This document provides a detailed analysis of two Business Law cases involving SOO Burgers and Sparkling Pty Ltd. It discusses the obligations of SOO Burgers in allowing claims for Mazda CX-9 and the legal implications of a loan taken by Sparkling. The analysis includes relevant rules and applications of contract law.
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Running head: BUSINESS LAW BUSINESS LAW Name of the Student: Name of the University: Author Note:
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1BUSINESS LAW Part A: Option 1: a)Issue: The issue to be analyzed in this case is whether SOO Burgers have obligation to allow Mickey the Mazda CX-9 as claimed by him. Rule: In a contract, the parties have obligations to perform their part as enumerated in the contract agreement and if such obligation is not performed then such party will be legally liable to the other party. It is to be noted that a contract has legal enforceability only when such contract has initiated by a valid offer by one party which has been accepted by the other together with the presence of valid intention of both the parties as held inBrambles Holdings V Bathurst City Council [2001] NSE CA 61 7. However there lies a major difference between an offer and an invitation to offer. The response to the offer amounts to an acceptance whereas the response to an invitation to offer amounts to offer. These were seen in thePharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401case. but when an invitation is supported with a promise of providing reward on fulfillment of certain conditions, it will result into an unilateral offer and when the pre- decided condition is fulfilled, a valid contract results in as contended in theAustralian Woollen Mills Pty Ltd v The Commonwealth. High Court of Australia (1954) 92 CLR 424case. The offer is said to be revoked by the offeror when such revocation comes into the knowledge of the offeree as provided inDickinson v Dodds (1876) 2 Ch D 463case.
2BUSINESS LAW Application: From the facts of the present case it is seen that Soo Burgers restaurant started a promotional competition in which a token attached with the wrapper of every burger and the collection of 50 such tokens will allow the customer to redeem a golden scratch card. If such card revealed on being scratched a golden car, then new Mazda CZ 9 can be obtained by that customer from the head office. This will amount to an advertisement of reward and it will result into the contract after accepting it on fulfilling the conditions laid therein. This is similar to the case facts observed inCarlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1. Here, Michael Mickey Morrow was eager to win the car. He bought 50 burgers to avail the offer. But while he finished them off, he was taken to the local hospital for emergency treatment to pump off his stomach. But prior of passing out, he had redeemed his 50 tokens for the golden ticket. While in hospital, announcements were made that there was a printing error in those golden tickets. Due to such error, every one customer out 5 were getting tickets though there should be only winning ticket. Though he did not hear those announcements but he over heard some of the nurses talking about it. When he scratched the card he found he won the golden car. Thus the offer made by the SOO burgers was revoked in a valid manner as such revocation came into knowledge of the offeree, Michael. Ths can be costrued in the case of Byrne & Co v Leon Van Tien Hoven & Co.Thus Michael has no authority to claim the Mazda CX-9. Conclusion: Hence it can be inferred that SOO Burgers have no obligation to allow Mickey the Mazda CX-9 as claimed by him.
3BUSINESS LAW a)Issue: The issue involved here is whether SOO Burgers have obligation to allow Brett the Mazda CX-9 as claimed by him. Rule: In a contract, the parties have obligations to perform their part as enumerated in the contract agreement and if such obligation is not performed then such party will be legally liable to the other party. It is to be noted that a contract has legal enforceability only when such contract has initiated by a valid offer by one party which has been accepted by the other together with the presence of valid intention of both the parties as held inBrambles Holdings V Bathurst City Council [2001] NSE CA 61 7. However there lies a major difference between an offer and an invitation to offer. The response to the offer amounts to an acceptance whereas the response to an invitation to offer amounts to offer. These were seen in thePharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401case. But when an invitation is supported with a promise of providing reward on fulfillment of certain conditions, it will result into an unilateral offer and when the pre- decided condition is fulfilled, a valid contract results in as contended in theAustralian Woollen Mills Pty Ltd v The Commonwealth. High Court of Australia (1954) 92 CLR 424case. An offer made by an offeror amounts to an agreement when such offer is accepted by the offeree who is eager to comply with terms of the offer. The acceptance must be unconditional and communicated. This is observed inR v Clarke [1927] HCA 47case.
