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Issue 1: Whether Al-Yasa’s advertisement created a legally binding contract?

Rule: Carlill v Carbolic Smoke Ball Company 

An advertisement becomes a legally binding contract when:

(i) an advertisement is an offer with conditions to anyone who, before the offer is

retracted, performs the condition/s.

(ii) In the advertisement, no further terms require discussion or negotiation

(iii) There was an intention to create a legal relationship based on the nature of control,

deliberation, calculation and awareness in the involvement of commercial

transactions.

Analysis: To sufficiently determine whether Al-Yasa’s advertisement created a legally binding

contract, one must assess the facts objectively. Al-Yasa’s advertisement is clear on terms and

conditions since his advertisement stated the price of all the paintings which was $100,000 each

and also specified the length of which the offer stayed open (two weeks). As such, the wording

in the advertisement did not make way for further discussion or negotiation. Additionally, the

words “first come, first served” indicated an intention to create a legal relationship with the first

person who accepts the offer to purchase the painting/s within the designated two weeks. Thus,

Al-Yasa’s initial advertisement constituted an offer. Hence, the first person to accept the offer

would be in a legally binding contract with Al-Yasa. If Al-Yasa made any subsequent

arrangements or agreements outside of the contract, Al-Yasa would be in breach of contract.

Conclusion: The advertisement constituted an offer, as such, a legally binding contract was

created.
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Issue 2: Whether Jeron is entitled to a painting?

Rule: An acceptance is a final and unqualified expression of assent to the terms of the offer.

Chitty on Contract

Analysis: It has been established that Al-Yasa’s advertisement constituted an offer and therefore

an acceptance by another party would create a legally binding contract. Jeron had sent Al-Yasa a

response via post one day before Jadia sent payment and details for delivery. In Jeron’s response,

however, he added the condition that he would only purchase a painting if it was 12 inches by 12

inches which would legally constitute a counter-offer Jacqueline Havener v Max Fernandez. In

other words, Jeron’s response could not legally constitute an acceptance because it was neither

final nor unqualified. If Jeron’s response was final and unqualified then he would be entitled to

the painting/s because his post was sent prior to the other interested parties and in law, the date

of postage is the date of acceptance as set out in Henthorn v Fraser. In the instant scenario,

however, since there was not an acceptance a legally binding contract was not created.

Conclusion: There was no legally binding contract and therefore Jeron was not entitled to the

painting/s.

Issue 3: Whether Jadia is entitled to seven paintings?

Rule: Carlill v Carbolic

An advertisement becomes a legally binding contract when:

(i) an advertisement is an offer with conditions to anyone who, before the offer is

retracted, performs the condition/s.

(ii) In the advertisement, no further terms require discussion or negotiation

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(iii) There was an intention to create a legal relationship based on the nature of control,

deliberation, calculation and awareness in the involvement of commercial

transactions.

Analysis: It has already been established that Al-Yasa’s advertisement was an offer since no

further terms required discussion or negotiation. One may argue it was merely an invitation to

treat, and a marketing gimmick. As Lindley.L.J opined in Carlill v Carbolic, however, “read the

advertisement how you will, and twist it about as you will, here is a distinct promise expressed in

language which is perfectly unmistakable.” This is to say, it would appear to the reasonable man

that Al-Yasa’s advertisement was a serious offer and promise. Since Jadia was the first person to

act by paying the requisite amount of money ($700,000) and sending the details for delivery

within the allotted two-week time period. This action constituted a valid acceptance because she

had reason to believe his promise made in the advertisement, “first come, first served” was

sincere Lefkowitz v Great Minneapolis Surplus Store Inc (1957). Additionally, she accepted the

offer before his retraction of the offer one day later therefore the argument of revocation would

be invalid (Deanna Stadnyk v Ted George Dash 2007).

Conclusion: A legally binding contract was created between Al-Yasa and Jadia which entitled

her to the seven paintings.

Issue 4: Whether Virin was legally entitled to the paintings in question?

Rule: In Warlow v Harrison (1859) 1 E & E 309, the courts held that at a without reserve

auction, the property offered must sell to the highest bidder.

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Analysis: It must first be stated that Al-Yasa was already in a legally binding contract with Jadia

which entitled her to the seven paintings. Hence, the principle aforementioned would only be

applicable if Al-Yasa was not in a previously binding contract. Since Al-Yasa stated that there

was no reserved price, the paintings would legally have to be sold to the highest bidder in a

without reserve auction. Virin stated that he was willing to buy all the paintings at ‘whatever

price’. While this statement is vague, in normal language Virin’s statement may have logically

made him the highest bidder since it seems as though he is willing to pay any price Al-Yasa

determines. While all of this is true, the fact remains that Al-Yasa’s contract with Jadia

prevented him from auctioning the paintings from the onset.

Conclusion: There was no legally binding contract and therefore Jeron is not entitled to the

paintings.