Case Study Analysis for LAW6000: Business and Corporate Law Assessment

This case study analysis for LAW6000, Business and Corporate Law, examines several legal issues through four distinct questions. The first question explores contract law, specifically the enforceability of agreements between Jeff and Tina, considering heads of agreement and conditions precedent. The second question delves into corporate law, evaluating the duties and liabilities of company directors Phil and Robert, focusing on breaches of the Corporations Act 2001, including sections related to acting in good faith, exercising care and diligence, and avoiding insolvent trading. The third question addresses agency law, analyzing the contractual relationships and liabilities arising from the actions of an agent, Rick, acting on behalf of his principal, Francis, with a focus on authority, both express and apparent, and the consequences of breaching agent's duties. The final question covers the law of negligence, assessing the potential liability of RuPeter and the Bilton Hotel to Prue, considering the elements of duty of care, breach, and causation, along with the damages Prue could claim. The analysis provides detailed legal reasoning, applying relevant case law to the facts of each scenario to reach conclusions and offer practical advice.

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Title page
Name of the student
Student ID

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Contents
Question 1........................................................................................................................................3
Issue A..........................................................................................................................................3
Law...........................................................................................................................................3
Application...............................................................................................................................3
Conclusion................................................................................................................................3
Issue B..........................................................................................................................................3
Law...........................................................................................................................................4
Application...............................................................................................................................4
Conclusion................................................................................................................................4
Question 2........................................................................................................................................4
Issues............................................................................................................................................4
Law...............................................................................................................................................4
Application...................................................................................................................................4
Conclusion...................................................................................................................................5
Issue A..........................................................................................................................................5
Law...........................................................................................................................................5
Application...............................................................................................................................5
Conclusion................................................................................................................................6
Issue B..........................................................................................................................................6
Law...........................................................................................................................................6
Application...............................................................................................................................6
Conclusion................................................................................................................................7
Question 4........................................................................................................................................7
Issue A..........................................................................................................................................7
Law...........................................................................................................................................7
Application...............................................................................................................................7
Conclusion................................................................................................................................8
Issue B..........................................................................................................................................8
Law...........................................................................................................................................8

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Application...............................................................................................................................8
Conclusion................................................................................................................................8
Reference List..................................................................................................................................9

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Question 1
Issue A
To evaluate the contract of Jeff and Tina based on Heads of Agreement?
Law
Every contract is made amid the parties and the parties must comply with the contract terms.
However, at times before the contract is concluded, there are certain actions that the parties
desire to comply with in order to be associated with any contract. (Chitty 2012)
Generally the parties desire to seek the approval of the solicitor before a contract is concluded.
As per Masters v Cameron (1954), if the parties have bargained all the terms and nothing is left
to be done then the agreement is valid and the only need is to make the agreement into a formal
contract. but, of something extra is required to be done, then, the same must be comply with to
make the contract enforceable (Tabcorp Holdings Limited v The State of Victoria [2014].
Application
Jeff and Tina agree to enter into a deal wherein Jeff is selling his business to Tina. A document is
signed which contains various terms and a formal contract must be made which needs the
consent of solicitor.
It is submitted that the agreement has all concluded terms and nothing else is to be made part of
the same. It is only the formal contract which is to be approved by the solicitor and thus it will
not alter the position of the parties. Thus, the agreement is concluded and is binding on the
parties.
Conclusion
The agreement is binding and enforceable
Issue B
If in the agreement, finance is to be attained by Tina before conclusion, then, is the contract
binding?

