Holmes Institute: HI6027 Business and Corporate Law Case Study

This case study delves into two distinct scenarios, exploring key aspects of contract and corporate law. The first scenario examines the enforceability of a promotional offer by SOO Burgers, analyzing issues of offer, acceptance, and revocation in the context of a unilateral contract. The analysis considers whether consumers, Mickey and Brett, can successfully claim a prize car based on their actions and the company's actions. The second scenario focuses on director's duties within Sparkling Pty Ltd, evaluating the actions of a director and their potential legal consequences under Australian corporate law. The analysis considers the director's breach of duty of care, diligence, and good faith, along with the implications of their actions for the company and potential penalties. The case study applies relevant legal principles and case precedents to each scenario, providing a comprehensive analysis of the legal issues involved.

RUNNING HEAD: CONTRACT LAW
Contract Law
Name of the student
Name of the university
Author Note

1
CONTRACT LAW
Response to Case Study 1-
Issue-
The primary issue in this provided case is that whether Mazda can be recovered by
Mickey from the unit of SOO burger.
Rule-
The contract is based on agreement that supplies the conditions and terms that is
necessary to be accomplished by the contractual parties. A creation of a contract is done when
any offer is produced to one of the contractual parties presenting the intention for entering into
the agreement as it is explained in the case of Carlill v Carbolic Smoke Ball Co1. When an
offer is accepted without any condition by the contractual parties to the opposite party where the
contract is produced it helps in the creation of the valid contract. In the same point of time there
is a presence of distinction between an invitation to the proposal and an proposal. This statement
can be related comparing case study of Harvey V Facey [1893]2. Invitation to an offer is a type
of invite made to get the response from the public making an offer where they involve the
negotiations. Acceptance of an offer makes a change in the offer into a contract at the same time
when an invitation to an offer is accepted its results into an offer.
Revocation of the offer can be considered when the offer is withdrawn back by the
contractual parties making the offer. This only happens when there is a cancellation of the offer
made by the party. A lawful revocation can be considered when certain conditions conditions can
be fulfilled, primarily the offer should be withdrawn before the acceptance of the offer and the
information of revoking shall reach the offeree though it would not be necessary to receive the
1 Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
2 Harvey V Facey [1893] A.C 552

2
CONTRACT LAW
communication. Another type of offer is observed where it explains when an offer is accepted by
the method of carrying out a performance is popularly known as unilateral contract. This contract
is observed to be used generally in case of an open request is received from the offeror where the
offeror promise to pay if the described act is performed. This statement can be easily supported
by the case study of Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 205 FCA3.
Application-
The provided case depicts the given scenario of SOO Burgers, the chain of the restaurant started
a selling competition for acceleration of the business. In this consequence ran the competition by
attaching a token with the wrapper of the burger and the condition of the restaurant chain was
that if one can collect 50 tokens will receive a scratch card that if revealed a Mazda vehicle, the
winner will get a car that will be provided by the main office of SOO Burgers. This can be
related to the case of the Carlill v Carbolic Smoke Ball Company (1892) 1 Civ EWCA4.
Michael an consumer was keen for winning the car. Therefore he bought willingly fifty burgers
and ate all the burgers at a time. On the consequence of finishing the burgers at a time made him
admitted to the clinic because of being exhausted. He scratched 50 tokens for receiving a scratch
card as he was about to passout.
The restaurant organization found out a printing mistake which resulted to a revocation of
the offer the organization announced that the offer will be void. Such announcement was not
head by Mazda directly but according to the discussion of the nurses he eavesdropped it. After
hearing of such discussion he won a scratch card where there was a car. Therefore successful
3 Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 205 FCA
4 Carlill v Carbolic Smoke Ball Company (1892) 1 Civ EWCA

3
CONTRACT LAW
revocation of the order took place as the news for the void offer announcement reached him
before the offer was accepted. As a result Mickey will not be able to claim.
Conclusion-
From the facts concluded from the above mentioned provision of the contract law it is clear that
Mickey will not be able to claim Mazda from the unit of SOO burgers.

