Case Study: HI6027 Business & Corporations Law - Contract & Corp

This assignment provides a legal analysis of contract and corporation law issues. It addresses John's potential obligations and rights regarding tool purchases, contract enforcement with AppTools, and liability for BuzzTools' shares, considering his capacity as a minor. The analysis applies relevant common...Read More

Contract and Corporation Law

I . Contract Law

Issue
To advise john whether:
• He would be bound to buy the tools;
• He could enforce the contract with AppTools; and
• He could be sued to recover remaining price of the BuzzTools’ shares.

Rule
• Capacity of the Parties – one of the essential element of a valid
contract.
• People abstained from contracting :
1. Minor
2. Lunatics
3. Intoxicated people
4. Bankrupts

Rule (contd…)
• Minor : Individuals below 18 years of age
• Under Common Law, Minors are barred from entering into a contract
except for:
1. Contract for necessities
2. Beneficial contract of employment
• In
Nash v Inman [1908] 2 KB 1,
Section 7 of the
Goods Act 1958
shaped the similar notion of the common law.

Application
• Purchase of tools for plumbing apprenticeship indicate ‘Necessity’.
• John is a minor who cannot enforce for deriving benefit from a
company trading in shares.
• On the similar note, John cannot be sued for he is a minor and does
not have the capacity to deal in stock market.

Conclusion
Therefore to conclude,
• John could be made bound by the contract for buying the tools.
• He cannot enforce the contract to gain the profit from the sale of his
AppTools shares.
• The liquidator cannot sue John to recover the remaining money that
he owed on the BuzzTools shares.

II. Corporation Law

Issue
• To ascertain what Carver’s Pty Ltd would assume regarding Adam's
affixation of the company seal to the contractual documents; and
• To ascertain the party who may be liable to pay Irish linen Ltd.

Rule
• A) Assumptions made by the other party
As per
section 127 (2), When a company execute a document under its
common seal, and there should be witness to observe such fixing.
Witnesses include:
1. Two directors; or
2. One director and one Company Secretary; or
3. A sole director, in case of a sole proprietary company.

Rule (contd…)
• B) Contracts signed before registration
Under section 131 (1), a pre-registration contract needs to be ratified:
1. within the time that has been agreed by the parties to the contract;
or
2. within a reasonable amount of time of the signing the contract in
case there is no agreed time

Application
A. A party to a contract is therefore free to assume that the company
that have affixed its common seal on a contractual document would
be legally bound to executed it.
B. The court would either order Master Plate:
• to make a payment of the entire or a part of the damages; or
• to return the tablecloths to Irish linen for not ratifying the contract;
• c) to make the legitimate payment of Irish linen for the tablecloths
that was supplied.

Conclusion
• Carver’s Pty Ltd is supposed to make an assumption of a prevalence of
a valid agreement.
• Master Plate Pty Ltd would be liable to pay Irish linen Ltd.

References
• Corporations Act 2001
• Goods Act 1958 (Victoria)
• Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC
103
• Nash v Inman [1908] 2 KB 1
• Roberts v Gray [1913] KB 520

Thank You