Corporation Law

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

1CORPORATION LAW
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.

2CORPORATION LAW
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