(Solved) Business and Company Law: Assignment

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Contents
Solution 1...................................................................................................................................2
A.................................................................................................................................................2
Issue........................................................................................................................................2
Applicable law........................................................................................................................2
Application of Law.................................................................................................................3
Conclusion..............................................................................................................................4
B.................................................................................................................................................4
Issue........................................................................................................................................4
Applicable law........................................................................................................................4
Application of Law.................................................................................................................5
Conclusion..............................................................................................................................6
Solution 2...................................................................................................................................6
Reference List............................................................................................................................8
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Solution 1
A
Issue
Can Magda and Avinash are in contractual relationship?
Applicable law
In Australia, an agreement has the forcibility of law when it is supported by consideration by
capable parties who have intention to abide by the agreement. Such agreement which has
forcibility of law are called contract. .1
In any contract formation there are requirements of few essentials. A brief analysis of the
same are submitted herein below.
An agreement –An agreement is made when a valid offer by an offeror is correspond with a
valid acceptance by an offeree.
When any kind of statement, either oral or written, is communicated by the offeror to the
offeree wherein the offer intends that the offeree will comply with the terms of the statement
then it is an act called offer and is held in Carlill v Carbolic Smoke Ball Co2. An offer must
reach to the notice of the offeree to make it valid. In Byrne v Van Tienhoven3 it was submitted
that any offer can be revoked provided the same is not approved by the offeree. Further, if the
offer is kept open for a certain period of time then the offer stands revoked after the lapse of
time and is held in Manchester Diocesan Council (1970)
Now, there is another concept in law called invitation to offer. Unlike offer, in invitation
offers are invited by the inviter. An inviter with the help of auctions, advertisement, display,
tenders etc, make invitations upon which the general public (offeror) can make offers to the
inviter (offeree). In Partridge v Crittenden4, an advertisement was held to be an invitation
and not offers.
When an offer is made for certain period of time and which is open to the offeree to accept
the same within such time duration then as per Errington v Errington Woods5, it is an open
offer and it must be supported with some benefit to make it valid. Otherwise, the offeror has
the option to revoke the offer before acceptance.
1 Hugh Collins. (2003). The Law of Contract. Cambridge University Press.
2 Carlill v Carbolic Smoke Ball Co [1893]..
3 Byrne v Van Tienhoven (1880).
4 Partridge v Crittenden [1968].
5 Errington v Errington Woods [1952] 1 KB 290
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Now, once an offer is made, it is very necessary that the same must be confirmed or accepted.
When the offeree to whom the offer is made gave his approval to the terms of the offer than it
is an acceptance in law. The terms of the offer and the acceptance are the mirror image of
each other.
If the offeree does not accept the offer but brings in certain changes before confirming the
offer then it is counter offer. As per Hyde v Wrench6, the counter offer has the capacity to
terminate the offer. The only offer that is left is the counter offer which must be approved in
order to make a binding agreement.
This agreement must be supported with:
Consideration- In Combe v Combe [1951]7 it was held that anything which has some value in
law and which are exchanged amid the offeror and the offeree so that the offer and
acceptance has enforceability in law, then, it is consideration.
Legal intention –In Jones v Padavatton [1969]8 it was held that the legal intention must be
present when the offer and acceptance is made.
Capacity of the parties – in Nash v Inman [1908]9 it was held that the soundness of parties
and their majority age is required for contract formation.
The law is now applied to the facts of the case.
Application of Law
Magda acts as a photographer. The prints are available for sale at her studio and over her
website. Photographs of the work are also displayed at the website and the work itself is
placed at the studio. The website has an advertisement which states that portraits are available
and one of the portrait of Paris Stilton can be bought at $2000.
Applying the law in Partridge v Crittenden [1968], the advertisement on the website is an
invitation and thus no offer is made by Magda. Interested parties must make an offer.
Avinash on 19th February makes an offer @ 1600. This email of Avinash is an offer against
the invitation of Magda. But, the offer of Avinash was rejected by Magda by quoting new
price @ 1800. So, as per Hyde v Wrench (1840), a new offer is made by Magda which is the
only valid offer left revoking all previous offers.
