Corporation Law

This document provides a comprehensive study material on Corporation Law, focusing on the rules and laws related to contracts, consideration, and other legal issues. It discusses the elements of a valid contract, the concept of an option contract, and the potential claims and remedies in case of a breach of contract. The document also covers various legal terms such as chattel mortgage, perfection, fixtures, Torrens system of registration for land rights and interests, and leasehold.

Running head: CORPORATION LAW
CORPORATION LAW
Name of the Student:
Name of the University:
Author Note:

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QUESTION 1:
1) Issue:
The issues involved in this case are whether there are any potential claims of the buyer
against the seller and whether the seller has any claims against the buyer.
Rules/Law:
A contract can be defined as an agreement made legally enforceable among the parties to
it. There are five main conditions that are to be fulfilled to constitute a contract. The first is an
agreement must be present between the parties. Agreement is formed by making an offer
showing intention to bind oneself in a contract as given by the decision of High Court in
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20. Offer is differentiated
from invitation to offer in the decision of New South Wales Supreme Court case of AGC
(Advances) Ltd v McWhirter [1977] 1 BPR 9454.
Invitation to offer is a request made to public in general and not to any specific person to
take the initiative of making offer such that some negotiation or discussion can be made between
them to create the contract.
A contract can never be created unless the offer is accepted. An offer after being accepted
results in to creation of a valid contract. Acceptance means eagerness of other party to bind
himself with the proposal given by the offerer. Hence the acceptance must be corresponding to
the offer else no contract will be formed. It is observed in the case of Banks v Williams [1912]
NSWStRp 55.

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Another important ingredient of the contract is known as the consideration. A contract
can be enforced only when it is supported by a valid consideration. Consideration cannot be
necessarily in the form of money, it can be a promise to do or not to do any act. There is no
particular amount of money in order to form a consideration, it is in the discretion of the court to
determine whether such consideration value is adequate or not. It was observed in the case of
Woolworths Ltd v Kelly [1991] 22 NSWLR 189. However in general, past consideration is
insufficient but a past service can amount to a valid contract.
To form a legally enforceable agreement, the parties must have the ability to enter into an
agreement. Mentally impaired persons, minors and intoxicated persons are barred to enter into
contract. When the parties to the contract do not have the required capacity, such contract is void
as held in the case of Blomley v Ryan [1956] HCA 81.
The fourth criterion is intention of the parties t o enter into contract. The parties must be
having the intention to create legal agreement. The act of the parties or their conduct can be
taken into account to determine the intention of the parties. It is observed in the leading case of
Emogenou v Greek Orthodox Community of SA Inc [2002] HCA 8.
Lastly, the terms and conditions of the agreement of the contract must be certain and
unambiguous such that the parties are clear about their rights and duties towards each other while
performing their part in the contract. This is held by the High Court in the case of Upper Hunter
County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8.
Another type of contract is present apart from the traditional form of contract called the
option contract where one party allows another party to buy or sell a particular thing of value on
a particular future date for the price agreed by both the parties. In such type of contract, the

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parties cannot revoke the contract or terminate it until that particular future date is over. It
provides the purchaser of the option an authority or right to buy or sell to enforce the contract on
the pre decided future date at that consideration but it does create any obligation on such party.
Application:
From the facts of the given case study, a ‘For Sale’ sign board was displayed on a courier
van. It forms an invitation of contract by the Seller to people in general to attract them to make
application in response of such invitation. Buyer after seeing the sign board made a call to Seller.
Seller told him that if he wants to buy the van, he should sent him a cheque of 5000 $ that day
and pay the remaining balance by 1st November. The Seller thus made an offer and it was
accepted by Buyer as he mailed him the cheque immediately. This corresponds to an option
contract. But before the stipulated period, the Seller changed his mind and on 25th October,
Buyer when made a call to the Seller to pick the van, the seller refused to deliver him as he found
someone who was ready to pay him more money. Thus the seller violated the contract and
further asked Buyer to pay him 20000 $ then and 400 $ monthly up to 25 months, then he will
deliver the van.
Conclusion:
From the rules and application discussed above, Seller was liable for the breach of the
option contract created between them as per the terms, the contract cannot be revoked until
November 1st. Buyer had performed his par of the contract by sending him 5000 $ cheque which
formed the consideration. Moreover, the buyer’s conduct of buying business cards, flyers
showed that he had intention to execute his business by using the van. Thus all the elements of

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contract were present. Thus Buyer could claim compensation or remedies against the Seller for
breach of contract.
However, Seller could claim that no contract was created between them as he did not
encash the cheque. Thus he could argue that as no contract was formed, there is no breach of it
and hence he could not be made liable.
If the case is brought before the court for proper decision, it is likely that the Buyer’s
claim against the Seller for breach of contract would succeed as an option was successfully
created and it cannot be terminated or revoked before the stipulated date.
2) If the Buyer succeeded in proving his claim against the Selelr for breach of contract, he could
seek remedies either in the form of injunction or specific performance of the contract. He could
either ask for the injunction against the delivery of the van to other party or may ask Seller to
perform his part of the contract, that is deliver him the van.
Question 2:
a) Chattel mortgage:
It is a legal notion or term which had its origin in the English law, is used to express a
type of loan contract. According to its provisions, the buyer borrows money from the lender, in
order to buy a movable personal property called chattel. The individual who lends money secures
it by way of mortgage on the chattel. In Australia, the chattel mortgage is used by the partnership
firms, companies and sole traders to get loan for purchasing vehicles for communication. As per
the rules given by the Australian Taxation Office, businesses that are listed to GST, are able to

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claim Input Tax Credit for all the GST paid plus the buying cost of the chattel on the upcoming
Business Statement Activity.
b) Perfection:
Perfection denotes extra steps required to be taken against the third parties to secure the
security interest. It is intended to maintain its effect when any default occurs by the grantor of the
security interest. Personal Property Securities Act 2009 contains the provisions related to
perfection in Australia.
c) Fixtures:
These are the parts of any real property. It represents a physical property which is
connected or attached to the actual real property like land or building in a permanent manner. In
Australia, as per the leading case of Hobson v Gorringe [1897] 1 Ch 182, when there is no
agreement, the doctrine of fixtures is applied to adjudicate the claims for title of any object. The
Fixtures and the Personal Properties Act 2009 (Cth) comprises of the present position of law
related to fixture.
d) Torrens - System of registration for land rights and interests:
Torrens is a system related to the land registration and the land transfer where a state
maintains a register containing records of land holdings and such entry of the record in the
register is regarded as the conclusive proof of the title of the holder whose name is recorded in
such register as the owner, lessor or any others. The Torrens title system was made on the basis
on a central registry of all land in the South Australian jurisdiction contained in the Real Property
Act 1886 (SA).

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e) Leasehold:
Leasehold is a type of transfer of property where the possession is transferred but the
ownership remains with the Crown. It means a land or property given on lease. It is mainly
provided under the Leases (Commercial and Retail) Act 2001. In general, under lease, the lessee
is granted the right of possession for the lease period.

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References:
AGC (Advances) Ltd v McWhirter [1977] 1 BPR 9454
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20
Banks v Williams [1912] NSWStRp 55
Blomley v Ryan [1956] HCA 81
Emogenou v Greek Orthodox Community of SA Inc [2002] HCA 8
Leases (Commercial and Retail) Act 2001
Personal Property Securities Act 2009 (Cth)
Real Property Act 1886 (SA)
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8
Woolworths Ltd v Kelly [1991] 22 NSWLR 189