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Lesson 8
This was an English contract law decision by the Court of Appeal, which held an advertisement containing certain terms to get a reward constituted a binding unilateral offer that could be accepted by anyone who performed its terms. The case concerned a flu remedy called the "carbolic smoke ball". The manufacturer advertised that buyers who found it did not work would be awarded 100.
The company was found to have been bound by its advertisement, which it construed as creating a contract. The Court of Appeal held the essential elements of a contract were all present, including offer and acceptance, consideration and an intention to create legal relations.
Barry v Davies (Trading as HEathcote Ball & Co) [2000] 1 WLR 1962
Offer and Acceptance Auction sales without reserve collateral contract
A seller put up two engine analysers for sale by auction, with no reserve. The price of the machines would have been 14,521 each if they had been new. The claimant was a bidder at the auction. He bid 200 for each machine, and was the highest bidder. The auctioneer refused to sell the machines to the claimant for such a low price, despite the no reserve' sale. The claimant brought an action against the auctioneer for breach of contract.
Barry v Davies (Trading as HEathcote Ball & Co) [2000] 1 WLR 1962
Offer and Acceptance Auction sales without reserve collateral contract
It was held by the Court of Appeal that there was a collateral contract between the auctioneer and the highest bidder. The offer was made by the auctioneer to sell to the highest bidder, and this was accepted when the bid was made.
The claimants, the Spice Girls, entered into a contract with the defendant motorcycle manufacturer under which the defendant agreed to sponsor the Spice Girls' tour in return for promotional work. The contract was signed on 6 May 1998. Geri Halliwell left the band on 27 May that year. The defendant discovered that Halliwell informed the other members of the group of her decision to leave prior to the signing of the contract. The defendants claimed they had been induced to enter the contract by a misrepresentation. The claimants denied misrepresentation.
The defendant building contractors entered into a contract with the plaintiff carpenter. The plaintiff was to carry out work in 27 flats. The price was 20,000. The plaintiff fell into financial difficulties, partly because the contract price was too low. The defendants were subject to a penalty clause' under the main contract on the flats. The defendants therefore agreed to pay the plaintiff an extra 575 per flat. The defendant failed to pay the extra money.
The question for the Court of Appeal was whether the plaintiff's performance of its existing contractual duty to complete the work on the flats could amount to sufficient consideration for the promise of the additional payment. The Court of Appeal held that consideration was present in the form of practical benefits' which would be obtained by the defendants, in the form of their avoidance of the penalty clause.