Business and Corporation Law : Assignment (Doc)

Running head: BUSINESS AND CORPORATION LAW
Contract Law
Name of the Student
Name of the University
Author Note

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Table of Contents
ANSWER TO QUESTION 1:.........................................................................................................2
Part (a).........................................................................................................................................2
Issue:........................................................................................................................................2
Rule:.........................................................................................................................................2
Application:.............................................................................................................................3
Conclusion:..............................................................................................................................3
Part (b).........................................................................................................................................4
Issue:........................................................................................................................................4
Rule:.........................................................................................................................................4
Application:.............................................................................................................................4
Conclusion:..............................................................................................................................5
Answer to question 2.......................................................................................................................5
Issue:............................................................................................................................................5
Rules:...........................................................................................................................................6
Issue (a)....................................................................................................................................6
Issue (b)...................................................................................................................................7
Issue (c)....................................................................................................................................8
Answer to question 3.....................................................................................................................10
Reference:......................................................................................................................................13

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ANSWER TO QUESTION 1:
Part (a)
Issue:
The main issue of the case is to determine the fact whether the contract for sale of Gold is
enforceable or not.
Rule:
According to Sudbrook Trading Estate v. Eggleton [1983] AC 444, an offer is a
willingness expressed by a person regarding a subject. When the person to whom the offer has
been made accepts the offer, the same could be regarded as acceptance. Both the parties should
have the intention to be binding them legally. Further, it has been observed in Harvey v Facey
[1893] AC 552 that an offer should be complete in nature. It is a general rule of contract that an
acceptance can only be made through direct communication. A contract can be fulfilled once the
offer has been accepted. However, there are certain exceptions to this rule such as postal rule. In
Henthorn v Fraser (1892), it has been held that an offer will be treated as accepted when the
person to whom the contract had been made post his consent letter. According to the case, it is
not necessary whether the person who made the offer has received the letter or not. This rule has
been supported in Byrne v Van Tienhoven (1880) 5 CPD 344. The postal rule has been
introduced in the case of Adam v Lindsell [1818] B & Ald 681.

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Application:
The subject matter of the case is based on the postal rules of contract. Contract is a
legally enforceable agreement that exists in between two parties. There are certain rules
mentioned for making a contract valid in nature. The most important element of contract is offer
and acceptance. In the present case, it has been observed that Susan has made an offer regarding
selling the gold to Terry on 27 January and the same offer has been accepted by Terry and he had
posted the acceptance letter on that day. Therefore, according to the case of Adam’s case, it can
be stated that the offer has been accepted successfully. However, it has been observed that Susan
had cancelled the offer on 30 January. According to the general provision of postal rule, it can be
stated that offer could be revoked only when the same made before the acceptance letter has been
posted. In this case, it has been observed that Susan had revoked the offer after the consent letter
has been posted. It has been observed in this case that an offer can be treated as validly accepted
when consent letter has been posted by the person. Therefore, three elements can be observed in
case of postal rule such as:
 Until the offer letter has not been received by the person to whom the offer has been
made could not be effective in nature (Jacques & Co v McLean [1880] 5 QBD 346);
 Acceptance will be effective as soon the consent of the person has been posted;
 Under the postal rule, the offer could be revoked before the acceptance letter regarding
the previous offer has been posted.
Conclusion:
Therefore, it can be stated that the contract for sale of Gold is enforceable.

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Part (b)
Issue:
The main issue of the case is to decide whether Kevin can bring a claim for negligence
against Terry or not.
Rule:
The present subject matter of the case is based on the capacity of the parties for making
valid form of contract and the provision of negligence. The elements of the negligence has been
pointed out in Donoghue v Stevenson’s case [1932] UKHL 100. According to this case, in case
of negligence, the parties have to prove whether the acts of the other party violated the duty of
care and damage has been caused due to the violation. According to the essential elements of
contract, capacity of the parties is one of them. A contract could not be regarded as valid if the
parties to the contracts have legal capacity and are mentally sound. Therefore, it can be stated
that if any party has made any statement in intoxicated condition, it could not be treated as valid.
Application:
In this case, it has been observed that Kevin wanted suggestion from Terry knowing the
fact that Terry is very intoxicated. Kevin had invested certain money in Ziro Ltd. as Terry had
stated him that the company is very profitable and it has been observed that Kevin had suffered
damage due to financial downturn. According to general principle, it can state that Kevin can
claim for compensation from Terry under negligence. If a person makes an investment based on
the statement of an intoxicated person and suffered loss, he can make a claim for negligence but
in such case, the defendant can defend his position to certain extent. This provision is based on
the doctrine of comparative negligence. In this case, the compensation made by the affected

