Legal Issues

In the case mentioned, the key legal issue to be resolved is whether or not there is an
existence of a contract between Joe and the makers of InvestorPlus, which entitles Joe to a
refund of the purchase price and the $5,000.00 compensation. In order to arrive to the answer
for this issue, there are sub-issues that must be taken into consideration. The sub-issues are as
follows:
a. Are advertisements offers that are capable of acceptance by performance?
b. Did Joe accept the offer by performance?
c. Is the advertisement in the same magazine last month cancelling all previous offers an
effective revocation of the first offer?

Rules
1. Advertisements are considered an invitation to treat where one party invite the other to
make an offer. However, for unilateral contracts, they can normally be accepted by the
other party without need for any further negotiations or counter-offers, and the person
who gave the offer through the advertisement intended himself to be bound by his offer.
Partridge v Crittenden [1968] 1 WLR 1204
2. The general rule is that acceptance of an offer must be communicated to the offeror.
Powell v. Lee (1908) 99 LT 284
3. For the courts to determine if an offer constituted in an advertisement is legally
enforceable, they shall apply the test of reasonableness. If any reasonable person, upon
seeing the advertisement, understands that the said advertisement is making an offer to
enter into a contract, then the offer is legally enforceable, and the court shall take into
account the facts and the circumstances surrounding the situation. Carlill v Carbolic
Smoke Ball Company [1892] EWCA Civ 1
4. In unilateral contracts where the terms of the offer require the performance of an act,
performance will amount to acceptance of the offer. Carlill v Carbolic Smoke Ball
Company [1892] EWCA Civ 1
5. An offer may be withdrawn at any time up until it is accepted. Payne v Cave [1789] 3 TR
148
6. However, it is not enough that the offer is revoked by the offeror. He should
communicate the revocation to the offeree. Byrne & Co v Leon Van Tien Hoven & Co
[1880] 5 CPD 344

Application
a. Are advertisements offers that are capable of acceptance by performance? Did Joe
accept the offer by performance?

Judging the facts of the case, the contract stemming from the advertisement by the
makers of InvestorPlus constitutes a unilateral contract, where one party offers to
another, and the offeree would accept the offer without further negotiation on the price or
compensation. Once the offeree sees the advertisement and decides to take the offer and
purchase or subscribe to whatever the advertisement offers, there will already be a
meeting of the offer and the acceptance, thus, the unilateral contract will be perfected. As
 in the case of Carlill v. Carbolic Smoke Ball Co, where Mrs. Carlill saw the offer and
bought the smokeballs, the contract was instituted from there. In this case, similarly, Joe,
a seemingly reasonable man who has worked as a plumber for 45 years, and decides to
invest his money, had already accepted the advertisement offer through his performance
of purchasing the InvestorPlus software. Additionally, the rule that the acceptance of an
offer must be communicated to the offeror, as established in Powell v. Lee, the
communication in this case was fulfilled by the purchasing act of Joe upon seeing the
advertisement. With the concurrence of InvestorPlus’ offer and the acceptance of Joe
through his performance of purchasing, there already exists a contract between
InvestorPlus and Joe.

The offer constituted in the advertisement is legally enforceable, applying the test of
reasonableness. In this case, reasonableness can be assumed given that Joe is a man with
established experience because of age and occupation; and the idea of investing would be
thought of by any reasonable man who wants to secure his savings and his future. Here,
Joe understood that the said advertisement is making an offer to enter into a contract,
therefore, the offer is legally enforceable on the basis of reasonableness, taking into
account the circumstances provided.

b. Is the advertisement in the same magazine last month cancelling all previous offers an
effective revocation of the first offer?
The defense of InvestorPlus that they had placed an advertisement in the same
magazine last month cancelling all previous offers may be tenable and may have been
effective in revoking the first offer, because they intended such announcement to be seen
by possible offerees. This may also be backed by the rule on Payne v. Cave that an offer
may be withdrawn at any time up until it is accepted. However, Joe has already
communicated his acceptance six months before the revocation of the first offer by
InvestorPlus. Therefore, the revocation shall not apply to the contract perfected between
Joe and InvestorPlus because no revocation has been established yet when their contract
was instituted. InvestorPlus may not invoke the revocation on said grounds.

Conclusion
The offer of InvestorPlus to the readers of the business magazine if legally enforceable,
because any reasonable man who would see it would understand and believe that there is an offer
being made, and they may choose to accept the offer if they agree with the stipulations
mentioned. The acceptance of the offer is established in the performance by purchasing the said
software. The receipt and the act of purchasing is proof that the contract has been instituted, and
that there already exists a contract that the advertiser is bound to do as what has been stipulated
in their advertisement. The revocation that InvestorPlus made does not include the contract
between them and Joe, because the revocation was made after the contract was perfected. Thus,
they are bound by their initial offer to Joe, and shall be governed by the stipulations under their
first advertisement offer.
These being said, it can be resolved that there is an existence of a contract between Joe
and the makers of InvestorPlus, and such contract entitles Joe to a refund of the purchase price
and the $5,000.00 compensation. InvestorPlus shall be bound by this and shall return the
purchase price and the $5,000.00 compensation accordingly.