4
CONTRACT LAW
(ii):
Issue-
A primary concern related to the provided case is that whether Brett will be able to claim Mazda
from the unit of SOO burgers.
Rules:
The contract is grounded on agreement that supplies the conditions and terms that is
necessary to be accomplished by the contractual parties. A creation of a contract is done when
any offer is produced to one of the contractual parties presenting the intention for entering into
the agreement as it is explained in the case of Carlill v Carbolic Smoke Ball Co5. When an
offer is accepted without any condition by the contractual parties to the opposite party where the
contract is produced it helps in the creation of the valid contract as it can be related to the study
of R v Clarke (1927) 47 HCA6. Invitation to an offer is a type of invite made to get the response
from the public making an offer where they involve the negotiations. Acceptance of an offer
makes a change in the offer into a contract at the same time when an invitation to a proposal is
accepted its results into an offer.
Another type of offer is observed where it explains when an offer or proposal is accepted
by the method of carrying out a performance is popularly known as unilateral contract. This
contract is observed to be used generally in case of an exposed request is received from the
offeror where the offeror promise for payment if the described act is performed. This statement
can be easily supported by the case study of Mobil Oil Australia Ltd v Lyndel Nominees Pty
5 Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
6 R v Clarke (1927) 47 HCA

5
CONTRACT LAW
Ltd (1998) 205 FCA7. Withdrawal of the proposal can be considered when the offer is
withdrawn back by the contractual parties making the offer. This only happens when there is a
cancellation of the offer made by the party. A valid and a lawful revocation can be considered
when certain conditions conditions can be fulfilled, primarily the offer should be withdrawn
before the acceptance of the offer and the information of revoking shall reach the offeree as it is
not necessary to receive the communication.
Application:
In this provided case it is observed that the chain of the restaurant units of SOO Burgers boosted
the sale of all the units by the method of promotion where a burger with a attached token will be
provided to the customers, where they attached 50 tokens along with the burger cover. The
condition was announced as on collecting all the 50 token by any of the consumer will be
provided with scratch card that on scratching can reveal a Mazda car. Another information was
mentioned that the consumer will be able to receive the winning car from the company’s main
office. This situation can be related to the case of Carlill v Carbolic Smoke Ball Company
(1892) 1 Civ EWCA8 amounting to unilateral contract.
Brett scratched all the tokens from the rubbish bins of the SOO Burgers without buying
any burger from the restaurant. In the consequence of his action he collected 100 tokens. After
redeeming all the tokens he got two car. This cannot be considered as the acceptance of the offer
as he was not complying all the conditions and expressions of the said offer. Therefore there was
no creation of contract in between the SOO Burgers and Brett. As a result of this he was unable
in claiming the vehicle.
7 Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 205 FCA
8 Carlill v Carbolic Smoke Ball Company (1892) 1 Civ EWCA.

6
CONTRACT LAW
Conclusion-
Thus from the above mentioned facts it is very clear that Brett will not be able to claim any
Mazda from the head office of the SOO Burgers.

7
CONTRACT LAW
Response to Case study 2:
Issue:
The first issue to be discussed in the provided case of Sparkling Pty Ltd is about the
significances of Sarah’s act and the possible result of the case. The second concern to be
discussed about would be regarding the significance of the case if the loan sanctioning officer
was careful concerning the expired appointment of Sarah along with this another concern is that
about the outcome if the amount of loan was sanctioned to the other outlets.
Rule:
The enforcement of the Australian Law provides several duties and obligations upon
various individuals those who are employed, and those carry out the performance or task for any
company or organisation of Australia. The precise duty or role of a person depends particularly
on the specific person in the organisation or the company.
Accountability of decent faith-
Directors must make use of their controls or power, and at the same time, should perform
their responsibilities and duties or role with the top interest along with moral faith of the
company wholly. The main focus of the director’s duty is to perform in an honest manner for the
well being of the organisation as per their belief. In addition to these the behaviour of the
Director can be objectively judged for the purpose of reference to be an example of a reasonable
director and in consideration of the greatest interest of the organisation or the company.