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Law
When any contract is to be formulated by compliance of a condition precedent, then, the contract
can be made only after the compliance of such term.
Application
Since Tina has to sought finance before conclusion, thus, it is a condition precedent and thus the
agreement is not binding.
Conclusion
The parties do not intent to abide by the terms and a condition needs to be performed and thus
the agreement is not binding.
Question 2
Issues
i. Is Phil personally liable for the liabilty?
ii. Is Robert personally liable for the liability?
iii. Can Phil and Robert rely on Business judgment rule?
Law
The various duties that every company director under corporation Act 2001 must comply are:
(Carter, 2013)
i. To act with honesty, good faith with adequate aim and in company’s favor as per
section 181 (Kuwait Asia Bank EC v National Mutual Nominees Ltd [1991].
ii. To act with all diligence and care as per section 180 (ASIC v Rich & Ors (2003).
Defense can be claimed under section 180 (2) by proving that the decision is based on
reasons and sound opinions (Talbot v NRMA Ltd (2001).
iii. No misuse of position and information as per section 182-183.
iv. No insolvent trading as per section 588G (Woodgate v Davis (2002).

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Application
LightsBright Pty Ltd has Phil as MD and CheepCheep Pty Ltd has Robert as MD. A contract is
made between the companies and Cheep has to pay $75,000 to Lights. The issues are resolved:
i. Phil being the MD of Lights is in breach of section 180 (1) as he contracted with
Cheep even after knowing that Cheep is not able to pay the money and thus care is
not taken. Also, he entered into contract to prove his friendship with Robert and thus
honesty is breached under section 181. He used his position for his friend benefit and
thus section 182-183 is breached;
ii. Cheep is in financial trouble and even after knowing the same, the MD, Robert raises
the debt of $75,000 which ultimately resulted in liquidation. So, section 588G is
breached. He acted without care and honesty and so section 180-181 is also violated.
iii. Phil can establish that his decision to enter into contract with Robert is based on
honesty, after thorough review, expert opinions, etc, then he can protect himself under
section 180 (2). But, Robert cannot escape his liability under section 588G.
Conclusion
Phil and Robert are in violation of their duties and Phil can avail the benefit of section 180 (2).
Question 3
Issue A
i. Is Francis have contractual relation with Allan for Kiss items?
ii. Is Francis is bound by Status Quo albums. If yes, can Rick be held liable?
Law
An agent is the authorized representatives of the principal who has power to enter into contracts
with third parties on behalf of the principal. The authority includes: (Gibson and Fraser, 2003)
The power which is granted to the agent expressly or impliedly by the principal is actual
authority ((Hely-Hutchinson v Brayhead [1968].. The power which is granted to the agent by any
representation which makes the outsider believe that the agent has power to bind the principal is
apparent authority (Freeman and Lockyer v Buckhurst park Properties [1964]).

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Application
Francis is the master/principal of agent Rick. There are two issues involved which are dealt
herein under:
i. Francis grants power to Rick to buy Kiss items from Allan up to $25,000. Rick buys
the same but for $32,000. An express actual power is given to Rick to buy Kiss items.
Thos power is in the knowledge of Allan. But, nothing is mentioned to Allan that the
power is restrained to $25,000. By not specifying the limitation a representation is
made to Allan that Rick has power to buy kiss items up to no monetary limits. Thus,
the express authority is converted into ostensible authority and the contract is binding
provided Allan is acting in good faith.
ii. Rick also purchased 3 original Status Quo albums but has no authority to do so. Now,
if Allan is acting in faith and is under belief that Rick is authored then the contract
worth $45,000 is binding. Francis can sue Rick personally for the losses.
Conclusion
Thus, Francis is bound by both the transaction, that is, kiss and status Quo items and can sue
Rick personally for the losses.
Issue B
In what manner Rick is in breach of his duties and the consequences there of?
Law
Every agent has several duties to comply with against his principal, which includes duty of
confidentiality and secrecy, duty to render accounts, duty to obey, duty to not to disclose
information, duty to act as per directions, etc. (Gibson and Fraser, 2003)
Violation of duties results in consequences of damages, compensation, redemption of accounts,
loss of profits etc.

