Report on Business Law: Contract and Corporation Law, Case Studies

This report provides an overview of business law, specifically focusing on contract and corporation law. It begins with an introduction to business law, highlighting its importance and scope, and then delves into two key areas: contract law and corporate law. In the contract law section, the report presents a case study involving a promotional offer by a burger company and analyzes issues of offer, acceptance, and revocation. It applies legal principles to determine whether customers are entitled to a prize based on the promotion. The corporate law section presents another case study involving a company and its managing director, addressing issues of director's duties, borrowing limits, and the validity of the director's actions after the expiration of their term. The report applies relevant provisions of the Corporations Act and case law to determine the liabilities and responsibilities of the company and the director. The report concludes with legal advice for both scenarios, offering insights into the outcomes of each case based on the application of the law.

LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART A: CONTRACT LAW..........................................................................................................1
Issue.............................................................................................................................................1
Rules............................................................................................................................................1
Application...................................................................................................................................2
Conclusion...................................................................................................................................3
Part B Corporation Law..................................................................................................................3
Issue.............................................................................................................................................3
Rules............................................................................................................................................4
Application ..................................................................................................................................4
Conclusion...................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business law is a physical structure of law and its is governed by commerce and business.
It is usually considered as civil law. It deals with both the private and public law. Business law
includes contract law, corporate, property, intellectual and negotiable law etc. It is very
important for business as it provides management help in maintaining business ethics. Present
report contains two types of law i.e. contact law and corporate law. In both the law case study is
provided and legal advice is asked (Anderson, 2016.).
PART A: CONTRACT LAW
Issue
SOO burgers wants to increase it sales of hamburgers because company has suffered loss
in the last financial year. SOO burger involved in a promotion activity named “the fair dinkum
deal”. According to the promotion a token was attached to the wrapper of every “double Decker
emu burger” and it was promoted through online, radios and newspapers. If a customer collects
50 tokens than they will scratch the golden ticket and if it says a golden car than they will be
awarded with brand new Mazda CX-9. Mickey heard the promotion on radio and purchased 50
burgers and started to eat, he suffered with exhaustion and was rushed to the hospital. Another
person named Brett scavenged trough the bins and collected 100 token which were discarded. He
scratched and found that he won 2 golden cars, he rushed to the reception area. An employee
came inside and posted a sign that there was a printing error, golden tickets was not part of the
promotion. Management said sorry and told that these tickets are void and cannot be claimed.
Meanwhile a customer emerged smiling and said “i am so happy to win the car”. Mickey was
also having golden ticket and after hearing news he ran out of the hospital. The issue here is that
whether Mickey and Brett should get the car and legal advice need to be provided for their
positions separately.
Rules
A contract is set of promise which is legally binding. A person offers something to
another person, offer need to be accepted by the person. A contract is formed where these
elements are fulfilled such as agreement (contains both offer and acceptance), consideration,
legal relations, ability to contract and conformation of legal authorities.
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Offer: It is a form of communication which account to a commitment to do or not do
something. A person to whom an offer is placed makes promise or does something in return.
Offer is made to group, an individual or whole world (Adriaanse, 2016).
Offer is different from invitation to treat: It is a term used in contract law to differentiate
between advertisements and formal offers. Invitation to treat offer is generally lacks the intention
in creating legal obligations. It is an invitation made to other person making an offer to contract.
Communication of offer: Communication of the offer need to be completed when the
offer comes in the knowledge of offeree.
Revocation of offer: Offer is terminated at any point before the acceptance of offer
regardless to if offeror promised to keep the offer till a specific date. Revocation of offer need to
be communicated with the offeree directly or indirectly or in form of words. Revocation will
covey that offer no longer exist (Loveland, 2018).
Acceptance: It is a statement written or oral from offeree that offer is being accepted.
Offer is accepted by an individual to whom it was placed. An acceptance is valid when offeree
agreed to all the terms and conditions mentioned in the contract. There need to be some
consideration.