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party could be reduced because of contributory negligence. Contributory negligence reflects the
liability of the claimant in case of negligence. When a person assumes certain possibility of risks
regarding a matter and continues the same and suffered loss, it can be stated that he has certain
liabilities over the sufferings. However, in this case, the defendant has to prove the burden of
proof lies on the claimant. In Australia, the terms contributory negligence falls under the
provision of Civil Liabilities Act 2002 (NSW). In case of intoxication, the mental state of a
person was not sound and therefore, if he makes any statement at that time could be voidable in
nature. If the other person did anything based on that statement, it can be stated that he is doing it
on his own risk and in case of any loss, he could not make the intoxicated person entirely liable
for that damage. However, in this case, it can be observed that Kevin knew the fact that Terry is
in intoxicated condition and there are certain risks. However, he had invested the money still
then. Therefore, Kevin can be held liable for contributory negligence. Terry can defend his
position under the provision of comparative negligence.
Conclusion:
Kevin can claim for negligence but he could not held Terry liable entirely, as he is jointly
liable for the damage.
Answer to question 2
Issue:
There are three issues present in the case:
a) Whether Florence can successfully make any claim against Renzo or not
b) Whether GLO is responsible for violating the terms of the contract or not
c) Whether Florence can get any remedies under contract law or not

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Rules:
Issue (a)
Considering the case study, it can be stated that there are three different rules will apply
in this case, as there are three different issues. The first issue is based on general rules for
formation of contract. There are two principles medium for the formation of contract such as oral
and written form. According to the law, where in a case, there are certain written terms present; it
is worthless to depend on the oral statement. This principle is a well-known principle and it has
been established in the case of Goss v Lord Nugent (1833) 5 B & Ad 58. According to the case,
the terms that are written in the contract will be a part of the contract and nothing extra could be
treated as the part of the contract. It has been mentioned in Hedley Byrne & Co Ltd v Heller &
Partners Ltd [1964] AC 465 that each party of the contract has certain duties of care against
them and no one is required to misrepresent others. It has further been stated in the case that no
party to the contract should suffer from economic losses due to the negligent misstatement of
other party. It has been decided in Van den Henderson v Arthur [1907] KB 10 that when the
terms of the business will be in written condition, the further application will be prevailed over
the written conditions. However, any of the parties can present all the oral evidences to
strengthen their case and make claim over the same.
Application:
In the given case study, it has been observed that a verbal interaction has been made in
between Renzo and Florence and it has been stated by Renzo that the position of his shop is quite
profitable and it makes huge turn over on monthly basis. Further, it has been mentioned that the
weekly transaction rate of the shop is $30,000. Based on those statements, Florence had bought

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the shop. After the purchasing process, it has been observed that Renzo had made false
statements and not all the verbal statements have been mentioned in the written documents.
According to Goss v Lord Nugent’s case, it can be stated that Florence could not claim anything.
However, from the citation of Henderson v Arthur’s case, it can be stated that Florence can
provide verbal evidence before the court and claim for damage suffered by Renzo. According to
the Contract Law, no contract could be regarded as valid if it has been made through coercion or
undue influence or misrepresentation. According to the contract Act, if any of the parties to the
contract has obtained the consent of the other party through misrepresentation, the nature and
effectiveness of the contract will be voidable.
Conclusion:
Therefore, it can be stated that Florence can make contractual claim from Renzo.
Issue (b)
Rule:
The subject matter of the second issue is based on the rules of misrepresentation. It has
been held in Attwood v Small (1838) 6 CI & F 232 that a party should have to show that he was
entirely depended on the statements and working capacity of the other party to the contract and
he suffered damage due to the misrepresentation caused by them. Further, it has been mentioned
in Edgington v Fitzmaurice (1885) 29 Ch D 459 that in case laxity on the grounds of the
defendant proved, the affected parties can claim damage for breach of contract. Similar principle
has been maintained in Ritchie v Atkinson (1808) 10 East 295, where the court has observed that
a contract will be said to be violated if any party to the contract made any breach regarding the
terms.

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Application:
According to the Contract Act, if any of the party to the contract has been held for
making misrepresentation or commit any deceptive conduct, the effectiveness of the contract will
be voidable in nature. In the case study, it has been observed that a contract has been signed in
between Florence and GLO regarding the renovation of the shop. There are certain terms in the
contract and Florence was worriless to get a good job from the renovation company. However, it
has been observed that the entire work has been completed after almost one month from the
specified time and much recklessness found in the works of the GLO Company and it was clear
that the company had filed to perform their duties as per the terms of the contract. Loopholes
found regarding the installation and completion of the work and according to the case of Ritchie
v Atkinson, the company is guilty for violate the provision of the contract.
Conclusion:
GLO has failed to perform according to the contract.
Issue (c)
Rule:
There are certain rules given to the affected parties if a contract has been violated.
According to the general rule of contract, the affected party has a right to claim compensation
from the defendant and bringing back the contract in its previous stage. Further rules have been
made under the provision of misrepresentation. It has been held in Howard Marine v
Ogden [1978] QB 57 that the affected parties to the contract could make action against the
defendant for whom he has suffered losses. In Carlill v Carbolic Smoke Ball, it has been held by
the court that when a party mention about certain thing and other party relies on the fact, the

