Business Law For Consumer Commission V TPG Internet

Elements required to form a Contract

Discuss about the Business Law for Consumer Commission v TPG Internet.

Whether a contract was formed in this case, particularly on the basis of the offer and acceptance elements, or not?

Contract contains a promise whereby part “A” promises to fulfil a particular undertaking and party “B” pays party “A”, a consideration value, which is decided between “A” and “B”, for undertaking the promise. In order to form a contract, which has legal validity, there is a need for the presence of offer, acceptance, consideration, capacity and intent[1].

The very first step, which leads to the formation of contract, is the presence of an offer. It is essential to make a distinction between an offer and an invitation to treat. The offer shows that the parties “A” and “B” want to create a contract, where as the invitation to treat shows that the parties “A” and “B” just want to negotiate upon the terms of the contract. The newspaper advertisements or commercials are deemed as an invitation to treat and not an offer[2]. In Partridge v Crittenden[3], the defendant’s conviction was quashed as the advert was deemed as an invitation to treat. It is also important to demarcate between offer, invitation to treat and a request for information, as was held by the court in Harvey v Facey[4] where no separate offer was deemed to have been made.

Upon an offer being made in a successful manner, the acceptance has to be attained on this offer. The acceptance has to be given by the party to which the offer had been made. So where the offer was made by “A” to “B”, “B” has to accept the offer. The offer can be revoked only till “B” does not accept it[5]. Also, there is a need to accept the offer in the manner in which it had been made, and if the terms are altered in the slightest of manner, it would result in a counter offer as was seen in Hyde v. Wrench[6], which would render the original offer useless.

The acceptance date is taken to be such date when the acceptance communication is obtained by the offering party[7]. Though, the postal rules to acceptance is the exception of this rule as under this rule, the acceptance date is such date on which the letter containing the acceptance is posted by the accepting party. The raison d’être behind this is that the postal office is given the status of the agent of the offering party and due to the operation of agency law, the acceptance by the postal office is to be considered as the acceptance by the offering party[8]. The date on which this letter reaches the offering party remains irrelevant. Upon the electronic communication, the Electronic Transaction Act, 1999[9] applies. The postal rules of acceptance are linked to the requirements of section 14 of this act. As per this section, the date and time on which the communication leaves the sender’s device, that is the date and time of the particular communication and not the date on which the same reaches the receiver. This section is applicable for offer and acceptance both.

Application of Contract Elements to the Case

Apart from these two elements, the formation of contract requires consideration as an element under which the parties mutually decide the value which has to be paid for the undertaken promise. There is a need for the consideration to have economic value for the contract to be valid[10]. The next requirement is to have the intention of forming legal relations. The parties also need to have the contractual capacity to create legal relations in terms of majority age and soundness of mind[11].

The facts of this case study are majorly concentrated upon the elements of offer and acceptance. The advert which Lianne saw in the newspaper, on the basis of Partridge v Crittenden, would be deemed as an invitation to treat as it invited quotes from the parties who wanted a party to be hosted. Section 14 of the Electronic Transaction Act and the postal rules of acceptance also play a crucial role in this case study. As the emails were exchanged in this case, on the basis of this section, the date of the communication would be the date on which it was sent and the date on which the receiver read it, would remain irrelevant.

The email which was sent on 10 Jun, the very first one in the chain of emails, would be considered as a request for information on the basis of Harvey v Facey since Lianne only requested information under it. The reply to this email was also not an offer as only information was being swapped under this. The three hour afterwards email was the point where the offer was made. On this, a counter offer was made with reduced amount as there was a change in the terms of the original offer. Again, a counter offer was made with particular conditions and the higher consideration amount and this offer was valid for a specified time period only. The offer was made on 10 Jun so, it expired after seven day period on 17 Jun. Hence, it was not valid on 20 Jun when Mary stated that the price had changed. The communication of Lianne on 20 Jun would not be an acceptance.

When Mary quoted $10,000 on 20 Jun that was when the new offer was made. And the acceptance was attained on this as Lianne sent an email regarding the same. However, later on she sent an email to revoke this acceptance, which would not be valid as the offer ahs to be revoked before acceptance is given. The reading or non-reading of the emails would remain irrelevant on the basis of postal rules of acceptance and section 14 of the Electronic Transaction Act. The value of consideration has already been established and the other elements of contract have been assumed as being present as the contrary to prove this is not present. This means that a contract had been created between the two parties.

Consumer Rights under the Australian Consumer Law

Conclusion

To conclude, indeed a valid contract had been created between Lianne and Mary.

Whether Lianne has any rights under the Australian Consumer Law, or not?

The Competition and Consumer Act, 2010 was an act brought out in the nation, for protecting the consumers and for ensuring that the competition is properly followed in the nation. Under schedule 2 of this act, is the Australian Consumer law, which is the key legislation for safeguarding the consumers. A consumer is such a person, as per section 3 of ACL, who takes services or purchases goods to the value of $40,000 in the nation, for their own use or consumption. Through section 18, the businesses are prevented from indulging in misleading and deceptive conduct. And through section 29, the same restriction has been placed with regards to false or misleading representation.

