Group Assignment: Case Studies in Business and Corporate Law

This case study assignment analyzes two distinct business law scenarios. The first case examines a promotional offer by SOO Burgers, focusing on contract formation, offer, acceptance, and revocation, with a focus on the rights of customers, Mickey and Brett. The analysis references key legal precedents, including *Carlill v Carbolic Smoke Ball Company* and *Byrne & Co v Leon Van Tien Hoven & Co*. The second case delves into corporate law, specifically addressing the validity of a loan taken by Sparkling Pty Ltd. It explores the company's constitution, the authority of the managing director, and the application of the rule in *Royal British Bank v Turquand* (indoor management rule) and sections 125 and 126 of the Corporations Act 2001 (Cth). The case examines the bank's rights, the impact of the loan on the company's constitution, and the relevance of the loan's purpose. The conclusion addresses the obligations of SOO Burgers and the bank's eligibility to claim the loan and interest.

Assignment
Case study

 Issue:
a) whether SOO Burgers have obligation to
allow Mickey the Mazda CX-9 as claimed by
him,
b) whether SOO Burgers have obligation to
allow Brett the Mazda CX-9 as claimed by him.
Case 1:

 In a contract, the parties have obligations to
perform their part as enumerated in the
contract agreement.
 A contract has legal enforceability only when
such contract has initiated by a valid offer by
one party which has been accepted by the
other together with the presence of valid
intention of both the parties as held in
Brambles Holdings V Bathurst City Council.
 There lies a major difference between an offer
and an invitation to offer.
Rule:

 The response to the offer amounts to an
acceptance whereas the response to an invitation
to offer amounts to offer. These were seen in the
Pharmaceutical Society of Great Britain v Boots
Cash Chemists (Southern) Ltd.
 When an invitation is supported with a promise of
providing reward on fulfillment of certain
conditions, it will result into an unilateral offer.
when the pre- decided condition is fulfilled, a valid
contract results as seen in the Australian Woollen
Mills Pty Ltd v The Commonwealth. High Court of
Australia.
Rule (Contd):

 An offer made by an offeror amounts to an
agreement when such offer is accepted by
the offeree who is eager to comply with
terms of the offer. The acceptance must be
unconditional and communicated.
 This is observed in R v Clarke [1927] HCA
47 case.
Rule (Contd):

 Soo Burgers restaurant started a promotio in which a token is attached with
every burger wrapper and the collection of 50 such tokens will allow the
customer to redeem a golden scratch card. If such card revealed on being
scratched a golden car, then new Mazda CZ 9 can be obtained by that
customer. This amount to an invitation to contract as in Carlill v Carbolic
Smoke Ball Company.
 Michael Mickey Morrow bought. While he finished them off, he was taken to
the local hospital for emergency treatment. But prior of passing out, he had
redeemed his 50 tokens for the golden ticket.
 While in hospital, announcements were made that there was a printing error
in those golden tickets. Due to such error, every one customer out 5 were
getting tickets though there should be only winning ticket.
 He over heard some of the nurses talking about withdrawl of offer. When he
scratched the card he found he won the golden car.
 The offer made by the SOO burgers was revoked in a valid manner as such
revocation came into knowledge of the offeree, Michael as seen in Byrne & Co
v Leon Van Tien Hoven & Co. Thus Michael has no authority to claim the
Mazda CX-9.
Application:

 The promotion was applicable to all the customers who
are purchasing the burgers from the restaurants of
SOO Burgers.
 However, Brett did not buy them instead he collected
the wrappers by scavenging the rubbish bins.
 The offer made by the SOO Burger was not accepted
by Brett in a valid manner as expressed by the offeror.
 It does not amount to a valid acceptance as given in
the case of Boreland v Docker.
 As there was no valid acceptance, no contract results
between Brett and SOO Burgers. Thus he cannot
enforce the contract by claiming Mazda CX-9.
Application (Contd.):

 that SOO Burgers have no obligation to
allow Mickey the Mazda CX-9 as claimed by
him.
 SOO Burgers have no obligation to give
Brett the Mazda CX-9 as claimed by him.
Conclusion:

 Issues:
 Whether bank is eligible to claim the loan amount
and its interest,
 Whether incurring of the loan violates the
constitution of the company,
 Whether the case will result into some other
outcome if the primary intention behind the loan
seeking was refurbishing the 2 cloth stores of
Sparkling,
 Whether the case will result differently it was known
to bank that there lies any disagreement between
Sarah and the Board of directors of Sparkling.
Case study 2:

 Every company has its own and separate constitution.
By that constitution, it may impose express certain
prohibitions or limitations on the company when it is
exercising any power.
 However if the company while exercising its power
contradicts with the terms of the clause then such
exercise of power by the company will not be
considered to be invalid just because it is contradicting
with those prohibitions or limitations as given in section
125 of the Corporations Act 2001 (Cth).
 if the company’s constitution sets out its object, any act
done in contradiction or beyond that object will not
render the act invalid.
Rules:

 A person can be authorized by the company
to act on its behalf to make any institution,
alteration, discharge or ratification related
to any agreement.
 Such authority can be exercised without
even using the seal. This is provided in
section 126 of CA which further states that
this section is not applicable to any legal
operation which prescribes any procedure
to be followed related to that contract.
Rules (Contd.):

 As per Royal British Bank v Turquand decision,
outside people who are making transaction with
any company will assume that the company rules
have been followed even if they are not. This is
called the rule of Turquand case or the indoor
management rule.
 It further states that outsiders are not needed to
peep inside the company’s internal management
and they will contract or deal with the company
assuming that all the formalities and regulations
have been maintained properly in the company.
Rules (Contd.):