The unilateral contract with Carbolic Smoke Ball Company

The basic definition
of an offer is given by Treitel who defines an offer as “An expression of willingness to contract on certain
terms, made with the intention that it shall become binding as soon as it is accepted
by person to who it is addressed.” 1The term of Unilateral offer can be defined as
a contract created by an offer which can then only be accepted by performance
of one of the individuals, without the performance. Acceptance of an offer generally
doesn’t have to be communicated and the offer can be accepted through conduct
by performing the act. A unilateral contract can be evidenced through the case of
Carlill v Carbolic Smoke Ball Company 1892 EWCA 1 1893 1 QB 2562,
this saw Carbolic Smoke Ball Co. advertise their Smoke Ball remedy, in which
the company offered a reward of £100 to anyone who used the remedy and still
contracted a flu. Upon seeing the Advert, Carlill by default of purchasing the
product, Carlil had entered into a unilateral contract with Carbolic Smoke Ball
Company by completing the dosage of the Smoke Ball remedy. Nevertheless, once
Carhlil had contracted the flu, he then became entitled to the reward,
previously offered by Carbolic Smoke Ball Co. This however, saw

 

In terms of acceptance with unilateral
offers, this is a fairly straightforward procedure as an offer is accepted once
the offeree accepted the offer and performance commences, this creates the
contract and binds it and ultimately brings the overall to its end.  Acceptance in unilateral offers can be evidenced
of acceptance can be shown in a significant amount of cases such as O’Brien v
MGN Ltd 2001 EWCA Civ 12793
which 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 if
they’ve matched the mystery bonus cash amount. However, Mr O’Brien got two sums
of £50,000 by mistake, this has similarly with 1472 other players, as MGN had
distributed too many cards by accident. This therefore showcases that as soon
an offer is shown to potential offerees, it can be accepted once the offerees
performance commences, this heavily impacts the offeror as if a mistake is
made, it becomes difficult to try and alter the contract within its means
without breach the contract.

 

The term revocation in regard to a unilateral
offer means for the offer to be withdrawn by the offeror. The original rule was
established 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 time
before performance commences, but communication was essential and must be
directly or indirectly given before revocation was possible. This is shown
through Byrne & Co v Leon Van Tien Hoven & Co 1880 5 CPD 344 5in
which the offeror wrote a letter offering goods to sell on the 1st
of October in which got to the plaintiffs on the 11th October and
was accepted on the 15th October however, the offeror had posted a 2nd
letter withdrawing the offer and this letter had been received by the plaintiffs
on the 20th. This therefore showcases the essentiality of
communication and the greater impact that communication has on the ability of
an offeror’s revocation of their offer. However, in more recent cases, the
terms of revocation have been drastically changed, this is highlighted significantly
in the case of Errington v Errington and Woods. 1952) 1 K.B. 2906 which showcases that once an offer has
been accepted by the offeree then acted upon, it then cannot be revoked by the
offeror, as it would be in breach of the contract. Furthermore, in the case of
Storer v Manchester City Council {1974} 3 All ER 824 at 828B 7Lord
Denning MR states “In contracts you do not look into actual intent in a man’s
mind. You look at what he said and did. A contract is formed when there is, to
all outward appearances, a contract. A man cannot get out of a contract by
saying: ‘I did not intend to contract’ if by his words he has done so”. This showc

 

(ii) In the case of Dougal regarding
his contract with Crivendoe Catering (CC), the ultimate question is asked
regarding if Dougal is still within his contractual obligations with CC. The
initial offer between CC and Dougal saw that every Tuesday, Dougal would be obliged
to supply CC with 4 pots containing enough for the 50 meals in which Dougal
would be paid £50 per week for this. However, this initial offer was altered as
Dougal had difficulty in managing the volume of cooking, this saw an increase
in the result of the offer from £50 per week to £60, only if Dougal could
ensure 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 Dougal
had to go back to the initial price in which they previously agreed to.

 

The first issue is if CC are
within their rights to revoke the current contract between their body and
Dougal. Firstly, it can be argued that Dougal has no furtherer contractual obligations
to Crivendoe Catering as the initial contract in which Dougal previously had
with CC was altered by the CC changing the base and conditions of the contract
with Dougal in order to prevent the late orders from ruining their reputation
and making them lose their contract with Sessex County Hospital (SCH) which created
an new offer as CC had changed the final result in which Dougal would receive a
week from £50 to £60. However, the rule in Errington v Errington Woods 1952 1 KB 290 8 during the Court of
Appeal states that an “offeree must be given a
reasonable amount of time complete performance of unilateral offer before
revocation”. Applying this to the facts, this therefore highlights that CC is
therefore required to give Dougal more time before they are able to revoke the
current unilateral in which they are both bound, otherwise CC would be in
breach of their contract with Dougal, this could potentially put CC under more
finance strain, however it would be in compliance with their contract. A draft
up of a new contract would also mean that Dougal would not be obliged to accept
this offer, if he cannot deal with the volume of cooking. To conclude, Dougal could
come up with a time period in which for CC could continue with the current
contract that he has with CC until the further notice, which could enable
Dougal with more time to deliberate whether or not he wants to create a new
contract with CC again.

 

The final ­issue in question is
whether or not if Dougal is entitled to a complete new term of contract with
Crivendale Catering. Firstly, it can be argued that Dougal is entitled to a new
term of contract with CC as the new deal in which CC created was working for a
few months until CC finances began to fluctuate, which lead to CC wanting to
revert back to the initial contract however as CC had broken the original contract
by increasing from £50 to £60. The rule in the 6 part test from Williams V Roffey
1991 1 QB 1,, 1 All ER 512 9states
that “new terms agreed negates the old contract essentially it is a new
contract” which therefore “new contracts means they are obligated to fulfil it
no matter what”. Applying this to the facts, this test would ultimately suggest
that Dougal is heavily entitled for CC to create a new contract as they’re
heavily altering the previous agreement, as CC do not wish to lose their
contract with Sessex County Hospital and ruin their reputation whilst Dougal
cannot meet the previous terms of condition under £50 per week, therefore
drawing up a new contract would help both the institution and individual as
they’d both be able to come to a compromise between both of them which would
benefit them significantly.  To conclude,
Dougal is entitled to a new complete contract with CC as they altered the original
terms of the contract, which by doing so meant that Dougal would be entitled to
a complete new term with CC, furthermore if CC create a new contract in which
Dougal doesn’t benefit from, Dougal is within his contractual rights to reject
the new offer.

1 G.H.
Tretel, The Law of Contract, 10th edn, p.8

2 Carlill v
Carbolic Smoke Ball Company 1892 EWCA 1 1893 1 QB 256

3 O’Brien
v MGN Ltd 2001 EWCA
Civ 1279

4 Payne v Cave 1789 3 TR 148

5 Byrne & Co v Leon Van Tien Hoven & Co 1880 5 CPD

6 Errington v
Errington and Woods. 1952) 1 K.B. 290

7 Storer v
Manchester City Council {1974} 3 All ER 824 at 828B

8 Errington
v Errington Woods 1952 1 KB 290

9 Williams V Roffey
1991 1 QB 1,, 1 All ER 512

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