward a case
against Fancy Bakery for misleading and deceptive conduct.
What rights, if any, does Simon have under the Australian Consumer Law?

Is Simon a consumer - explain how/why he is a consumer, use section 3 of the ACL

Does Simon have rights as a consumer – when Simon purchases those pies he has entered
into a contract, even if it is not written in the contract Simon still has guarantees or
protections under the ACL.
What are the guarantees and then what ones apply to Simon. (use the 6 ones from the
PowerPoint, don’t worry about the one listed under G)
Protections/guarantees:
- Product matches description
- Quality has to be acceptable
- Misleading and deceptive conduct, if a business advertises a statement that is meant to
intise the consumer or the purchaser into buying something and it might be that they
have made references to a company with a similar name to try and create confusion.
(Case example: Penfole wines vs McDonalds)
- Unconscionable conduct – (estoppal, shouldn’t be allowed to get away with it)
- Bad advertising
- Acceptable quality – (54 – it has to be of acceptable quality)
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- Substantially fit for its common purpose

- If it doesn’t match the description advertised the consumer is entitled to some form of
compensation
- If it doesn’t match the sample than the consumer is entitled to some form of
compensation
Issue: is Simon a consumer and if so, what rights does he have under ACL
Rule of Law: the possible protections/guarantees under ACL
Application: protections/guarantees that apply to Simon
Conclusion:

Reference list
McNamara, N. (2023). Contract Law (7th ed.). LexisNexis Butterworths.
Pharmaceutical Society of Great Britain v Boots Cash Chemists (1952) 2 QB 795
 Assessment 2 – Hannah Whitaker, s4656240

Pharmacy and Poisons Act 1933 (ACT)

James, N. (2021). Business Law (6th ed.). John Wiley and Sons.
Roscorla vs Thomas (1842) 3 QB 234