HI6027 Business & Corporations Law: Case Study Analysis T1 2019

This case study analysis delves into two distinct legal scenarios. The first part examines a contract law issue concerning a salon's advertisement for discounted haircuts and the enforceability of the offer after its withdrawal. It applies principles of offer, acceptance, and consideration to determine the rights of customers. The second part focuses on partnership law, analyzing the relationships and liabilities within a business formed by three friends. It addresses issues such as breach of fiduciary duty, the impact of a partner's death on the business, and the ability of creditors to identify the individuals behind the business name, referencing the Partnership Act 1963 of Australia.

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

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Question 1 (MING ):
Issues:
The issues to be discussed in this assignment are as follows:
 Whether the forty customers who produced the advertisement before the notice goes up
will be able to enforce any legal agreement against Ming.
 Whether the ten customers without any advertisement will be able to enforce any
agreement against Ming.
 Whether Ming can argue since the amount 10 dollars is not sufficient for a promise that
will normally charge 60 $ for a haircut, there lies no legal obligation on the business.
 Whether Ming’s belief that since he had withdrawn the offer, he did not have any
obligation to give cut price haircuts is correct.
Relevant Law:
Contract means a legally enforceable agreement between two or more parties who are
obliged to follow the terms and conditions laid down in the agreement. A valid contract is
created when some essential conditions are present. It must be based on an agreement which is
formed of offer given by one of the parties and acceptance of the offer made by the other party as
seen in R v Clarke [1927] HCA 47, (1927) 40 CLR 227, High Court. It must be entered by
persons who are not legally prohibited to enter the contract like minors, drunken, mentally
challenged people as observed in Westmelton (Vic) Pty Ltd v Archer and Schulman [1980]
VicRp 16, [1982] VR 305. Every contract must be supported by a suitable consideration in the
form of some act, service or monetary benefits exchanged between the parties as seen in

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Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20, (1954) 92 CLR
424, High Court. The parties to the contract must have free consent to the creation of the contract
and its terms and conditions. The parties must have the intention to abide by the contract as
observed in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235. All these
elements when satisfied, a valid contract is created.
Publicly circulated or communicated advertisements are not to be regarded as the offer to
initiate a contract. It generally refers to an invitation to offer or treat as it is made to any specific
party to enter in to contract instead it is made to public inviting to them to make negotiations to
initiate the contract. It was seen in the case of Partridge v Crittenden [1968] 1 WLR 1204. but
when the advertisement provides some sort of reward after the fulfilling of any specific
condition, the person who is able to fulfill the condition will have a right of claiming the reward,
provided the condition must not be vague else the claim will not be available. It was observed in
the case of Gunthing v Lynn (1831) 2 B7 Ad 232.
However, an advertisement can be treated as an offer made to a unilateral contract. In this
type of contract, offeror gives an offer that on fulfilling certain condition by the offeree, the latter
will be eligible for a reward to be give by the former. Communication of the acceptance by the
offeree is not needed to validate the contract, main criterion is the fulfilling the contract. It was
observed in the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 where
the Court of Appeal specifically decided that an advertisement having certain and non vague
terms to give a reward constitutes of a unilateral offer that can be accepted by any individual by
fulfilling the terms. In these cases, acceptance in express manner is not necessary to form the
contract, fulfilling the condition is needed to form the contract resulting the contract to be
binding on the parties. In the case of R v Clarke (1927) 40 CLR 227, it was held that a person

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not having the knowledge of the offer is barred from claiming its benefits. In another case of
Chappell v Nestle [1960] AC 87, adequate amount of consideration is not needed, its presence
is enough to validate a contract as per Woolworths Ltd v Kelly (1991) 22 NSWLR 189.
Application:
In the present case study, it is seen that Ming is the owner of a salon named Australian
Hairlines, hereinafter referred to as Hairlines. He plans to promote his business by giving
advertisement of a ‘Special offer’ in the local newspaper. This forms an offer to the people at
large as per Carlill v Carbolic Smoke Ball Company. As per the advertisement in the
newspaper, the salon Hairline on production of the cutting of the advertisement will be eligible to
get a hair cut at a discounted price of 10 $ only.
The day following the day of advertisement in the newspaper, around 50 people appeared
at the salon for the special cut at the discounted price. Ming was happy with the response but he
also realized that his salon will incur loss if the promotion is allowed to continue long.
Hence he put up a sign in the window of the salon stating that the offer has ended.
However, out of 50 customers, 40 already have reached the shop before the offer was withdrawn.
As the 40 customers are willing to avail the benefits of the offer by Hairlines, it will be regarded
as the giving acceptance to the offer made by the Salon. Thus a valid contract is formed between
the 40 customers and the salon and they are bound by the contract. 40 customers can enforce the
contract.
But for the remaining 10 customers who appeared to avail the offer are without the
advertisement with them. Thus valid contract is not formed between the two parties. They will
not be able to enforce the contract. The argument put forwarded by Ming about the insufficiency

