Business and Corporations Law Research Assignment

This research assignment covers the topics of valid contract, breach of contract, unconscionable conduct, and exclusion clause under Business and Corporations Law. It includes two questions with their respective issues, rules, applications, and conclusions. The first question deals with the validity of a contract between Joe and Annie, and the second question deals with the unconscionable conduct of Joe towards Florence. The remedies available to Florence are also discussed.

Business and Corporations Law
Assessment Two: Research Assignment
Question 1
9/14/2018
Student’s Name
Student’s number
Total Word Count: 2179

Table of Contents
Question 1........................................................................................................................................3
Issue (a)........................................................................................................................................3
Rules (a).......................................................................................................................................3
Application (a).............................................................................................................................4
Conclusion (a)..............................................................................................................................4
Issue (b)........................................................................................................................................4
Rules (b).......................................................................................................................................4
Application (b).............................................................................................................................5
Conclusion (b)..............................................................................................................................5
Question 2........................................................................................................................................5
Issue (a)........................................................................................................................................5
Rules (a).......................................................................................................................................6
Application (a).............................................................................................................................7
Conclusion (a)..............................................................................................................................7
Issue (b)........................................................................................................................................7
Rules (b).......................................................................................................................................8
Application (b).............................................................................................................................8
Conclusion (b)..............................................................................................................................8

Bibliography....................................................................................................................................8
Books/Journals.............................................................................................................................9
Cases............................................................................................................................................9
Other Resources...........................................................................................................................9

Question 1
Issue (a)
The issue is to check that whether there is a valid contract between Joe and Annie?
Rules (a)
For a valid contract, there must be an offer and acceptance1. For an offer, this is necessary that
the same must be properly communicated to the offeree. Parties to the contract can choose any
mode of offer and acceptance. In those cases where parties do communication via particular
mode, then such mode will be considered as a valid one. For an acceptance, this is required that
the same must be made within the time mentioned in the offer itself2. If no time is mentioned by
an offeror under an offer, the offeree can accept the same within a reasonable time period.
Further, an acceptance must be communicated to the offeror.
Request for Information
In some of the cases, offeree asks for further information from the offeror in order to take a wise
and reasonable decision. It was held in the case of Harvey v Facey3 that such information cannot
be treated as a counteroffer until unless puts some additional conditions and therefore such
information does not cancel the original offer.
Postal Rules
1 O. Ray Whittington, Wiley CPA Exam Review Fast Track Study Guide (2018) < https://books.google.co.in/books?
id=xv8PukDlepsC&dq=For+a+valid+contract,
+there+must+be+an+offer+and+acceptance&source=gbs_navlinks_s>.
2 Amanda C. Brock and Rafi Azim-Khan, E-Business: The Practical Guide to the Laws (Spiramus Press Ltd, 2008)
3 Harvey v Facey [1893] AC 552

When an offeree gives his/her acceptance via post then postal rules will be applicable. It was
held in the case of Adams v Lindsell4 that under postal rules, an acceptance will be treated as
complete as soon as offeree drops the confirmation letter to the mailbox.
Revocation of Offer
An offer can be revoked at any time before the acceptance takes place. It was held in the case of
Dickinson v Dodds5 that an offeror can revoke or withdraw the offer before offeree accepts the
same. However, when an acceptance takes place, then a valid contract will be developed between
the parties and thereafter the offeror will not be able to revoke the offer.
Application (a)
In the given case, on 12th February 2018 Joe has received the mail regarding quotation of 75
single core CPUs from Annie. In the said mail, Annie has offered 75 single core CPUs for $4000
to Joe. This was an offer of the case and the of communication that parties chosen were e-mail,
which was a valid one. In reply to this mail, Joe was required to accept the offer in the manner
mentioned in the mail. It was stated in the mail that if Joe wants to accept the offer, he need to
take print out of the form and send the same via post after signing. Further, it was also mentioned
that the quotation is open for the next 7 days. It means Joe could accept this offer by 18th
February. Joe at the first did not accept the offer but requested Annie to keep open the offer till
next 14 days and also asked for some further information. The information he asked was a
quotation related query regarding 75 quad-core CPUs. This was not a counter offer and therefore
the first offer was still validly opened for Joe with the original terms and conditions
4 Adams v Lindsell (1818) 106 ER 250
5 Dickinson v Dodds (1876) 2 Ch D 463

