lOMoAR cPSD| 2472100

Distributing prohibited | Downloaded by Adrienne Shau Yean Ho ([email protected])

 lOMoAR cPSD| 2472100

A GUIDE TO ANSWERING PROBLEM BASED QUESTIONS

The following is a guide only. It is a structured approach to answering problem based

questions and is not meant to be an exhaustive (or model) answer nor the only approach
for answering such questions. Sample questions and suggested approaches are provided
below for students’ reference:

Question 1

On Monday, A advertises in the local paper as follows: “Sony Home Theatre set selling
for half its cost. Owner migrating. Interested, please call 8884444.”

On the same day, B phones A and says “I accept your offer to buy your home theatre set
at half its cost”. A says that the set is selling for $1000. B asks A if he will accept $500
but A refuses.

On Tuesday, C phones A and asks him – “How much will you sell your set for”? A
replies – “$1000”. C asks – “Does your set come with 4 amplifiers?” A says – “No”. C
says that he needs to wait for his payday and asks A to give him till Saturday to decide.
A agrees.

On Thursday, B phones A and says – “I have your $1000 and am ready to collect the set
as agreed”. A says – I don’t like your tone – I am not selling you anything.”

On Friday, A sells the set to E, C’s sister. E calls C to tell him the good news! An
unhappy C then immediately calls A and tells him – “I accept your offer to sell the set for
$1000.”

Discuss if B & C have any contractual rights against A.

Suggested Approach

Identify and state the issue/s:

The issue here is whether there is an enforceable contract between A and B, or A and C,
for the sale of A’s home theatre set. I propose to deal with B’s and C’s legal position
separately.

The legal position of A v B:

The facts say that on Monday, A placed an advertisement in the local paper for the sale
of his home theatre set. In law, such an advertisement is considered to be an invitation to
treat. It is not an offer. An invitation to treat invites others to make an offer. This is
proposition is supported by the case of Partridge v Crittenden.

©Ram(2008) 1

Distributing prohibited | Downloaded by Adrienne Shau Yean Ho ([email protected])

 lOMoAR cPSD| 2472100

Then on the same day, B phones to A to “accept” the offer. There is no offer to begin
with for B to accept, so no agreement has been reached as yet. A then says that he is
selling the set for $1000. An objective test must be used to determine if a statement is an
offer – Carlill v Carbolic Smoke Ball Co. A’s statement may arguably be regarded as an
offer as there is a definite indication of A’s willingness to sell the set for the price stated.
(However, an alternative argument may be raised that this is merely the provision of
information, since A does not specifically indicate his willingness to sell to B, though this
may be implied from the circumstances – Harvey v Facey). On a balance, my view is that
this is an offer. When B asks A whether he will accept $500, this may be construed as a
counter offer. A counter offer automatically terminates the original offer – that is, A’s
offer of $1000 is extinguished and B cannot purport to accept A’s offer in the future
(unless A agrees otherwise). A case in point is Hyde v Wrench in which it was held that a
counter offer terminates the original offer.

On Thursday, B phones to accept the A’s offer. If B’s earlier statement is a counter offer,
there is nothing for B to accept now. It may be said that B is in fact now making an offer
to A of $1000, but since A is not prepared to sell, B’s offer is rejected. There is thus no
binding agreement between the A and C and C has no contractual rights against A.

An alternative argument may be raised that B’s statement (asking for $500) was merely
an enquiry – Stevenson, Jacques v McClean – in which case A’s offer of $1000 remains
until its expiry or revocation. If B’s earlier statement is merely an enquiry, then A’s offer
of $1000 remains valid – B could then be said to have accepted the offer by intimating
that he has the cash ready and is ready to collect the set. In this situation, there will be a
binding contract between A and C.

The legal position of A v C:

On Tuesday, C phoned A and enquired about the price of set. A’s reply to C may be
construed as an offer. A’s statement that his set does not come with amplifiers amounts
to a supply of information – Harvey v Facey. A’s agreement to give C until Saturday
indicates that A’s offer is valid until Saturday. However, there is nothing to preclude A
from revoking the offer at any time before acceptance is communicated (Bryne v Van
Tienhoven) since B did not provide consideration to keep the offer open till then –
Routledge v Grant.

The facts indicate that on Friday A sells the set to E, C’s sister. C comes to know of this
from his sister who bought the set. At this juncture, C has received communication of the
revocation of the offer from a reliable third party – the cases of Dickinson v Dodds and
OUI Ltd v Turegum Insurance Co may be cited in support – thus, A’s offer is thus
effectively revoked. C cannot therefore purport to accept A’s offer by phoning him as
there is now no offer to accept.

There is thus no binding contract between A & C, and C has no contractual rights
against A.

