Business Law

The Carbolic Smoke Ball company published an advertisement offering a reward of ￡100 to anyone who purchased the smoke ball and nevertheless caught influenze after using the smoke ball according to the instruction. Carlill saw the advertisement and used the product, when she nevertheless caught influenza, the company refused to pay as it promised in the advertisement. The court decided that the what the company made is an offer rather than an invitation to treat, as the advertisement amounted to an offer that was capable of acceptence. Although an offer is usually made to specified members or group of persons, there is also reasonable that an offer can be addressed to anyone in the whole world if that is what the offeror intends to do. The valid acceptance of such offer by Carlill could create an legally binding contract with the smoke ball company.

Once the terms determined, they can be provided wholly written or partially writing and spoken. The former type of contracts are proved by reference to the written contract alone, which is refered as ‘parol’ evidence rule. For example, in the case of LG Thorne & Co v Thomas Borthwick & Sons (1955) 56 SR (NSW) 81, after a test of sample Neatsfoot oil from Thomas Borthwich, Thorne entered into a contract with the company and ordered a 50 drums of oil. However, the quality of the delivery was not as good as the sample one. The court held that the contract formed by these two parties did not show the sale was agree to by “by sample”;besides, the wholly written contract appeared to be a complete and wokable agreement. As a result, the court had to apply the ‘parol’ evidence rule, which excludes evidence of additional orally agreed terms.

In contrast, the other case, Van den Esschert v Chappell [1960] WAR 114 involves terms of partly written and partly oral contracts are proved by oral and written evidence. Before buying the house of Van den Esschert, Chappell aked whether the house is free from infestation by white...