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Wednesday 21 December 2011

On Monday, Arnold placed an advertisement in ‘The Daily Much’ which read ‘£10,000 Reward – for the safe return of Bessy, a prize winning Holstein cow’. A description of Bessy was given which included the fact that she was wearing a collar bearing her name and that she had left Arnold’s field with her sister cow, Clara. On Tuesday, Daniel, having reading the advertisement, set off to the countryside to search for Bessay and Clara. Daniel spent £100 on his railway ticket and £250 on a week’s accommodation. On Wednesday, Edwin, a neighbor of Arnold’s, found Bessy and wrote to Arnold that ‘£10,000 is not nearly a sufficient reward for a cow of his value – would you pay £15,000?’ Later that day, Bessy broke out of Edwin’s barn. Frank found her on Thursday and took her back to his farm. On Friday, Daniel found Clara and returned her to Arnold. Arnold refused to pay Daniel anything and decided to cancel his reward advertisement. He placed a small note on the door of the village shop announcing that no moneys were payable for the return of Bessy. Frank, noticing Bessy’s address on her collar took her to Arnold on Saturday. As Arnold was not in, he left her in Arnold’s field and returned home. Edwin, noticing Frank’s actions left a note at Arnold’s house claiming the reward. Advise Arnold.

Arnold has to be advised that whether he is under a contractual obligation to pay the reward of £10,000 either to Daniel, Edwin or Frank. In order to claim the reward, the party must prove that a valid contract was in existence between him/her and Arnold. To prove that there is a valid contract, the party must prove that there is an agreement, consideration and intention to create legal relations. However, the case focuses on the existing of a binding agreement which involves an offer followed by an acceptance. I would like to break the case down into several constituent issues by party to party with a view to determining whether or not a contract has been formed.

Firstly, we have to determine whether the advertisement placed by Arnold is an offer or an invitation to treat. An offer is an expression of willingness to contract on specified terms made with the intention that it shall be binding as soon as the offer is accepted. However, an offer must be distinguished from an invitation to treat. An invitation to treat is an expression of willingness to enter negotiation which leads to the conclusion of a contract at a later date. Generally, based on business sense, an advertisement is treated as an invitation to treat while it is likely a bilateral offer: Partridge v Crittenden (1968). But in the case of Carlill v Carbolic Smoke Ball Company (1893), the advertisement which was a unilateral offer requiring a stipulated act to accept was held to be an offer to the world at large. The advertisement posted by Arnold on Monday stipulated an act to accept the offer – safely return Bessy and clearly stated the amount of the reward. Therefore, it is a unilateral offer which is capable for being accepted. 

While there is an offer in existence, now we should see whether the performance of returning Clara by Daniel is an acceptance or not. In a bilateral contract, an acceptance is the performance of the stipulated act requested by the offeror. Any performance which is not specified by the offeror is not a valid acceptance. On Wednesday, Daniel returned Clara to Arnold. However, Arnold stated very clearly that only the person who ‘safely returns Bessy’ can claim the reward. Even though Daniel did suffer from detriment on the journey to look for Bessy, his conduct is not what Arnold requested. Therefore, his act did not constitute an unequivocal acceptance by conduct.

Now we see whether Arnold’s revocation of the offer is effective or not. In English law, to revoke the offer of a unilateral contract the offeror must use a method which reaches largely the same people as viewed his offer: Shuey v USA (1875). So, in order to revoke the offer, Arnold should place the announcement on The Daily Much where he posted the advertisement. However, Arnold posted the notification of revocation of the offer on the door of the village shop. Therefore, the revocation is more likely to be held to be not effective. The offer is still effective and capable for being accepted.

An acceptance is an unqualified expression of assent to the terms purposed by the offeror. However, if a purported acceptance seeks to introduce a new term to those proposed in the offer, it is not an acceptance but a counter-offer: Hyde v Wrench (1840). A counter-offer terminates the original offer and make it incapable for being accepted. While Edwin found Bessy on Wednesday, he did not return it to Arnold and asked Arnold to pay an extra £5,000 for the return of Bessy. Edwin was actually making a counter-offer which killed off the original offer. Suppose that he compromise for the original price at a later stage, he has become the one who made the offer. Henceforth, there is no contract concluded between Edwin and Arnold.

In the case of Gibbons v Proctor (1891), the claimant successfully claimed for the reward in ignorance of the offer. However, in English law, an offer is only effective when it is communicated to the offeree. A reward cannot be claimed if there claimant who had performed the act of acceptance was unaware at the time that a reward was being offered. In the case of R v Clarke (1927), the court held that a person who, in ignorance of the offer, performed the act or acts requested by the offeror was not entitled to sue as on a contract. Another recent case which is relevant here is the case of Day Morris Associates v Voyce (2003) which the ratio decidendi is that conduct will only amount to an acceptance if it is clear that the offeree did the act in question with the intention of accepting of the offer. On Friday, Frank returned Bessy to Arnold in ignorance of the offer. The fact here shows that he had not read the advertisement and there was no offer in his mind while he was safely returning Bessy. Therefore, there is no contract concluded between Frank and Arnold. Frank is not entitled to claim for the reward.

Finally, the last question is whether Edwin is entitled to claim the reward or not. Edwin may apply the case of Stevenson v McLean (1880) where the ratio decidendi is that a request for more information did not indicate that the original offer is not acceptable but instead the offeree is merely postponing his decision until more information is provided. He may argue that his statement made on Wednesday was not a count-offer but a mere inquiry so that the original offer was still open to acceptance. Therefore, a contract concluded while he wrote the note to claim for the reward. However, Edwin was not the one who returned Bessy. It was Frank who returned Bessy. Edwin did not do the act requested by Arnold in order to accept the offer. No contract was concluded between Edwin and Arnold. Hence, Edwin cannot claim the reward.

Arnold is not liable contractual obligated to pay the reward of £10,000 either to Daniel, Edwin or Frank because there was no contract concluded.

2 comments:

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  2. Thank yoo. This was a great help as a guide to do the question.

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