On 16 February 2018, Annie sent another mail to Joe stating quotation of 75 quad-core CPUs.
The quotations were not suitable for Joe and therefore he decided to go ahead with an original
offer without considering additional information provided by Annie. As it was mentioned in the
mail that acceptance needs to be given within 7 days via post, Joe has posted the acceptance
letter to Annie on 17th February. Applying the provisions of postal rules, acceptance will be
treated as valid and complete as on 17th February.
Annie could withdraw the offer before acceptance was made by Joe i.e. before 17th February but
she did not do the same. Therefore, a valid contract was there between Joe and Annie.
Conclusion (a)
Annie has made an offer that Joe accepted within the prescribed time, hence a valid offer and
acceptance was there. In addition to this, consideration was also there and both the parties have
the intention to create a legal relationship with each other. As all the necessary elements existed
in the transaction, this is to conclude that a valid contract has developed between Joe and Annie
in respect to the sale of 75 Single core CPUs for consideration of $4000.
Issue (b)
Another issue involved in the case is to check that whether Joe can seek any remedies under
Contract Law or not?
Rules (b)
Under Contract Law, a contract can be discharged in many ways such as by performance, by
agreement, by frustration, and by the breach6. Where one party does not perform the obligation
6 E-Law Resources, Discharge of a contract (2018) < http://e-lawresources.co.uk/Discharge-of-a-contract.php>

as required under the contract, then such a situation is termed as a breach of contract. If a party
perform one or more obligation under the contract but does not perform according to the required
manner then also it will be treated as a breach of the contract. Breach of a valid contract makes
the guilty party liable and another party of the case (innocent party) can initiate an action against
the liable party. It was held in the case Hochster v De la Tour7 that where one party show his/her
intention to not to perform the obligation under the contract, then the other party would not be
required to wait till the actual breach. In such a situation the innocent party can initiate an action
against the first party on the basis of his/her non-intention to perform obligation set under the
contract. This situation is known as an Anticipatory breach and the innocent party can ask for the
performance of the contract except in those cases where the personal skill of the defendant is
required.
Application (b)
In the studied case, there was a valid contract between Joe and Annie. Annie has denied
delivering 75 Single core CPUs to Joe as on 18th February 2018. Her conduct cannot be treated as
a revocation of the offer as by sending acceptance letter on 17th February, Joe has accepted the
offer made by Annie. A valid contract has developed between both of them as on 17th February
2018. Now, as Annie has denied providing 75 Single core CPUs to Joe, this can be stated that
she has breached the contract. Joe can initiate an action against her.
Conclusion (b)
To conclude the issue involved in the case, this can be stated that Joe can sue to Annie for the
performance of the contract as she has breached the conditions of a valid contract by saying no to
7 Hochster v De la Tour (1853) 2 E & B 678

provide 75 Single core CPUs. Joe can also ask for the damages if any would occur him cause of
the delay of performance on Annie’s part.
Question 2
Issue (a)
Whether Florence will be succeeding in any claim against Joe or not.
Rules (a)
For a valid contract, it is necessary that all the required elements must be there. Offer and
acceptance are two basic elements of a contract. In addition to the existence of these two factors,
the validity of the same is also necessary. An acceptance must be free from any unfair terms such
as misrepresentation, fraud, and unconscionable conduct.
Unconscionable conduct: - This is a state of a contract where one party (offeror) holds a
superior bargaining power over another person (offeree) and use such power to seek the
acceptance of such other person (offeree)8. The factor of unconscionable conduct exists in those
situations where the other person has some disadvantages such as poverty, illiteracy,
drunkenness, lack of education and so on and other person takes unfair advantages of such
disadvantages. It is a situation where this is to assume that a reasonable person would not have
entered into such a contract9. The fact, that in a contract whether the acceptance is affected by
Unconscionable conduct or not can be determined by reviewing the position of offeror and
offeree. If an offeror remains in a capacity of bargaining power and offeree contains some
8 Legal Match, What is an Unconscionable Contract? (2018) <
https://www.legalmatch.com/law-library/article/what-is-an-unconscionable-contract.html>.
9 Elliott May Lawyers, Unconscionable Conduct: Can a Lender Protect Itself? (2018) <
https://www.elliottmay.com.au/unconscionable-conduct/>.

special disadvantage, then this will be assumed that consent given in the case is not an
independent one and offeree has made such consent because of the influence of offeror. It was
held in the case of Blomley v Ryan10 that a person cannot ask for the performance of the contract
if an element of unconscionable conduct exists there.
A contract, where acceptance is not independent or the same is affected by the unconscionable
conduct of another party, cannot be held enforceable.
Exclusion Clause: - This term is also counted as an unfair term under Contract law. This is a
situation where one party of the case escapes or limits his/her liability under a contract by stating
a statement. Such a statement is known as an exclusion clause in a contract. It was given in the
decision of the case of L’Estrange v Graucub11 that regardless of the fact that a party has read out
such clause or not, an exclusion clause will be valid and applicable if the same is mentioned
under a contract and other party signs the contract.
Invalidity of Exclusion Clause:- An exclusion clause work well in a valid contract. However, in
that situation where a party seeks the consent of another party by Unconscionable conduct, an
exclusion clause will not be held valid as the same limits the right of the victim person i.e.
offeree12.
Application (a)
In the given case, Joe has decided to go for an option of ‘door knowing’ to seek some new
employment. One day he knocked on the door of Florence Nightingale, who was a 70-year-old
lady. She owed a computer. Joe offered free checking of the computer to Florence. He checked
10 Blomley v Ryan (1956) 99 CLR 362
11 L'Estrange v F Graucob Ltd [1934] 2 KB 394
12 Peter J. Roberts, Deceit and the enforceability of Exclusion Clauses (15 December 2014) <
https://www.lawsonlundell.com/Commercial-Litigation-and-Dispute-Resolution-Blog/deceit-and-the-enforceability-
of-exclusion-clauses>.

