Differentiation between an Offer and Invitation to Treat

Whether a contract was formed between Avinash and cafe based on the given case study, or not?

A contract is deemed as a promise made by two or more parties, who later on came to be known as contracting parties. The promise of both the parties is different where one party agrees to pay the consideration value as has been agreed upon between the parties, and the other party promises to undertake the work of the contract. The formation of any contract requires the presence of all the essential elements of a contract, which include the elements of agreement, i.e., offer and acceptance, followed by consideration, capacity, intent, and clarity. Where any of these elements is missing, a contract would not be formed.

The first step for forming a contract is for an offer to be made by the offering party to the other party. This offer needs to clearly state what the offered terms are in detail. There is a need to make a difference between an offer and an invitation to treat. The offer shows that the parties have the intent of getting into a contract, while there is an absence of intent in an invitation to treat, and simply shows a willingness to negotiate upon a possible contract. This differentiation can be elucidated with the help of case of Pharmaceutical Society of Great Britain v Boots.

In this case, Boots had introduced a new self service system in their shop through which the consumers could pick up the goods from the shelf, put them in a basked, and lastly, take them to the counter to pay the cash. An action was brought forward by the plaintiff for determining the legality of this system regarding the sale of pharmaceutical products as these required a presence of pharmacist to be sold to be public under the law. Thus, it had to be determined by the court when the contract came into existence. It was held by the court that the goods on shelf had to be deemed as an invitation to treat instead of being deemed as an offer. The goods are taken by the consumer and this makes it an offer. The shop assistant after this instance has the option of accepting or rejecting this offer. The contract thus is concluded when the customer takes the goods to till when the pharmacist is present.

Once an offer has been made, there is a need to accept the offer. This requirement is present due to the element of acceptance. It is important that the offer is accepted in the manner in which it has been made. As was seen in Hyde v. Wrench, a variation is terms results in counter offer, instead of an acceptance being attained. The next element in formation of contract is the consideration. There is a need for a contract to have a consideration, which has an economic value; it has to be sufficient not adequate; and present not past. There is also a need for the parties to have the intent of being bound in a legal manner, where they would have legal rights and legal liabilities. The next element is for the parties to have the contractual capacity to enter in the contract; and for this, they need to have the legal age and sound mind. Lastly, the terms of the contract have to be clear in order to form a binding contract. 

Essential Elements of a Contract

In the given case study, the facts are quite similar to the case of Pharmaceutical Society of Great Britain v Boots. Based on this quoted case, a contract was formed between Avinash and the cafe when he placed the order through the touch screen and the offer was accepted when the ticket was generated. In other words, when Avinash came and scrolled through the menu, it was just an invitation to treat. Only upon him finalizing the product, was an offer made; which could be accepted or denied by the cafe. This offer had the value of $7.50, where the terms were cappuccino and a Danish pastry. This offer was accepted upon the ticket being generated. There was a clear intention between the parties, as products were ordered, for clear sum of money, having clarity on the terms, and the same were delivered by the cafe. As nothing shows the lack of legal age or sound mind of the parties, the contractual capacity is assumed to be present.

Conclusion 

Thus, on these bases, it can be stated that a contract had been formed between the cafe and Avinash.

Whether the cafe can successfully rely upon the clause printed on the ticket to avoid the injury caused to Avinash, or not? 

Exclusion clauses are such terms in the contract, which when inserted validly in the contract, have the ability of restricting or limiting the liability of the party inserting the exclusion clause in the contract. In Thornton v Shoe Lane Parking Ltd, the driver entered the car parking and got a parking ticket from the machine. This made the driver bound by the tickets before the ticket is taken by the driver and even before such terms are brought to their attention. This is due to the fact that a contract is formed upon the ticket being taken. In such cases, the car parking owners cannot be made to rely upon the exclusion clause which has been printed on the back side of the ticket, where nothing has been done by them beforehand for making the driver aware of the same; for instance, by displaying the same in a prominent manner. When the car is damaged, owing to insufficient care by parking company, they would be liable for the damage caused, as such exclusion clause cannot be deemed as valid, for the reasons of not being brought before the attention of the parties.

