Bangladesh University of

Professionals

Assignment on Legal Environment of Business

Course Code: BUS7305

Submitted To:

Barrister Shahrina Razzaque Juhi

Barrister-at-Law, Honourable Society of Lincoln’s Inn, London, UK
PGDL, Northumbria University, UK
MBA, Bangladesh University of Professionals
LL.B (Honours), University of London, UK
Diploma in Law, University of London, UK

Submitted By:
Abdullah All Masud
ID: 2023032036, Section: B, Session: May 2020

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QUESTION 1:

Discuss and analyse the concept of “mere invitation to treat” with appropriate case laws
and judicial decisions.

Answer:

Interchange of goods and services between human, have been continued through human being.
The basic of trade and shopping depend on basic transactions and people agreed on the basic
principles in their interchange, which was mainly depended on promises between people.

At the beginning, we need to comprehend what the contract law is. A contract is an enforceable
agreement by law which legally bind the parties. To create a contract, it does not need to be
written. Therefore, a contract can be made between parties either orally or in writing. Legally
binding contract means that one party can sue through the courts to the other party. We make
countless contracts over the time. For instance, when we buy something or even, we have our
hair cat. These are some of the example of legally binding without documents.

It must be four elements to existence a contract: Offer, Acceptance, Consideration, Agreement.

Definition of mere invitation to treat:

In the invitation to treat or offer, no specific party has the intention to enter into a contract. The
seller can enter a contract with anyone from the public who offers him the best. So, the essence
of an invitation to offer is that the offer is made by the buyer. A proposal or an offer must be
differentiated from invitation to treat or offer. Sometimes a person may not offer to sell his
goods.

Difference between offer and invitation to treat

• The difference between an offer and an invitation to treat is very basic and is primarily
rooted in the ‘intent’ of the parties. While an offer allows the other party to enter into a
contract directly (which is a legally binding agreement) as soon as it is accepted, an
invitation to treat is primarily an invitation to the other party to negotiate and makes an
offer to the seller himself.
• When we go to a bookstore, the display of books in the shop is an invitation to treat the
public by the bookseller. Anyone passing through the shop can come to buy one of their
books or can buy later. Here, no one is legally obliged to perform any action.
• Similarly, most forms of advertisements are not offering, but invitations to make offers.
but gives some details or information to invite others to make an offer on that basis.

Example 1: Advertisements are usually an invitation to treat because they lack important
information that would make it an offer. Although they make some claims about their products,
and these claims must be proven, they are not offered in the legal sense of a contract.

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Example 2: The exhibition of any type of goods for sale. A bookseller sends a catalogue of
books with prices of books to many persons. This is an invitation to treat and not an offer. If
anyone is interested in purchasing book or books mentioned in catalogue, he may make an
offer and the person who is circulating the catalogue has the discretion to accept or not accept
the offer.

Case Laws and Judicial decisions:

1. Harris vs. Nickerson

Facts of the case: The defendant advertised a sale by auction. The plaintiff travelled to the
advertised place of auction and found that the defendant had cancelled the auctioned sale. He
bought an action against the defendant to recover the expenses of the travel.

Judgment of the case: In this case, the court held that he was entitled to recover his travelling
expenses from the defendant as there was no contract between the two parties, which could
make the defendant liable.

2. State Bank of Patiala vs. Romesh Chander Kanoji

Facts of the case: Voluntary Retirement Scheme (VRS) framed by the appellant court, and the
respondent employee made an offer for making an application seeking voluntary retirement. In
the scheme, 15 days was given to the employee to opt for the scheme. It was also provided that
application once made could not be withdrawn. Hence, withdrawal after the date of closure of
the scheme was not permissible.

Judgment of the case: The Supreme Court observed that scheme was an ‘invitation to offer’
and not an ‘offer’, and such schemes, employees are permitted to withdraw their applications
at any time even after the closure of the scheme, so in this case, all the calculations of the
management of bank would fail.

QUESTION 2:

Conduct in depth research on the following two cases:

i. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991]

ii. Carlill v Carbolic Smoke Ball Co [1893]

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i. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991]

Answer:
Case Summary:
Roffey Bros was contracted by Shepherds Bush Housing Association Ltd to refurbish 27 flats
at Twynholm Mansions, Lillie Road, London SW6. They subcontracted carpentry to Mr Lester
Williams for £20,000 payable in instalments. Some work was done and £16,200 was paid. Then
Williams ran into financial difficulty because the price was too low. Roffey Bros was going to
be liable under a penalty clause for late completion, so they had a meeting on 9 April 1986 and
promised an extra £575 per flat for on time completion. Williams did eight flats and stopped
because he had only got £1,500. New carpenters were brought in. Williams claimed.

