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MGT809 Plaintiff and Defendant Argument: Carlill v Carbolic Smoke Ball Company Case Assessment Answer

Subject TitleBusiness Law and Governance
Subject CodeMGT809
Assessment TitleCase Study

Case Study

The purpose of this case study is to test your understanding of business law and ONE of the following areas of the Australian legal system:

  1. Contract Law
  2. Tort Law
  3. Consumer Law

You are expected to refer to the relevant Australian legislation and any other relevant case law in the analysis of your case study.

Topic

Choose ONE of the following leading cases:

  1. Contract LawCarlill v Carbolic Smoke Ball Co [1893] 1 QB 256
  2. Tort Law: Donoghue v Stevenson [1932] UKHL 100
  3. Consumer Law: Commercial Bank of Australia Ltd v Amadio [1983] HCA 14

Your assignment should in no more than 3000 words:

  1. Discuss the facts of the case;
  2. Critically analyse and compare the arguments of both the plaintiff and the defendant;
  3. Analyse the ratio decidendi of the case;
  4. Appraise the decision of the Court. In doing so, you should comment on whether you agree or disagree with the decision.

General Guide

  1. You need to consider Australian laws only.
  2. In your answer you need to demonstrate your understanding of the relevant elements and principles of contract, tort or consumer law
  3. Please read the referencing guidelines on Moodle and use correct citation to avoid plagiarism. Refer to ICMS policy on plagiarism policy.
  4. Use the APA style of referencing
  5. You are expected to support your answer with reference to other useful sources as evidence of research. These include cases and legislation (primary sources), journal articles, industry publications and any other submissions to government (secondary sources).
  6. This is an individual research and you are expected to display your own opinion.
  7. You are advised to use the ICMS cover page for assignment submission.
  8. Ensure that you have ticked off the checklist on the assessment template before you submit to Turnitin.
  9. Please refer to the rubric to ensure that you have addressed the criteria
  10. Due date is Week 9. Please submit the soft copy to Turnitin and bring the hard copy to class.
  11. Failure to submit on the due date will incur penalties. Please refer to the ICMS policy on late submissions.

Answer

Contract Law


Executive summary

This report divulges the implication of the case study of the Carlill v. Carbolic Smoke Ball (offered product)Company. However, this case study is accompanied by the contract rules and regulations which is required to be complied by contract parties while entering into the contract. There are several essential elements of the (legal contract) which contract parties need to comply while entering into the contract. The contract is the legal agreement which binds the parties to perform certain terms and conditions and failure to comply with those terms may result in the breach of the contract. However, there are available contract remedies which are given to the aggrieved party in the contract rules if another contract party fails to perform. This report reveals the arguments of the plaintiff and defendant in the given case of the Carlill v. Carbolic Smoke Ball (offered product)Company. There are several elements and legal implication of the contract which have been described in the given case. This given case shows that both the parties to the contract are legally binding and if one fails to perform the contract then other parties could go for the injection and other legal remedies to the defaulting party. This report has shown the key aspects of the contract to determine whether the advertisement published in the legal contract or not.

Introduction

It is considered that contract parties (Parties who are entered in legal contract) are legally binding to the contract terms and conditions which they need to comply to discharge their legal liabilities. In this report, the legal implication of the contract terms and set essential intents of contract (Acceptance, legal parties, consideration, offer and acceptance) have been given. These intents needs to be full filed by contract parties (two or more parties). This report reveals the key implicating of the legal contract of Carlill v Carbolic Smoke Ball (offered product)Company [1892] EWCA Civ 1 which divulges the key elements of the English contract and court decisions by the court of appeal in the open advertisement. In the starting of this report, facts of the case and its legal essential factors have been given. This case has shown the legal formation of the contract and how an open advertisement in the market could form a legal contract. After that, arguments of plaintiff and defendant in the given case of the Carlill v. Carbolic Smoke Ball (offered product)Company has been divulged. Afterward, the issues of the case and legal finding which results in the formation of the contract have been given. This report shows the key aspects of the contract and the legal implication reveals by the plaintiff and defendant in the given case. The given case has shown that the decision of the court of appeal is given and as there is a binding contract between the plaintiff and defendant. In the given case, the legal liability of the defendant due to his fault has been given and assessed whether he is bound to pay the compensation amount to the plaintiff for the same or not. 