Application of Exclusion Clauses

The Competition and Consumer Act, 2010 is a key piece of legislation, through which the consumer laws for Australia are provided. Under Schedule 2 of this act, the Australian Consumer Law is provided through which the consumers of the nation are protected. Under section 3 of the Australian Consumer Law, the criterion for holding a person as consumer has been given. As per this section, a person who purchases goods, or acquires services, the value of which is $40,000 or less than $40,000; and makes use of the purchased goods or acquired services for personal use, household consumption or domestic use, would be deemed as a consumer for the purpose of this act. Under section 60 of the Australian Consumer Law, the contracts for supply of services cover an implied warranty regarding the services to be rendered with skill and due care. Section 64 of the Australian Consumer Law results in the term of contract being voided, where the purpose of this is to modify, exclude or exclude the rights of the consumer for relying on the consumer guarantee regime.

In the given case study, the facts are similar to that of Thornton v Shoe Lane Parking Ltd and here also the exclusion clause was not brought to the attention of Avinash. He was simply given the ticket for the products he ordered and the exclusion clause printed at the backside of the ticket was not brought to his attention. Based on common law, this was not a valid exclusion clause and this would mean that the cafe would not be successful in relying on this clause to limit their liabilities arising from the incident that took place.

Avinash was a consumer based on section 3 of Australian Consumer Law as he purchased food item for personal consumption and the value of which fulfilled the requirements covered in the quoted section. Based on section 60 and 64 of the Australian Consumer Law, the cafe cannot deny their liability as they had to provide the services in a careful manner, and they had no right to exclude, restrict or modify the rights of Avinash, to get safe product. 

Conclusion 

Thus, on the basis of both common law and statutory law, the cafe would be unsuccessful in relying upon the exclusion clause, for the same not being brought to the attention of the parties, and as the same breached the provisions of the Australian Consumer Law.

Difference between Express and Implied Terms in Contracts

2.There are two types of terms in any contracts; the first category is of express contracts, where the terms are provided in a clear manner; and the other is implied terms, where the terms come to be implied in an obvious manner and the same is usually brought before the attentions of the parties, during the negotiation phase of the contracts. Even though they operate for the same contract, they are quite different from each other. This discussion would shed light on the manner in which the implied and express terms are deemed as separate terms of the contract.

The very first difference between the two terms lies in their meaning. The express terms are the ones in which the matter of discussion is clearly stated in a verbal or oral manner, in the contract; whilst the implied terms are expressed in a non-verbal manner. The contract creation method in the express terms is by words, and in implied terms is by behaviour or conduct. So, the implied terms are the ones which have not been mentioned by either of the contracting parties as is the case with express terms, and they are still included in the contract as the contracts do not make sense without these implied terms, particularly in commercial sense. So, the implied terms can go beyond the words, to mean something which was not even the intent of the parties.

The implied terms also result in a lot of ambiguities in the contract, which can also take place for express terms but is more common for implied terms. This is because owing to the lack of written terms in an express manner, the parties can deny the presence of implied terms, or can accept the presence of implied terms, but in a varied manner for both the parties. The key reason for stating that the express and implied terms are different is that the express terms are stated based on the particular contract. However, the difference exists and can be explained through an example. In an employment contract, the employer and employees responsibilities, duties, rights and the other details entailing to the contract are stated. Even though it is not stated, it is an implied term that the employee would be honest towards the employer and would not work in a manner which is detrimental to the employer. This term is quite different from the terms stated by the employer in the employment contract and yet is an implied term, making it an unavoidable part of the contract. So, even without something being stated expressly, an employee can be made liable for the implied terms. Again, in the previous case, it was an implied term for the cafe to provide safe food to Avinash, instead of providing an adulterated one, which caused him injuries. 

When it comes to the breach of contract, establishing a breach of express terms is easier in comparison to the implied terms as the express terms are clearly stated and provide what had to be done, making it easier to classify if a breach had been undertaken or not. But in cases of implied terms, the same is not easy, due to variance in implied terms being deemed by the parties of the contract. In such cases, the court plays the role of deciding on the presence of implied terms, and on deciding what these terms were exactly.

Thus, from the discussion carried on above, it becomes clear that there is a lot of difference between implied and express terms of a contract. This is due to the inherent nature of these two terms and the manner in which the two are construed by the parties of contract. 

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

Carter JW, Contract Law in Australia (LexisNexis Butterworths, 2013)

Carter JW, Peden E, and Tolhurst G, Contract Law in Australia (LexisNexis Butterworths, 5^th ed, 2007)

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)

McKendrick E, and Liu Q, Contract Law: Australian Edition (Palgrave Macmillan, 2015)

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

Hyde v. Wrench (1840) 3 Beav 334

Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401