Case Study Analysis: LAW6000 Business and Corporate Law Assignment

This document presents a comprehensive case study analysis of various scenarios in Business and Corporate Law. The analysis covers key legal principles, including contract law, agency law, and the tort of negligence. The first case examines the enforceability of a Heads of Agreement, referencing the Masters v Cameron case to determine if Tina is legally bound to purchase a business. The second case explores directors' duties under the Corporations Act 2001, assessing the liabilities of Phil and Robert concerning unpaid debts and the business judgment rule. The third case delves into agency law, focusing on apparent authority and the liabilities of principals and agents, with reference to Chan Yin Tee v William Jacks and Co. and Castillo v. Case Farms of Ohio. The final case study addresses the tort of negligence, examining Prue's potential claims against Gladrags and the Bilton hotel, and the damages she could claim, referencing Donoghue v Stevenson and Wagon Mound No 1.

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

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CASE STUDY ANALYSIS
Answer 1:
Part A
Issue:
The issue of the present case is whether Tina can be made legally bound to purchase the
business of Jeff because of her signing of the Heads of Agreement.
Rules:
In order to analyze the present case of Tina, the case of Masters v Cameron (1954) 91
CLR 353is to be referred and considered [1]. The decision given by the High Court in the case of
Masters v Cameron held that signed contract can be categorized into three kinds. The first one is
the one where the parties agreed to the contract terms and have intended to be bound
immediately to perform it but they had intention to make in broader or more precise form at the
same time. The second kind is that the circumstance is such that the parties had agreed to the
contract terms and had executed one or more terms on the condition of executing a formal
document. The third kind is that the parties are not ready to be bound by the contract until a
formal document is executed between them. In the 1st and the 2nd kinds, the contract is found to
be valid and binding whereas in the third one, it is not considered to be binding on the concerned
parties.
Application:
If the second kind of the signed contract as laid down in the Masters v Cameron case is
considered, the contract is regarded to be bound on the parties concerned in the contract.
Conclusion:

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CASE STUDY ANALYSIS
Hence, it can be concluded that Tina is legally bound to buy the business.
Part B:
Issue:
The issue of this question whether the contract is binding on Tina in a situation when she
had added an additional conditional term in the Heads of the Agreement.
Rule:
According to the decision of the High Court of Australia in the Master v Cameron (1954)
91 CLR 353 case, a signed contract is of three categories. In the 1st and 2nd types of signed
contract as seen in High court decision, the parties are not bound by the contract as discussed in
the Rules part of the Part A of Question no.1. However, as per the 3rd type, the signed contract is
of such a nature that the parties have no intention to execute and conclude the contract until a
formal contract is done.
Application:
According to the rule discussed above, the parties are not bound by the contract unless
the condition mentioned in the contract is satisfied.
Conclusion:
Hence, Tina is bound to buy the business from Jeff.
Answer 2:
a) Issue:

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CASE STUDY ANALYSIS
Whether Phil is liable to the unpaid debt?
Rules:
According to section 180(1) of the Corporations Act 2001, a director or other officers of
any corporation must utilize his powers to perform his duties as a reasonable person of standard
degree of diligence and care will do being the director or officer of such corporation in similar
situations and has hold the same position and duties in corporation as the officer or director [2].
As per section 180(2) of the said Act, the officer or director of a corporation must take
any judgment or decision for proper reason and in good faith and he must not enjoy any personal
benefit and must take any decision for the company’s best interests.
According to section 181, the officer or director of any corporation must execute his
duties in good faith for the best result of the company.
As per section 182, the director, secretary, employee or other officer of a corporation is
under an obligation of not misusing his position to get an undue benefit for himself or any one or
to cause any loss to the corporation.
According to section 183 of the said act, any person who get any information being the
director, employee or any other office of the corporation must not use such information
inadequately to get any profit for himself or anyone else or for causing loss or damage to the
corporation.
Application:

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CASE STUDY ANALYSIS
According to sections 180,181, 182 and 183 of the Corporations Act 2001, Phil has not
executed his duties to generate the best result of the corporation in spite of being its director, due
to which the LightsBright PTY. LTD. had incurred 75000$ loss.
Conclusion:
It can be held that Phil is personally liable for the unpaid debt..
b) Issue:
The issue of the given case is that whether Robert is liable for the unpaid debt.
Rules:
As per section 588H of the Corporation Act, a direct can be held personally liable for the
new debts incurred by the corporation when such director allowed the corporation to incur a new
debt in spite of knowing that the company is insolvent.
Application:
Robert knew about the financial crisis of the corporation. In spite of that, he made a
transaction with another company.
Conclusion:
It can be held that Robert is personally liable for the debt of 75000$ incurred by its
company.
c) Issue:

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CASE STUDY ANALYSIS
The issue to be analyzed here is whether Phil or Robert is subjected to the ‘best judgment
rule’.
Rules:
According to the ‘business judgment rule’, there lies a presumption that while taking any
decision, the director of any corporation must perform his duty in good faith and in an honest
way so that such action brings best result for the company [3]. it is derived from a legal principle
that allows an immunity to the directors if they have acted in good faith.
Application:
Robert and Phil have executed transactions for their respective companies that did not
produce any positive result, rather resulted in financial loss.
Conclusion:
The said rule is relevant to both of the directors as they had infringed the rule by not
acting for the best result of their respective companies.
Answer:
Part A:
a) Issue:
The issue of the given case is that whether the contract can be enforced by Allan with
Francis for three items.
Rules:

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CASE STUDY ANALYSIS
According to the common law of Agency, ostensible or apparent authority depicts a
situation in which a 3rd party would regard an agent to have an authority to act on behalf of his
principal, even if the agent had no authority, expressed or implied.
In the case of Chan Yin Tee v William Jacks and Co., this principle of apparent authority
is held to be the basis of the principle of estopple where the agent is barred from denying the
existence of his agent to the third party on the condition that a representation through words or
acts, is made to the third party that indicates the agent to be acting for the principal. In such
situation, the principal can be held responsible for the act done by the agent on his behalf [4].
Application:
Allen knew that Rick was the agent of Francis. However, he did not know that Francis
had limited his transaction to 25000$. Hence he was ready to transact with Rick though the
amount exceeded the limit. It is known that the principal is liable for the act of his agent under
the doctrine of apparent authority.
Conclusion:
After going through the rules and application discussed above, it can be concluded that
Allan can enforce the contract with Francis.
b) issue:
whether Francis is bound to proceed to buy the SQ albums from Allan as per the contract and
for the results if he is not bound to buy.
Rules:

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CASE STUDY ANALYSIS
As per the principle of apparent authority under the provisions of the common law agency, a
principle is responsible for the act done by his agent till the third party is aware of the existence
of the agency. But when it is known to the 3rd party that the agent is acting beyond his duty or is
causing its breach, then the principal can not be held responsible. This type of observation was
seen in the famous Castillo v. Case Farms of Ohio, 96 F. Supp. 2d 578 (W.D. Tex. 1999) case
[4].
Application:
Francis informed Allan that Rick had no authority to transact beyond 25000$. Still he
made an agreement with Rick again for 45000$.
Conclusion:
Thus Francis is not liable to proceed to buy the SQ albums from Allan and moreover,
Rick can be made liable for the next transaction.
Part B:
Rick has gone beyond the monetary limit set by Francis and has made transaction with
Allan for 32000$. In addition to this, Francis intimidated Allan that Rick had no authorization to
make transaction of 32000$ as it was beyond his limit. In spite of knowing this, Allan again
makes a transaction with Rick for 45000$.
In the first instance of transaction, Francis can make Rick personally liable or can even
terminate the agency with him. For the 2nd incident, Allan can make Rick liable for the contract
and can even recover the amount of money from him.
Answer 4:

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CASE STUDY ANALYSIS
a) issue:
the issue of this case is whether legal action can be taken by Prue against Gladrags and
the Bilton hotel.
Rules:
As per the tort of negligence, in order to succeed in a claim for negligence, the claimant
has to prove that the defendant had a duty to take care of the claimant, that the defendant has
caused the breach of such duty and due to it, the claimant has suffered damages [5]. All these
conditions were given in the Donoghue v Stevenson [1932] AC 562 case [6].
Application:
From the facts of the case, it is seen that the designer has breached the duty of care to her,
due to which he suffered both monetary loss and physical injury. Hence she can sue against the
Gladrags, the boutique of Rupert.
But, the hotel has not caused any breach of its duty to Prue. She got her leg fractured as
she fell down herself from the stage as she was feeling dizzy.
Conclusion:
Hence Prue can sue GLadrags successfully but not against the hotel.
b) issue:
the issue of the case is what damages Prue can claim if she is successful in her action
against the Gladrags.

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CASE STUDY ANALYSIS
Rules:
In the tort of negligence, damages are awarded to the plaintiff as compensation to restore
the past situation of him before the damage of negligence was occurred to him [8]. The plaintiff
had to prove that the damage caused to him is reasonably foreseeable and was not of too remote
in nature. If the loss or damage caused to him can be foreseen reasonably, then the defendant is
liable to pay for the total loss, even when such loss is much greater than apprehended. All these
were found in the famous Wagon Mound No 1[1961] AC 388 case [9].
Application and concluison:
When Prue became successful in her claim for negligence against the Gladrags, she could
demand such amount as compensation according to the loss and injury she suffered. She could
claim for 10 million $ for her loss of income as a model, 5 million $ for the cancelled movie deal
and 15000$ for the hospital bill.

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CASE STUDY ANALYSIS
References:
1. Masters v Cameron (1954) 91 CLR 353.
2. The Corporations Act 2001.
3. Gurrea-Martínez A. Re-examining the law and economics of the business judgment rule: notes
for its implementation in non-US jurisdictions. Journal of Corporate Law Studies. 2018 Jul
3;18(2):417-38.
4. Chan Yin Tee v William Jacks and Co.
5. Castillo v. Case Farms of Ohio, 96 F. Supp. 2d 578 (W.D. Tex. 1999).
6. Luntz H, Hambly D, Burns K, Dietrich J, Foster N, Grant G, Harder S. Torts: cases and
commentary. LexisNexis Butterworths; 2017.
7. Donoghue v Stevenson [1932] AC 562.
8. Stickley AP. Australian torts law. LexisNexis Butterworths; 2016.
9. Wagon Mound No 1[1961] AC 388.