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person making the statement should have to maintain all the statements. Otherwise, the another
party could face losses from the same and in this matter, the first party should have to make
compensation to the affected party.
Application:
According to the current case, it has been observed that Ranzo and GLO had failed to
perform their duties perfectly and Florence has to face problems due to the same. The GLO
Company has failed to act as per the contract signed in between them. Further, Renzo had failed
to comply with all his statements made by him to Florence regarding the quality of the shop. He
had failed to mention about the terms in the contract and after the purchasing process, it has been
observed that there are yawning gap in between the word stated and word written. Florence is
suffered due to the misrepresented facts and therefore, she could claim compensation from the
parties. further, it can be stated that the alleged company and Renzo had failed to act in good
faith. They should have to Act prudently but they have failed to do it and that causes great
dilemma to Florence. According to contract law, the terms and condition of the contract are
mandatorily imposed on the parties and they are bind by those terms. Therefore, it is required to
meet all the provision. In case of any failure, the act will be treated as breach to the terms and the
defendant has to compensate the affected parties. Therefore, it can be stated that the parties have
failed to act in accordance with the provision of the contract law and therefore held guilty and
should have to give compensation to Florence.
Conclusion:
Florence can claim damage under the principle of misrepresentation and breach of
contractual terms and conditions.

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Answer to question 3
To
The client
Subject: Advice for structured the business
Respected Sir/Madam
There are certain kinds of business structure that are required to be discussed for the well
understanding of the facts. The structures are sole trader, corporation and partnership. It is up to
the individuals to choose any of the medium and the nature of the company can be divided into
two parts such as public company and proprietary company. Certain issues are here to be
discussed for providing effective advice regarding the same. The issues are as follows:
 All the available business structures are to be discussed here;
 It is required to structure the business with an intention to minimize the tax.
 The process to make additional funds should be discussed here.
 Further process regarding the poor work done by the management staffs should have to
be discussed and the amount the company could suffer losses for the same should be
discussed here;
 Advice should be given regarding the decision-making process for the company.
Available business structure has been mentioned. However, regarding the proprietary company,
any person can profess their business in their own name. in this case, the separate nature of the

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company will not attract and both the director and company could face similar legal dilemmas.
There is certain positive scenario in this process. The cost is affordable in this case and much
effort is not required under this system. However, the rate of tax is quire higher in this system
and process of securing personal assets is also limited in nature.
Another business structure is partnership where several persons can profess the business by
forming partnership. In this process, the management of the business are dealt by more than one
person and there is a possibility to handle all the works systematically. However, problems can
be cropped up regarding the decision-making process, as there is more than one director. Further,
conflict of interest could be observed to this effect. There are certain other loopholes to this
effect. Under the Partnership Act, all the partners are liable for the acts of each other and
therefore, if any wrong thing happens by one partner, the liability will be imposed on the other
partners. According to the issues mentioned in this advice letter, it could be stated that
partnership business is not appropriate in this case.
The last option is the corporation. It has a different business structure. The first thing is there are
different options available for the business commenced through corporation. In case of
proprietary company, the rate of tax and personal liabilities could be mitigated. Further, further,
this process could resolve no dispute while making the decision process could happen like the
partnership and therefore, the matter regarding effective business process. Further, the share
holding capacity of the directors and shareholders are also liberal in this process. In addition to
this, it can be stated that the problem regarding the limited liabilities is not applied on the public
companies. Therefore the liabilities of the directors could be unlimited and they can exercise
their powers in wider sense. Therefore, in this case, the directors of the company could get more
rights and approaches. In addition to this, the law regarding the corporations is quite strict and it

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is tough for the directors and other official to work for their own interest, as they have to work
for the benefit of the company and the shareholders. In this process, the directors will be
compelled to take liberal and justified decisions. Proper legal actions can be taken if any
loopholes can be observed in the management malfunction. Similar principle could be taken for
fraud and all the effective guidelines are mentioned under the Corporation Act to this effect.
Further, under this business structure, the company takes all the effective measures for earning
additional income; however, the acts should be done prudently.
It could be stated that corporation is the best selected business structure for the client. In this
process, the client can make all the issues and related requirements could be met. Therefore, it is
advices to the client to go for the corporation structure.
Regards

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Reference:
Adam v Lindsell [1818] B & Ald 681
Attwood v Small (1838) 6 CI & F 232
Byrne v Van Tienhoven (1880) 5 CPD 344
Carlill v Carbolic Smoke Ball
Donoghue v Stevenson’s case [1932] UKHL 100
Edgington v Fitzmaurice (1885) 29 Ch D 459
Goss V Lord Nugent (1833) 5 B & Ad 58
Harvey v Facey [1893] AC 552
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Henthorn v Fraser (1892)
Howard Marine v Ogden [1978] QB 57
Jacques & Co v McLean [1880] 5 QBD 346
Ritchie v Atkinson (1808) 10 East 295
Sudbrook Trading Estate v. Eggleton [1983] AC 444
Van den Henderson v Arthur [1907] KB 10