by Tran Nguyen
Here is a hypothetical legal problem in Australian Contract law and an sample answer.
On 1 October Acme Pty Ltd placed the following notice in the ‘National Advertiser’ newspaper:
Special Shoes – Special Discounts
Acme Pty Ltd is awaiting the delivery of the latest summer collection shoes from Italy. Styles include the new sling-back sandals and wedge heels. Prices start at $2000 per hundred pairs (certain styles only); big discounts may be negotiated for bulk orders. All inquiries to Ms Pollock, Sales Manager, on 1400 765 432 or by fax on 09 9234 567.
On 2 October Swish Shoes sent the following fax to Ms Pollock:
Can you please confirm that the shoes come in a range of colours?
On 3 October Ms Pollock sent the following fax to Swish:
The shoes are available in black, brown and pink.
On 4 October Swish Shoes sent the following fax to Ms Pollock:
We accept your offer in the ‘National Advertiser’. We wish to order 500 pairs at $2000 per hundred. Details on delivery to follow
On 5 October Joanna, the owner of shoe retailer Joanna’s Shoes which had several regional stores throughout Australia, sent the following fax to Ms Pollock at Acme:
We refer to your notice in the ‘National Advertiser’ and would like to purchase 2000 pairs of sling-back sandals. Our best price is $30,000 including GST and delivery. Please advise.
On 6 October Ms Pollock sent the following fax to Joanna:
Acme will sell 2000 pairs of sling-back sandals for $30,000, excluding delivery. Payment by cash or bank cheque is due on delivery. Please advise.
Joanna immediately wrote the following letter to Ms Pollock, which was mailed on 8 October:
We refer to your fax of 6 October and are prepared to meet you on those terms. Please let me know the earliest delivery date.
On 10 October Ms Pollock telephoned Joanna. After a short discussion Joanna faxed Ms Pollock a copy of the letter of 8 October. The parties agreed that Joanna’s Shoes would take delivery of the sandals from Acme’s Sydney warehouse on 1 November.
Referring to relevant case law and giving reason for your propositions, discuss the legal effect of each of the communications between Acme, Swish Shoes and Joanna’s Shoes that took place between 1 October and 10 October.
Marking criteria: You will be assessed on your ability to:
- Identify the relevant rule/s and case/s for each communication.
- Describe each communication and
- Explain the legal effect of each communication.
- Fulfill the standard academic requirements regarding referencing, style, argument, coherence, grammar and spelling.
The notice on 1 October:
The notice in the newspaper clearly amounted to an invitation to treat, rather than an offer for sale (Grainger and Son v Gough  AC 325). This was an invitation to potential customers who can make an offer to Acme for the goods. In turn, if Acme accepted such an offer, there was an agreement. Moreover, the Acme’s advertising would not be held to be an offer as the words used in the advertising was open for negotiation.
Transaction on 2 October:
The fax made by Swish to Ms Pollock constituted a request for further information as to the Acme shoes’ colours, rather than an offer. The words are, ‘Can you please confirm that the shoes come in a range of colours?’, meaning that “[t]here is nothing specific by way of offer or rejection, but a mere inquiry, which should have been answered and not treated as a rejection of the offer”.
Transaction on 3 October:
The fax here was merely the Acme’s answer to the request made by Swish a day earlier.
Transaction on 4 October:
The fax actually accounted to an offer for the shoes although the words in the fax were: “We accept your offer in the ‘National Advertiser’…”. This fax cannot be seen as an acceptance because the Acme’s advertising was an invitation to treat, not an offer to be accepted. In turn, if Acme (offeree) accepted this offer, the agreement was created between the parties.
Transaction on 5 October:
Being similar to last transaction, this fax was clearly an offer by Joanna to purchase Arme’s sandals with an alternative proposition of price and delivery in compared to the Acme’s advertising. This offer was waiting to be accepted by Acme (as an offeree).
Transaction on 6 October:
The fax was a counter-offer. It destroyed the offer on 5 October made by Joanna. In other words, this counter-offer constituted a complete rejection of the original offer, so that this original offer was no longer available for acceptance. By saying ‘Acme will sell 2000 pairs of sling-back sandals for $30,000, excluding delivery’, Acme, the offeree, put an alternative proposition to the offeror, Joanna. Also the offeree adds new terms as to mode of payment which was not included in the offer (the fax from Joanna to Ms Pollock) on 5 October.
So far there was no contract in existence (Turner v Kempson & Co Pty Ltd v Camm  VLR 498).
Transaction on 8 October:
One question arises here as to the content of the transaction, by using the words: “Please let me know the earliest delivery date.”, did the whole letter constitute an acceptance which embodied new term (here is the time of delivery) or merely an acceptance plus a request for further information (as to the time of delivery)? If the answer was the former, the letter was the counter-offer made by Joanna. But it seems to me that these words (the second sentence in the fax) can be seen as a request for further information because this is similar to those in Stevenson Jacques & Co v McLean (1880) 5 QBD 356. Therefore, the whole letter was an acceptance made by Joanna.
However, as Acme has indicated in its advertising, the method of acceptance was by fax and phone, but not only the mode of accepting the offer. Joanna’s letter sent by the postal service did not prove to be equally or more advantageous to the offeror (than by fax and phone). Accordingly, this letter cannot be treated as a valid acceptance (Eliason v Henshaw (1819) 4 Wheaton 225).
In conclusion, by that time, the parties had not reached an agreement yet.
Transaction on 10 October:
When Ms Polllock received a copy of the letter of 8 October from Joanna by fax, the agreement was concluded (Entores Ltd v Miles Far East Corporation  2 QB 327). There was no more new terms or alternative propositions. Joanna was responded for the request as to the delivery day which would be on 1 November. The place of delivery which would be Acme’s store in Sydney was not something new because it had been mentioned in the transaction on 6 October.
 See the words of Lush J (at 350) in Stevenson Jacques & Co v McLean (1880) 5 QBD 346