LAW OF CONTRACT
Question 1
Abdul Aziz entered Jaya Jusco supermarket to do some shopping
for his lovely wife Mariam. He took a trolley provided by the
supermarket and filled it up with various goods from the shelves.
When he was about to push the trolley to the cashier’s desk, he
discovered that he has left his purse/wallet at home. Pretending as
if nothing had happened and whistling his favourite tune, he
started to walk down the rows of shelves and put back the goods
on the shelves. Whilst doing so, the supermarket supervisor stops
him, saying that he has bought these goods and therefore must pay
for them. Advise Abdul Aziz.
LAW OF CONTRACT
Question 2
On 1 November 1989, Muhammad who lives next door to Abdul Aziz
called on Abdul Aziz and offered to sell his IBM computer for £2,000.
On 3 November 1989 Abdul Aziz wrote and posted a letter to
Muhammad accepting the offer. The letter was not addressed properly.
Hence Muhammad received the letter of acceptance on 8 November
1989 instead of 5 November 1989. On the evening of 6 November
1989, Muhammad telephoned Abdul Aziz and said, ‘I revoke my
offer.’ Advise Muhammad.
LAW OF CONTRACT
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Question 1
Answer Plan:
Identify the issue (s) that the problematic question is addressing i.e.
whether ‘display of goods in a supermarket’ would amount to an offer or
it is a mere case of an invitation to treat.
Apply the law on the issue (s) identified. For example, the question
expects students to differentiate between an offer and invitation to treat
in the context of the facts given. Take note of the necessary requirements
for a valid offer.
By making reference to the law, what do you think of the supervisor’s
act or conduct? Was he right?
Conclusion.
LAW OF CONTRACT
Answer:
Introduction:
• You need to stated that for there to be a valid contract between Abdul
Aziz and Jaya Jusco supermarket, certain requirements need to be
satisfied as far as contract law is concerned i.e. offer, acceptance,
consideration and intention to create legal relations. From the facts given,
once again you need to state that the issue here is as to whether ‘display
of goods in a supermarket’ would amount to an offer or it is a mere case
of an invitation to treat. (Define these two terms). An offer is defined as
a proposition put by one person to another person made with the
intention that it shall become legally binding as soon as the other person
accepts it. (See also sec 2(a) of the Contracts Act 1950 on how the term
‘offer’ is defined). On the other hand, an invitation to treat is a statement
made by one person asking the other to make the first person an offer.
LAW OF CONTRACT
Answer: (Continuation)
The body:
• You need to state that regarding the issue of ‘display of goods in a
supermarket’ as to whether it is an offer or not, reference should be made
to some of the requirements needed for a valid offer e.g. the offer must
be communicated to the offeree (promise) before it can be accepted. This
is the general rule. Based on such analysis, contract law considers
‘display of goods in a supermarket’ as a case of invitation to treat and not
an offer. Why? Because the offer is not communicated by merely
displaying the goods on the shelves. It is only communicated the
moment the buyer is at the cashier’s counter making payment. (See the
case of Pharmaceutical Society of Great Britain v Boots Cash
Chemists Ltd- where the court was faced with the issue as to when and
where the sale of the medicine took place. Was it when a customer put
the medicines in her shopping basket or was it when she presented the
goods to the cashier. The court held that the sale could only be said to
have taken place when the customer presented the goods to the cashier)
LAW OF CONTRACT
Answer: (Continuation)
• You need to state that ‘goods on display in a supermarket’
only shows that the other party (i.e. the seller) is merely
inviting offers, which he is then free to accept or reject. Thus,
meaning to say the supermarket (the seller) did not intend
that there should be an ‘intention to create legal relation’.
This is on the basis that an ‘invitation to treat’ is an offer to
negotiate. (See the case of Fisher v Bell- where the court
stated that goods on display are inviting customers to make
an offer to buy them from the shopkeeper).
LAW OF CONTRACT
Answer: (Continuation)
• You need to state that the mere statement or indication of
price on the goods on the shelves could not be viewed as a
case of saying that there is a valid offer between Abdul Aziz
and the supermarket. This could not be argued in the context
of consideration and thus stating there was a valid contract.
(See the case of Fisher v Bell – where the Court of Appeal
treated the point beyond dispute stating that: “It is perfectly
clear that according to the ordinary law of contract the
display of an article with a price on it in a shop window is
merely an invitation to treat. It is in no sense an offer for
sale, the acceptance of which constitute a contract”. (See
whether the rule laid down in Havey v Facey could be
applied here)
LAW OF CONTRACT
Answer: (Continuation)
• You need to state that since we cannot establish the
necessary elements of a valid contract i.e. offer, acceptance,
consideration and intention to create legal relation from the
facts given, it is, therefore, right to conclude that Abdul Aziz
was merely being invited by the supermarket to make an
offer. Hence, the supervisor of the supermarket was not right
to say that by putting the goods in the trolley- Abdul Aziz
bought them and must pay for the goods.
LAW OF CONTRACT
Answer: (Continuation)
Conclusion:
• You need to state that although the rule (distinction between
invitation to treat and an offer) is well settled, its application
to self service stores has been criticised because it overlooks
the moral rights of the prospective customer.