©Ram(2008) 2

Distributing prohibited | Downloaded by Adrienne Shau Yean Ho ([email protected])

 lOMoAR cPSD| 2472100

Question 2

Seletar Wildlife Reserve (SWR) placed the following ad in the Straits Times on 1 July:
“We are offering to pay $10,000 to any person who catches Jumbo, a (tagged) baby
crocodile weighing 6 kg and 3 feet in length which has escaped from the reserve into the
nearby Seletar river. The reward has already been deposited in the Safe Haven Bank.”

On the following day, Seletar river was crowded with people holding nets in the hope of
catching Jumbo. At 12 noon, a rumour surfaced that there was an error in the ad – the
prize should have been $1,000 instead. The rumour was in fact true. The 1pm Tamil
news on FM 101 confirmed the rumour but Tom was unaware of it. Tom later caught
Jumbo, and SWR’s chief executive certified the catch but did not say anything about the
prize. Unfortunately, Jumbo bit its keeper and once again escaped into the Seletar river.
After a few months, all hope of finding Jumbo was lost and it was thought that it had
died. Jerry who never saw the ad nor heard the news caught Jumbo whilst fishing on
New Year’s eve.

Advise whether Tom and Jerry can each successfully claim $10,000 from SWR.

Suggested Approach

Identify and state the issue/s:

The issue here is whether there is an enforceable contract between SWR and Tom and/or
between SWR and Jerry which entitles either or both of them to the reward. I propose to
deal with Tom and Jerry’s legal position separately.

The legal position of Tom v SWR:

The facts say that on 1 July, SWR placed an advertisement in the Straits Times offering a
reward to the person who catches Jumbo. In law, an advertisement is generally
considered to be an invitation to treat. It is not an offer. An invitation to treat invites
others to make an offer. This is proposition is supported by the case of Partridge v
Crittenden. An offer, on the other hand, is an expression of willingness to be bound on
stated terms. An objective test must be used to determine whether a statement is an offer
or invitation – Carlill v Carbolic Smoke Ball Co. Here, SWR has left nothing to be
negotiated – they have made a conditional promise to the world at large that they will
pay $10,000 to the person who catches Jumbo. This is an offer which gives rise to a
unilateral contract with the required acceptance being the catching of Jumbo.

An offer may be revoked at any time before acceptance is communicated – Byrne v Van
Tienhoven – unless the offer amounts to an option – Routledge v Grant. There is no
option here. However, there was an attempt to revoke the original offer of $10,000 and
replace it with a new offer of $1000. Revocation is not effective unless and until it is
communicated by the offeror, his agent or a reliable third party as decided in Dickinson
v Dodds. However, an offer resulting in a unilateral contract cannot be revoked once the

©Ram(2008) 3

Distributing prohibited | Downloaded by Adrienne Shau Yean Ho ([email protected])

 lOMoAR cPSD| 2472100

offeree has started to perform as decided in Abbott v Lance which has been endorsed by
the local case of Dickson Trading v Transmarco; a similar stand was also taken by the
English Court of Appeal in Errington v Errington.

Whilst it is debatable whether the offeree, Tom, had started to perform at the time when
the rumour surfaced, the rumour itself can hardly be considered to be effective
communication by the offeror, his agent or reliable third party of the revocation the offer.
It is true that SWR purported to revoke its offer ultimately, but it had failed to do so
before Tom’s acceptance which resulted when he caught Jumbo. Additionally, the
revocation is also invalid as the same channel was not used – Shuey v US – the original
offer was published in the Strait Times, whereas the purported revocation was done
through FM101 which has a limited target audience in comparison. There is thus an
agreement between Tom and SWR for the payment of the reward.

There is also intention to create legal relations as evident from the deposit of the reward
in the Safe Haven Bank. A similar scenario was also present in Carlill v Carbolic Smoke
Ball Co when the latter said it had deposited money in the bank as evidence of its
sincerity. Consideration must be sufficient but need not be adequate as decided in
Thomas v Thomas and Chappel v Nestle. Consideration flowed from Tom, the promisee,
when he caught Jumbo in return for the reward of $10,000 promised by SWR.

In view of all of the foregoing, a binding contract exists between Tom and SWR for the
payment of the reward.

The legal position of Jerry v SWR:

SWR’s original offer was made on 1 July to the person who catches Jumbo. It is clear
that the offer is not capable of being accepted by more than one person at that point in
time.

Jerry never saw the ad nor heard the news. His action in finding Jumbo was not done
with knowledge of the reward nor in contemplation of accepting the reward – R v
Clarke. Further, an offer lapses if it is not accepted within a reasonable time – Ramsgate
Victorial Hotel Co Ltd v Montefiore. It had been six months after the offer had been
made; besides, it had been thought that Jumbo had died. On balance, the offer had
lapsed before Jerry could accept it.

There is thus no contract between Jerry and SWR, and Jerry is thus not entitled to the
reward.

END OF DOCUMENT

©Ram(2008) 4

Distributing prohibited | Downloaded by Adrienne Shau Yean Ho ([email protected])