THE ENFORCEABLE CONTRACT?
The 1f, who were the proprietors and vendors of a medical preparation called “The Carbolic Smoke Ball”, inserted in the Pall Mall Gazette and in other newspapers the following 2j:
“$100 3k will be paid by the Carbolic Smoke Ball Company to any person who catches influenza, colds, or any other disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. $1000 is 4p with the Alliance Bank, Regent Street, showing that we are serious. During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this 5s, and in no case was the disease caught by those who had used the carbolic smoke ball. One carbolic smoke will last a family several months, making it the 6r remedy in the world at the price of $5. The ball can be refilled at a cost of $2.5. Address, Carbolic Smoke Ball 7o 27, Princess Street, London.”
The 8a, a lady, on the faith of this advertisement, bought one of the balls at a chemist’s, and used it as directed, three times a day for two weeks, when she was attacked by 9h. She 10q to recover $100 reward and won the case: the 11m of first instance held that she had the right to recover. The defendants appealed. The court of 12l ruled that the contract was too vague to be 13n.
Under English contract law, an offer must involve a definite 14g made by the 15b that he will bind himself if the exact terms specified by him are 16d. In this particular case the advertisement is not a definite offer because there is no time limit fixed for the catching of the influenza. It is too wide regarding the persons involved because it is an 17i made to the world in general, not a particular 18c. It is not a 19t offer because there is no chance of checking the experiment. The advertisement is rather a puff than a serious promise or offer intended to turn into a contract when accepted. But the main point is that the vagueness of the advertisement shows that there was no 20e to contract.
a) plaintiff f) defendants k) reward p) deposited
b) offeror g) promise l) appeals q) sued
c) person h) influenza m) court r) cheapest
d) accepted i) offer n) enforced s) disease
e) intention j) advertisement o) Company t) definite
TASK 2. Rewrite the following passage filling in the gaps with the words which have already appeared in the text. Put the words in the appropriate form.
COMPANY FORMATION
The money needed to start a business is called capital. If a person does not have enough capital he may borrow some from the bank in the form of a loan or overdraft. Capital which is borrowe is called loan capital. Before the bank will give a loan he must pay up some security (such as his house) in case he cannot pay back the money.
If a business owned by one man (a sole proprietor) runs into trouble, the owner is liable to pay all the debts to his creditors, even if he has to sell his private possessions. A sole proprietor is personally liable to his creditors. Unlike a sole proprietor, all the investors in a limited company have limited liability. Investment in a limited company is in the form of shares. Everyone who buys shares in the company is a shareholder. The liability of each shareholder is limited to the amount of his investment.
TASK 3. The Articles of Association govern the running of a company and set out the rights and obligations of members and directors. In the following table are the main sections of the Articles of Association. The details below describe the terms and conditions in each section. Match each section to its description.
Sections
1 Share Capital- f
2 Calls - a
3 Transmission of Shares - b
4 Notice of Meetings - d
5 Proceedings at General Meetings - e
6 Directors - h
7 Indemnity - c
8 Winding Up - g
Details
a) This allows the directors of the company to sell a shareholder’s shares in the company to repay any debt owed by the shareholder to the company.
b) This provides that any shareholder who wishes to sell his shares has first to offer them to the other shareholders at the same price as (s)he wishes to sell to a third party.
c) This provides that the directors of the company shall not be personally liable in any civil or criminal proceedings as long as they have carried out their duties lawfully.
d) This deals with advance information that is to be given to each member about meetings and provides that each member is allowed to appoint a proxy to attend in his place at meetings.
e) This requires all directors to be informed about meetings, whether they are in the country or abroad.
f) This sets out the share capital of the company.
g) This allows the assets of the company to be distributed if the company goes into liquidation.
h) This states the number of members who must be present.
