Case Assignment: Corporation and Business Law Analysis (BUS2010)

This case study examines a business law scenario involving Charlie Martin and the company PHOCCI, focusing on contract law principles. It analyzes the validity of contracts, including the impact of misrepresentation and standard form contracts. The study explores breach of contract issues, such ...Read More

Running head: CORPORATION AND BUSINESS LAW
Corporation and Business Law
Name of the Student
Name of the University
Author Note

1CORPORATION AND BUSINESS LAW
1. A valid contract entered into by parties must create a legal relationship and the same
must be initiated by an offer followed by an acceptance of such offer. The contract
must be based on the terms that have been provided in the offer (Cartwright, 2016). It
must not include or exclude any terms that have been provided in the offer and upon
which the offeree has based his consent upon. However, in case there is a written
contract the offeree must read the terms of the contract carefully before signing it.
This is because after signing the same, the offeree cannot claim a repudiation under
misrepresentation. The signing the contract would be construed as if he has read the
documents carefully before signing the contract. Therefore, Charlie Martin should
have read the documents of the contract carefully before signing it and have checked
whether the terms written in the contract document matches with the original offer
that has been made to him and upon which he has based his consent.
2. A standard form of contract implies a contract, the terms and conditions of which are
fixed by the offeror and the offeree does not have an option to negotiate the same. The
offeree may either accept the offer or reject it without any chance of negotiating the
same (Cartwright, 2016). These kind of contracts are mainly used in situations where
a same kind of contract is entered into by an organisation with different clients of
theirs. This will reduce the time spent behind each contract and reduce the price of the
formalities relating to the contract. In this present situation, PHOCCI is an company
which franchises many businesses, the franchisee agreement of PHOCCI has been
created to be for the purpose of entering into contracts with all the businesses it is
going to franchise. Therefore, in Franchisee agreement of PHOCCI, a standard form
of contract has been used.
3. A valid contract must always be instituted by an offer made by one party, which must
have been accepted by the other party forming an agreement (Waddams, 2017). In
this case, there was an offer made by PHOCCI to enter into a contract with Charlie
Martin to franchise the business of Charlie Martin, which implies a proper offer. The
offer has been accepted by Charlie Martin by signing a contract agreement having the
effect of a proper acceptance forming an agreement. The consideration relating to the
contract in this case is $75,000 and a five percent royalty of gross weekly sales to be
paid by Charlie Martin to PHOCCI in return of availing their franchise services. The
free consent of the parties in entering into the contract is needed to be analysed. The
consent of Charlie Martin was based on the report presented by the representative of
PHOCCI named Nell. The report have been found to be misleading and untrue. This
would render the contract to be voidable giving Charlie Martin an option of either
repudiating the contract or ratify it. In this case after realising the same, Charlie
Martin failed to rescind the contract. This would have the effect of ratification of the
contract creating legal obligations to both the parties to the contract. This makes the
contract valid and requires its performance to be effected.
4. The contract being a valid one requires the performance of the terms contained in the
contract (Waddams, 2017). In this case, the franchise agreement contained a term for
the payment of a weekly royalty and marketing fund, which Charlie Martin failed to
make. This failure to make such payments is owing to the severe financial distress
that the company have been facing. This is a breach of an essential part of the contract
as these terms forms the part of the consideration of the contract. This type of breach
has the effect of creation of rights to the aggrieved party and an obligation towards the

