Business and Corporate Law Report: Contract, Corporations Law Analysis

This report, created by a student, addresses key aspects of business and corporate law. Part A focuses on contract law, specifically examining fraudulent misrepresentation in a car purchase scenario, and analyzing the remedies available to the purchaser, Belinda. It delves into the concept of valid consent, the implications of misrepresentation, and the role of consideration. Part B shifts to corporations law, exploring the liabilities associated with pre-registration contracts and the responsibilities of directors. It considers the legal entity status of a company, the roles of directors as agents, and the assumptions third parties can make when dealing with a company, including the implications of contract ratification and the significance of a company's common seal. The report references relevant legal provisions and case law, including the Corporations Act 2001 (Cth), and provides a comprehensive overview of the legal issues presented.

Business and Corporate Law
Student’s Name

Part A
Issue
Issue involved in the case is to check that Whether the purchaser of the car,
Ms. Belinda has any right in the subjective contract and if yes that what
rights these are.
Rules
According to provisions of Contract Law, consent involved in a case must be
a valid and free consent. Misrepresentation is a term that is closely connected
to a valid consent. This is a situation where an offeror shows a fact or law to
offeree to obtain the acceptance in the contract and these facts and laws are
not true in actual (Business Dictionary, 2018).
Misrepresentation can be of many kinds and according to the type of
misrepresentation, remedies are prescribed under law (Davies, 2018).

In the case of Fraudulent Misrepresentation, an innocent party can cancel
the contract. In addition to this, the same can also ask for the damages.
Consideration is also an important factor of a Contract. It was held in the
case of Chappell v Nestle [1960] AC 87 that consideration in a contract
need not to be adequate always but the same must be sufficient. Further,
consideration can be anything as decided by the parties but the same must
be according to the provisions of law.
Application
In the given case, Belinda has purchased a car from American Car Sales.
The sales person made a misrepresentation to Belinda about the
manufacturing year of the Car.
Belinda has come to know about the existence of misrepresentation of sales
person after 3 months of the purchase of the car.

Sales person might be aware about the true facts of the car and therefore the
misrepresentation made here in the contract is a fraudulent misrepresentation.
Further, the consideration involved was also more than $5000 than the actual
consideration. However applying the provisions of Contract law, the
consideration will be treated as valid.
Belinda can cancel the contract on the basis of the fact that sales person made
a misrepresentation about manufacturing year of the company
Conclusion
Cause of existence of fraudulent misrepresentation, Belinda has an option to
cancel the contract, demand the value of care back from American car Sales
and she can also ask for the damages.

Part B
Issue
Issue involved in the case is to check:-
(1) Who is liable to make the payment to Irish Linen Ltd.
(2) What assumptions Carvers Pty. Ltd. Can make.
Rules
(1) In general a company is a separate legal entity. Directors act as an agent of the
company. This law of agency do not exist in case of pre-registration contract.
Pre-registration contracts are those, that promoters of the company develop on
behalf of the to be incorporate company (Latimer, 2011) .
Section 131 (1) of the Corporations Act 2001 (Cth) says that a company can ratify
the pre-registration contracts within specified or reasonable time (Austlii, 2018). .

Sub section 2 of Section 131 states that if a company do not ratify a pre-
registration contract, then the promoter who developed such contract will be
held personally liable
(2) Assumptions
A third party who enters in any registered company has reason to believe that a
director is acting on behalf of the firm and therefore the same has authority to
enters into a contract on behalf of the company. Further, because of agency rule,
a third has right to assume that directors are only agent of the company and
company can be sued in case of non-performance of the contract. Section 127 of
the act defined the manner in which a contract of a company should be
developed.

Application
(1) Adam has entered in a Pre-registration contract on behalf of the
company. The contract was related to purchase of table clothes.
Some issues has developed there in between Adam and other director of
the company named Poh and cause of such issues, the company has not
ratified this contract.
In such a scenario, Adam will be held personally liable for the
performance of the contract.
(2) The third party of the case i.e. Carvers Pty. Ltd. can assume Adam is
acting on behalf of the company and company will be held liable for the
performance of the contract.

Conclusion
(1) Adam will beheld personally liable to make the payment to seller of table
clothes because company has not ratified his pre-registration contract.
(2) Because of affixation of common seal, the third party of the case i.e. Carvers
Pty. Ltd can assume that company has affixed this seal in the presence of both of
the directors and contracts signed is bind o n the company.

References
Austlii. (2018) Corporations Act 2001 - SECT 131 [online] Available from:
http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s131.html
[Accessed on 10/09/2018]
Latimer, P. (2011). Australian Business Law 2012. Australia: CCH Australia
Limited.
Chappell v Nestle [1960] AC 87
Business Dictionary. (2018) Misrepresentation. [online] Available from:
http://www.businessdictionary.com/definition/misrepresentation.html
[Accessed on 10/09/2018]
Corporations Act 2001 (Cth)
Davies, P., S. (2018) JC Smith's the Law of Contract (2nd ed.). Uk: Oxford
University Press.

Thank You