Contract Law and Director's Duties under Corporations Act

This presentation discusses the issues related to contract law and director's duties under Corporations Act. It covers landmark cases and rules applicable to the scenarios. The first issue is whether SOO Burgers is responsible to provide Mickey with the car under the contract law. The second issue is whether SOO Burgers is responsible to provide Brett with the car under the contract law. The presentation also discusses the duties of a director under section 180 of the Corporations Act and the 'defence of safe harbor' under section 588GA.

Business law
Part A, Option 1
Part B, Option 2

The issues are:
 whether SOO Burgers is responsible to
provide Mickey with the car under the
contract law.
 whether SOO Burgers is responsible to
provide Brett with the car under the
contract law.
Issues:

a) Mickey
 In Partridge v Crittenden [1968] it was held that the advertisements which are seen as
being published in newspapers or any other form of media should always be
considered to be ‘invitation to offer’ and not actual offer. Following this judgment it can
be seen that an individual who has published an advertisement is not legally bound for
following the advertisement.
 According to the decision of Carlill v Carbolic Smoke Ball Company [1893] an
advertisement which can be seen as containing any kind of term for rewards is
required for being treated as an offer that is binding towards the offeror for any
individual accepting the offer. The judgment of the case provides the description of an
offer to be proposal given by one of the parties for any specific arrangement to the
other party and when the party to whom the offer is made is seen to be making the
declaration of acceptance of the offer in written or oral way it is called acceptance to
the offer.
 The judgment of Byrne v Van Tienhoven & Co. [1880] held that the revocation of an
offer is required to be made before the offer has been accepted and the notice for the
revocation is needed to be communicated to the offeree in a direct and indirect way.
 In Dickinson v Dodds [1876] the judges held that the revocation of any offer is not
necessary for being communicated by the individual making the offer to the offeree in
a personal or direct manner.
Rules applicable:

For Brett:
 In Partridge v Crittenden [1968] it was held by the judges in the
court that the advertisements which are seen as being published
in newspapers or any other form of media should always be
considered to be ‘invitation to offer’ and not actual offer.
 According to the decision of Carlill v Carbolic Smoke Ball, an
advertisement which can be seen as containing any kind of term
for rewards is required for being treated as an offer that is binding
towards the offeror for any individual accepting the offer.
 According to Appleby v Johnson [1874] a contract is only seen as
forming between the two parties when the offeree accepts the
offer in oral or written terms.
 In Payne v Cave [1789] it was held by the judges that the
withdrawal of any offer can be done only by way of revocation
process when there has been no acceptance made by the offeree.
Rules applicable:

 Following case Partridge v Crittenden [1968] it is being seen that SOO
Burger is not required for being bound by the advertisement that they have
published instead of being a real offer the advertisement is considered as
being an invitation to offer.
 However, following the decision of the judges in landmark case Carlill v
Carbolic Smoke Ball , it is observed that the advertisement which SOO
Burgers have published had one term for the reward of a car to any of the
individuals winning a golden scratch card so the SOO Burger’s
advertisement can be considered to be an offer for anyone accepting it.
 Following Byrne v Van Tienhoven & Co. [1880], in this given scenario it can
be seen that Mickey had been admitted in the hospital and he was not able
to be hearing the official notice for revocation of the offer by SOO Burgers’
offer and hence the revocation would not be effective towards him.
 However applying the judgment in the case Dickinson v Dodds [1876] it can
be observed that Mickey had been hearing the discussions of the nurses in
passing about the revocation of the SOO Burger offer hence the revocation
would be effective to him.
Application
(Mickey):

 Following the judgment of Partridge v Crittenden [1968] it is
being seen that SOO Burger is not required for being bound by
the advertisement that they have published.
 However, following the decision of the judges in landmark case
of Carlill v Carbolic Smoke Ball Company it is observed that the
advertisement which SOO Burgers have published had one
term for the reward, so the SOO Burger’s advertisement can
be considered to be an offer for anyone accepting it.
 As per Appleby v Johnson [1874] case Brett had presented the
winning tickets before the announcements of the revocation so
his acceptance is valid.
 Applying Payne v Cave [1789] in the current scenario it can be
seen that Brett already accepted the offer and so SOO Burgers’
revocation would not affect him
Application
(Brett):

 SOO Burgers is not responsible to be
providing Mickey with the car Mazda CX-9s
under the contract law.
 SOO Burgers is responsible to provide Brett
with the car Mazda CX-9s under the
contract law.
Conclusion:

