Negligence and Contract Law

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Title page
Name of the student
Student Id

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Contents
Question 1........................................................................................................................................3
Part A...........................................................................................................................................3
Issue..........................................................................................................................................3
Law...........................................................................................................................................3
Application...............................................................................................................................3
Conclusion................................................................................................................................3
Part B............................................................................................................................................3
Question 2........................................................................................................................................3
Issues............................................................................................................................................3
Law...............................................................................................................................................3
Application...................................................................................................................................4
Conclusion...................................................................................................................................4
Question 3........................................................................................................................................4
Part A...........................................................................................................................................4
Issues........................................................................................................................................4
Law...........................................................................................................................................4
Application...............................................................................................................................5
Conclusion................................................................................................................................5
Part B............................................................................................................................................5
Question 4........................................................................................................................................6
Issues............................................................................................................................................6
Law...............................................................................................................................................6
Application...................................................................................................................................6
Conclusion...................................................................................................................................6
Reference List..................................................................................................................................7

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Question 1
Part A
Issue
Is the signing of the Head of the agreement brings an obligation on Tina to purchase the
business?
Law
An agreement which has the enforceability of law is called a contract. The statement made by an
offeror showing his intention to comply with the term is called an offer (Smith v Hughes [1871]).
The approval which is given to the terms of the offer by the offeree is an acceptance and is
declared under (Gilbert J McCaul(AustPty Ltyv Pitt Club Ltd (1957). (Chitty 2012)
The offer and acceptance bring enforceability to the contract and the parties should fulfill the
terms at any cost. But, if the parties agree that the contract is subject to the assent given by the
solicitor, then, the sanctity of the contract depends upon the circumstances and intention of the
parties. The law in Masters v Cameron (1954) submits that when the parties have decided that
the contract is binding and only its formal execution is required, then, the contract is enforceable
even if there is a need of solicitors approval. Court considers that if the party’s negotiation is a
concluding one, then, the contract is enforceable (Geebung Investments Pty Ltd v VorgaGroup
Investments (No 8) Pty Ltd (1995) and Tabcorp Holdings Limited v The State of Victoria [2014].
(O'Donovan 2014)
Application
A business is operated by Jeff. He offered to sell the same to Tina and she agreed. They
negotiated and a deal is finalized @ $2.5 million. A document is prepared by Jeff and is signed
by both. The agreement contain terms that submits that a formal contract should be made which
requires solicitors approval. It is stated that the parties do not want any kind of future bargain and
are willing to abide by the pre-stated terms. So, as per Tabcorp Holdings Limited v The State of
Victoria the contract is binding.
Conclusion
The negotiation was binding and is not affected by any solicitors approval and thus Tina must
buy the business of Jeff at an agreed price.
Part B
If one of the terms in the Heads submits that it is necessary to seek finance by Tina and this is a
condition to the agreement, then, the parties wishes to have further negotiation. Thus, as per
Masters v Cameron, the contract cannot be said to be enforceable.
Question 2
Issues
i. Is Phil obligated for the unpaid debt?
ii. Is Robert obligated for the unpaid debt?
iii. Is ‘business judgment rule’ applicable on Phil or Robert?
Law
The Corporation Act 2001 guides the acts of the officers and employees of the company. Section
198 C defines a managing director who commands the acts of the company (Howard Smith Ltd v
Ampol Petroleum Ltd (1974). The duties imposed on director’s includes: (Fitzpatrick et al, 2014)