Mr Rupert Jackson QC held Williams should get the eight times £575 with a few deductions
for defects and some of the £2,200 owing from the original sum. He said that they had agreed
that the original price was too low, and that raising it to a reasonable level was in both sides'
interests.

Legal Aspects discussion:

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5 is a leading English
contract law case. It decided that in varying a contract, a promise to perform a pre-existing
contractual obligation will constitute good consideration so long as a benefit is conferred upon
the 'promiseor'. This was a departure from the previously established principle that promises to
perform pre-existing contractual obligations could not be good consideration.

Judgement Passed:
The Court of Appeal held that the doctrine in Stilk v Myrick had been refined since then.
Gildwell LJ said a promise to make bonus payments to complete work on time was enforceable
if the promisor obtained a practical benefit and the promise was not given under duress of by
fraud. It was the appellants’ own idea to offer the extra payment. Therefore, there was no
duress. The appellants also gained a practical benefit by avoiding the penalty clause. Russel
LJ said (at 19) that the court would take ‘a pragmatic approach to the true relationship between
the parties. Consequently, the promise for extra pay was enforceable.

Implication of the Judgment on the law of contract:

It is suggested that the novel aspect of the case is to be found in the judgement of Glidewell
LJ. The significant passage is proposition (iv) to the effect that consideration can amount to
conduct that ‘in practice [confers] a benefit or obviates a disbenefit’. As a result of the promise
the builder was potentially spared a great deal of inconvenience and this was enough. Had the
subcontractor breached the contract the matter of the potential liquidated damages and other
losses could have been addressed in an action for damages. The problem was that, therefore,
the subcontractor was likely to become insolvent and the builder’s remedies rendered
worthless. Russell LJ found advantage to the builder arising from the rearrangement of the

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‘haphazard method of payment’ and Purchas LJ referred to the benefit to the builder inherent
in the rearrangement of the schedule. The benefit to the builder was certainly worth more than
a peppercorn.

The easy option would have been a decision couched in terms of the subcontractor’s second
pleading, that is, that the original contract agreement had been terminated by mutual consent
and the new agreement.

The Court of Appeal’s reasoning overlooks the fundamental role played by the doctrine of
consideration in establishing a contractual obligation between two parties at the time they
exchange promises. The reasoning in Williams v. Roffey leaves parties to a transaction in a
legal no man’s land only knowing for certain if a promise is binding after a court has examined
the transaction and found ‘practical benefit’.

ii. Carlill v Carbolic Smoke Ball Co [1893]

Answer:
Case Summary:
The Carbolic Smoke Ball Company came up with a new advertising strategy that would require
the company to advertise that their Carbolic Smoke Ball was a definite panacea for influenza,
hay-fever, coughs and colds, headaches, bronchitis, laryngitis, whooping cough and any other
sore throat related troubles.

The company was, in fact, very confident of the usefulness of their product. They also claimed
that the carbolic smoke ball not only possesses the ability to cure influenza but also prevent
users from getting any type of common flu. However, the main crux of their advertisement was
that the company stated that any person who catches a cold or gets affected by influenza even
after using their product (carbolic smoke ball); such a person will be entitled to claim £100
from the company provided that the product has been used for a certain specified period of
time.

The company also stated that it had also gone as far as to deposit £1000 in a certain Alliance
Bank. This deposit was made by the company in the event of any claims that could be made in
lieu of their advertisement. The plaintiff Carllil followed all the procedures of using the carbolic
smoke ball. Even after following the procedure she still caught the flu. Consequently, she filed
a suit against the Carbolic Smoke Ball Company. Her claim was £100 from the company as
the company advertised their product as such. The Court ruled in her favour. The defendants,
however, appealed.

Legal Aspects:
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 is an English contract
law decision by the Court of Appeal, which held an advertisement containing certain terms to

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get a reward constituted a binding unilateral offer that could be accepted by anyone who
performed its terms. It is notable for its curious subject matter and how the influential judges
(particularly Lindley and Bowen LJJ) developed the law in inventive ways. Carlill is
frequently discussed as an introductory contract case and may often be the first legal case a law
student studies in the law of contract.