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4BUSINESS LAW Application: From the facts of the present case it is seen that Soo Burgers restaurant started a promotional competition in which a token is attached with the wrapper of every burger and the collection of 50 such tokens will allow the customer to redeem a golden scratch card. If such card revealed on being scratched a golden car, then new Mazda CZ 9 can be obtained by that customer from the head office. This will amount to an invitation to contract by means of an advertisement of reward and it will result into the contract after accepting it on fulfilling the conditions laid therein. This is similar to the case facts observed inCarlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1. The promotion was applicable to all the customers who are purchasing the burgers from the restaurants of SOO Burgers. However, Brett did not buy them instead he collected the wrappers by scavenging the rubbish bins. The offer made by the SOO Burger was not accepted by Brett in a valid manner as expressed by the offeror. It does not amount to a valid acceptance as given in the case ofBoreland v Docker [2007] NSWCA 94. As there was no valid acceptance, no contract results between Brett and SOO Burgers. Thus he cannot enforce the contract by claiming Mazda CX-9. Conclusion: Thus SOO Burgers have no obligation to give Brett the Mazda CX-9 as claimed by him. Part B (Option 1): Issues: The issues that require proper analysis are as follows:
5BUSINESS LAW oWhat will be the result of the present case, oWhat should the result of it, oWhether the result will be distinct if the loan was taken to refurbish both the clothing shop of Sparkling, oWhether the result will be distinct if it was known to loan officer of the bank that Sarah and Board are not in favour with each other and that Sarah was trying for a new job. Rules: Every company has its own and separate constitution. By means of that constitution, it may impose express certain prohibitions or limitations on the company when it is exercising any power. By introducing any clause and such restrictions or limitations are valid and binding if are in accordance with section 125 of the Corporations Act 2001 (Cth), hereinafter referred to as CA. However if the company while exercising its power contradicts with the terms of the clause then such exercise of power by the company will not be considered to be invalid just because it is contradicting with those prohibitions or limitations. Further, if the company’s constitution sets out its object, any act done in contradiction or beyond that object will not render the act invalid. Further a person can be authorized by the company to act on its behalf to make any institution, alteration, discharge or ratification related to any agreement and such authority can be exercised without even using the seal. This is provided in section 126 of CA which further states that this section is not applicable to any legal operation which prescribes any procedure to be followed related to that contract. Moreover, as perRoyal British Bank v Turquand (1856) 6 E&B 327decision, outside people who are making transaction with any company will assume that the company rules have
6BUSINESS LAW been followed even if they are not. This is called the rule of Turquand case or the indoor management rule which further states that outsiders are not needed to peep inside the company’s internal management and they will contract or deal with the company assuming that all the formalities and regulations have been maintained properly in the company. Application: From the facts of the present case, it is seen that Sparkling Pty Ltd hereinafter referred to as Sparkling is an incorporated company that runs 3 clothing stores for children in Tasmania. In August 8 of 2007, Sarah became the managing director of the company for two years. This was lodged with ASIC. After the expiry of 2 years on 8thAugust 2019, her appointment was not renewed. But she continues to act as the managing director for the company. Further the expiry of her appointment was not lodged with ASIC. Her appointment contract has prohibited Sarah to get into any type of borrowing transactions exceeding 20000 $. Any transaction beyond the said amount will require the board of director’s approval. However, Sarah on December 20thof 2010 entered into a log contract on behalf of the company with a Bank for borrowing 30000 $ from the bank for plantation of eucalyptus. Both borrowing of loan of 30 thousand dollars together with eucalyptus plantation are in excess of the company’s constitution and Sarah’s contract with the company as the managing director. Here it is seen that the Bank is not aware of the contract content of Sarah and also the return which was lodged with ASIC when Sarah was appointed in the company as the managing director. The bank being an outsider is not required to peep into the internal matter of the company according to the rule of indoor management due to which the bank will assume that the internal affairs of the company have been complied with properly. When the board had come to
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7BUSINESS LAW know about this contract of loan, it stopped repaying it but this is not justified as the bank is protected by the rule of Turquand case for giving loan to Sparkling as under this rule the bank is required to assume that the internal management of the company is rightly complied with its rules. Hence the bank has the option to sue Sparkling as it was not aware of its internal management. Further, the plantation of Eucalyptus is although against the company’s constitution but it is protected by the sections 125 and 126 of the CA rendering the contract for eucalyptus plantation valid. In case the loan was taken for refurbishing both the clothing shops of Sparkling, it will not result into any other alternative result as both the refurbishment and the eucalyptus plantation are to be considered as valid actions as per sections 125 and 126 of CA. The Bank being the an outsider is not required to peep into the bitter relationship of Sarah with the company and it will not make any difference as it is protected by the indoor management rule. Conclusion: Hence from the discussion made above it can be concluded that oThe bank is eligible to claim the loan amount and its interest, oThe incurring of the loan violates the constitution of the company but its protected under sections 125, 126 of CA, oThe case will not result into some other outcome even if the primary intention behind the loan seeking was refurbishing the 2 cloth stores of Sparkling,
8BUSINESS LAW oThe case will not any other result if the bank knows that there lies any disagreement between Sarah and the Board of directors of Sparkling
9BUSINESS LAW References: Australian Woollen Mills Pty Ltd v The Commonwealth. High Court of Australia (1954) 92 CLR 424 case. Brambles Holdings V Bathurst City Council [2001] NSE CA 61 7. Byrne & Co v Leon Van Tien Hoven & Co. Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1. Dickinson v Dodds (1876) 2 Ch D 463 case. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 Royal British Bank v Turquand (1856) 6 E&B 327 The Corporations Act 2001 (Cth)