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An advertisement in the Herald Sun (a newspaper) states that: a new health drink can protect people from being infected with mumps and the manufacturer will pay $10,000 to anyone who is diagnosed with mumps provided they drink a bottle each day for at least one year. Trevor Brown buys the drink in response to the advertisement and drinks a bottle every day. Two years later, he catches a severe case of mumps and is very ill for two weeks. Is the manufacturer legally obliged to pay $10,000 to Trevor? Give reasons for your answer.
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The main issue that arose as per the facts of the case is that whether there is a valid contract amid the manufacturer and Trevor. If yes, then whether the manufacturer is liable to pay $10,000 to Trevor.
In Australia, in order to formulate a valid contract, there must be the presence of offer, acceptance, intention, capacity and consideration.
An offer is the intention of the offeror which is communicated to the offeree to undertake a task which when confirmed by the offeree results in acceptance. An offer and acceptance are valid when the same is communicated to the parties. An offer once accepted results in a binding agreement. However, not every communication of intention is an offer, for instance, communication of intention through advertisements, auctions, tenders are called invitation to treats because in such cases offers are intended to receive from the general public.
In the invitation, offers are received which when confirmed by the inviter results in a binding contract. But many times invitations are made in such a manner that they act like offers and are called unilateral offers. In unilateral offers, the offeror lays down the terms of the offer and whosoever comply with such terms is considered to have accepted the offer. There is no requirement of communication of acceptance and fulfilment of terms are in itself are deem acceptance. The law behind the unilateral offer is established in Carlill v Carbolic Smoke Ball Co.
In Carlill case, an advertisement is displayed by the company and it was contended that any person who complies with the terms will not be contracted with influenza. If a person still suffers from the disease then the company will pay 100 pounds to such person and authenticate the intention the amount is deposited in Bank. Mrs Carlill acted in the advertisement but still suffers from the disease. The company was held liable and compensation was awarded to Mrs Carlill. The main reasons which lead the judgement in favour of Mrs Carlill are:
Thus, unilateral offers may result in the binding contract provided the other elements of the contract that is intention and capacity must be present.