Commercial and Corporation Law Assignment: Answers to Questions

This document presents a comprehensive solution to a commercial and corporation law assignment, addressing two distinct scenarios. The first scenario examines a breach of contract involving the supply of cars, analyzing the application of promissory estoppel and the principles established in Pinnel's case. It explores whether a party can claim damages for non-performance and whether the doctrine of promissory estoppel can be used as a defense. The second scenario delves into contract frustration, focusing on an event rental agreement disrupted by an accident. It investigates the implications of contract frustration, referencing the landmark cases of Taylor v Caldwell and Codelfa Construction Pty Limited v SRA of New South Wales. The assignment offers detailed legal analysis, relevant case law, and a conclusion on the issues presented.

Running head: COMMERCIAL AND CORPORATION LAW
Commercial and Corporation law
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer 2..........................................................................................................................................2
Issue.............................................................................................................................................2
Relevant legal rules......................................................................................................................2
Application..................................................................................................................................4
Conclusion...................................................................................................................................6
Answer 3..........................................................................................................................................6
Issues............................................................................................................................................6
Relevant legal rules......................................................................................................................6
Application..................................................................................................................................8
Conclusion...................................................................................................................................9
References......................................................................................................................................11

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Answer 2
Issue
i. whether the failure of Gareth to fulfill his promise to provide cars will entitle Peninsula
Tours to make a legitimate claim of $1200
ii. Can Gareth seek any remedy against Peninsula Tours if it accepts three cars after he had
incurred expenses for its repair and recruiting drivers?
Relevant legal rules
Exemption of Promissory Estoppel
The concept of promissory estoppel is defined as an equitable doctrine that prevents a
person from refuting a promise that the person had made earlier. This concept had been further
reaffirmed by the court in the landmark case of Tool Metal Manufacturing v Tungsten [1955] 1
WLR 761. In order to make successful claims under the concept of promissory estoppel, certain
requirements must be satisfied. Firstly, the promise made by the person must be clear and
unambiguous. Secondly, there must be an existence of contractual obligation, which has been
subjected to modifications. Thirdly, there have been certain circumstantial changes with respect
to both the parties (Barnett and Oman 2016). Lastly, the court must be satisfied that denial of the
promise shall be inequitable. In the Tool Metal case, the court held that it is crucial to establish
such elements to succeed in the claims.
However, there are circumstances under which the court may reject the claims made
under the doctrine of promissory estoppel. In Conbe v Combe [1951] 2 KB 215, a husband
failed to fulfill a promise that he made to his wife. The promise was related to certain payment

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whih was to be made to her but he failed to execute the promise. The wife initiated legal
proceedings against him stating that doctrine of promissory estoppels shall be applicable in this
situation as failing to make such payment; her husband cannot deny that he had promised to
fulfill such promise. Nevertheless, the court rejected the claim stating that the concept of
‘promissory estoppel’ doctrine shall not be granted under such circumstances, as this legal
principle can be used as ‘sword and not as a shield’ In other words, the court explained that this
legal principle can be used as a defense but not as a ground to make any claim. Furthermore, the
other ground for which the court did not grant the claim was that it did not include any
modification in the contractual promise that existed between the parties (Fried 2015). This case
is significant as it recognizes the importance of all the elements that must be established to make
a successful claim.
The other requirement, which states that the doctrine shall only be applicable if it
amounts to ‘inequitable’ between the parties. This requirement has been further established in the
case of D&C Builders v Rees [1966] 2 WLR 28. It was established that in case of either parties
take an undue advantage of the position of the other party, the doctrine cannot be applicable
when its application shall result in inequitable.
The significance of the doctrine was further explained in the landmark case of
Woodhouse A.C. Israel Cocoa Ltd v Nigerian Product Marketing Co Ltd [1972] AC 74. In this
case, a contract was required to be paid by means of pound and sterling. The seller mistakenly
sent an inaccurate invoice, which included payment in the form of Kenyan shillings and showed
equal value of both the currency. The buyer did not make any objection and accepted the
inaccurate invoice as well the delivery accordingly. Later, with a fall in the value of the pound,
the buyer claimed that payment be made by means of sterling as it was mentioned within the