This is no accepted by Avinash and wants the time till 21st February for confirmation. This
was approved by Magda. Since no consideration is provided by the Avinash to keep the offer
6 Hyde v Wrench (1840),
7 Combe v Combe [1951] 2 KB 215.
8 Jones v Padavatton [1969] 1 WLR 328
9 Nash v Inman [1908]
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open, thus, Magda is not free her offer before 21st February by applying the law in Errington
v Errington Woods.
Avinash before 21st, that is, on 20th February sends his approval but with a requirement of the
need of certificate of authenticity. So, new term is added making it a counter offer thereby
revoking the offer of Magda made on 19th February.
Now, no acceptance is made by Magda, rather, an email is sent submitting that she is making
an offer to Avinash for sale of portrait @ 1800 which must be accepted by 4PM, 20th
February. Avinash did not accept the offer by the given time and the offer is alredy revoked
because of lapse of time and as per Manchester Diocesan Council (1970)
Magda also revoked her offer and communicated the same to Avinash. Avinash accepted the
offer after the revocation and such acceptance has no relevance.
Conclusion
There is no binding contractual relationship amid Magda and Avinash.
B
Issue
i. Can Elton qualify as a consumer?
ii. Are any terms are breached by Magda?
iii. Are the statements made by Magda are misstatements?
Applicable law
When any contract is made then it is necessary that the parties to the contract must comply
with the terms of the contract. The parties are obligated to fulfill the contractual terms. But, in
any consumer contract there are few implied terms that are made part of the Australian
Consumer Contract which must be furnished by the seller or manufacture of the consumer
products in order to protect the interest of the consumers.
But, first it is important to understand the term consumer under the Australian Consumer law.
Section 3 of the law states that when any person buys products the value of which is not more
than $ 40,000, then he is a consumer. Also, if the value of the product exceed $40,000 then he
still be considered as a consumer provided the product so purchased is for domestic use, that
is, the product so acquired is not meant for any re sale or commercial purposes. 10
10 Stephen G. Corones. (2012). The Australian Consumer Law. Lawbook Company.
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Now, every seller or manufacture must make sure few implied terms; firstly, section 55
submits that the goods which are purchased by the buyer must comply with the requirements
for which the goods are actually purchased for and is held in Grant v Australian Knitting
Mills11. If the goods does not fit in the purpose then there is breach of the implied term and is
held in Griffiths v Peter Conway Ltd12; secondly as per section 54, the goods must be of such
a quality that must be acceptable, means, that the goods should be durable, safe, fit for the
purpose normally acquired etc and is rightly held in Henry Kendall & Sons v William Lillico
& Sons Ltd13. If the goods are of not as per the quality then there is breach; thirdly, as per
section 56 the description submitted by the seller must correspond with the products actually
supplied to the buyer and is held in Varley v Whipp14. If there is variation in the sattemenst
made and the actual goods supplied then the same is breach. (McKendrick & Liu 2015)
Section 18 also submits that no seller must make any statements which is not true in nature
and which is made in order to deceive the buyer so that he makes a contractual relationship
with the seller and is held in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd15. It is
an act of misrepresentation and is prohibited under section 18 of the and is held in Henjo
Investments v Collins Marrickville16.
If the implied terms are not comply with then there are major failures that are incurred by the
seller under section 259-260 of ACL and thus reject the goods by giving notification to the
supplier and also seek compensation for the same.
The law is now applied to the facts of the case.
Application of Law
Issue 1
The facts reveal that Elton has purchased the portrait from Magda on 20th February from
$2000. The value of the portrait is $2000. Thus, the value is not more than $ 40,000 thus it
makes no difference as whether the portrait is for domestic or commercial use. Elton fits in
the definition of section 3 of the Act and thus is a consumer.
Issue 2
It is submitted that while selling the portrait there are various statements that are made by her
to Elton and which are found to be in violation of the implied terms made part of the
Australian Consumer Act.
11 Grant v Australian Knitting Mills [1936].
12 Griffiths v Peter Conway Ltd [1939];
13 Henry Kendall & Sons v William Lillico & Sons Ltd [1968].
14 Varley v Whipp [1900].
15 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004).
