Australian Contract and Corporation Law Case Study

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BUSINESS AND CORPORATE
LAW
TOTAL WORD COUNT:
WORD COUNT (PART A):
WORD COUNT (PART B):
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Table of Contents
PART A: CONTRACT LAW........................................................................................ 3
ISSUE 1...................................................................................................................3
RULE....................................................................................................................... 3
APPLICATION.........................................................................................................3
CONCLUSION.........................................................................................................4
ISSUE 2...................................................................................................................4
RULE....................................................................................................................... 4
APPLICATION.........................................................................................................5
CONCLUSION.........................................................................................................5
PART B: CORPORATION LAW..................................................................................7
ISSUE 1...................................................................................................................7
RULE....................................................................................................................... 7
APPLICATION.........................................................................................................7
CONCLUSION.........................................................................................................8
ISSUE 2...................................................................................................................8
RULE....................................................................................................................... 8
APPLICATION.........................................................................................................8
CONCLUSION.........................................................................................................9
ISSUE 3...................................................................................................................9
RULE....................................................................................................................... 9
APPLICATION.........................................................................................................9
CONCLUSION.......................................................................................................10
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PART A: CONTRACT LAW
ISSUE 1:
Whether there is the existence of any legal agreement between the Australian
Hairlines and the customers?
RULE:
Under the Australian Contract Law, there are convinced essentials which are
required to be fulfilled for the formation of the contract between two parties. These
requirements have the very first essential as the formation of an agreement between
the parties (Marshall, 2012).
In the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA 1, [1893] 1
QB 256, the court of Appeal held that the formation of an agreement between the
parties is generally a result of the offer and acceptance.
APPLICATION:
Ming in the instant case runs a business of salon under the name Australian
Hairlines. For the purpose of the promotion of his business, he gives an
advertisement in the newspaper providing that he shall give a haircut to the
approaching customers in $10. The next day due to the advertisement around fifty
customers arrived at his salon claiming the offer. but then he realised his business
shall face losses if he fulfilled the condition mentioned in the advertisement. And so,
he stated on the window that the offer has finished.
Among the fifty customers, forty of them produced the advertisement before the
placing of the statement on the window. Hence, in this case, as per the Australian
Contract law, there is the formation of an agreement between Ming and forty
customers as the formation of the agreement requires the fulfilment of offer and
acceptance. In this case, there is an offer made by Ming through his advertisement.
This offer is accepted by forty customers.
In the case of R v. Clarke [1927] HCA 47, (1927) 40 CLR 227, High Court the
Australian high court has held that the formation of an agreement for the
enforcement of the contract requires the offer to be made by one party which shall
be accepted by the other party (Marshall, 2012).
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Though advertisement is considered an invitation to treat, the advertisement which is
clear in expressing terms of offer shall be treated as a valid offer made by the
offeror. There is a difference between making an offer and an invitation to treat. The
offers are made with the intention of entering a contract whereas the invitation to an
offer is made with the intention of inviting offers from the other party. In this case, as
well the advertisement of Ming is an offer made by him which is accepted by forty
customers before the statement is made on the window. Hence, there is a formation
of a contract in the instant case (Cuniberti, 2013).
CONCLUSION:
Thus, the offer made by Ming through an advertisement is an offer to the general
public and the fulfilment of it by the customers refers to acceptance for the offer.
Hence, there is a formation of a valid contract and Ming is liable to perform his part.
ISSUE 2:
Whether the ten customers who do not have the advertisement entitled to claim the
offer and whether Ming could argue that the amount of $10 is not justified for the
haircut?
RULE:
The offer made by Ming is a valid offer under the provisions of the contract laws of
Australia. This offer shall turn in a valid contract once it is accepted. The offer made
by Ming through the newspaper attracted fifty customers out of which forty fulfilled
the required condition. Ten customers did not have the advertisement to avail the
offer (Marshall, 2012).
In the case of Australian Woollen Mills v. The Commonwealth (1954) 92 CLR
424) it was held by the court that an offer is an expression of one person to another
party in which he expresses his willingness to get himself bound by the terms
mentioned in the offer.