 The first issue in this scenario is whether
Mercedes can be held liable for the breach
of director’s duties under the Corporations
Act.
 The second issue in this scenario is whether
Gregg can be held liable for the breach of
director’s duties under the Corporations Act.
PART B-OPTION B
Issue:

 Section 180 of the Corporations Act 2001 mentions the duties that a director is
required to be following for acting with required degree of care and diligence.
The provision of the section was seen as being discussed in Sino Australia Oil
and Gas Limited (in liq) v Sino Australia Oil and Gas Limited (in liq) [2016].
 In the landmark case ASIC v Rich (2009) the ‘business judgment rule’
mentioned in the provision of section 180 (2) was established that can be seen
as providing that any director of any company would meet the requirements
present in the section 180(1) if they are seen as taking a a business judgment
for a proper purpose in good faith; they are not seen having any type of
material interest; they have made themselves informed about the subject
matter for which the judgment is taken up to such an extent that would be
believed to be appropriate reasonably; they have believed in a rational manner
that the company’s best interest would be ensured by that judgment.
 Under section 588G , the duties of any director to act in prevention of the
company’s insolvent trading during has been mentioned. In the famous case
Tourprint v Bott [1999] this section was seen to be discussed. Section 588GA
provides with protection to the director of the company by way of the ‘defence
of safe harbor’.
Law
a) Mercedes

 Section 180 of the CA 2001 mentions the duties that a director is
required to be following for acting with a specific degree of care
and diligence.This section was seen as discussed in the judgment
of the case Sino Australia Oil and Gas Limited v Sino Australia Oil
and Gas Limited.
 Under the provisions of section 588G of the CA 2001 the duties of
any director to act in prevention of the company’s trading during
has been mentioned. In the famous case Tourprint v Bott [1999]
this section was seen to be discussed.
 Section 588GA provides with protection to the directors of the
company by way of ‘defence of safe harbor’.
 Under the provisions mentioned in the section 181 of the CA
2001 the duty of a director has been to be acting in good faith for
the company’s best interest as mentioned in the case Bell Group
Ltd v Westpac Banking Corp.
Law:
b) Gregg

 Following Section 180 of the Corporations Act 2001 Mercedes
can be seen to in breach of this section. Applying the
judgment of the case Sino Australia Oil and Gas Limited v
Sino Australia Oil and Gas Limited in this scenario it can be
seen that the requirement to be exercising their powers with
such due diligence and care that can be expected from any
rational individual was also not followed by her.
 However her decision can be protected under the business
judgment rule mentioned under the section 180(2) of the Act.
 As a director Mercedes has the duty to be preventing the
company from trading in insolvency under s 588G as
discussed in the judgment of the case Tourprint v Bott [1999].
However Section 588GA could provide Mercedes with
protection by way of the ‘defence of safe harbor’.
Application
a) Mercedes:

 Following the provisions of Section 180, Gregg can be
seen to in breach of this section as discussed in the
case Sino Australia Oil and Gas Limited (in liq) v Sino
Australia Oil and Gas Limited (in liq) [2016].
 As a director Gregg has the duty to be preventing the
company from trading in insolvency under s 588G as
discussed in the judgment of the case Tourprint v Bott.
However Section 588GA could provide Gregg with
protection by way of ‘defence of safe harbor’.
 Applying the provisions mentioned in the section 181
of the CA 2001, Gregg can also be found liable for the
breach of the duty of acting for the company’s best
interest.
Application
b) Gregg

 Mercedes would be held liable for the
breach of section 180, 182 and 588G under
the Corporations Act, however, she has the
protection under section 180(2) and 588GA.
 Gregg would be held liable for the breach of
sections 180, 181 and 588G under the
Corporations Act. He would be protected
under section 588GA
Conclusion:

 Appleby v Johnson [1874]
 ASIC v Rich (2009)
 Bell Group Ltd v Westpac Banking Corp (2008)
 Byrne v Van Tienhoven & Co. [1880]
 Carlill v Carbolic Smoke Ball Company [1893]
 Corporations Act 2001
 Dickinson v Dodds [1876]
 Partridge v Crittenden [1968]
 Payne v Cave [1789]
 Sino Australia Oil and Gas Limited (in liq) v Sino
Australia Oil and Gas Limited (in liq) [2016]
 Tourprint v Bott [1999]
References:

Thank you…