Business Law Assignment: Contract, Agency, and Property Law Analysis

This business law assignment solution addresses several key areas of law. Question 1 analyzes contract law, specifically the enforceability of an agreement between family members, focusing on offer, acceptance, and intention to create legal relations, citing the Jones v Padavatton case. Question 2 examines contract law, determining the existence of a binding contract between parties exchanging offers and counter-offers, referencing the Entores Ltd v Miles Far East Corporation case. Question 3 delves into agency law, exploring the liability of a principal for an agent's actions, even if the agent exceeds their authority, and the concept of vicarious liability. Question 4 focuses on property law (intellectual property), specifically copyright infringement in the context of music composition, and the remedies available to the copyright holder. Finally, Question 5 addresses property law (real property), analyzing the enforceability of a restraint of trade clause in a business sale, considering reasonableness and legitimate business interests, referencing Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd case. The solution provides a detailed analysis of each scenario, citing relevant case law and legal principles to support its conclusions.

BUSINESS LAW
ASSIGNMENT
Student Name
[Pick the date]

Question 1
Contract law
Legal Issue
The issue is to ascertain whether an enforceable contract exists between Jennifer and her
grandmother Betty and whether Jennifer can sue Batty for not fulfilling the promise of
transferring the house to Jennifer.
Applicable Law
Presence of valid offer, acceptance, and consideration are the key aspects that must present in
any contract. Further, the capacity of the parties and intention of the parties to enact a contract is
also imperative. The intention of the contractual parties will be a pivotal essential when the
parties are connected in a domestic/social relationship. This is because in the lack or absence of
intention on the part of the parties, no contractual liabilities would arise1. In this regards, the
breach of the contract would not provide any rights to the party to claim for the damages. Hence,
In domestic/social contracts, it is essential that parties must conduct in a manner which
highlights the intention to enter into legal relationship or else it would be assumed that the
intention to enter into legal relationship is not present. The judgement of Jones v Padavatton2
case is the testimony of this aspect3.
Application
It can be seen that Jennifer and Betty are connected parties and have enacted a contract. As per
the contract, Betty has made a promise to Jennifer that she will provide the ownership of her
house if Jennifer leaves Adelaide and moves to Mount Gambier. Jennifer has left the place, her
family and job and started living in Mount Gambier with her grandmother Betty. It can be said
that there is no evidence present in the case that reflects that parties have intention to enact a
legal relationship. Hence, no enforceable contract has been formed between the parties due to the
lack of intention to create legal relationship.
1 Andy Gibson, Douglas Fraser, Business Law (Pearson Publications., 8th e, 2014)
2 Jones v Padavatton [1968] EWCA Civ 4
3 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 4th ed, 2012)
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Conclusion
Jennifer and Betty do not have the intention to create legal relationship and therefore, no
enforceable contract has been formed between the parties. Hence, Jennifer cannot sue Betty for
the act of non-transferring the ownership of house.
Question 2
Contract law
Legal Issue
The central issue is to comment whether the parties Sanche and Richard are bound in an
enforceable contract or not.
Applicable Law
A conditional acceptance is referred to as counter-offer. When the offeree has sent a counteroffer
against the original offer to the offeror, then the original offer would no longer be available for
the acceptance for offeree. The verdict of Entores Ltd v Miles Far East Corporation4 case is the
evidence of the above fact. It is noteworthy that when the offeree has used electronic mode for
communicating (fax, mail) the acceptance, then acceptance would be enforceable only when the
respective mail or fax would have received by the offeror in the specified time period that the
offer is still valid5.
Application
Offeror Sanche has made an offer to offeree Richard in regards to sell Holden Monaro car. He
has also stated that the consideration amount is $60,000 and this offer will be valid for
acceptance until 5 pm on February 3, 2015. The very same day, Richard has got the offer and has
sent a counter offer through message by saying that he can purchase the Holden Monaro car for
the consideration of $55,000. It is apparent that due to counter offer, the original offer gets
revoked and hence, will not be available for acceptance for Richard. Hence, Richard cannot
enact a contract with Sanche on the account of original offer.
4 Entores Ltd v Miles Far East Corporation [11] in 1955
5 Robert Bryan Vermeesch, Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 12th ed. 2011)
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Conclusion
There is no contract has been enacted between Richard and Sanche because Richard has made a
counter offer against the original offer and acceptance from Richard would not be termed as
valid acceptance because the original offer gets terminated due to original offer.
Question 3
Agency law
Legal Issue
The issue is to determine whether the contract enacted by agent with the third party would be
binding on principal or not.
Applicable Law
In law of agency, the authority would be given to a person called agent on the part of principal to
enact contract with external parties. Any contract which is enacted by the agent with a third
party would be held as binding and enforceable on the principal irrespective of the fact that the
agent was authorised to enact such an agreement or not. This is in line with the principle of