her computer and said that there are many viruses in her computer and she should change the
same. He further asked the uses of a computer for Florence. Florence replied that she needs to
send some email and to do video calls with grandchildren. This was the only utility of computer
for her. Joe has offered a sale of a computer for $2000 to Florence. Florence became ready to
purchase the same as she had a very few computer literacies. Later on, it has come into light that
the computer sold by Joe had no applications and operating systems. Here in the case, joy done
an unconscionable conduct as in actual computer had no viruses. Joe took benefit of less
knowledge of Florence and was liable towards her. Further, the features of the provided
computer were not fulfilling the purpose of Florence.
Exclusion Clause and validity: - Although to escape his liability, Joe has made an exclusion
clause under the contract, which Florence has accepted by signing the same. However, the clause
will not be held a valid one as acceptance itself was not valid.
Conclusion (a)
As Florence had very less knowledge about computers, Joy has taken unfair benefit of her
condition and conducted unconscionably. The acceptance provided by Florence will not be
treated as valid. Further, the exclusion clause stated under contract will also be held invalid as
the acceptance was not an independent one and intention of the exclusion clause was related to
the unconscionable conduct of Joe. Therefore, Florence seems to be held successful in her claim
against Joe.
Issue (b)
What remedies are available with Florence?

Rules (b)
In the cases of unconscionable contract, a contract becomes voidable at the end of the innocent
party13. Where an offeror takes the acceptance of offeree by influencing him/her, then in the lack
of independent consent, the contract becomes voidable. In such a scenario, an innocent party can
rescind the contract and ask for the damages14.
Application (b)
In the given case, Joe used his position negatively over Florence. He took unfair advantage of
less knowledge of Florence. He was aware of the actual needs and expectations of Florence still
he sold a computer without an operating system. Further, the exclusion clause is also not a valid
one because of unconscionable conduct. The contract developed between Joe and Florence is
voidable in the part of Florence.
Conclusion (b)
Florence could deny performing her obligation under the contract but as she has already made
the payment, now she can sue Joe to take her money back and treat the contract, as the same has
never been developed. In addition to this, she can also claim for the damages.
13 Upcounsel, What Makes a Contract Voidable? (2018) < https://www.upcounsel.com/what-makes-a-contract-
voidable>
14 Lexis Nexis, Contracts—termination and contractual claims and remedies—overview (2018) <
https://www.lexisnexis.com/uk/lexispsl/bankingandfinance/document/391289/5FKM-GJ81-F185-X1CM-00000-
00/Contracts_termination_and_contractual_claims_and_remedies_overview#>.

Bibliography
Books/Journals
Amanda C. Brock and Rafi Azim-Khan, E-Business: The Practical Guide to the Laws (Spiramus
Press Ltd, 2008)
Cases
Adams v Lindsell (1818) 106 ER 250
Blomley v Ryan (1956) 99 CLR 362
Dickinson v Dodds (1876) 2 Ch D 463

Harvey v Facey [1893] AC 552
Hochster v De la Tour (1853) 2 E & B 678
L'Estrange v F Graucob Ltd [1934] 2 KB 394
Other Resources
E-Law Resources, Discharge of a contract (2018) < http://e-lawresources.co.uk/Discharge-of-a-
contract.php>.
Elliott May Lawyers, Unconscionable Conduct: Can a Lender Protect Itself? (2018) <
https://www.elliottmay.com.au/unconscionable-conduct/>.
Legal Match, What is an Unconscionable Contract? (2018) < https://www.legalmatch.com/law-
library/article/what-is-an-unconscionable-contract.html>.
Lexis Nexis, Contracts—termination and contractual claims and remedies—overview (2018) <
https://www.lexisnexis.com/uk/lexispsl/bankingandfinance/document/391289/5FKM-GJ81-
F185-X1CM-00000-00/
Contracts_termination_and_contractual_claims_and_remedies_overview#>.
O. Ray Whittington, Wiley CPA Exam Review Fast Track Study Guide (2018) <
https://books.google.co.in/books?id=xv8PukDlepsC&dq=For+a+valid+contract,
+there+must+be+an+offer+and+acceptance&source=gbs_navlinks_s>.
Peter J. Roberts, Deceit and the enforceability of Exclusion Clauses (15 December 2014) <
https://www.lawsonlundell.com/Commercial-Litigation-and-Dispute-Resolution-Blog/deceit-
and-the-enforceability-of-exclusion-clauses>.

Upcounsel, What Makes a Contract Voidable? (2018) < https://www.upcounsel.com/what-
makes-a-contract-voidable>.