Communication of acceptance: To make an acceptance effective it need to be
communicated properly. An agreement is valid when acceptance is communicated by the offeree
to offeror. Agreement does not have any legal effect until it is communicated with other party.
Application
After considering Harvey v Facey HELD (1893) AC 552, it can be said that in the above
case of SOO burger also has issue in offer and acceptance.
SOO burger made an offer to customers that if they collect 50 tokens from the wrapper of double
Decker emu burger and redeem it to get a golden scratch then they will earn a brand new car
Mazda CX-9. The offer was an invitation to treat in which there is an invitation given and there
is no legal obligation.
2 customers named Mickey and Brett accepted the offer. According to contract law of
Australia, a contract is completed when there is agreement, involvement of legal intention and
consideration. Here in the given case there is an offer, acceptance and consideration i.e. a brand
new car but there is no involvement of legal intention (Goh, 2016).
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Both Mickey and Brett does not read or listen to the full promotion and rushed to gain
Mazda CX-9. SOO burger management said that there was a misprinting in the offer and golden
scratch is not included in the promotion. Communication of offer was not properly done due to
this there was misunderstanding among the customers. Thus, this offer is not valid. In the case
of Mickey, he was in the hospital and without listening the offer correctly he rushed to SOO
burger for claiming his car. Revocation of offer was communicated properly but Mickey does
not listen to the offer. Revocation of offer was done before he claimed the car therefore this offer
is not valid to him.
In the case of Brett, he won 2 cars by scratching golden tickets. He rushed to SOO
burgers to claim the car but while waiting at the reception an employee came and revoke the
offer. Offer was not communicated properly, as car will be given to only one customer but
golden scratch ticket was in every five tickets. Before Brett came, there was one customer who
won the car. Thus Brett cannot claim the car (Tushnet, 2017).
Conclusion
From the above case study it can be said that Mickey and Brett cannot claim the car as
revocation of offer was done before they claim the car. There was a printing error in the offer
which made offer void. Both the customers Mickey and Brett cannot take the help of legal
authorities because there is no contract between company and customers. Before Brett
communicate to the manager of the company the offer was canceled thus, he cannot claim the car
as offer was not valid due to printing error. Mickey does not listen to the offer properly which
creates a communication error, he reached SOO burger after revocation of offer.
Part B Corporation Law
Issue
Sparkling limited is a company which is operating three children's clothing shop in Tasmania.
Company adopted Sarah in 2007 as managing director of company for two years. After
completion of 2 years Sarah was not formally appointed by company after that date but she
continued to act managing director of Sparkling for which there was no lodging of return. In this
case terms of contract included a provision restricting Sarah to commit any borrowings on
company exceeding $20000 and if necessary required prior approval of board. In 2010 Sarah
incurred a borrowing of $30000 for plantation without taking approval of board of directors. So
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concerned case, was whether company is correct in stopping its repayment and whether
appointment of Sarah was valid after expiry of 2 years.
Rules
Corporation Act, 2001
As per corporation act, 2001 director is person who is validly appointed as director or
unless contrary intentions are appearing, also includes person who has not been validly appointed
as director if they are acting in position of director.
The Act also says that a director cannot be removed from except by approval of members of a
company. This is to be considered even when there is an agreement between company and
directors. Board of directors cannot be removed by directors.
Managing director has acted beyond its capacity and terms of contract. Company can
held managing directors personally responsible for acts that are incurred by him contravening
the provisions director has also borrowed loan from bank for plantation exceeding limits
prescribed of $20000 without taking approval of board of directors(Bourne, 2016).
Duties of director are defined by company in its articles. They act as agents of company
in which they are appointed as director. Duties include that money of company is utilized by
company for its business projects. Any contravention of act can lead directors to face penalties.