ISSUES OF THE CASE:-

The appeal made to the court by the defendant have been on the basis of the facts, issues and other legal factors by the both contract parties in the advertisement contract

  1. Whether the advertisement is a contract?
  2. Whether offer acceptance is duly given or communicated to offeror?
  3. Whether both parties are legally bound to contract?
  4. Whether there is a valid consideration?

Finding

In the said case, the Company "Carbolic Smoke Ball (offered product)Company'' launched  given item name "Smoke Ball" to cure influenza and other ill-ness. The Smoke Ball (offered product) is tube attached rubber Ball which was filled with carbolic acid and it is used by inserting it in the user's nose to release the acid.

The Company had advertised in the Pall Mall advertisement on November in the year of 1983, that they will pay £100 to anyone who influenced by Carbolic Smoke Ball (offered product)

Mrs. Carlill read the advertisement and used the Smoke Ball (offered product) as per the direction is given by the Company. But after using it, she enter into given contract with influenza on 17 January 1892 and claimed the reward of £100 from the Company. But the Company refused to give the reward as offered by the Advertisement. She brought a suit against the Company in the Court. 

However, in the given case, it was found that there are several essential elements and intents of contract which needed to be complied or accepted by contract parties. However, elements are given below. 

Offer- In order to form a legal contract, there needs to be one offer given by one party to the other party. It is analyzed that forming a legal contract requires mandatory the essential element to be complied. There would be legal offer by contract party to another party (Adriaanse, 2016). 

Acceptance- It is analyzed that once the offer is made by one party to other, there needs to be a formal acceptance given by one party to the other offeror. This is required to be given either in written or oral (Duguit, 2018).

Agreement- there needs to a legal agreement either written or orally between the parties. The agreement is formed only after the offer and acceptance is given by the parties to the contract. 

Consideration- This is the amount of money or certain compensation which is required to be paid or being paid by the parties to the contract. It is an essential element to form the legal contract (Schmidt, 2017)

Legal capacity (Contract parties) - All the contract parties needs to have the legal capacity to enter into the contract. The Contract party (Those who have contract among) should be major and does not suffer from any lunatic and idiotic ill-ness (Stone, & Devenney, 2017).

After assessing the legal conditions of the contract, it is found that once the contract is framed then the parties to the contract are legally binding to perform the set terms and conditions in the contract. In the given case, the performance of the contract by the party has been assessed and determined whether the defendant pay the consideration to the Contract party (Those who have contract among) for the non-performance of the contract (Hughes, Champion, & Murdoch, 2015). 

ARGUMENTS OF PLAINTIFF AND DEFENDANT:-


Plaintiff’s Arguments
Defendant’s Arguments
  1. The Plaintiff was seeking the Compensation of £100 as promised by the Carbolic Smoke Ball (offered product) Company in their Advertisement (Poole, 2016).
  2. She had complied with all the conditions as specified in the advertisement for using the product "Smoke Ball".
  3. After compliance with Conditions and Directions given by the Company, she contracted with influenza. She claimed it as a valid contract to enforce it before the Court (Vettori, 2016). 
  4. The Company made an offer or promise to pay certain amount (Reward) of £100 to anyone who contracts influenza after using the Smoke Ball (offered product) as per the directions issued.
  5. The Plaintiff acted following the conditions as specified in the Advertisement. It will be deemed as Valid Acceptance (Crock, & Dale, 2019).
  6. The Company had sold many of smoke balls with this advertisement but only 3 persons claimed the rewards of £100. 
  7. The offeror promise did not contain any time duration for expiry of the offer as it will be considered as valid for a definite period (Cartwright, 2016).