16 Henjo Investments v Collins Marrickville (1987)
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Magda has given a description about the portrait which submits that the portrait of archived
quality and is printed. Te paper was declared was acid free. However, the quality of the paper
is very poor which has resulted in the deterioration of the color. This is nothing but violation
of section 56. Since the quality of the portrait is not acceptable thus there is breach of section
54. Section 55 is breached as the purpose of Elton is not served for which the portrait was
actually bought. Thus contract can be terminated and compensation can be sought under
section 259-260 of the ACL.
Issue 3
There are misstatements that are made by Magda which is nothing but the breach of section
18 of the law. Magda stated that the portrait that she is selling has limited edition of only 3
prints and only one is not sold. However, later it was found that Magda has sold 10 more
portraits. Thus, a statement was made by her in order to induce Elton so that he buys the
painting. Thus there is a clear breach of section 18.
Conclusion
So, Elton is consumer. Further, Magda has violated several implied terms and is also
involved in the act of misrepresentation.
Solution 2
‘Consideration provided under a contract is not always valid. This can have unfortunate
consequences for a party seeking to enforce the ‘contract’.
In Australia, an agreement has the forcibility of law when it is supported by consideration by
capable parties who have intention to abide by the agreement. Such agreement which has
forcibility of law are called contract and is held in Carlill v Carbolic Smoke Ball Co17.
One of the most prime elements which is required in any contract formation is consideration.
A consideration is a valuable thing which is transferred by the parties amid them to make the
promises made by them enforceable and is held in Coulls v Bagots Executor & Trustee Co
Ltd (1967)18. In law in order to make a consideration valid it must have some validity in the
eyes of law and is held in Wigan v Edwards (1974) 19. A sufficient consideration is valid even
when the same is not adequate in law.
Whenever an offer is exchanged with an acceptance and is supported with consideration then
such an agreement has validity in law. but there are times when consideration is moved amid
17 Carlill v Carbolic Smoke Ball Co [1893].
18 Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460
19 Wigan v Edwards (1974) 1 ALR 497.
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the parties still such consideration does not have any relevance and makes the contract
invalid.
Firstly, a past consideration is in valid and is held in Pao On v Lau Yiu Long [1979]20.
When no consideration is moved at the time of promises or after the promises but exist before
the promise then it is invalid and is held in Harrington v Taylor21. Secondly, no person can
seek anything in exchange for the duties which he is bound to perform in law as per
Musumeci v Winadell Pty Ltd22 and when he is centrally bound to do as per Stilk v Myrick23.
Thirdly, part payment of debt is not good consideration and is held in Pinnel's Case (1602),
however, the rule has no relevance when there is promissory estoppel and is held in Central
London Property v High Trees [1947]
It is thus justified in submitting that no contract can attain validity unless and until the same
is supported with consideration as it makes the contract binding in nature. however, if the
consideration has no legal validity then it has no relevance.
Magda and Elton has supported their promises of sale and purchase of the portrait with a
valuable consideration of $2000 which has legal validity.
20 Pao On v Lau Yiu Long [1979] 3 WLR 435.
21 Harrington v Taylor (1945).
22 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723.
23 Stilk v Myrick 1809.
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Reference List
Books/Articles/Journals
Collins, H. (2003). The Law of Contract. Cambridge University Press.
Corones, S. (2012). The Australian Consumer Law. Lawbook Company.
Case laws
Byrne v Van Tienhoven (1880).
Central London Property v High Trees [1947]
Combe v Combe [1951] 2 KB 215.
Carlill v Carbolic Smoke Ball Co [1893].
Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460
Errington v Errington Woods [1952] 1 KB 290
Grant v Australian Knitting Mills [1936].
Griffiths v Peter Conway Ltd [1939];
Hyde v Wrench (1840).
Henjo Investments v Collins Marrickville (1987)
Harrington v Taylor (1945).
Henry Kendall & Sons v William Lillico & Sons Ltd [1968].
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004).
Jones v Padavatton [1969] 1 WLR 328
Manchester Diocesan Council (1970)
Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723.
Nash v Inman [1908]
Partridge v Crittenden [1968].
Pinnel's Case (1602)
Pao On v Lau Yiu Long [1979] 3 WLR 435.
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Stilk v Myrick 1809.
Varley v Whipp [1900].
Wigan v Edwards (1974) 1 ALR 497
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