IRAC Issue, Rules, Apply and Conclude

Question

Zayed went to Grand Supermarket. He selected few items from the shelf and put it in the trolley. While waiting for payment at the counter he received a phone call from his wife telling him that their son was involved in an accident at school. Zayed leaved the queue and pushed aside the trolley. On seeing this, one of the salesmen approached him and asked him to make payment for all the goods that he had put in his trolley. Zayed refused. He had been brought to see the manager. What would be the possible arguments for Zayed and Grand Supermarket? Explain whether a contract has been concluded in the above situation and give reasons for your answer.

The answer seems correct i.e. there is no valid contract exists between Zayed and the Supermarket. But to answer this question, you need to refer to the relevant legal provisions and apply those rules from the legal provisions to support your points.

You may want to use this formula IRAC (Issue, Rules, Apply and Conclude).

Model Answer:

The fundamental issue need to be discussed here is whether a valid and binding contract exists between Zayed and Grand Supermarket? To answer this question, it is important to consider 2 points namely, whether the display of goods constitutes an offer or an invitation to treat; and whether Zayed can revoke his offer by refusing from continuing with his purchase.

i. First issue: whether the display of goods in Grand Supermarket constitutes an offer.

Offer is defined in s.2(a) Contracts Act. Offer may be made expressly (in words) or impliedly (by conduct). It is an intimation by words or conduct, of a willingness to enter into a legally binding contract, specifying the terms of the binding agreement which will be formed should the offer be accepted by the party to whom it is addressed. An offer once accepted creates an agreement. (s.2(b)).

An offer can be contrasted with an invitation to treat. An invitation to treat is an invitation to enter negotiations. The “acceptance” of an invitation to treat does NOT create an agreement. The general rule is that the display of goods in a self-service shop constitutes an invitation to treat and not an offer to sell the goods.

In Pharmaceutical Society of Great Britain v. Boots Cash Chemists [1953],

the court held that the display of goods on shelves in a self-service store is not offer of the goods for sale but an invitation to treat.

The court held the same view in Fisher v. Bell [1960],

where it was held that where goods are displayed in a shop together with a price label, such display is treated as an invitation to treat by the seller, and not an offer. The offer is instead made when the customer presents the item to the cashier together with payment. Acceptance occurs at the point the cashier takes payment.

Here the offer takes place when Zayed took the goods off the shelf and put them in the trolley. Here, he was the one making an offer to purchase the goods.

ii. Second issue concerns the revocation of an offer - whether Zayed can revoke his offer?

S. 5(1) provides that an offer may be revoked at any time before the communication of the acceptance is complete as against the offeror but not after wards. Here, the general rule in relation to communication of acceptance under s.4(2)(a) applies, i.e. the communication of acceptance is complete as against the offeror, when it is put in a course of transmission to the proposer (offeror).

In the present case, Zayed can revoke his offer at any time before the acceptance takes place. Since this was a face-to-face transaction, and no acceptance has taken place yet (i.e. by the cashier at the counter), Zayed can revoke his offer and his revocation is valid.

The rule about revocation of offer is that the revocation must be communicated to the intended recipient, namely the offeree. Such revocation is ineffective until communicated to the offeree (s.6(a)). Since the staff at the supermarket knew that Zayed is leaving the queue without any intention to continue with his purchase, the communication is complete and the revocation is effective.

Based on the circumstances discussed above, it can be concluded that there was no binding contract concluded yet between Zayed and Grand Supermarket since there was a valid revocation of offer before an acceptance took place at the cashier counter, The salesman nor the manager had no right to insist Zayed to pay for the goods that he has placed into the trolley.