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Application
Francis has specifically instructed Rick that he must not tell about the purchase to any one,
however, this command was violated by Rick as he told 3 of his friends. Also, he was directly to
carry out purchase up to $ 25,000 but he exceeded his power and bought goods for $32,000.
He also purchased Status quo items which he was not authored, so, since the contract is
enforceable then he must make good the loss suffered to Francis.
Conclusion
So, Rick can be held personally liable for the losses.
Question 4
Issue A
To evaluate the position of Prue under the law of negligence against the Bilton Hotel and
RuPeter?
Law
The law of negligence hold the defendant liable if any loss is caused to the plaintiff because of
his acts and is held in Donoghue v Stevenson (1932). The prime elements are: (Kelly, et.al, 2017)
i. The duty of care should be carried out against the plaintiff who are neighbors are
foreseeable (Barnett vPacker(1940).
ii. The duty does not meet the level of care that is required and thus breach is incurred;
iii. The loss is caused which is because of the breach and is not remote (Junior Books Ltd
v Veitchi Co Ltd [1983].
Application
Prue is indulged in the profession of modeling and is interested in becoming an actor. She has to
visit Bilton Hotel for an event and thus she approached RuPeter for a gown. It is submitted that
Prue has the right to sue RuPeter because:
i. RuPeter is a designer from which a gown was ordered by Prue. The gown is to be
worne by Prue and this fact is in the knowledge of Rupeter. Thus, as per Donoghue v

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StevensonRuPeterowns duty of care for Prue as the impact of the gown will fall upon
Prue directly and thus there is nearness amid the parties. Also, the presence of Prue is
foreseeable by Rupeter. Thus, the duty exists.
ii. The gown which is provided by Rupeter must be defect free as he was aware that
Prue will wear the same. But, this duty is breached by RuPeter because the fabric
from which gown is prepared have toxic material and the same was not washed and
removed by RuPeter before delivery. He has a duty to provide safe gown but this duty
was not comply with;
iii. Now, because of the gown, Prue suffered boils on skin, rashes and fever. These
damages are caused because of gown and these damages are anticipated by Rupeter
reasonably. Thus, damage is also caused.
So, RuPeter is negligent.
Also, because of the rashes and pain she become dizzy and fall resulting in injury in legs. This
injury has no relevance on the part of hotel. No breach of duty is incurred by hotel to impose
liability under the law of negligence.
Conclusion
Prue can sue Rupeter under negligence but cannot sue Bilton hotel as the damage caused is not
because if any breach of duty by the hotel.
Issue B
If Prue is successful in her action, then, to evaluate the damages she can claim?
Law
In the law of negligence, it is necessary that damage must be caused to hold the defendant liable.
The damage must be:
i. Causation – Should be caused because of the breach of duty;
ii. Foreseeable – Should be reasonably foreseeable by the defendant.

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Application
It is submitted that Prue because of the gown suffered from boils on skin, rashes and fever. These
are the damages that are caused because of breach and can be anticipated. Thus, Rupeter is liable
for such losses. RuPeter is also liable for the medical expenses of $15 000.
Also, she suffers loss of income of $10 million and movie of $5 million, but, this loss I too
remote and thus RuPeter is not liable for the same.
Conclusion
So, Prue can sue RuPeter for some of her damages.
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Reference List
Books/Articles/Journals
Chitty, J. (2012). Chitty on Contracts, Volume 1.Sweet & Maxwell.
Carter, J. (2013). Contract Law in Australia, LexisNexis Butterworths, 2013.
Gibson, A and Fraser, D. (2013). Business Law 2014, Pearson Higher Education AU.
Kelly, D, Hammer, R, Hendy, J. (2017). Business law. third edition, Routledge.
Legislation
The Corporation Act 2001
Case Law
ASIC v Rich & Ors (2003).
Barnett vPacker(1940).
Donoghue v Stevenson (1932, HL);
Freeman and Lockyer v Buckhurst park Properties [1964].
Hely-Hutchinson v Brayhead [1968].
Masters v Cameron (1954),
Junior Books Ltd v Veitchi Co Ltd [1983] 1 AC 520.
Kuwait Asia Bank EC v National Mutual Nominees Ltd [1991] AC 187.
Tabcorp Holdings Limited v The State of Victoria [2014]
Talbot v NRMA Ltd (2001).
Woodgate v Davis (2002) 20 ACLC 1314)