  1. The Advertisement was only a policy, not a contract.
  2. It was mere puff for the promotion of ball
  3. Defended contended that It is not binding because it is not made with anyone in particular.
  4. As per the Contract law, when an offer is made, it should be duly accepted as well as duly communicated to offeror or promisor.
  5. As the Advertisement is so vague and uncertain, so it cannot be enforced as a valid contract (Cartwright, 2016).
  6. It is also contended by the defendant that there was no consideration in this transaction.
  7. The Plaintiff and defendant are not contracting parties as the contract was private. So it will not be considered as a valid contract (Cantatore, & Johnston, 2016).
  8. The defendant said that the company would not pay any amount or it is not liable to pay any consideration to plaintiff (Compensation of consideration to plaintiff) (Gray, 2015).



    

This case of legal contract has revealed that defendant said that it is not liable to pay any consideration to plaintiff (Compensation of consideration to plaintiff) considering the fact that there is no legal contract framed (McKendrick, & Liu, 2015).

RATIO DECIDENDI:-

The observations of the Court of Appeal are as follows:

LINDLEY L.J.
BOWEN L.J.
A.L. SMITH L.J.
  1. The First observation is that "whether there is an express promise to pay certain amount (Reward) of £100" and the advertisement states that 1000£ is deposited in the Alliance Bank and it shows the sincerity to perform the promise. It is not mere puff to attract the customers of the product but only guaranteed about the product (Schlechtriem, 2016). 
  2. The Advertisement offers to anyone who complies with the conditions as stipulated by the Company regarding the usage. So It is an implied offer which is deemed as duly accepted as the offeree acted in the accordance of the terms of the offer.
  3. This offer is continuing one and it cannot be revoked.
  4. As per the General provision, the acceptance should be duly communicated.
IF the acceptance is to be notified, the acceptor should communicate his acceptance before the revocation of the offer.
In this case, the transaction did not require the notification of the acceptance.
  1. The transaction contains all the elements of the valid contract i.e.
  2. Offer
  3. Acceptance
It can be enforced before the court.
  1. The Language of the advertisement is not suggesting any time limit. It is due for performance when any person contracted with influenza after using the Smoke Ball (offered product) thrice daily for 2 weeks as per the words of the Advertisement.
  2. Another observation is that whether there was a valid consideration. Consideration in this transaction is the large scale of the smoke balls and having earned profits by the increased sale of this product.
  3. There is no privacy of the Contract as both parties are contracting and legally bound by the Contract.
Therefore, In his opinion, the Company must perform his liability or pay compensation (Abdulwahid, & Muntaha 2017).

  1. The offer made by the Company is made to the world. It is termed a general offer.
  2. According to his opinion, the advertisement should be read in the plain language as the general public understands. It states that the company will be liable to pay £100 to anyone who contracted with influenza after using the Smoke Ball (offered product)as directed by the defendant company (Noto La Diega, 2016).
  3. It can be enforced by anyone who fulfills the conditions as laid by the Company.
  4. The advertisement is an offer or tender and it is a contract with the world.
  5. When an offer is made, it should contain the particular model of the acceptance and the acceptor should communicate his acceptance in such mode. If no mode is prescribed, the acceptor should act upon the stipulation made in the offer.
  6. The justice has given in the case that once you satisfy condition of acceptance then it is deemed to be given acceptance.
  7. The consideration is determined as set amount among the contract party on which they are mutually agreed. 

Therefore, in this transaction, consideration would be paid by other party. 

  1. The Advertisement given by the defendant is considered as Promise to pay certain amount (Reward) to the plaintiff.
  2. The advertisement also guarantees the performance of the promise by using the language that they had deposited £1000 in the Alliance bank and this offer can be claimed by anyone who got sick after using influenza as per the printing guidelines of the advertisements. It shows the sincerity of the promisor to perform the promise.
  3. As per the language of the advertisement, the offer is for an uncertain period. There can be 3 possible points of time to the contract:-
  4. Contracting with influenza during its continuance
  5. Contracting with influenza while using the smoke ball
  6. Contracting with influenza within a reasonable time after the expiration of 2 weeks of usage (Knapp, Crystal, & Prince, 2019.
  7. Performance of legal certain condition of an implied offer is treated as acceptance of the offer.
  8. The person who performed the conditions of the offer becomes the acceptor.
  9. There are two considerations:-
  10. The inconvenience of using the carbolic Smoke Ball (offered product) for 2 weeks three times in a day
  11. Money earned by the increased sale of the Smoke Ball (offered product) as used by several users.
Therefore, there is sufficient consideration in this promise and there is no policy or waging agreement.