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contract. In respond to the legal claim brought against the buyer, the court held that the
acceptance of the invoice was clear without any ambiguity, which amounts to implied promise
regarding the acceptance of the contractual terms.
Part Payment of debt is inadequate consideration
Any payment that has been made partly to fulfill the debt cannot be considered as an
adequate consideration and this principle was established in the landmark Pinnel’s case [1602] 5
Rep 117. The court in this case held that the plaintiff is entitled to make necessary claims for the
outstanding amount of the debt that the defendant has owed to the plaintiff. This claim can be
made even if the plaintiff has promised not to make any further claims for the outstanding
amount that the plaintiff owes and the defendant has only partly paid for it.
Part payment is an inadequate consideration but is subjected to an exception, where it is
considered as adequate consideration provided the payment have been made prior to the date of
the actual payment. Under such circumstances, the promise shall be considered as valid
(Cartwright 2016).
Application
On the facts here, Gareth and Peninsula Tours have entered into a contract where Gareth
made a promise to provide five cars to Peninsula Tours. However, Gareth could not fulfill his
promise because his cars broke down and required to be fixed. Further, the drivers of tehcars also
resigned which require him to recruits new drivers. Hence, he stated that he will be able to
provide peninsula with only three cars presently instead of five as was mentioned in the contract.
Under these circumstances, the principles stipulated in the Pinnel’s case can be applied.

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The promise made on art of Gareth to provide lesser cars than the stipulated amount does
not amount to any additional consideration which entitles Peninsula Tours to claim damages for
the loss that Peninsula Tours will suffer due to non- performance on part of Gareth. In the
absence of additional information additional consideration that is provided by Gareth, it can be
inferred that Peninsula has legal rights to make claims for non-performance of the contract
against Gareth.
Nevertheless, if the legal principle in Combe v Combe [1951] be applied in the given
circumstances, there was a pre-existing contractual duty between Gareth and Peninsula Tours
due to the responsibility of Gareth to provide the Peninsula Tours with five cars. However, there
was an amendment in this duty due to change in the circumstances where the cars broke down
and the drivers resigned. Gareth informed Peninsula Tours about the changes in the
circumstances and informed that he will only be able to provide three cars to Peninsula instead of
five. Moreover, Peninsula Tours made acceptance without making any objections. Under such
circumstances, Gareth may use the doctrine of promissory estoppel in her defense.
The second issue that was related to the legal remedies to which Gareth could be entitled
in case the Peninsula tours accepted three cars after Gareth has repaired the cars and recruited
new drivers, the doctrine of promissory estoppel may be applied again. As was stated by the
court in Combe’s case that the doctrine can be used to defend a claim but not as a ground to
make any claim under the doctrine. Further, based on the decision given in D&C Builders’s case,
if permitting a person to go back to his promise results in inequitable, the doctrine shall notbe
applicable under such circumstances. In this case, Peninsula tours had expressly or impliedly
accepted the delivery of three cars when Gareth told about the damage caused to his car and

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resignation of drivers had left hi with no option but to provide with only three cars to Peninsula
Tours.
Conclusion
In regards to the issue, it can be inferred that Gareth may use the doctrine of promissory
estoppel in his defense against the claim of $1200 from Peninsula Tours. However, Gareth shall
not be entitles to make any claims against Peninsula Tours for non-acceptance of the cars.
Answer 3
Issues
The issues identified after analyzing the facts given in first scenario includes:
 what is the contractual position of Gareth with respect to the Event rental Pty Ltd
 what is the contractual position of Gareth with respect to the singer
 Can Julie make any claims under the given circumstances
Relevant legal rules
In contract law, a contract may be discharged through the doctrine of frustration. The
doctrine enables the contracting parties to discharge the contract. A contract is a frustrated
contract when the change in circumstances with respect to the parties have taken place after the
formation of the contract and such changes makes it impossible for the parties to perform the
contract (Andrews 2015). The change in the circumstances must be such that it is beyond the
control of the contracting parties which makes the performance impossible and does not lead the
contract to achieve its commercial purpose. In the event, a contract is discharged on the ground

