Business and Corporate Law Case Study: Karacal Kitchens - BAA215

This case study examines the legal issues arising from the Karacal Kitchens case. The analysis addresses the enforceability of agreements between parties, focusing on contract formation, consideration, capacity, intention, and clarity of terms. It explores the concept of ratification and its impact on contractual obligations, specifically in relation to an employee, Barry, entering into a contract with a neighbor, Nia, on behalf of Karacal Kitchens. The study also investigates the legal implications of a minor, Mark Smith, being involved in a contract, and whether Barry, Karl, and Kelsey can claim the contract is invalid due to Mark's age. Finally, the case study evaluates whether the legal principle of 'termination by subsequent agreement' can be used to make the contract between Karacal Kitchens and Nia fully enforceable. Relevant legal principles are applied to the facts, leading to conclusions on each issue.

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

1BUSINESS AND CORPORATE LAW
Question 1
Issue
Whether there are any enforceable agreements between any of the parties and who are the
parties to the agreement and what are the terms.
Rule
A contract indicates a legally enforceable agreement between the parties that has been
achieved by the offer made by one party which has been accompanied by an acceptance by
another. An agreement is required to satisfy five elements for achieving the status of a valid
contract, which is legally enforceable. Firstly, the contract needs to be formed with an
agreement attained between the parties. these formation of a valid contract needs to be
effected with an offer made by the offeror and with an acceptance of that offer by the offeree.
Secondly, the contract to be valid needs to be entered into for a consideration for both the
parties. The consideration is not required to be adequate, the mere presence of it will be
enough to create a valid contract. Thirdly, the parties to the contract are required to have the
capacity to form contracts. A contract with a minor depends upon the election of the minor
and the other party cannot dispute the performance of the contract based on his incapacity to
contract. Fourthly, the parties to the contract are required to have the intention to develop a
legal relationship between themselves. Fifthly, the terms of the contract needs to be clear and
unambiguous.
Ratification of a contract indicates the approval of a contract entered into by an agent that
has not been done in the scope of the agency by the principal. This binds the principal liable
to the third party with respect to the terms of the contract. The contract on ratification
becomes binding upon the parties on the same terms and agreements upon which the contract

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has been initially entered into. The same can be illustrated with the case of Wheeler v.
Northwestern Sleigh Co., 39 Fed. 347.
Application
In the present situation, Barry was a not a partner in the Karacal Kitchens as he has been
paid a salary and the Karacal Kitchens does not consider him to be a partner in their
partnership contract. Barry in this case can be treated as an employee or an agent of the
Karacal Kitchens. However, he has entered into a contract with Nia who was the neighbour
of Barry. He quotes $45 000 for the work. This quote is not written up using the standard
form used by Karacal Kitchens. Barry prepares the design while on site at the Karacal
Kitchens business premises in Moonah. Barry was a fifteen years old friend of Barry who has
been employed by him. Up to this point of the situation, the agreement is a valid contract and
the parties are Barry and Nia for the contract of designing the kitchen of Nia and between
Barry.
However, later on Barry could not complete the contract and informed Karacal Kitchens
about the contract. Karacal Kitchen is annoyed but agrees to have the partly assembled
kitchen moved to the factory in Coleman Street, Moonah. This is a ratification of the contract.
The new parties to the contract will be Karacal Kitchen and the Nia. The terms of the contract
will be the previous one only as the ratification does not change the terms of the contract and
just changes the parrties ot the contract.
Conclusion
There are enforceable agreements between the Karacal Kitchen and Nia after the
ratification and the terms of the contract will be the previous one only as the ratification does
not change the terms of the contract and just changes the parrties ot the contract.