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of the payment of 10 dollars for the promise will not be a valid ground as amount of
consideration is not taken into consideration; its presence is enough to validate the contract.
A perusal of the above discussion shows that though Ming has withdrawn the offer, those
customers will be coming to the salon with the advertisement cutting can avail the reward, that is
the hair cut at the discounted price.
Conclusion:
The conclusions that can be inferred from the above discussion are as follows:
 The forty customers who produced the advertisement before the notice goes up will be
able to enforce any legal agreement against Ming.
 The ten customers without any advertisement will be able to enforce any agreement
against Ming as they do not have the advertisement with them.
 Ming cannot argue that the amount 10 dollars is not sufficient for a promise that will
normally charge 60 $ for a haircut, hence he will have legal obligation.
 Ming has to give haircut at discount price to all the customers who will come to the salon
with the advertisement even though he has withdrawn the contract.
Part B (LuSeKo):
Issues:
The following issues to be discussed in this case study:
 Whether three friends Lucy, Koo and Seamus are doing a partnership business.
 Whether Koo and Lucy will be liable for contributing to the buying of the mower.

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 Whether there is any breach of duties by Lucy as a partner for doing her work in
weekend.
 Whether FASTCUT will be able to discover to the people behind the Luseko business
name to institute a legal action.
 Whether the partnership will be affected by the death of the Seamus.
 Whether the partnership can be identified by Lucy and Koo and whether the property of
the partnership can be utilized to appropriate the loss incurred by Luseko.
Relevant law:
The partnership business is governed by the provisions enumerated in the Partnership
Act 1963 of Australia. Section 6 of the said Act states that partnership is a fiduciary relation that
lies among the parties called the partners to run a common business legally in order to make
profit. Partnership can be a limited partnership that is being incorporated as seen in Wang v
Rong [2015] NSWSC 1419.
As per section 9 of the Act, the partners are empowered with certain rights and duties
which must be construed. A partner can act as both the principal and agent of the partnership
business. Thus a system of agency is present in the partnership contract. The partners of a
partnership can bind the firm as well as other partners of the firm by their acts. Hence, each of
the partners is liable legally and financially for the acts of other partners.
As per section 33 of PA, every partner has a duty to give correct information and also
give true accounts regarding the every matter that can affect the business. As per section 34,
every partner is needed to provide true account of the personal gain which he gained by the use
of the business asset, name or property without the knowledge or consent of the partners.

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According to section 35 of the PA, every partner is prohibited to initiate and continue any
business of similar nature as that of the parent business of partnership. If anyone does so, he
needs to account as well as transfer the profit gained to the account of the firm. Section 38 states
that a partnership business will be dissolved if any of the partners dies. As per the common law
of Partnership, a firm’s property means any property that is owned by the partners as the joint
property or in the firm’s name.
Application:
In this case study, three friends Lucy and Seamus together with Koo started a partnership
business and got is registered in the name of the LuSeKo. They made the business registered and
made its advertisement in the local area due to which they had many clients. During the business,
Seamus had duty to cut grass, Lucy had a duty to remove the clippings to her truck and Koo had
to maintain accounts. Hence, it is seen that they had been conducting a partnership business as
per the PA 1963.
Seamus realizing the need of a ride on mower contracted to buy a mower with the
FastCut mowers without intimidating other partners. This contract is executed in the name of the
business by Seamus by being the partner within authority he is entrusted with. Thus, the contract
is binding on all the partners together with the firm as per section 9.
Lucy started a separate business of similar nature with the clients of Luseko where he
was personally involved of removing the rubbish on weekends without the knowledge of other
partners. The profits made by him in this business were moved to his personal account. This
shows that Lucy violated his duty as a partner as per sections 34 and 35.

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Sudden death of Seamus will cause the dissolution of the business of Luseko if there lies
no alternative clause in the contract regarding this. This is given in section 38 of the Act. FastCut
has the right to contact with ASIC to discover the people involved behind the business name
Luseko to bring a legal action against them. This is because all types of businesses in Australia
are subjected to the strict observation and control of ASIC. The partnership business property
will comprise of all the assets that are acquired by carrying the business.
Conclusion:
From the discussion made above, the followings can be inferred;
 Three friends Lucy, Koo and Seamus are doing a partnership business.
 Koo and Lucy will be liable for contributing to the buying of the mower.
 There is any breach of duties by Lucy as a partner for doing her work in weekend.
 FASTCUT will be able to discover to the people behind the Luseko business name to
institute a legal action by making contact with ASIC.
 The partnership will be dissolved by the death of the Seamus.
 The partnership can be determined by Lucy and Koo and such property of the partnership
can be utilized to appropriate the loss incurred by Luseko.

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References:
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20, (1954) 92 CLR 424
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Chappell v Nestle [1960] AC 87
Gunthing v Lynn (1831) 2 B7 Ad 232
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Partridge v Crittenden [1968] 1 WLR 1204
R v Clarke (1927) 40 CLR 227
R v Clarke [1927] HCA 47, (1927) 40 CLR 227
The Partnership Act 1963
Wang v Rong [2015] NSWSC 1419
Westmelton (Vic) Pty Ltd v Archer and Schulman [1980] VicRp 16, [1982] VR 305
Woolworths Ltd v Kelly (1991) 22 NSWLR 189