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of being frustrated contract, both the contracting parties are discharged from their contractual
obligations and bars them from making any claims for the breach of contract in the future.
In the landmark case of Taylor v Caldwell 3 B & S 826, the court held that a frustrated
contract implies that the subject matter of the contract cannot be achieved due to the change in
the circumstances of the parties which were beyond the control of such contraction parties. In
this case, the plaintiff hired a music hall for a unction in exchange of significant amount but the
hall was destroyed in fire prior to the occurrence of the function. The court rejected claim made
by the plaintiff for her loss as the contract amounted to a frustrated contract which is incapable f
achieving its commercial purpose.
In Codelfa Construction Pty Limited v SRA of New South Wales (1982) 149 CLR 337,
the court has applied the test that would determine whether the contract was frustrated contract
or not. In this case, the plaintiff was prevented to carry out work at a specified time based on the
local council laws subsequent to the formation of the contract. This cause delay in the
completion of the project and the court held that the contract amounts to a frustrated contract.
Nevertheless, certain circumstances exist wherein a contract is not regarded as a
frustrated contract. Such circumstances include conditions where a contract has become difficult
to be carried out or has become more expensive owing to the fault of contracting parties, it shall
not be considered as a frustrated contract (Stone and Devenney 2017). The parties shall be held
responsible for making the contractual obligations difficult to be carried out and such difficulty
was foreseeable along with the presence of a Force majeure clause within the contract.
Further, in Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 9, the court clarified
that mere difficulty in performance of the contract shall not render it as a frustrated contract. In

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this case, the parties were capable of performing the contractual obligations without resulting in
any damages. The changing circumstances must be such that it will not be possible to achieve the
commercial purpose of the contract apart from being difficult to perform the contractual
obligations (Andrews 2015).
Application
As per the given facts, Gareth has entered into a contract with Event Rental Pty wherein
the event company was obligated to provide portable, large electric sound marquees and sound
systems. However, due to the accident that took place two days prior to the occurrence of the
program, the company failed to provide Gareth with the required equipments that was necessary
to organize the program. These facts renders the contract as frustrated and the parties are likely
to be discharged from their future contractual obligations.
This is because the accident that happened was inevitable and beyond the control of both
the contracting parties. Further, it has made the performance of the contractual obligation
impossible due to the change in the circumstances. Thus, the discharge of the contract shall
disentitle both the parties from making any future claims with respect to breach of the contract.
The parties shall not be able to make any claims regarding the breach of the contractual
obligations against each other on the grounds of frustration of contract.
In the given case, the accident was caused without any fault on part of either the
contracting parties to the contract. This implies that the parties could have foreseen neither the
accident nor the cause, which led to the occurrence of the accident. Therefore, it was not
possible for either parties to control the accident which satisfies another requirement that the
change in circumstances of the parties was beyond their control and they could not avert it. The

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other requirement that such change in the circumstances shall make it impossible for the parties
to complete the contract and the contract shall not be able to achieve its commercial purpose.
Thus, under the given circumstances, the doctrine of frustration has been effectively applied
which renders the contract as discharged.
In regards to the second issue, Gareth entered into a contract with the singer who was
hired to sing on the day of the event. The singer refused to sing as she did not find the sound
system to be appropriate. Due to the discharge of the contract between Gareth and Rental event,
the good quality sound system was not provided and Gareth had to arrange for a sound system
that was of poor quality.
Under such circumstances, the singer may bring legal claims on the ground that she will
not sing in the program as the sound system with which she was supposed to sing. Since a good
sound system was not available, the contract formed between the singer and Gareth amounts to
an frustrated contract and should be discharged.
However, the court shall not accept the claim as mere difficulty in performance of the
contractual obligations shall not render a contract as discharged as was mentioned in the case of
Tsakiroglou & Co Ltd. The singer may use the new sound system and carry out the contractual
obligations. Since, the singer did not sing with the new sound system, Gareth may make a valid
claim for breach of contract against the singer.
Further, Julie has traveled inter-state only to attend the show but could not as the program
could not be held. This also amounts to discharge of the contract between Gareth and Julie. Julie
may only rescind the contract in the form of a refund for $800 but no additional compensation.

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Conclusion
The contract between Gareth and Rental Event Pty Ltd has been discharged on grounds
of frustration of contract.
Gareth may make a claim against the singer from breaching the contract
Julie may only rescind the contract and can claim only refund of $800 but no additional
expenses.

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References
Andrews, N., 2015. Contract law. Cambridge University Press.
Barnett, R.E. and Oman, N.B., 2016. Contracts: Cases and Doctrine. Wolters Kluwer Law &
Business.
Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing.
Codelfa Construction Pty Limited v SRA of New South Wales (1982) 149 CLR 337
Conbe v Combe [1951] 2 KB 215
D&C Builders v Rees [1966] 2 WLR 28
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Pinnel’s case [1602] 5 Rep 117
Stone, R. and Devenney, J., 2017. The modern law of contract. Routledge.
Taylor v Caldwell 3 B & S 826,
Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761.
Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 9,
Woodhouse A.C. Israel Cocoa Ltd v Nigerian Product Marketing Co Ltd [1972] AC 74.

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