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Introduction to Business Laws

   

Added on  2021-05-30

6 Pages1484 Words39 Views
Business Law1Business Law

Business law2Answer 1Issue:Whether contract law imposes any obligation on the Visit Victoria to pay additional amount of$50 per car to the Gareth for supplying the car, and whether this responsibility changes iftravellers fail to visit the place because of the volcanic explosion? Rule:Consideration is the area of the contract law which determines the validity of the contract andfor this purpose consideration is considered as the act of promise by one party for whichpromise of other party is accepted. It must be noted that consideration under the contract lawmust be of some value. If consideration is not present in the contract then it might be possiblethat person who made the promise will suffer disadvantage in comparison of other party to thecontract, and this is the factor which is considered by the Court while determining the validityof the agreement made between the parties. Consideration is the broader area and it recognizesdifferent scenarios such as existing duty rule (ACL, 2018)Existing duty rule cover another aspect of the consideration and as per this rule, if offeree madeany additional promise to the promise under the existing contract and if such additional promiseis not different from the existing promise then it is not considered as new promise and will notbe enforceable. Under this rule, new consideration is analyzed as bad consideration if person towhom such consideration is offered already under the duty to do something and such personmust complete his obligation in exchange of consideration defined in original contract(Giancaspro, 2014). This rule is come into existence from the historical case law that is Stilk v Myrick, 1809 2 Camp317; [1809] EWHC KB J58, 170 ER 1168. In this case, one party offered extra consideration tothe other party for fulfilling their obligation stated under existing contract. In this case courtdecided that, party was not obliged to pay any extra amount because obligation of the partywere already existing in the original contract and such contract is binding on the parties. Courtfurther stated that captain of the ship was not bound to make any additional amount to the

Business law3seamen for the purpose of sailing the ship back to the Port. Therefore, this promise was not newand not binding on the parties (ACL, 2018). However, from the starting this rule has both strength and dimness, and dimness related to thisrule showed when additional promise made by one party does not get validity because it is notdifferent from the existing one. The main agenda of this rule is to ensure that parties bind underthe original contract does not get any additional benefit and does not get any legal power to bindthe promisor under additional promise (Law shelf, n.d.). The ancient concept of this rule is toensure that if promisor under the contract made any new promise then such new promise mustbe new, which means it must not be similar to the existing promise. If such promise is similar tothe existing one then it is not considered as the valid promise under contract law of Australiabecause it provide additional benefit to the party for the same duty under the existing contract.However, it must be noted that this rule has some exceptions also and as per these exceptions:One party under the contract provide additional consideration to the another party forsome extraordinary factor such as providing consideration for completing the workbefore time or conduct any extra effort to complete the work. Another exemption is contractual obligation with the third party on the basis ofadditional promise. However, applicability of this rule is not valid if promise enters intocontract with the third party towards the third party by relying on this new promise.When the promisee is obligated towards the third party, then performance of thatpromise with the third party is determined as good consideration by the Court for thenew promise. In this situation additional promise is considered as new promise andparties to the contract are bound to perform it (Pao On v Lau Yiu Long, [1979] 3 WLR435) (ACL, 2018). Application:In this case, Original contract between Gareth and Visit Victoria (VV) impose obligation on theGareth to supply cars to the VV, but after some time Gareth realize that he suffer loss in thisdeal. Gareth refuses to provide cars to VV from the following day, but because of the largenumber of customers visits VV offer to pay $50 extra for each car to Gareth. Gareth agreed andsupply cars to the VV but later they denied to pay additional decided payment to Gareth.

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