The facts of this case study show that Lianne is a consumer as she undertook the services of Mary and entered into a contract with her for a value of $9,500. These services were used for her personal party. And so, as per section 3, Lianne is a consumer. By not fulfilling the terms which were promised, Lianne was misled and deceived by Mary as she was provided with a different cuisine, instead of what was promised. Further, the space in the boat was falsely represented. This would mean that both sections 18 and 29 were contravened by Mary.

Conclusion

To conclude, Lianne is a consumer in this case, who had rights to sue Mary for breaching section 18 and 29 of the ACL.

The invitation to treat and an offer are two terms which cause a lot of confusion in the daily lives of people. The confusion is due to the fact that at particular instances, the particular communication can be taken as one thing and at other instances, it could be deemed as the other one. This confusion can lead to certain liabilities for the businesses who give such adverts through the different mediums. In this discussion, the points have been put in favour of the care which needs to be undertaken by the businesses while creating the adverts to be published in hard copy and soft copy.

In the first part of this discussion, Lianne reads a newspaper advertisement which was taken to be an invitation to treat based on a quoted case. The reason for holding this as an invitation to treat was because the judge in the case of Partridge v Crittenden had analysed the wordings of the advertisement and applied statutory rules of interpretation for taking out its meaning, which was ultimately deemed as an invitation to treat, instead of an offer[12]. Where a case of invitation to treat is established, there is no need for the parties to complete the sale and no liabilities are attracted on them as was seen in Pharmaceutical Society of Great Britain v Boots[13]. However, this is not the case with every advertisement.

Conclusion

To make a demarcation between a particular advert being an invitation to treat and it being an offer, the wordings of such advert have to be considered. Unlike Partridge v Crittenden, in Carlill v Carbolic Smoke Ball Company[14] the court deemed that the advertisement was an offer. The difference between the two could be established in the context of the placed advertisement[15]. In the case of Carlill v Carbolic Smoke Ball Company, the company had given an advertisement in the newspaper where it promised to award the person who got the disease even when they had used the smoke ball produced by the company. The award money was £100. Carlill used this smoke ball and still got influenza so she went to the money and claimed the award money of £100. The company denied the claim on the basis that this was an invitation to treat. However, the court agreed with the plaintiff as they stated that the newspaper advert wordings were such where the offer could be accepted by simply acting upon it. And so, the court ordered the plaintiff to be paid the promised award money[16].

The advertisements are placed in newspapers and in this growing digital age, they are found more than often across the digital platforms. The adverts also include the one posted on billboards and on the buses. So, at every place where the businesses post their advertisements, they have to take care in printing their adverts. Whatever promises or offers they made under the advertisements, have to be drafted in a manner that they remain an invitation to treat and do no become an offer. In case an offer is made through such advertisements, liability would be attracted for the businesses as they would have to go forward with the contract when the offer is acted upon by the other party[17].

Apart from the liabilities which can be raised for the businesses for posting their advertisements under the contract law, the businesses can also be made liable for the adverts on the basis of the Australian Consumer Law. Australian Competition and Consumer Commission v TPG Internet Pty Ltd[18] is a leading example of this in which TPG had advertised a price for their product. However, this price was deemed as misleading and a breach of section 18 was established as the adverts did not disclose fully that the consumers had to pay additional sum at later stage as this additional sum was hidden from the published advertisement.

To conclude the discussion which had been carried on till now, it becomes very clear that the businesses have to take special care when they place any advertisement through the different mediums. This is because these adverts can result in a contract, where this advert is an offer, instead of an invitation to treat. And in such cases, the businesses become bound by the contract and have to fulfil the obligations covered under the contract. Apart from this, the businesses also become liable under the other laws including the Australian Consumer Law. Hence, as was stated at the outset of this discussion, it is crucial that businesses take care while placing any advert, or would attract liabilities upon them.

A. Articles/ Books/ Reports

Andrews N, Contract Law (Cambridge University Press, 2^nded, 2015)

Davies PS, JC Smith’s the Law of Contract (Oxford University Press, 2016)

Elliott C, and Quinn F, Contract Law (Pearson Education Limited, 9^th ed, 2013)

Furmston M, and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press, 2010)

Gibson A, and Fraser D, Business Law (Pearson Higher Education AU, 2013)

Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31^st ed, 2012)

Marson J, and Ferris K, Business Law Concentrate: Law Revision and Study Guide (Oxford University Press, 3^rd ed, 2016)

McKendrick E, Contract Law (Pearson Education Limited, 11^th ed, 2015)

Poole J, Casebook on Contract Law (Oxford University Press, 2016)

Stone R and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3^rd ed, 2014)

B. Cases