The unilateral contract with Carbolic Smoke Ball Company

Topic: BusinessCompany
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Last updated: May 2, 2019

The basic definitionof an offer is given by Treitel who defines an offer as “An expression of willingness to contract on certainterms, made with the intention that it shall become binding as soon as it is acceptedby person to who it is addressed.” 1The term of Unilateral offer can be defined asa contract created by an offer which can then only be accepted by performanceof one of the individuals, without the performance.

Acceptance of an offer generallydoesn’t have to be communicated and the offer can be accepted through conductby performing the act. A unilateral contract can be evidenced through the case ofCarlill v Carbolic Smoke Ball Company 1892 EWCA 1 1893 1 QB 2562,this saw Carbolic Smoke Ball Co. advertise their Smoke Ball remedy, in whichthe company offered a reward of £100 to anyone who used the remedy and stillcontracted a flu. Upon seeing the Advert, Carlill by default of purchasing theproduct, Carlil had entered into a unilateral contract with Carbolic Smoke BallCompany by completing the dosage of the Smoke Ball remedy. Nevertheless, onceCarhlil had contracted the flu, he then became entitled to the reward,previously offered by Carbolic Smoke Ball Co.

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This however, saw  In terms of acceptance with unilateraloffers, this is a fairly straightforward procedure as an offer is accepted oncethe offeree accepted the offer and performance commences, this creates thecontract and binds it and ultimately brings the overall to its end.  Acceptance in unilateral offers can be evidencedof acceptance can be shown in a significant amount of cases such as O’Brien vMGN Ltd 2001 EWCA Civ 12793which saw the offeror place scratch cards within newspapers – Daily Mirror,which meant if the card came up with money, the players would have to see ifthey’ve matched the mystery bonus cash amount. However, Mr O’Brien got two sumsof £50,000 by mistake, this has similarly with 1472 other players, as MGN haddistributed too many cards by accident. This therefore showcases that as soonan offer is shown to potential offerees, it can be accepted once the offereesperformance commences, this heavily impacts the offeror as if a mistake ismade, it becomes difficult to try and alter the contract within its meanswithout breach the contract.

 The term revocation in regard to a unilateraloffer means for the offer to be withdrawn by the offeror. The original rule wasestablished in the old English contract case Payne v Cave 1789 3 TR 1484,in which saw that an offer could potentially be revoked at any given timebefore performance commences, but communication was essential and must bedirectly or indirectly given before revocation was possible. This is shownthrough Byrne & Co v Leon Van Tien Hoven & Co 1880 5 CPD 344 5inwhich the offeror wrote a letter offering goods to sell on the 1stof October in which got to the plaintiffs on the 11th October andwas accepted on the 15th October however, the offeror had posted a 2ndletter withdrawing the offer and this letter had been received by the plaintiffson the 20th. This therefore showcases the essentiality ofcommunication and the greater impact that communication has on the ability ofan offeror’s revocation of their offer.

However, in more recent cases, theterms of revocation have been drastically changed, this is highlighted significantlyin the case of Errington v Errington and Woods. 1952) 1 K.B. 2906 which showcases that once an offer hasbeen accepted by the offeree then acted upon, it then cannot be revoked by theofferor, as it would be in breach of the contract. Furthermore, in the case ofStorer v Manchester City Council {1974} 3 All ER 824 at 828B 7LordDenning MR states “In contracts you do not look into actual intent in a man’smind. You look at what he said and did. A contract is formed when there is, toall outward appearances, a contract.

A man cannot get out of a contract bysaying: ‘I did not intend to contract’ if by his words he has done so”. This showc (ii) In the case of Dougal regardinghis contract with Crivendoe Catering (CC), the ultimate question is askedregarding if Dougal is still within his contractual obligations with CC. Theinitial offer between CC and Dougal saw that every Tuesday, Dougal would be obligedto supply CC with 4 pots containing enough for the 50 meals in which Dougalwould be paid £50 per week for this. However, this initial offer was altered asDougal had difficulty in managing the volume of cooking, this saw an increasein the result of the offer from £50 per week to £60, only if Dougal couldensure he would be on time with CC orders, in which Dougal had stuck by. However,CC had started to experience financial difficulties and decided to that Dougalhad to go back to the initial price in which they previously agreed to. The first issue is if CC arewithin their rights to revoke the current contract between their body andDougal. Firstly, it can be argued that Dougal has no furtherer contractual obligationsto Crivendoe Catering as the initial contract in which Dougal previously hadwith CC was altered by the CC changing the base and conditions of the contractwith Dougal in order to prevent the late orders from ruining their reputationand making them lose their contract with Sessex County Hospital (SCH) which createdan new offer as CC had changed the final result in which Dougal would receive aweek from £50 to £60. However, the rule in Errington v Errington Woods 1952 1 KB 290 8 during the Court ofAppeal states that an “offeree must be given areasonable amount of time complete performance of unilateral offer beforerevocation”.

Applying this to the facts, this therefore highlights that CC istherefore required to give Dougal more time before they are able to revoke thecurrent unilateral in which they are both bound, otherwise CC would be inbreach of their contract with Dougal, this could potentially put CC under morefinance strain, however it would be in compliance with their contract. A draftup of a new contract would also mean that Dougal would not be obliged to acceptthis offer, if he cannot deal with the volume of cooking. To conclude, Dougal couldcome up with a time period in which for CC could continue with the currentcontract that he has with CC until the further notice, which could enableDougal with more time to deliberate whether or not he wants to create a newcontract with CC again. The final ­issue in question iswhether or not if Dougal is entitled to a complete new term of contract withCrivendale Catering. Firstly, it can be argued that Dougal is entitled to a newterm of contract with CC as the new deal in which CC created was working for afew months until CC finances began to fluctuate, which lead to CC wanting torevert back to the initial contract however as CC had broken the original contractby increasing from £50 to £60. The rule in the 6 part test from Williams V Roffey1991 1 QB 1,, 1 All ER 512 9statesthat “new terms agreed negates the old contract essentially it is a newcontract” which therefore “new contracts means they are obligated to fulfil itno matter what”. Applying this to the facts, this test would ultimately suggestthat Dougal is heavily entitled for CC to create a new contract as they’reheavily altering the previous agreement, as CC do not wish to lose theircontract with Sessex County Hospital and ruin their reputation whilst Dougalcannot meet the previous terms of condition under £50 per week, thereforedrawing up a new contract would help both the institution and individual asthey’d both be able to come to a compromise between both of them which wouldbenefit them significantly.

 To conclude,Dougal is entitled to a new complete contract with CC as they altered the originalterms of the contract, which by doing so meant that Dougal would be entitled toa complete new term with CC, furthermore if CC create a new contract in whichDougal doesn’t benefit from, Dougal is within his contractual rights to rejectthe new offer.1 G.H.Tretel, The Law of Contract, 10th edn, p.82 Carlill vCarbolic Smoke Ball Company 1892 EWCA 1 1893 1 QB 2563 O’Brienv MGN Ltd 2001 EWCACiv 12794 Payne v Cave 1789 3 TR 1485 Byrne & Co v Leon Van Tien Hoven & Co 1880 5 CPD6 Errington vErrington and Woods.

1952) 1 K.B. 2907 Storer vManchester City Council {1974} 3 All ER 824 at 828B8 Erringtonv Errington Woods 1952 1 KB 2909 Williams V Roffey1991 1 QB 1,, 1 All ER 512

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