vicarious liability where there is obligation on the superior party (i.e. employer) for
compensating any negligence or fraudulent act conducted by inferior party (i.e. employee) 6.
An exception to the above principle arises under the scenario when there exists reasonable
suspicion in the mind of the third party or there is information regarding agent not being
authorised to enact the contract. It is noteworthy that the damages suffered by the principal on
account of such contracts where the agent lacks the authority, can be recovered from the agent
owing to breach of fiduciary duty7.
Application
6 Pendleton, Wayne & Vickery, Roger, Australian business law: principles and applications, (Pearson Publications, 5th ed., 2015)
7 Pathinayake, Athule, Commercial and Corporations Law, (Thomson-Reuters, 2nd ed., 2014)
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Based on the given facts, the principal is Kevin while Ravi acts as the agent responsible for sale
of furniture. As per instruction from Kevin, the dining table must not be sold for an amount
lower than $ 7,000. Ravi floats an advertisement for the same and attracts a potential buyer
Theresa willing to pay $ 6,500 for the table. This offer is accepted by agent (Ravi). During the
delivery of the table, Theresa notices a scratch on the table which earlier went unnoticed and
hence she demand her money back which Ravi refuses. In accordance with the agency law and
vicarious liability principle the amount of $ 6,500, would be returned by Kevin to Theresa since
she entered the contract is good faith without knowing that the true owner of the table was
Kevin. For recovering his loss, Kevin can sue Ravi.
Conclusion
It is apparent based on the above discussion that the refund would be given to Theresa. Also,
Kevin can sue Ravi for violation of fiduciary duties.
Question 4
Property law (Intellectual Property)
Legal Issue
The central issue is to ascertain if a copyright infringement has occurred owing to Declan’s
actions.
Applicable law
In relation to music and other related creations, there is granting of copyright so that the creator
can enjoy the benefits by protecting the intellectual property rights. The definition of copyright
refers to “exclusive and assignable legal right” for the original creator so as the creator may use
the same in the manner that he/she deems fit. Copyright Act 1968 contains the legal provisions
through which the copyright tends to be protected8. As per this Act, copyright infringement is not
permissible and only authorised users are allowed the usage of the same. Further, usage for
8 Ibid. 1
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commercial purpose when the requisite consent is lacking results in damages to be provided to
the creator for financial losses occurred owing to royalty loss9.
Application
A per the relevant details, it is clear that Trevor has composed music with the use of a given
software. However, before selling this music, he share this with his friends one of whom is
Declan. After listening to Trevor’s music, Declan goes home and composes a song that has a
chord very similar to that of Trevor. This is evidence of copying on part of Declan as he made
the composition only after listening to Trevor’s composition. Declan also sells this to a company
and hence earns money from the same. Since the original creator is Trevor, hence the copyright
should also be possessed by him. Hence, compensation would be provided by Declan for sales
that Trevor lost in Europe due to copyright infringement. Also, Declan cannot continue selling
his pirated music.
Conclusion
From the above, it is evident that copyright infringement has happened owing to Declan and
hence compensation would be payable to Trevor. Also, Declan would have to stop his music
selling or an injunction order would be given.
Question 5
Property law (Real Property)
Legal Issue
The central issue is to highlight whether the restraint of trade clause would be applicable and
hence legally enforceable or not.
Applicable law
9 Ibid. 2
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As per Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd10 case, the validity of
restraint of trade clause depends on whether any of the underlying parties can highlight that it is
reasonable. For this clause to be reasonable, it must safeguard the legitimate business interest of
the buyer who purchased the business. Additionally, the above factor is not considered in
isolation rather in conjunction with supporting factors like nature of constraints, business type
and relative bargaining power at the time of the enactment of the clause11.
Application
Based on the given scenario, it is evident that Maddie is the buyer for the hairdressing business
and has enacted the restraint of trade clause so as ensure that Clare (seller) cannot conduct
business in Adelaide for the next 10 years. The clause enacted is clearly unreasonable as it bars
Clare from doing any businesses for 10 years and does not limit only to hairdressing business.
Further, 10 years seems an unreasonably long time considering the type of business sold.
Besides, Maddie in the given case is posing objections to opening a café which is unreasonable
considering that it is unrelated with the hairdressing business.
Conclusion
Hence, no breach of the restraint clause has occurred in this case owing to the unreasonableness
of the same.
10 Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535
11 Ibid.5
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Bibliography
Davenport, Shayne & Parker, David, Business and Law in Australia, (LexisNexis Publications,
2nd ed., 2014)
Gibson, Andy & Fraser, Douglas, Business Law, (Pearson Publications, 8th ed., 2014)
Latimer, Paul, Australian business law, (CCH Australia Ltd, 24th ed., 2005)
Pendleton, Wayne & Vickery, Roger, Australian business law: principles and applications,
(Pearson Publications, 5th ed., 2005)
Pathinayake, Athule, Commercial and Corporations Law, (Thomson-Reuters, 2nd ed., 2014)
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