Question

Facts:

Bouncing Bulbs Pty Ltd, a marketing firm, has decided to introduce a new business method for marketing CDs to consumers containing a “contract” stating that the CDs cost $27 each

and that payment should be remitted to Bouncing Bulbs’s Post Office Box address if the consumer wishes to keep the CD, otherwise the CD must be returned. The contract also states, in small print, that should a consumer fail to either return the CDs, or remit payment within 30 days, the company would commence legal proceedings to recover the $27.

Required:Advise Bouncing Bulbs as to its right to recover the price of each CD from consumers who fail to return the product

Questions to Consider:

• Has a valid of fer been made?

•Has that offer been accepted? How was acceptance to take place?

•Is there agreement?

Please use the following structure to answer –PIRAC,

Parties

Issues

Rules

Application

Conclusion

Answer 1

Parties: Bouncing Bulbs Pty Ltd. and members of the public buying CDs.

Issue: Bouncing Bulbs makes a conditional offer to the general public. It seems that there is a Sale on Approval. If the customer approves of the CD and wishes to keep it, he/ she must remit a sum of $ 27 to a post office box address. Otherwise the CD must be returned. Not clearly mentioned what is the timeline of the return, but it is informed in small print that if a customer fails to remit $ 27 or to return the CD within 30 days, legal proceedings would be commenced by Bouncing Bulbs. Is Bouncing Bulbs entitled to recover the price of the CDs from consumers who fail to return the CDs?

Rule: A contract is an agreement enforceable by law. An accepted offer / proposal is an agreement. An offer should be absolute and unconditional.It should also not amount to an invitation to offer. It should be communicated to the offeree, and it should be accepted by the offeree in the prescribed manner within the prescribed time. If there is valid offer, coupled with valid acceptance of the offer, it leads to an agreement. For the agreement to be enforceable, the parties to the agreement must have the capacity to contract, the agreement must be supported by consideration, the consent of the contracting parties must be free, and the object of the agreement must be lawful.

Application: In the given situation, the offer made by the company is neither absolute nor unconditional. It seems that the customers are sent the CDs at the very outset. The condition is that if the offer is accepted, the customer should remit $ 27. If the offer is not accepted, the CDs should be returned. There is an element of IF. It also appears to be an invitation to offer. Therefore, it is not a valid offer, unless and until someone remits $ 27 to the post office box. That act would constitute acceptance of the offer. Only is the payment is made, there can be a valid agreement.

Conclusion : First and foremost, the consumers did not ask for the CDs to be sent to them. The CDs were sent as a part of a business strategy to increase awareness and sales. Secondly, there was no valid offer, as it was conditional. Without a valid offer, there cannot be an enforceable contract. Hence, Bouncing Bulbs would not have the right to recover the price. Third, there is cost involved in returning the CDs. Who should bear that cost? Why should the consumers bear the cost of returning something which they did not ask for in the first place.

Therefore, Bouncing Bulbs has no right to recover the price from the consumers through a court of law, as there is no enforceable contract.