Business Law: Contract Breach and Contractual Obligations Analysis

This assignment delves into the realm of business law, specifically examining contractual disputes and obligations within the context of the Corporations Act 2001 (Cth). The first scenario explores a breach of contract by Michele, a party to an agreement with John and Motorbikes Pty Ltd, focusing on whether her actions constitute a breach under Section 121(1) and 121(2) of the Act. The analysis considers the elements of a valid contract and potential grounds for termination, referencing relevant case law such as Frumar vs. Guilfoyle Developments Pty Ltd. and Crown vs. Clarke. The second scenario involves George, the owner of a cake shop, who has signed a contract to sell the business to Cakes Pty Ltd. and now seeks to retract the agreement. The assessment investigates whether George remains bound by the contract, considering his capacity to contract, the absence of undue influence, and the understanding of the contract terms. The analysis again references relevant legal precedents, including Balfour v Balfour and ABN Amro Bank NV vs. Bathurst Regional Council, to determine the enforceability of the contract and George's obligations. This comprehensive analysis provides a clear understanding of contract law principles and their application in business settings.

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LAW OF BUSINESS ASSOCIATION
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Q1.
Issue: A contract describes a legal document which binds two or more parties to one
another. It needs one or both parties to meet the obligation ahead of its completion. Termination
of a contract can take place thus making it void of any legal binding. Strictly parties engaged in
such an agreement might trigger its termination. The issues are thus, could Michele be breaching
the contract after signing it under the Section 121(1) and 121 (2) of the Corporation Act 2001
(Cth)? 1
Law: A contract can be terminated due to lack of consideration; performance
impossibility, contract breach, initial agreement, contract rescission, contract completion, the
statute of fraud, mutual mistake and misrepresentation. A contract must be legally binding and
enforceable by law to and be an agreement made between two or additional parties. In this case,
the termination of the contract seems to be caused by breach of a contract. Therefore, there is a
dispute between John and Motorbikes Pty Ltd. It is true that a contract has been signed by the
three parties. However, one party, Michelle is breaching the contract based on a claim of too
much payment for the motorbike. Thus, there is a dispute between the company and John. Thu
the focus is to check whether the four elements of a contract are present to make this contract a
binding one.
Application: In this case, there is a dispute, and the parties are arguing whether the
contract or fundamental part of the contract, have been breached. The contract is between John
and the company alongside Michelle, a contract’s party wants to end it. She Motorbikes Pty
Ltd.’s owner alongside Tim and director remains bound to contract and hence the firm. Being
1 Corporation Act 2001

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that they Tim and Michele signed that contract at the time they purchased motorbike of John
implies their firm is bound by it. If they want to end contact, it is a requirement for them to agree
to termination. The contract termination’s rights emerge in 3 occasions: agreement’s
renunciation or repudiation by a party; reasonably severe non-essential term breach; and a crucial
term’s violation. Here, if right to terminate surfaces, John shall decide on to either confirm the
contract and then proceed to claiming breach damages or he could end it and then claim
complete loss of bargain damages. The company further needs to defend termination based on
having a lawful right to perform this as well as if they stood knowledgeable or not during
contract signing. As observed in Frumar vs. Guilfoyle Developments Pty Ltd. (2014) NSWCA
225. 2 A significant element in the definition of if parties to a contract to have an intention of
immediately bound by the change to the contract is existence of essential by either party to a
rapid agreement to other change as observed in Crown vs. Clarke (1927) 40 CLR 227. 3 The
challenge in demonstrating oral contract is further demonstrated here.
To sum up, Michelle, one of the owners of the firm already signed a contract. The signing
implied she had consented to contract terms. For her to later wish to withdraw from the contract
still leaves the company bound by a contract. Thus, Motorbikes Pty Ltd. remains bound by the
contract.
Q2.
Issue: Here, George remains the Cake shop’s owner where Sylvia and Gerard want to
purchase. The company has been registered by them as “Cakes Pty Ltd”. Stamping of the seal is,
however, done for the company during contract signing implying that George has entered a
2 Frumar vs. Guilfoyle Developments Pty Ltd. (2014) NSWCA 225.
3 Crown vs. Clarke (1927) 40 CLR 227

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contract with Cakes Pty Ltd. Gerard and Sylvia are only witnesses to contract to sign. Here, the
issues are that George needs the shop back, yet he already had signed a contract of selling thiss
shop. Here, is Gerard breaching the contract as reflected in Crown vs. Clarke (1927) 40 CLR
227?4
Law: A contact merely is an agreement to do/not do something. The contract needs to be
enforceable and legally binding to be valid. The agreement must be highlighted to bar disputes.
Here, George already signed a contract to sell the shop needs it back since he thinks he engaged
in a bad idea to sell it. Gerard now wishes to terminate the contract. For him to be bound by this
contract, George must have the legal ability to form a contract or capacity to contract. Further,
improper persuasion, threats, coercion, and the false statement must never have been utilized to
force him to sign a contract as highlighted in Balfour vs. Balfour [1919] 2 KB 571. 5 Both
parties, Cakes Pty Ltd. and George, must have engaged in mistake. Further, George must never
have assumed the risk or error contractually. It is imperative to that an individual who signs a
given contract is presumed to comprehend it is bound to contract’s terms.
Application: Once he has signed a contract, George remains bound by it. Signing the
contract implied that George was aware intensely of terms of agreement. Further, no evidence
showing that improper persuasion, threats, false statement, coercion were employed by either
Sylvia or Gerard to compel George to sign it. Further, no evidence telling us that a mistake
existed in fundamental assumption upon which contract is anchored for it to be terminated.
4 Crown vs. Clarke (1927) 40 CLR 227?
5 Balfour v Balfour [1919] 2 KB 571

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Hence, George remains presumed to have fathomed the contract and stays bound by the contract.
As observed in “ABN Amro Bank NV vs. Bathurst Regional Council (2014) FCAFC 65”. 6 The
former promised to a financial product with some characteristics for “Local Government
Financial Services Pty Ltd”. It was considered by Federal Court whether the terms must have
been implicit by S.12ED of ASIC Act 2001 (Cth) (ASIC ACT) that needed ABN Amro to come
up with a note with a degree of security corresponding an “AAA’ rating as seen in “Beaton vs.
McDevitt (1987) 13 NSWLR 162”. 7
To sum up, by George’s agreement to sell the shop on his free will and going further to
sign a contract, George remains legally bound by the contract. By signing a contract, George
showcases he had read and comprehended contract terms.
References
Balfour v Balfour [1919] 2 KB 571
6 ABN Amro Bank NV vs. Bathurst Regional Council (2014) FCAFC 65.
7 Beaton v McDivitt (1987) 13 NSWLR 162

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Beaton v McDivitt (1987) 13 NSWLR 162
Corporation Act 2001
Crown v Clarke (1927) 40 CLR 227