Contract Law Problem Question: Competition for Free Gym Membership

2422 words (10 pages) Essay in Contract Law

06/06/19 Contract Law Reference this

Last modified: 06/06/19 Author: Law student

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 Fitness For All Gym has recently upgraded many of its new facilities including crosstrainers, strength equipment and a couple of water rowers in the run up to winter. Fitness For All gyms wanted to promote a new winter program they will be running, so to promote this they held a Facebook competition.  The owner of the gym posted the advertisement on the Gyms public Facebook page. It stated “The first 10 people to complete 2km on the gyms new water rower in under 7 minutes will win 1 Annual membership worth €1,500.” Paul saw the advertisement that Fitness For All Gym posted and went and completed the challenge in under the required 7 minutes. Paul went to claim one of the first 10 memberships from the owner. The owner informed him afterwards that he had replaced the first notice with another on the Facebook page and the offer was no longer available. The owner stated he was no longer doing the promotion and no free memberships will be given out.

When considering if Paul has a case against Fitness For All Gym, we must look at whether the public advertisement had an offer and acceptance or was it an invitation to treat. What are the main differences between the two? For an offer and acceptance to have been formed, it is necessary to show that one party has made an offer, which has been accepted by the other party. (Citycolleges, 2017) An offer is a clear unambiguous statement with terms that the plaintiff is prepared to be bound contractually. It can be verbal, written or implied by conduct. It is possible to have a contract to the world at large. The acceptance is an agreement of the other party to the offer presented. In Pauls case, the owner of the gym offered 1 Annual membership worth €1,500. Paul accepted the offer by performing the duties under the control. The offer and acceptance together make up an agreement.

However do we know if it was a definite offer and not an invitation to treat? In contrast to a contract, an invitation to treat does not contain an offer, an acceptance or consideration. It is merely an invitation for a customer to submit an offer. (TransLegal, 2016).

A general public advertisement is usually not a contract but merely an invitation to treat. As seen in the case Partriage v Crittenden (1968). Partriage displayed a classified stating he was in possession of Branmblefinch cocks and hens, however the words ‘offer for sale’ were not used. A member of the general public posted him a cheque and Partriage provided one of the birds in a box in return. Partriage was charged with unlawfully selling wild live birds under the Protection of Birds Act 1954. Partriage appealed the conviction and the high court ruled against the conviction and decided that the advertisement was an invitation to treat and not offer for sale (Casebrief.me, 2016).

As discussed above Paul accepted the offer by Fitness For All by performing the duties stated in the advertisement. There was a clear Offer and Acceptance. The contract must also provide something of value. This ‘something of value’ is also known as a ‘consideration’. Considerations are key elements in most contracts and do not necessarily need to be money. In Pauls case the consideration was receiving an annual membership worth €1,500 of the gyms gratis. However, in reward cases if the advertisement is specific and clear as to what terms must be fulfilled in order for the participant to claim the reward it can be considered a contract.

In the case Carlill v Carbolic Smoke Ball Co (1893) the defendant placed various advertisements in local newspapers offering a reward of £100 to anyone who purchases the ball and after using the ball three times daily for two weeks according to the instructions provided, if they still contracted the influenza they were entitled to the hundred pounds. The company also issued a statement telling the public of their one thousand pound deposit they have put in with Alliance Bank, showing the public their sincerity in the matter. Mrs Carlill followed the instructions directly for 2 weeks however she caught the flu and sought out her reward. There is a general rule of making a binding contract. The offer is made, accepted and the acceptance should be notified however there are exceptions. Unilateral contracts are an exception. In unilateral contracts there is no requirement to communicate the intention to accept since the acceptance is through performance. (Casebrief.me, 2016).  The Plaintiff should be entitled to the reward as it was a unilateral contract which she accepted by performing the conditions stated above. It is possible to make an offer to the world at large. . (Lawteacher.net, 2016) The courts decided that she did not have to inform the company that she accepted the offer. It was ruled by the courts that a contract did exist between Mrs Carlill and the company. 

A contract is defined as an agreement between two or more parties. Legally binding agreement giving rights and obligations.

Harvey v Facey (1893).   Harvey sent  three telegraphs to Facey enquiring about a Bumer Hall Pen. It stated “will you sell us Bumer Hall Pen? What is the lowest cash price?”. Facey replied in the second telegraph stating the lowest price he would sell it for was nine hundred. To which Harvey replied, “We agree to buy Bumper Hall Pen for the sum of 900 asked by you”. Harvey went on to sue Facey for a breach in contract. Harvey argued Faceys made an offer which he sent by telegraph “agreeing to buy” Bumper Hall Pen. The Privy Council held that there was no legal contract made between either parties. Facey had not answered the first question as to whether they would sell and the lowest price that was stated was only responding to a request by Harvey for information not an offer. Furthermore no evidence of an intentionthat the telegram sent by Facey was to be an offer. No contract existed here. (Casebrief.me, 2017)

