Commercial Law Case Studies with Relevant Laws and Applications

This article presents three case studies in commercial law, covering partnership liability, Australian Consumer Law, and consideration in contracts. Each case study includes relevant laws and their applications. The article provides a comprehensive understanding of commercial law concepts.

Running Head: Commercial law 1
Commercial Law

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Case Study 1
Issue:
Whether partnership is bound by the contract entered by Lance with the Mighty Motors, and
whether other two partners of the firm have any right to take action against the lance?
Law:
Section 9 of the partnership Act 1963 stated that certain partners have power to bind the firm.
As per this section partner of the form (except incorporated limited partnership) is considered as
the agent of the firm and also of the other partners in the business in context of business of the
firm.
Clause 2 of this section stated that if any action is conducted by the partner of the firm for
carrying out the firm’ business then it firm and other partners of the firm liable unless such
partner who perform the act does not have any authority to take action on behalf of the firm in
any certain situation, and the third party with whom such person is dealing have knowledge that
the partner does not have authority to enter into the contract or does not believe that partner is
the actual partner of the firm. Watteau v Fenwick [1893] 1 QB 46: V & L, 19.44 is the case
which clarifies this.
Section 10 of this Act stated the provisions related to the liability of partners by acts done on
behalf of the firm. As per this section if any act is done related to the business of the firm, then
such act is binding on all the partners in the firm if such act is done by the person who is
authorized to do the act in the firm’s name or in any other which reflects the intention of the
partner to bind the firm.
It must be noted that even though partners act in excess of their authority then also firm will be
held liable towards the third party if third party does not have knowledge that the partner does
not have authority to enter into the contract or does not believe that partner is the actual partner
of the firm. However, it provides the rights to the other partners of the firm to take action
against the partner who breach his authority. Other partners get right to recover the resulted
damages from the partner who breach his authority.

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Application:
In the present case, Lance purchased the new UTE from the Mighty motors of $25000 but he is
not authorized to enter into any contract which is more than $20000. In this case act done by
Lance bind the firm and other two partners of the firm towards the Mighty Motors because
section 9 stated that partner the firm’s agent and also of the other partners in the business in
context of business of the firm. If partner of the firm conduct any action for carrying out the
business of the firm then it binds the firm and other partners of the firm. Therefore, Herbal
product business is liable towards the Mighty Motors.
However, Lance acted in excess of his authority which because of which other partners get right
to take action against the Lance who breach his authority. Other partners get right to recover the
resulted damages of $5000 from the partner who breach his authority.
Conclusion:
Partnership is bound by the contract entered by Lance with the Mighty Motors, and other two
partners of the firm have any right to take action against the lance.

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Case Study 2:
Issue:
Whether Saqlaim is bound by the terms of the contract?
Whether Consumers have any remedy in context of claims made by the moisturizer?
Law:
Section 18 of the Australian Consumer law states the provisions of misleading and deceptive
conduct. As per this section, any business must not engage in any such conduct which misleads
or deceives or likely to misleads or deceive consumers and other business organizations. This
section apply on the business even though business does not intend to misleads or deceives or
likely to misleads or deceive consumers and other business organizations. There is an exception
related to this section, which stated that puffery statement made by business is not considered as
misleading or deceptive statements. Puffery statements are those statements which state wildly
exaggerated, fanciful or vague claims related to any goods and services, and these statements
are not treated seriously be the consumers.
This can be understood through case law, REA Group Limited ("REA") v Fairfax Media
Limited ("Domain")[2017] FCA 91. In this case, Court stated that statement is considered as
misleading or deceptive statement on the basis of below stated facts:
 How a largely uninformed cross section of the public would respond related to this
statement in the advertisement, and if public take this statement seriously then it is
considered as misleading or deceptive statement.
 Whether statement made by organization is common and used commonly in the
advertising industry.
Australian consumer law also deals with the unconscionable conduct under which those
transactions are considered which held between the dominant and weaker party. It generally
includes duress and undue influence. This conduct is prohibited by both equity and statute. This
can be understood through case law Commercial Bank of Australia v Amadio, (1983) 151 CLR
447; [1983] HCA 14. In this case, Court stated that transaction is not valid in context of relevant