The case concerned a flu remedy called the ‘carbolic smoke ball’. The manufacturer advertised
that buyers who found it did not work would be awarded £100, a considerable amount of money
at the time. The company was found to have been bound by its advertisement, which was
construed as an offer which the buyer, by using the smoke ball, accepted, creating a contract.
The Court of Appeal held the essential elements of a contract were all present, including offer
and acceptance, consideration and an intention to create legal relations.

Judgement passed:
The English Court of Appeals held that the contract was a binding one. Carlill was successful.
The reasoning provided by the judges are as follows:

In a nutshell, Justice Lindley stated that the advertisement shall be treated as an express
promise. According to this promise, anyone who contracts the flu despite the preventive
capacity of the smoke ball as claimed by the company will be paid 100 pounds provided that
the ball is utilised as per the directions (three times daily for 2 weeks). Elaborating his reasoning
as follows:

1. Justice Lindley said that the advertisement was not an empty boast or a mere puff
because of the use of a particular statement that is “1000 is deposited with the Alliance
Bank, showing our sincerity in the matter”. This statement makes it evident that the
company was sincere enough while offering the reward in the first place.
2. The promise made by the company is binding enough even though there was no specific
at the receiving end of this conditional benefit. This is a unilateral offer which doesn’t
require acceptance as it is made to the world at large. It shall be treated as an offer to
anyone who performs the conditions and anyone who performs the specific condition
(in this case using the smoke ball 3 times for 2 weeks) accepts the offer.
3. Justice Lindley also concluded that the advertisement is not vague. The words used to
construct the language of the advertisement can be construed as a promise. The words
are reasonably constructed to lead any potential consumer to believe that if they
contracted the flu even after using the smoke ball, they are entitled to 100 pounds.
4. About the notification of acceptance Lindley observed that the notification of the
acceptance need not precede the performance. It was a continuing offer. For example,
if an express acceptance was required, then the person making the offer gets the notice
of acceptance along with a promise of performance of the condition laid down in the
advertisement”. In other words, if the specific conditions are performed then it implies
the communication of acceptance of the offer.
5. Lastly, Justice Lindley concluded that consideration did exist in this case mainly for 2
reasons. Firstly, the company received a benefit in the form of sales. Secondly, there is

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 a detriment involved that is the direct inconvenience caused to the consumer who uses
the smoke ball as per the conditions laid down in the advertisement. Thus, the
performance of the specified conditions constitutes consideration for the promise.

Justice Bowen also offered his reasoning. Bowen also agreed with Justice Lindley. His
reasoning can be summed up into 3 points.

1. An offer made to the public at large can also ripen into a contract if anyone fulfils the
conditions of the contract. Their performance implies their acceptance and also
establishes the consideration.
2. A specific Notification of acceptance is not required in such situations.
3. There exists a valid consideration. Firstly, the company will profit from the sale of the
product. Secondly, the fact that the company deposited 1000 pounds in the bank for the
purpose of the offer made by them implies their sincerity to fulfil their part of the
bargain in case their product fails to prevent the flu.

Finally, Justice Smith went with the reasoning of Justice Bowen and Lindley and dismissed the
appeal unanimously. The plaintiff received compensation of £100.

Implication of the Judgment on the law of contract:

This judgment impacted English contract law. Especially the concept of Unilateral contract as
now companies and advertising agencies are more careful with what they release to the world
at large. A thoughtless marketing strategy can incur grave losses for the company as they may
be pulled into an unnecessary litigatory matter.

Now, there are other scenarios of unilateral contracts. For example, If a person/ pet goes
missing and the missing person’s family/ owner puts up a poster with their picture and name
on it, offering a reward for any relevant information of the missing person/ pet or even the safe
return of the same; this can be treated as a unilateral contract. It is an offer to the world at large.
Once the person or pet is found then it shall be implied that the offer was accepted. Thus, the
offeror is now under the obligation to perform his part of the agreement that is to reward the
person who found them.

Similarly, if the police offer rewards to the public at large if anyone provides information that
will assist the police in a criminal investigation; then also such a scenario shall be treated as a
unilateral contract. Thus, making the reward money payable.

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