Contract Law

You are a local solicitor specialising in contract law. A person living in your town named
‘Jordan Regaine’ makes an appointment to see you one day at your offices. Jordan explains
that they recently saw a hair product advertised in the local newspaper which claimed to
reverse hair loss. The advertisement also stated that the company (‘Bring it Back DAC’)
would compensate anyone who used the product and did not notice any difference. The
advertisement further stated that the company had deposited a sum of money at one of the
main national banks (the Bank of Narnia) to show that the company was sincere in what
they were saying.

Jordan purchased and used the product as instructed but noticed no difference. Jordan
then contacted the company to claim the compensation but Jordan says the company
refused to honour its promise, saying that the advertisement was simply an ‘invitation to
treat’. Jordan
has shown you the newspaper advertisement, which you can see is consistent with what
Jordan has described.
Advise Jordan, supporting your answer with reference to relevant case law

Issues

In order to advise Jordan, we must consider whether the communication made in the
newspaper advertisement was a valid offer, and whether Jordan can be said to have accepted
any offer, if one was made. In order to do this, we must consider the difference between an
offer and an invitation to treat, and also the difference between unilateral and bilateral offers.

Law

An offer is a clear and unambiguous statement of the terms upon which the person making
it is willing to contract and the person to whom it is made is willing to accept.

No specific formalities usually apply and no special formula of words is required. However,
an offer must be clear, certain and complete. It can be made in writing or orally and can be
inferred from gestures or conduct. The offer must be communicate, and is effective until
terminated.

An offer should be distinguished from an invitation to treat. An invitation to treat is merely a

communication to others, inviting them to make offers.

A bilateral offer is where a promise by one person is exchanged for the promise of another.
The exchange of promises means both promises are enforceable, e.g. buyer A promising to
pay a price for goods and seller B promising to deliver those goods in return for price. A
unilateral offer is a promise by one person to do something in exchange for an act of the
other person. Here, only the person making the offer is definitely bound to do something.

An example from case law is Carlill v Carbolic Smokeball Co (1893). Here, the defendants
manufactured a ‘carbolic smoke ball’, advertised it and stated they would pay money to any
person who purchased it and contracted the flu, depositing money in a bank to show they
were sincere. The plaintiff purchased the smoke ball and used it but still caught the flu. The
defendants refused to pay money to the plaintiff and were sued in Court. The defendants
tried to argue the advertisement was too vague and made to the ‘world at large’, so could
not have been a valid offer. The court did not accept the defendant’s arguments,
concluding that this was a valid ‘unilateral’ offer, also having regard to the behaviour of the
defendants.

Courts may take a different view if, in all the circumstances, not to regard a
display/advertisement as an offer would be inappropriate or cause some injustice. A good
example is the US case of Lefkowitz v Great Minneapolis Surplus Store (1957). If an
advertisement is sufficiently clear, definite, and explicit, leaving nothing open for discussion
or negotiation it constitutes an offer rather than an ‘invitation to treat’.
Acceptance is a final and unequivocal expression of agreement to the terms of an offer. The
communication must be in the same terms as the offer or must match the offer. If accepted
on different terms, it is more likely to be a ‘counter-offer’. However, looking for further
information is not necessarily a counter-offer or acceptance, as seen in Stevenson, Jacques
& Co v. McLean (1880).

Application

The communication in the newspaper is clearly a valid offer, as per Carlill v Carbolic
Smokeball Co. The facts here are very similar to that case, as in both scenarios, an
advertisement was placed in a newspaper, promising that money would be paid out if the
product didn’t work, someone took up that offer, but the company which placed the
advertisement did not honour its commitment to pay. In Carlill, the company which placed
the advertisement was deemed not to have made an invitation to treat, but rather a
unilateral offer, which the plaintiff had accepted by their conduct.

Nothing about the facts in this problem question suggest that a different outcome would be
reached in this case. There is no indication, for example, that this could be found to be an
invitation to treat, as was found in cases such as happened in Lefkowitz v Great Minneapolis
Surplus Store, because unlike in that case, this offer was sufficiently clear and unambiguous,
and merely required action by Jordan to be accepted.

Conclusion

In conclusion, Jordan should be advised that he will have a cause of action against ‘Bring it
Back DAC’, as the advertisement they posted will most likely be deemed a unilateral offer,
and hence not something they can label as merely a ‘puff piece’ or ‘invitation to treat.’