2CORPORATION AND BUSINESS LAW
party breaching the terms of the contract. The aggrieved party, in this situation
PHOCCI has the option of enforcing the contract and demanding performance of the
same, it also has an option of repudiating the contract claiming damages.
5. In order to succeed in an action for breach of contract, the plaintiff must prove that the
breach have been committed in relation to a term of the contract, which is essential to
the contract and the whole contract is depending upon the same. The contract would
not have entered into if the same has not been present in the contract. The plaintiff
must prove that the term, which has been breached was forming the subject-matter of
the contract (Campbell, Mulcahy & Wheeler, 2017). The breach of such a term of the
contract would render the contract to be invalid and will incur a right towards the
aggrieved party.
6. The contract between Charlie Martin and his younger sibling has been instituted with
an offer by Charlie Martin offering to provide a ten percent ownership to his younger
sibling for the payment of $50,000 by his younger sibling towards the payment for
franchise. This offer was accepted by his younger sibling. This forms a valid contract
between Charlie Martin and his younger sibling. The contract is formed on the basis
of an offer made by Charlie Martin followed by an acceptance of the same which has
formed a valid agreement of the same. The contract was entered into on the basis of a
valid agreement. The consent of the parties to the contract has been obtained without
the influence of any duress, misleading representations or mistake. The consideration
in the agreement was also valid. This makes the contract valid as it contains all the
requirements of a valid contract (Campbell, Mulcahy & Wheeler, 2017). Therefore,
the contract between Charlie Martin and his younger brother is valid.
7. The promise made by Nell Madison to Charlie Martin has been extended to provide
Charlie Martin with an extra time for making payment for the royalty. This agreement
between Nell Madison and Charlie Martin was made owing to the financial distress
that had been faced by the business of Charlie Martin. The agreement does not
provide for a consideration to Nell Madison for providing extra time to Charlie
Martin. This lack of consideration in the agreement does not satisfy the requirements
of a valid contract regarding the consideration of a contract. This would not confer the
agreement with the status of a valid contract for lacking consideration, as
consideration is an essential requirement of a valid contract (Poole, 2016). The court
will view the promise to be a mere agreement, which does not attain the status of a
valid contract. Owing to this, the agreement will not be binding on the parties and will
not create any legal obligations towards the parties to the contract. This will not create
any rights to the parties to enforce the contract. The parties to the promise also does
not possess any remedy if the promise is violated by any of the parties. No claim for
damages will arise in case of breach of the agreement constituted by this promise.
8. The judge will view the Entire Agreement clause of the contract to be binding upon
the parties as the same forms an essential part of the contract, which was valid (Poole,
2016). Moreover, the agreement that contained this clause was signed by the both the
parties. The signing of the same will construe the acknowledgement of the entire
clause by both the parties. The parties signing this clause have agreed upon the same
and had agreed that all the previous agreements would be rendered ineffective and
invalid after signing the same. Any previous understanding and agreement made prior
to this agreement will stand cancelled. The business is not responsible for any

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representations, inducements, warranties, or promises that has been made by any
representatives of the company prior to this agreement. Such agreements which are
rendered void may have been made directly, indirectly, collaterally, orally or
otherwise, but in all such cases, the same will not be applicable to be enforced under
the present agreement.
9. The agreements and breaches that have arisen from the contract made between
Charlie Martin and PHOCCI has led to a dispute, which demands litigation for the
resolution of the same. In this case, the non-payment made by Charlie Martin and
misrepresentations made by Nell, the representative of PHOCCI will render the the
contract to be addressed through a litigation. However, the institution of a litigation
by both the parties can be avoided if the parties opt for an arbitration for addressing
the disputes of arising out of their contract. For the purpose of this, they can opt for
Alternative Dispute Resolution(ADR). ADR is a process, which involves techniques
and ways to solve disputes that have been arrived upon by the parties, with the help of
a third party addressing the issues and arriving at an agreement considering the
situations relating to both the parties to the dispute (Billingsley & Ahmed, 2016). This
is a way of dispute resolution that can avoid the litigation and provides for an easy an
speedy remedy for both the parties.

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Reference
Cartwright, J. (2016). Contract law: An introduction to the English law of contract for the
civil lawyer. Bloomsbury Publishing.
Waddams, S. (2017). Contract Law and the Challenges of Computer Technology. The Oxford
Handbook of Law, Regulation and Technology, 317.
Campbell, D., Mulcahy, L., & Wheeler, S. (Eds.). (2017). Changing concepts of contract:
essays in honour of Ian Macneil. Springer.
Poole, J. (2016). Textbook on contract law. Oxford University Press.
Billingsley, B., & Ahmed, M. (2016). Evolution, revolution and culture shift: A critical
analysis of compulsory ADR in England and Canada. Common Law World Review,
45(2-3), 186-213.