Further, on existence of a valid agreement between the parties Ming is not entitled to
terminate the agreement as it has been held in the case of Koompahtoo Local
Aboriginal Land Council v. Sanpine Pty Limited [2007] HCA 61, (2007) 233 CLR
115, High Court that in case one party breaches the agreement or is unwilling to
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perform his part of contract, the innocent party shall have the right to terminate the
agreement (Cuniberti, 2013).
APPLICATION:
Ming is running a hair salon under the name Australian Hairlines and for the
promotion of his business, he gave an advertisement in a newspaper to attract
customers and give them haircut at a discountable price if the customers produced
the advertisement. The advertisement attracted fifty customers out of which forty
have produced the advertisement but ten customers approached without
advertisement. Soon after that Ming stated on the window that the existing offer
stands finished.
As per the existing Australian contract law, the formation of a contract requires the
fulfilment of the condition laid down in the offer. on the fulfilment, only the offer shall
deem to be accepted and there shall be the formation of a valid contract (Sims,
2012). Hence, the ten customers approaching without advertisement are not eligible
to claim the offer.
Further, Ming has made an offer to give haircut at a discounted rate of $10 and the
offer is accepted by the customers by fulfilling the condition as mentioned in the
advertisement. Once the conditions are fulfilled, there is a valid contract formed
between the parties and Ming is not entitled to withdraw from the agreement.
Here Ming is not entitled to argue that the amount of $10 is not justified for the
haircut as he is bound by the statement he has made in the advertisement and that
the customers have fulfilled the condition required in the advertisement.
CONCLUSION:
Hence, to claim the fulfilment of the offer the offeree is required to accept it in due
time as was done by the first forty customers in this case. The later ten customers
failed to abide by the condition laid down by the offeror Ming and thus they are not
eligible to claim the haircut at a discounted rate. Further, Ming is also not entitled to
withdraw from the agreement as the agreement has bound him to perform his
obligation under the contract law in Australia.
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References
 Carlill v Carbolic Smoke Ball Company [1892] EWCA 1, [1893] 1 QB 256.
 R v. Clarke [1927] HCA 47, (1927) 40 CLR 227, High Court.
 Australian Woollen Mills v. The Commonwealth (1954) 92 CLR 424).
 Koompahtoo Local Aboriginal Land Council v. Sanpine Pty Limited [2007]
HCA 61, (2007) 233 CLR 115, High Court.
 Marshall, B.A., 2012. Reconsidering the proper law of the contract. Melb. J.
Int'l L., 13, p.505.
 Cuniberti, G., 2013. The international market for contracts: the most attractive
contract laws. Nw. J. Int'l L. & Bus., 34, p.455.
 Sims, A., 2012. Unfair contract terms: A new dawn in Australia and New
Zealand. Monash UL Rev., 39, p.739.

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PART B: CORPORATION LAW
ISSUE 1:
Whether there is the existence of a partnership between Lucy, Koo and Seamus and
what are the liabilities of Lucy and Koo regarding the purchase of the mover?
RULE:
The Corporation Act 2001 is the governing body of the corporations and companies
operating in Australia. All the companies are required to get their name registered
under the Corporations Act 2001. But the registration depends upon the
classification of the companies whether it is a sole trader company or a partnership
firm. Under Australian Corporation Law partnership firms are registered under the
Partnership Act 1963 (Shaoul, et. al., 2012).
The partnership business between the three partners exists under the provisions of
the Partnership Act 1963 which is in force in Australia. Section 7 of the Act provides
that the carrying on a common business by the partners with a view and intention of
gaining profit shall be the determination of the existence of partnership (Klettner, et.
al., 2014).
APPLICATION:
The existence of the partnership is determined by the criteria for the existence as
laid down under the Australian partnership law. This includes the existence of a valid
agreement between the partners, carrying on a common business, the existence of
common rights and obligations and intention of gaining profit. All the above
essentials are present in the instant case hence, there existed a partnership between
the parties.
Section 9 of the Act provides that each partner is responsible legally as well as
financially for the actions of other partners. Further section 16 provides that when
one partner acts negligently and there is an absence of indemnity insurance, all the
partners shall be held liable jointly and severally.