8
CONTRACT LAW
Responsibility of care and diligence-
The essential behaviour needed for conducting a duty, hinges on the circumstances of the
organisation along with the position and responsibility of that particular director. Any director
that includes the executive director should consist of a distinctive skill and experience for
gaining a higher standard. Directors must make use of their power and control, and at the same
time they should perform their responsibilities and roles along with enough care and diligence
that a reasonable person should focus if they act as the Director of the company under the
circumstantial evidence. At the same time if they perform a similar role as a director of the
particular company occupying a similar organisation. For example a director of finance lacking
enough care and diligence in the matter related to finance or any matter of funding mat lead to
breaching of duty and liability and an even behaviour from a director of non-executive standard
may not create a breach. In the same situation if there is any responsibility of special category
carried out by the Board may lead to lack in the responsibility of caring. The same case of Bell
Group Ltd v Westpac (No 9) can be taken into grant. In this case it was said by the court that
the director was personally liable for the debt in the name of the organisation as the sanctioned
loan came to be known as fraudulent.
The behaviour of the director should not be taken into consideration because of the
absence of skill and experience. All the directors should themselves set up for meeting the lowest
standard of the goal or objective. The Corporation Act of the year 2001 u/s 180 handles with care
and diligence on the director’s performance. Under the provision of the Corporation Act section

9
CONTRACT LAW
181 says that good faith and proper purpose if breached can hold a director to be liable
personally.
Director’s Duties:
The purpose of the panel or the board is to appoint and reward the CEO of the company.
They formulate the strategies and approves the plan for the business that set the goal of the
company. They plan for the annual budget of the company and decides the key management for
the successful running of the company. They also think about the management’s performance
and monitors the result of the particular business.
Application-
(i) The consequence of this legal case can be suggested that the performance of Sarah as
a director is bad in the eye of law. She has not accomplished any obligations and
duties, along with care and diligence. She may be held guilty in the provision of the
Corporation Act 2001 u/s 180 and u/s 181.
The performance carried out by Sarah is not legal according to the consent of the law.
She has face the following consequences for the particular act:
 She can be penalized up to $200,000
 She can be imprisoned up to five years
 She can be debarred form organisation management
 She can be held liable for paying the debts of the company as her own liability.
(ii) The consequence of the provided case can be depicted as Sarah was not carrying any
right to borrow beyond the transaction limit of the business given to her that is

10
CONTRACT LAW
$20,000 as per the contract made in favour of the organisation. Sarah as a director
has breached her duty by transacting beyond the limit without any support from the
director’s board or without the reference from the director’s board.
(iv)
(a) The result would be similar as the organisation has provided the limit of transaction of
$30,000 in the favour of the company’s director even if an amount of loan was
refurbished for the other two clothing shop of Sparkling.
(b) The result of the provided case would not be the same if the officer of the loan
department would have noted about the expiration of Sarah’s appointment that she has
exceeded the transaction limit as specified by the organisation. It was not noted by the
loan officer that Sarah was finding a fresh job because of the expiration of her
appointment in the position of a director. Costello Bank would not lend $30,000 in favour
of Sarah if they were aware of the contractual limit provided by the company to Sarah as
the director of the organisation.
Conclusion:
From the above facts, it has been proved that Sarah has not legally performed the liabilities and
the duties of the director with care and diligence. It cannot be uttered that Sarah was a reasonable
and good director of the organisation.

11
CONTRACT LAW
Reference:
Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 205 FCA
Carlill v Carbolic Smoke Ball Company (1892) 1 Civ EWCA
R v Clarke (1927) 47 HCA
Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 205 FCA
Harvey V Facey [1893] A.C 552