In Pauls case he clearly accepted the unilateral contract similarly to Carlill v Carbolic Smoke Ball Co (1893) by performing the requirements stated in the advertisement. His communication of the acceptance was the performance of the 2km on the new water rower in less than 7 minutes. By having an offer, acceptance and consideration it is not enough to say that it is a contract. However, the author would assume that the manager of the gym is of sound mind, otherwise he or she would not be in charge of the facility and that he understood the advertisement as he was the one who published it to be advertised to the public on Facebook. Therefore the advertisement may be seen as a contract. However when Paul had performed the requirements set in the advertisement he was informed by the owner that the previous promotion had been taken down since and replayed with a new promotion. Paul was informed that he would no longer be entitled to the reward of a free annual membership. Is Paul still entitled to claim the prize from the original contract and does Paul have a case against the owner for Fitness For All gym? Was there a breach in the original contract by one of the parties involved? Does the original contract still apply?

A breach of contract is a failure to meet the agreements made in the contract, the requirements outlined in the contract or to live up to his or hers responsibilities. It is possible to breach a part of the contract or the whole thing itself. There are two main types of breaches in contract law, an anticipatory breach and an actual breach in contract law. An anticipatory breach is when there is a clear indication that one of the parties will not perform what is outlined in the legal contract agreed before the performance is due. (Lawteacher.net, 2017).

When a contract is breached damages are available for the plaintiff. In this case Paul is the plaintiff. Damages, specific performance and injunctions in contract law are known as legal remedies. (E-lawresources.co.uk, 2017). Damages are an award of money to the innocent party in contract law. Damages help compensate the innocent party and put them in a safe position as if there was no breach in the contract in the first place. (E-lawresources.co.uk, 2017) Specific Performance is a court order by the judge to perform a certain act. It is usually an order by the court to perform the contractual obligations that was breached. (E-lawresources.co.uk, 2017). However the courts must look at whether this is an adequate remedy to the situation. If the party can be compensated by an award of damages for the breach of contract, the courts are unlikely to order specific performance. The manager of the gym may have breached the contract unless the contract was terminated due to a time lapse. One party may be considered to be out of contract if the expiration date for the offer has passed.

Ramsgate Victoria Hotel v Montefoire  (1886). The defendant offered to buy shares at a certain price for the company of the claimant. Six months later the claimant agreed to the offer for the shares. However at this time, the shares had fallen from the original price when the offer was made. The defendant did not state he wanted to withdraw his offer but he refused to continue with the sale. The claimant brought the defendant to court under specific action in contract. An order of specific performance would force the other party into the binding contract. However the offer was no longer available because the subject matter was fluctuating shares for a company. The offer lapsed after the six month time period.  The courts ruled there was no contract and the claimant’s action for specific performance was unsuccessful. (E-lawresources.co.uk, 2017).

In Pauls case against the gym this is not valid as there was no mention of an expiration date ‘time-lapse’ or date for a change in promotion in the original information provided. If the manager had intended on withdrawing the promotion then he should have set a date to do so in the original advertisement.

This could lead us to the conclusion that there was a breach in contract between Paul and Fitness For All Gym. A breach of Contract which is caused by being unclear of the terms and conditions in the contract, leaving unsatisfied customers, lost opportunity to improve their business, and get a lawsuit for breach of a contract. It is important to have a detailed and unambiguous contract made so that a breach will not happen in future situations. A breach can include not finishing a job, failing to make a payment in full or on time, not delivering all of the goods, or vastly different goods and many others also. (Definitions.uslegal.com, 2017) With Pauls case, The manager failed to perform the duties outlined in the original contract provided and did not give Paul a legal legitimate excuse for withdrawing the promotion. (Definitions.uslegal.com, 2017).  This in turn cost Paul time out of his day and the opportunity to use Fitness For All gym free of charge for the year ahead. Therefore making Paul very unsatisfied with the service of Fitness For All gym.

Errington v Errington and Woods (1952). In this case there was a father that bought a house for his son and daughter in law. The father told the daughter that the mortgage was to be paid off in installments. They had already paid off part of the mortgage when the father died. The house was under the fathers name. However, when the state wanted to kick the children in-law out, the court ruled that it was a unilateral contract. Therefore the contract cannot be annulled once the other party has entered the performance of the act. The contract would however cease to be bound if the performance was incomplete.

It would appear Paul did complete the performance of the act laid out in the advertisement to claim his free annual membership of the gym. He was only informed after completing the terms of the advertisement that the promotion was withdrawn by the manager for a new one.

For Paul to claim his free membership he could apply for a Discharge by Agreement to an existing contract to get rid of the conditions of the original contract. (Law Trove, 2017) They could terminate the old terms and agree orally or in written form on a new agreement, supported by consideration. If this fails, Paul could get an order of ‘specific performance’. This means the courts will order Fitness for all Gyms to provide the claimant with the original promotion stated in the advertisement. (Law Trove, 2017). In Pauls case careful consideration must be taken as the outcomes of the districts courts are uncertain.

Bibliography

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