Application

Hence, it was held that the Advertisement is a promise or general offer made by the Company to the entire world. As it is implied offer, the acceptance is complete when the conditions of the offer are performed by the users of the smoke ball. This transaction is having all elements of the valid contract. That’s why it can be enforced by the plaintiff who used the Smoke Ball (offered product)as per the printing instructions of the Company. The defendant is liable to pay certain amount (Reward) of £100 to the plaintiff.

As in the case held of Williams v Carwardine 4 B. Ad. 621, it is divulged that as per the general provision, there should be following essentials for forming a valid contract:-

  1. Promise
  2. Acceptance
  3. Consideration

In the above-discussed case, the advertisement is not mere puff. The language of the advertisement suggests that they had deposited the sum in the Bank account with Alliance Bank for the performance of the promise. This will be considered as ‘Promise’ and the performance of legal certain condition specified in the Advertisement is considered as ‘Valid Acceptance’

It is analyzed with the valid acceptance of the contract agreement of the contract will become the contract and parties to the contract would be legally binding to perform the terms and condition to discharge their liabilities.

By this advertisement, the Company had gained lots of the profit and increased the sale of their product. This is adequate Consideration for the promise.

The offer does not contain any time limit for performance of the offer, so it cannot be revoked by the Company. 

After assessing the case, it could be inferred that it is completely agreed with the decision of the court of appeal as there is a binding contract between the plaintiff and defendant. Thus, the Defendant is bound to pay certain amount (Reward) Amount of £100 to the Plaintiff for the performance of the contract. However, after that, there was the appeal made by the defendant to take relief on the passed order but the Arguments of the Defendant was rejected by the court.

Recommendation

After assessing the legal implication of the contract laws and regulations, it has been found that contract is the legally binding on the parties and Contract party (Those who have contract among) are liable to perform the obligation of the contract. It is advised that if the Contract party (Those who have contract among) fails to perform the contract then the other aggrieved party may go for the injection or performance of the contract. In this case, the defendant of the contract should go for the performance of the contract or if the plaintiff fails to perform the contract then the defendant being an aggrieved party would be liable to be compensated by the plaintiff.  In the case of Carlill v Carbolic Smoke Ball (offered product)Company [1892] EWCA Civ 1, it is advised that all the elements of the contract should be legally full field by the Contract party (Those who have contract among) if they want to frame a legal contract. However, in the failure to comply one element of the contract may result to doubt of the contract legality. And it is being assessed that if the performance of the contract is failed by the one-party then other parties would be legally bound to compensate the other party or will perform his party of obligation. In the above-discussed case, the advertisement is not mere puff. The language of the advertisement suggests that they had deposited the sum in the Bank account with Alliance Bank for the performance of promise (Mansell, 2015). This will be considered as Promise’ and the performance of legal certain condition specified in the Advertisement is considered as ‘Valid Acceptance’. 

Conclusion

After assessing the contract case, the fact found here is that the advertisement contract would be considered a legal contract. This contract is accompanied by the intents of framing legal contract. In this case, it is agreed that the defendant would pay compensation (Consideration equal to loss) to plaintiff. It is analyzed that the defendant is bound to pay certain amount (Reward) amount of £100 to the Plaintiff for the performance of the contract.  This is found that if any of the party failed to perform the contract then that person would be liable to pay for the compensation. Hence, it was held that the Advertisement is a promise or general offer made by the Company to the entire world. As it is implied offer, the acceptance is complete when the conditions of the offer are performed by the users of the smoke ball. This transaction is having all elements of the valid contract. That’s why it can be enforced by the plaintiff who used the Smoke Ball (offered product)as per the printing instructions of the Company and the defendant is liable to pay certain amount (Reward) to the plaintiff.

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