Bank has also acted by giving loan to directors of company without considering the
articles which are open to public for their referrals. Law also says that company is bound by act
and transactions of its directors even if they do not fall under objectives of company but it has
exceptions where director has acted beyond powers granted to directors.
Fiduciary duty of directors to inform company about every act that is being taken for
company. Director did not inform company or any of its director about loan borrowed from bank
(England, 2019).
Application
From above study of various provisions of law that are framed above. It can be applied in
present case as directors has contravened the provisions of law as well as of agreement that has
been entered between company and Sarah. In above case director is holding office after
expiration of its tenure of two years but as he has not been removed by directors he has
continued in capacity of managing directors with same roles and responsibilities. Though
agreement was for two but it will continue to remain in force as Sarah is still working in
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company as managing director. So it will be binding on managing director. Director has
contravened provisions of corporation law she has borrowed money from bank without taking
prior permission of board of directors exceeding $20000. Director has taken loan for business
purpose but was beyond its powers. An act which is done by director beyond its capacity will not
company liable but company can held directors personally liable for loan borrowed beyond its
capacity(Miller, 2018).
Taking Case of ASIC vs Cassimatis, 2016 Federal court of Australia gave decision
about duties of directors, in present case directors of company breached their duties regarding
directors where they have allowed client borrowing loans against their equity funds. These
decisions led investors to suffer losses during global crisis. Court found that directors had
breached their duty by providing financial services to clients. It gave decision it is responsibility
of director to carry out it operations with due care and diligence.
Applying the above case it is brought that Sarah has contravened the agreement and has
performed beyond the powers granted to it. It also borrowed loan without informing and taking
prior approval of board of directors. Company will be liable to bank as bank has given loan as it
was not aware of the agreements between company and director. In the present case director will
be held personally liable top bank as he has not taken prior approval of board of directors and it
was clearly mentioned in agreement that it borrowing for loan is restricted to $20000 so
company can be bound for acts of directors (Glasbeek, 2018.).
Conclusion
In the present case it can be concluded that company has not renewed its agreement with
managing director and also not filed it return to ASIC. Company should also be held liable as it
haws also not renewed its agreement with director. Director has exercised his duties power
granted, therefore she is personally liable for amount of loan which has taken for company for
plantation which was not a business related issue.
If director had taken loan for refurbishment it would not make any change as
expenditure was beyond power and would result in same penalty. If bank officer had given loan
even after knowing that company has not appointed Sarah as it director than bank was liable on
its own for borrowings and company may have avoided its repayment because bank loan has
given loan even after knowing that Sarah is acting beyond its capacity (Douglas and Bath, 2017)
.
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REFERENCES
Books and Journals
Adriaanse, M.J., 2016. Construction contract law. Macmillan International Higher Education.
Anderson, J., 2016. Uniform evidence law. Federation Press.
Bourne, N., 2016. Bourne on company law. Routledge.
Douglas, M. and Bath, V., 2017. A New Approach to Service Outside the Jurisdiction and
Outside Australia under the Uniform Civil Procedure Rules.
England, P., 2019. Trends in the Evolution of Floodplain Management in Australia: Risk
Assessment, Precautionary and Robust Decision-Making. Journal of Environmental Law.
Glasbeek, H., 2018. Class privilege: How law shelters shareholders and coddles capitalism.
Between the Lines.
Goh, B.C., 2016. Law without lawyers, justice without courts: on traditional Chinese mediation.
Routledge.
Loveland, I.D., 2018. Constitutional law. Routledge.
Miller, M., 2018. Climate Finance and Financial Markets in Australia: The CEFC and
ARENA. AUSTRALIAN LAW JOURNAL. 92(10). pp.822-829.
Tushnet, M., 2017. Comparative constitutional law. In The Oxford handbook of comparative law.
Online
Australian contract law. 2018. [online]. Available through
<https://www.australiancontractlaw.com/contractlaw/formation.html>
Corporation Act .2001. [online]. Available through
<http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/>
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