Corporation Law

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

1CORPORATION LAW
QUESTION 1:
1) Issue:
Whether there are any potential claims of the buyer against the seller? Whether there are
any potential defences by the Seller against the buyer?
Rules/Law:
A contract is a legally enforceable agreement between the parties. There are five
essentials for a valid contract. Firstly there must be an agreement between the parties. The
validity of an agreement is being discussed here in the light of offer and acceptance as given in
the R v Clarke [1927] HCA 47. Offer by one party shows his willingness to enter in to a contract
by such party with another. The concept of offer is being elaborated precisely in the case of
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20. As said before, offer
denotes an offeror’s intention to bind himself in an agreement to other party. The court usually
determines the intention of the offeror as held in the case of Brambles Holdings Limited v
Bathurst City Council [2001] NSWCA 61 by the Court of Appeal. However, there lies a
difference between offer and invitation to offer.
Invitation to offer or treat is a request to others in general not to any specified party, to
make offers so as to engage in negotiations or discussion to create a contract as given in
Westminster Estates Pty Ltd v Calleja [1970] 1 NSWR 526; (1970) 91 WN (NSW) 222.
However any offer is ineffective unless it is accepted. An acceptance of an offer results in
to a valid contract which is binding on the parties to it. Acceptance denotes the willingness of

2CORPORATION LAW
another party to bind himself with the offer put forwarded by the offeror as observed in the case
of Taylor v Johnson [1983] HCA 5.
The second essential of a contract is the consideration. According to Beaton v McDivitt
[1987] 13 NSWLR 162, a promise will be enforceable only when it is provided with
consideration. The third element of contract is the capacity or the ability of the parties to enter
into a legally enforceable contract. As per the observations made in Johnson v Buttress [1936]
HCA 41, minors, intoxicated persons and mentally ill persons are prohibited to enter into
contract. The fourth element is the intention of the parties to enter in to a contract. This has been
observed in the case of Helmos Enterprise Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235. The
final element for any valid contract is certainty. To create a valid contract, the agreement must be
sufficiently complete and certain such that the rights and duties of the parties can be identified
and enforced as per the decision of Whitlock v Brew [1968] HCA 71.
Another important type of contract is called the option contract where the agreement
gives one party an option to buy or to sell a particular asset or product of value on a later date for
a price agreed upon. It gives the purchaser of the option a right but not an obligation to buy or
sell any valuable thing at an agreed price on a later date.
Application:
In the given case, the ‘FOR SALE’ sign put up on the courier van was the invitation to
contract made by the Seller to the public to respond and apply to such invitation. Buyer, in
response to such invitation to offer made by the Seller called Seller. Seller informed him that "If
you want the van, mail me a cheque for $5000 today. Pay the balance by 1 November." This was
the offer made by the Seller to the buyer to create the contract. Buyer on the same day mailed