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Question 2
Issue
Whether Barry, Karl and Kelsey can argue that there is no contract with Mark because he
is a minor.
Rule
A contract indicates a legally enforceable agreement between the parties that has been
achieved by the offer made by one party, which has been accompanied by an acceptance by
another. An agreement is required to satisfy five elements for achieving the status of a valid
contract, which is legally enforceable. Firstly, the contract needs to be formed with an
agreement attained between the parties. These formation of a valid contract needs to be
effected with an offer made by the offeror and with an acceptance of that offer by the offeree.
Secondly, the contract to be valid needs to be entered into for a consideration for both the
parties. The consideration is not required to be adequate, the mere presence of it will be
enough to create a valid contract. Thirdly, the parties to the contract are required to have the
capacity to form contracts. A contract with a minor depends upon the election of the minor
and the other party cannot dispute the performance of the contract based on his incapacity to
contract. The minor has the capacity to elect whether to enforce or to repudiate the contract.
The other party does not have the scope of repudiating or ratifying the contract or using the
same as a defence (Gilbert 2018). Fourthly, the parties to the contract are required to have the
intention to develop a legal relationship between themselves. Fifthly, the terms of the contract
needs to be clear and unambiguous.
Application
In the present situation, approaches his friend’s grandson Mark Smith who is fifteen years
old and looking for work. Barry offers Mark 20 hours a week work, assisting in the

4BUSINESS AND CORPORATE LAW
construction of Nia’s kitchen. He agrees to pay him $20 per hour. Barry could not complete
the contract and informed Karacal Kitchens about the contract. Karacal Kitchen is annoyed
but agrees to have the partly assembled kitchen moved to the factory in Coleman Street,
Moonah. This is a ratification of the contract. The new parties to the contract will be Karacal
Kitchen and the Barry. The terms of the contract will be the previous one only as the
ratification does not change the terms of the contract and just changes the parties to the
contract. Hence, being the whole contract being ratified all the contracts that are connected to
the main contract will be binding. Moreover, a contract with a minor depends upon the
election of the minor and the other party cannot dispute the performance of the contract based
on his incapacity to contract. The minor has the capacity to elect whether to enforce or to
repudiate the contract. The other party does not have the scope of repudiating or ratifying the
contract or using the same as a defence. Hence, Barry, Karl and Kelsey cannot argue that
there is no contract with Mark because he is a minor.
Conclusion
Barry, Karl and Kelsey cannot argue that there is no contract with Mark because he is a
minor.
Question 4
Issue
Whether Karl and Kara can use the legal principle of ’termination by subsequent
agreement’ to make the contract between Karacal Kitchens and Nia fully enforceable.
Rule
A contract can be expressly terminated when a subsequent agreement has been formed.
This forfeiture of the previous agreement and formation of the new agreement provides the
parties with a chance to formulate a new agreement with respect to consideration. The same

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can be illustrated with the case of British Russian Gazette & Trade Outlook Ltd v Associated
Newspapers Ltd [1933] 2 KB 616. However, to implement the same a new contract required
to be formed and the same will not be applicable in case of ratification. Ratification does not
implies formation of a subsequent agreement. Ratification of a contract indicates the approval
of a contract entered into by an agent that has not been done in the scope of the agency by the
principal (Cartwright 2016). This binds the principal liable to the third party with respect to
the terms of the contract. The contract on ratification becomes binding upon the parties on the
same terms and agreements upon which the contract has been initially entered into. The same
can be illustrated with the case of Wheeler v. Northwestern Sleigh Co., 39 Fed. 347.
Application
In the present situation, initially the agreement has been entered into as a valid contract
and the parties were Barry and Nia for the contract of designing the kitchen of Nia and
between Barry.
Barry could not complete the contract and informed Karacal Kitchens about the contract.
Karacal Kitchen is annoyed but agrees to have the partly assembled kitchen moved to the
factory in Coleman Street, Moonah. This is a ratification of the contract. The new parties to
the contract will be Karacal Kitchen and the Nia. The terms of the contract will be the
previous one only as the ratification does not change the terms of the contract and just
changes the parrties ot the contract. This does makes indicates the termination of the initial
contract by subsequent agreement. Hence, Karl and Kara cannot use the legal principle of
’termination by subsequent agreement’ to make the contract between Karacal Kitchens and
Nia fully enforceable.

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Conclusion
Karl and Kara cannot use the legal principle of ’termination by subsequent agreement’ to
make the contract between Karacal Kitchens and Nia fully enforceable.

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Reference
Wheeler v. Northwestern Sleigh Co., 39 Fed. 347.
British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB
616.
Gilbert, R., 2018. Consequences where a minor enters into an electronic contract without
necessary assistance of a parent or guardian (Doctoral dissertation, University of Pretoria).
Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing.