Business Law Issue Solution Assesment

BUSINESS LAW

Issue 1: The first issue that has been determined in given case study is whether Jumping Jack
Darcy, herein referred to as the JJD, would be successful under the contract law in
establishing the claim for prize of $750,000.
Rule 1:
The Contract Law of Australia is the chief law for the legal directions in relation to the
establishment, administration, and the performance of the validly enforceable contracts in
Australia. The contract law principles work in conjunction with the Federal, State, and the
Territorial laws for the governance of the contract related matters. A contract is regarded to
be a relationship between two or more parties either in verbal or written form that may be
enforced in the courts of law, in the events of the conflicts between the parties and otherwise.
The contract law states that certain key conditions must be fulfilled for an agreement between
the parties to be regarded as a contract1. These key conditions are intention for the creation of
a legal relationship, offer, and acceptance, consideration to support the agreement, presence
of certain terms, and the capacity of the parties to enter into legal contracts. These conditions
are described in detail as follows.
The first condition for a contract to be regarded as valid is that one party must extend an offer
to the other, and the other party must render an absolute acceptance to the same. The offer
here denotes a proposal to do or not to do something, and may be a bilateral act or a unilateral
act of performance. The acceptance of the other party to the said extension of offer leads to a
specific promise. The significance of the acceptance was held in the case law of Empirnall
Holdings Pty Ltd v Machon Paull Partners Pty Ltd2. This above condition is followed by the
presence of consideration in the contract. The consideration denotes price to be paid by a
party to the contract in exchange of the performance or non-performance of something, as
decided by the parties. The said price need not necessarily in the monetary terms, but it must
be something that can be measured. The significance of the consideration in the contract was
mentioned in the case of Australian Woollen Mills Pty Ltd v The Commonwealth3. In addition
to the above, the parties must intend to be legally associated to each other, and the principle
has been well established in numerous case laws including the Air Great Lakes Pty Ltd v KS
Easter (Holdings) Pty Ltd4. The said conditions gives power to sue each other when the terms
of the contract are not adhered to. Furthermore, the terms of the contract must be certain and
1 Paul, Latimer, Australian Business Law 2016 (CCH Australia Limited, 2016).
2 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
3 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 (High Court)
4 Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309

not vague, so that the parties associate with each other with similar and absolute
understanding of the terms. Thus, when the agreement between the parties fulfils all the
above-mentioned conditions, the said agreement would be regarded as a valid contract. Thus,
when all the stated terms are complied with by a party, the consideration would be entitled to
be given to said party.
In addition to the above rules, one key rule is that of the vicarious liability. The provision of
vicarious liability states that the employer of an entity would be responsible for the acts of the
employee by the virtue of the relationship of the principal and the agent shared between the
two. The principle of vicarious liability has been well established in a number of case laws,
including the New South Wales v Lepore & Anor5.
Application 1:
The following points must be noted essentially as derived on the application of the legal rules
discussed in the previous parts. There exists a validly formed contract between JJD and the
company Fast Track Oils Ltd, hereinafter referred as entity FTOL. It is vital to note that the
terms of the contract between the two parties stated for the participation of JJD in the car
races as per the instructions of the company FTOL. The offer of these terms is certain and is
accepted by Jumping Jack Darcy when extended by the company. In addition, a valid
consideration exists to support the contract in the form of the weekly payment to be received
by JJD by the company FTOL. Both the parties have associated with each other in their
respective legal capacity and thus the evidence of legal relationship intention exists. Thus, in
the given circumstances there is a valid contract between the parties, as ascertained from the
legal principles as announced in the various case laws as elaborated in the previous parts.
The first party to the contract that is JJD has participated in the rally as per the directions of
junior rally official, representing the company. The employee gave the said directions to
Jumping Jack Darcy even after the non-possession of roadworthy certificate. Thus, the said
participation would be regarded as valid as the terms and conditions in the form of the
directions of the company are complied with. The legal rule that is applicable here is the rule
of vicarious liability. In accordance of the applicability of the said rule, employer would hold
a responsibility for the acts of the employees, which includes the acts of negligence. It is
important to note that there was an essential condition of the roadworthy certificate
possession for the participation in the rally, yet junior rally official which was employed by
5 New South Wales v Lepore & Anor (2003) 212 CLR 511