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equitable principles if other party who wants to enforce the transaction takes unfair advantage of
their own superior bargaining power, or other party was in the position of disadvantage.
Application:
In the present case, advertisement made by the company regarding their moisturizer is not mere
puffery and it is misleading and deceptive in nature because large number of people is affected
by this advertisement and it is not the common term used in advertising industry. Therefore,
Xiaojing breach section 18 of the Australian Consumer law.
On the other hand, car sell by partnership to the Saqlaim is not considered as valid transaction
because transaction is not valid in context of relevant equitable principles as partnership wants to
enforce the transaction and takes unfair advantage of their own superior bargaining power, or
other party that is Saqliam does not know English which put him in the position of disadvantage.
Therefore, this transaction is affected by unconscionable conduct.
Conclusion:
After considering the above facts, it can be said that Saqlaim is not bound by the terms of the
contract, and Consumers have any remedy under section 18 of the Australian consumer law in
context of claims made by the moisturizer.

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Case study 3:
Issue:
Whether Felix can sue Xiaozing for the $100 or not?
Law:
It is the general rule that consideration shows its reality either with the promise or following the
promise. If decided consideration occurs before the promise date then it will not be considered
as good consideration. This can be understood through example, A made promise to B to
transfer the ownership of his car for the help provided by B in previous month. This can be
understood through case law Roscola v Thomas in which promise was not considered as
binding promise because the only consideration given for a promise related to the soundness of
a horse was signing the original contract, and this was occurred before the promise was made.
In this case, Court held that there was no consideration for the promise made by seller in context
of horse soundness and the only consideration in this case was related to the contract for the sale
of the horse. However, this had preceded the promise of the defendant, and this was not become
the part of the bargain. Therefore, it is not considered as good consideration in this case.
There is an exception to this general rule also, and as per this exception past consideration can
also be the good consideration if:
 Consideration is provided at the request of the promisor.
 Parties to the contract understood that the act would be remunerated.
 Promise made by party is occurred in advance of the act.
This can be understood through case law Pao On v Lau Yiu Long, [1979] 3 WLR 435. In this
case, court stated that there was good consideration because an act done before the promise was
made can be considered as good consideration in some cases. Particularly, considered will be
considered as good consideration if the act done was done at the request of the promisor.
Application:
In the present case, consideration cannot be considered as the good consideration because act
done by Felix was done before the promise is made and parties to the contract do not understand

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that the act was remunerated. In other words, there is past consideration and past consideration
cannot be considered as the good consideration.
It must be noted that act performed by Felix is a voluntary act and no one instruct him to
perform that act. There is one more case law Harrington v Taylor, 36 SE 2d 227 (1945), in this
case Court stated that act was voluntarily performed.
Conclusion:
After considering the above facts, it can be said that felix cannot sue the xiaozing for $100.
References:
Partnership Act 1963- Section 9.

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Partnership Act 1963- Section 10.
Australian Consumer Law- section 18.
REA Group Limited ("REA") v Fairfax Media Limited ("Domain")[2017] FCA 91.
Commercial Bank of Australia v Amadio, (1983) 151 CLR 447; [1983] HCA 14.
Watteau v Fenwick [1893] 1 QB 46: V & L, 19.44.
Roscorla v Thomas, (1842) 3 QB 234.
ACL. Consideration. Available at: https://www.australiancontractlaw.com/law/formation-
consideration.html#considpast. Accessed on 19th April 2018.
Harrington v Taylor, 36 SE 2d 227 (1945).
Pao On v Lau Yiu Long, [1979] 3 WLR 435.