In the instant case where LuSeKo moving service got itself registered under this
name and carried on a business, the business is a partnership between the three
partners and shall be governed by the partnership act 1963. Further, when Seamus
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decides to purchase a mover without the knowledge of Lucy and Koo, the decision
was to carry further the mowing business. Hence as per the provisions of section 16
of the Partnership Act 1963, the other two partners shall also be held liable to pay for
the mover.
CONCLUSION:
Thus, it can be concluded that the provisions of the partnership Act 1963 provide for
joint and several liabilities of the partners for all the actions done in continuation of
the partnership business. Further, the partners shall also be held liable for the
negligent act if done by any of the partners as per the provision of section 16 of the
Act.
ISSUE 2:
Whether the act of Lucy to carry out a weekend business is a breach of her
partnership liabilities?
RULE:
The Corporations Act 2001 has separated the governance of the partnership firms by
the enactment of the Partnership Act 1963. Part IV of the partnership Act 1963
provides for the relations which are to be maintained by partners towards one
another. Section 35 of the same Act restricts the partners of a firm to carry out
another business of the same nature apart from the partnership business (Shaoul,
et. al., 2012).
APPLICATION:
In the instant case, Lucy entered in a separate business without informing her other
partners. The business was the removing of garbage and rubbish from the properties
of the clients. The clients were the same who were clients in the partnership
business. It is important to note that the provision of the Act is applied differently.
The provisions of partnership Act 1963 through section 35 puts a restriction on the
partners to carry on the business of the same nature (Moyeen, and Courvisanos,
2012). Here the partnership business and the business carried on by Lucy are of
same nature. Hence, Lucy is this case is entitled to account her other partners as
she is engaged in the business of the same nature.
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CONCLUSION:
Thus, to conclude Lucy as a partner is carrying out the same business on weekends
which is of the same nature and so she shall be held under an obligation to account
her other partners for her business.
ISSUE 3:
Whether the death of Seamus effect the partnership business and how will the
determination of partnership property be done along with its use to recover LuSeKo’s
losses?
RULE:
Section 30 under Clause (1) of the Partnership Act of 1963, provides that all the
property which is bought in furtherance of the partnership business shall be termed
as the partnership property (Envall, and Hall, 2016).
In case of Robinson v Ashton (1875) LR 20 Eq 25, the court held that purchasing a
property from the partnership account shall be deemed as per the intention of the
partners to be partnership property.
Further, as per Section 38 of the Act, the death of a partner shall bring the
partnership business to an end.
APPLICATION:
Seamus in the instant case has purchased a mowing machine from FastCut Mowers
to further carry on their mowing business. The other partners Lucy and Koo were
unaware of the purchase. But as per clause (1) of Section 30 of the Act, the property
purchased for the partnership business is termed as the partnership property (Envall,
and Hall, 2016). And Lucy and Koo shall be equally and jointly liable to pay the bill of
FastCut Mowers.
Later on, when Seamus was operating the machine, he got hit with it and died as a
result of severe injuries. The death of one partner shall bring the partnership
business to an end. Provisions of Section 38 of the Partnership Act 1963 provides
that:
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"A partnership business shall dissolve if any of the partners dies or
becomes insolvent or faces bankruptcy or enters into a personal
agreement relating to bankruptcy.”
CONCLUSION:
Thus, to conclude the machine purchased from the FastCut Mowers for carrying on
the partnership business shall deem to be partnership property and Lucy and Koo
shall be equally liable to pay for the machine after Seamus Death. Further, the Death
of Seamus shall also bring the partnership business to an end as per the provisions
of the Partnership Act prevailing in Australia.
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References
 Robinson v Ashton (1875) LR 20 Eq 25.
 Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate
sustainability: Empirical insights into the development, leadership and
implementation of responsible business strategy. Journal of Business Ethics,
122(1), pp.145-165.
 Envall, H.D.P. and Hall, I., 2016. Asian strategic partnerships: New practices
and regional security governance. Asian Politics & Policy, 8(1), pp.87-105.
 Shaoul, J., Stafford, A. and Stapleton, P., 2012. Accountability and corporate
governance of public-private partnerships. Critical Perspectives on
Accounting, 23(3), pp.213-229.
 Moyeen, A. and Courvisanos, J., 2012. Corporate social responsibility in
regional small and medium-sized enterprises in Australia. Australasian
Journal of Regional Studies, The, 18(3), p.364.
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