LAW OF CONTRACT
Question 2
Answer Plan:
• Address the issue (s) that the problematic question is addressing i.e.
whether there was a valid offer made and followed by acceptance of the
said offer. In other words, could it be said that there was a valid
communication of the acceptance from the other party (Abdul Aziz)?
Was it reasonable for the other party (Abdul Aziz) to resort to this mode
of communication in accepting the proposal/offer from his neighbour
Muhammad? Assuming that it was clearly stated in the proposal i.e. the
means of communication, what would have been the effect of the letter
not being properly addressed to the other party (Muhammad) and was
well as the revocation of the offer.
• Apply the law on the issue (s) identified. For example, the question
requires a thorough discussion on the ‘postal rule’ like the rules
governing its application, etc.
• Conclusion.
LAW OF CONTRACT
Question 2
Answer:
Introduction
• Point out that the first requisite of any contract is an agreement
(consisting of an offer and acceptance). In other words, there must be an
offeror and an offeree. In the present case, Muhammad is considered as
the offeror and Abdul Aziz as the offeree. However, point out that the
important point to address here is as to whether the communication of
the acceptance was conveyed to the other party (Muhammad) for us to
say that there was a valid agreement between the two parties. Here,
reference must be made to the ‘postal rule’ and the conditions
surrounding its application.
LAW OF CONTRACT
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Question 2
Answer: (Continuation)
The body:
Point out that the gist of the problematic question revolves around the ‘postal
rule’. This rule only applies when the acceptance is sent by post or telegram.
Acceptance here takes effect when the letter is posted. (See sec 4(2)(a) and (b) of
the Contracts Act 1950). In other words, with regard to postal communication
and telegraph, acceptance is complete upon posting or dispatch of the telegram.
The ‘postal rule’ is an exception to the general rule that the acceptance is only
complete when it is communicated to the offeror/proposer.
Point out that in advising Muhammad, it is important to touch on the
fundamental principles surrounding the ‘postal rule’. Point out that where a party
uses the post as his means of communicating acceptance, it must be reasonable
in all circumstances. (See sec 7(b) of the Contracts Act 1950 where it is provided
that in order to convert a proposal/offer into a promise the acceptance must be
expressed in some usual and reasonable manner unless the proposal/offer
prescribes the manner in which it is to be accepted). Was it reasonable for a
neighbour to use this mode of acceptance?
LAW OF CONTRACT
Question 2
Answer: (Continuation)
• Still in advising Muhammad, point out that it would not be normal to
reply by letter a proposal that he made to his neighbour Abdul Aziz
unless he had clearly stated the mode of acceptance i.e. by letter.
Assuming that Muhammad did not state clearly the mode or means of
acceptance of the proposal/offer from his neighbour Abdul Aziz, the
governing principle is that where a party uses the post as his means of
communicating acceptance, the circumstances must be such that ‘it must
have been within the contemplation of the parties that, according to the
ordinary usages of mankind, the post might be used as a means of
communicating the acceptance of an offer’ as per the case of Henthorn v
Fraser. Based on this principle, it could not be said that Muhammad and
Abdul Aziz had that kind of contemplation in mind i.e. that Abdul Aziz
will respond to the offer via a post. So, what’s the effect of the
revocation made by Muhammad?
LAW OF CONTRACT
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Question 2
Answer: (Continuation)
In advising Muhammad, point out also by way of making an assumption as to
what would have been the situation assuming that Muhammad clearly stated that
the acceptance of the proposal/offer must be made by way of a post. If that were
to be the position, then the promisee or offeree (Abdul Aziz) is bound to accept
in the prescribed manner. From the facts of the case, it would then be alright for
Abdul Aziz to do what he did irrespective of being neighbours with Muhammad.
Hence, communication of acceptance here will be complete upon posting of the
letter (i.e. 3 November 1989)- See the case of Adams v Lindsell where the rule
was laid down. (See also the case of Ignatius v Bell- where the defendant, Bell,
gave an option to the plaintiff to purchase a piece of land on condition that the
option must be exercised on or before 20 August 1912 by a notice in writing.
The plaintiff exercised the option by posting a letter on 16 August. The
defendant only received the letter on 25 August. The plaintiff sued the defendant
for specific performance. The Court of Appeal held that the acceptance was
complete against the proposer, Bell (the defendant), when it was put into the post
on 16 August).
LAW OF CONTRACT
Question2
Answer: (Continuation)
• Still on the above issue, point out that although acceptance is complete
upon posting of the letter, from the present facts given it is stated that the
letter was not addressed properly and thus reached Muhammad on 8
November 1989 instead of 5 November 1989. Point out that in such a
situation i.e. where a letter is not properly addressed- the governing
principle is that the ‘postal rule’ will not apply. So, what do you think of
Muhammad’s position revoking the offer? Was he right even after
having made the assumption i.e. that he clearly stated the mode or means
of acceptance e.g. by post.
LAW OF CONTRACT
Question2
Conclusion:
• Point out that your advise to Muhammad will revolve
around the issues pointed above and it is most unlikely for
the court to consider that there was a valid mode or means of
communicating the acceptance by Abdul Aziz to
Muhammad because of the arguments presented above.