Business Law: Contract Formation, Consideration, Exclusion Clauses and Sale of Goods

Running Head: BUSINESS LAW
BUSINESS LAW
Name of the Student:
Name of the University:
Author Note

1
BUSINESS LAW
Answer One:
Issue
The issue that has been identified in the given scenario is whether the contract of selling the
flower business is a valid one and whether there was intention of the parties to be legally bound
by the terms of the contract.
Rule:
It can be mentioned that the intention create legal relation is an essential element for the
formation of a contract. A contract will only be legally binding upon the parties if it is assessed
by the courts that parties involved in the contract had the intention to be legally bound. The
courts generally analyze and assess this element to give validity to the contract. The objective
test is applied to assess intention to create legal relations. Previously it had been held by the
courts in that domestic or family contract are not enforceable as the courts assumed that the
parties to the domestic agreements did not intend to create legal relations. This had been
illustrated in the case. However, this view of the courts of considering the assumptions of while
determining the intention of the parties had been rejected. In the Ermogenous case it had been
held by the court that the courts are not to consider any assumptions while determining the intent
of the parties.
Relevant cases:
The cases that are relevant to the given scenario are:
Carlill v Carbolic Smoke Ball Company [1893] – objective test
Balfour v Balfour- domestic agreement

2
BUSINESS LAW
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Application:
By analyzing the facts of the case it can be said that if Ali sues Charlie in the court for breach of
a term of the contract he is likely to succeed. As held in the Ermogenous case, it can be stated
that the courts will not consider ay presumptions that the parties did not intend to be legally
bound. Thus as it had been clearly mentioned in the terms of the contract that Ali was prohibited
to open a business within a radius kilometers, Ali’s act of opening the flower shop within one
kilometer of Charlie’s shop would constitute breach of contract.
Answer 2
Issue
The issue that has been identified in the given scenario is whether Nick is liable to pay
consideration to the police.
Rule
It can be stated that a person is not required to consideration to party if it is established that the
party had an existing public duty to perform the same duty. Thus this means that the
consideration is not required to be paid to police personnel as it is already their duty to provide
protection to the people of the society. However, it is assessed that someone exceeded their
public duty, consideration is required to be paid to such person.
Relevant case laws