Case Study Scenario 1 (Contract Law - formation)

Q1 (25 Marks)

Whilst perusing a catalogue, David sees an advertisement for sale of second-hand books at the University co-op bookshop as follows "Up to 50% off on all finance textbooks. Hurry! While stocks last. If a customer spends at least $50 in store, they are entitled to a gift card with $30 credit on it which can be used anytime over the next few months." David decides to visit the bookshop that afternoon and when there, observes a promotional table which had the sign "All Finance books $10.00". David thought it was quite a bargain, picked up 3 books and went to the cash register handing the cashier $30.00. The cashier told David that the books were wrongly priced and that each of them should in fact be $20.00. David informs the cashier that the only reason he came to the store was because he saw the catalogue advertising a discount promotion and insists he be sold the books at $10 each. David then enquired whether he could at least get the gift card with $30 credit on it if he spends more than $50 in store, to which the cashier replied, "No sir, that advertisement was not meant to be taken seriously." David is of the view that he is entitled to the gift card with $30 credit on it. Since his dealing with the bookshop, David has tried to take his mind off the missed gift card and decided he needed to purchase a laptop for his University studies. Peter, a marketing student at WSU (who happens to be David's friend), has a Macbook Air which he has advertised on a private sales website, www.lemontree.com.au, for $2000. David saw the advertisement and sends an email to Peter and asked, "Is this laptop the latest model and does it have a good camera and quality speakers? I can pay you $1500." Peter replied via email, "Yes it is the Macbook XVIII, the latest premium range and it does have the features you enquired about. I have a lot of interest in the laptop.I am keen to sell quickly.My final price is $1900." David replies via email stating, "We've got a deal, but I will need to pay you in weekly instalments." Peter then states, "If I don't hear from you in 3 days' time, I assume that you are keen to purchase the laptop. I will need a lump sum amount to be paid I'm afraid." The next day David finds out that Peter sold the laptop to his friend Luke for $1500.00. He approaches Peter and says, "We had a deal, you owe me the laptop".

Advise David whether there are any contracts in existence in the above scenarios and if he has any rights under them. Each of the scenarios should be answered in a separate IRAC