Company Law: Legal Issues and Relevant Laws

Running head: COMPANY LAW
Company Law
Name of the Student
Name of the University
Author Note

1COMPANY LAW
Question 3
Legal issue
There have been three issues which have to be addressed in relation to the scenario
 Firstly, what right does Gareth has in relation to the contract with Event Rental Pty Ltd
 Secondly, what are the rights of Gareth in relation to the contract with the singer?
 Thirdly the liability of Gareth in relation to damages caused to Julie
Relevant law for issue 1
It has been provided through the case of Davis Contractors Ltd v. Fareham UDC [1956] 2 All ER
145 that there are no liabilities of the parties once the contract between them has been
discharged1. There are various ways in which a contract can be discharged by law. The ways
include performance of contract, agreement between the parties, breach of contract and the
doctrine of frustration. The doctrine of frustration states that when the parties to the contract are
subjected to the situation where the performance of contract has become impossible they do not
have the obligation to carry out the terms of the contract and are discharged from contractual
liabilities wed to each other.
There are several situations in which a contract is regarded to be frustrated. In the case of Taylor
v Caldwell 3 B & S 826 the plaintiff had booked a hall for an event2. However the hall was
destroyed by fire. In the given situation the plaintiff made a claim for damages which he suffered
for not been able to obtain the hall. The court in this case ruled that the contract between the
plaintiff and the defendant was frustrated as there was nothing the defendant could do in relation
1 Davis Contractors Ltd v. Fareham UDC [1956] 2 All ER 145
2 Taylor v Caldwell 3 B & S 826

2COMPANY LAW
to protecting the hall from burning. They had all reasonable safety equipments in place. Thus
were the situation got out of control the contract is deemed to be frustrated and there is no claim
which can be brought against the defendant.
The application of the doctrine of frustration in Australia had been done in the case of Codelfa
Construction Pty Limited v SRA of New South Wales (1982) 149 CLR 3373. In this case it had
been held by the court that where a person has been prevented for working for a particular time
after the formation of a contract and the obligation under the contract could therefore not be
performed the contract would be deemed to be frustrated and there is no claim which the plaintiff
can make in relation to the rights under the contract.
Further in the case of Fibrosa Spolka Akcyjna v Fairburn Lawson Combe Barbour Ltd [1943]
AC 32 it has been stated by the court that where the parties could control the circumstances
which resulted in the destruction of the subject matter of the contract the doctrine of frustration
would not be applicable4.
Law for issue 2
A contract consists of conditions and warranties. Conditions as defined as an essential term for
contract formation. The condition is relied on by the parties to get into the contract. This means
that the parties would not have got into the contract where such conditions had not been present.
In the case of Poussard v Spiers (1876) 1 QBD 410 it had been provided by the court that breach
of condition provides an exclusive rights to the parties to the contract to repudiate the contract5.
This right is not available otherwise to the parties whose contractual right are breached. Further
3 Codelfa Construction Pty Limited v SRA of New South Wales (1982) 149 CLR 337
4 Fibrosa Spolka Akcyjna v Fairburn Lawson Combe Barbour Ltd [1943] AC 32
5 Poussard v Spiers (1876) 1 QBD 410