MLC101 Law for Commerce: Case Study Analysis, Trimester 1, 2019

This document presents solutions to three case studies related to Law for Commerce, addressing key legal principles. The first case examines insolvent trading under the Corporations Act 2001, focusing on a director's liability for incurring debt while the company is insolvent. The analysis references Section 588G and a Victorian Court of Appeal decision to determine the director's guilt. The second case explores contract formation, specifically the elements of offer and acceptance, using the case of Fisher v Bell as a reference. The third case analyzes a breach of contract scenario, where a football club denies a prize based on a clause stating agreements are binding in honor only. The document concludes that Wilson cannot sue the football club for breach of contract because of the specific clause in the coupon.

Law For Commerce

Table of Contents
Case study-1...............................................................................................................................2
Case study-2...............................................................................................................................2
Case study-3...............................................................................................................................3
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Case study-1
a) Under section 588 g of the corporation act 2001, it has been stated that it is the duty of the
director to prevent insolvent trading by the company. This section applies if the director of
the company incurs debt knowing that the company is insolvent or the company becomes
insolvent because of the debt incurred by the director and the director had knowledge of the
fact that the company is insolvent or will become insolvent after incurring the debt. Serena
the director of Rafa borrowed money by using credit. Buying stocks allows one to leverage
the gains from those stocks. However, leverage can be dangerous if the stocks go down in
value. Serena being the director of the company was well aware of the company's financial
conditions and took this drastic step of buying stock on credit and consequently, the company
goes into liquidation. Section 588 g has clearly stated the fact that if after knowing the
company's insolvency the director incurs any loan he will be prosecuted under the act.
b) The Victorian court of appeal has upheld the decision of the Supreme Court of Victoria
regarding the prosecution of Serena as she has been found guilty of insolvent trading. The
corporation act 2001 has prospective effect. Serena is guilt as her conduct has enhanced the
insolvency condition of the company. In the future, the courts of Australia can use this case
as a reference to decide other cases based on the same issues. The previously decided cases
constitute the precedent and precedents of the superior courts are binding on the inferior
courts.
Case study-2
Issue
In this particular case Jane was the one who offered Andrew to buy her book for $80 and had
specifically mentioned in her post on facebook that if Andrew is willing to purchase the same
he can revert back with a message. However, Andrew called her up and dropped a message
proposing to buy the book at $70 during her shift time which annoyed Jane. Jane afterward
rejected his offer. Andrew then tried his luck of finding out another second-hand book but
was unsuccessful. Andrew again contacted her for the book to which Jane has replied that she
has sold her book.
Rule
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There should be the existence of offer and acceptance in the formation of a contract. In the
case of Fisher v Bell it has been held that, when goods are displayed with price label in a
shop such display is treated as an invitation to offer and not an offer (Turner, 2017). Offer is
when customer presents the item along with the payment for the item in the cash counter.
Acceptance occurs when the payment is accepted by the cashier in the cash counter.
Analysis
In this particular case there was no agreement between Jane and Andrew because Andrew at
first instance has not agreed with the consideration and later Jane rejected Andrew's offer
stating that she has sold her book to another one. The agreement between two parties is
analyzed by the rule of offer and acceptance. There must be an offer by one party and
unqualified acceptance by another. So in this particular case, there was no agreement between
Jane and Andrew.
Conclusion
In this particular case it was held that there was no agreement between Jane and Andrew
because two constitute offer Andrew must have paid the consideration amount of $80.
Case study-3
Issue
In this particular case Wilson saw a football club offering a football jersey having the
signature of his favorite footballer to anyone who wins the competition by guessing the real
weight of the nominated player. He fills the coupon with his details along with the age of the
nominated player as guessed by Wilson. Wilson was not given the prize in spite of his right
guess regarding the age of the nominated player. The football club denies Wilson's claim and
points towards a clause in the coupon which stated that “any agreement entered into was
binding in honor only".
Rule
The rule is that if any clause states that “any agreement entered into was binding in honor
only". It does mean that that the court will allow it to take effect and will not enforce the
agreement. In the case of Brogden v Metropolitan Railway Company, it was held that in the
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absence of a written contract it will be presumed that a contract has arisen by the conduct of
the parties (Turner, 2017).
Analysis
Here in this particular case of Wilson though he has correctly guessed the correct weight of
the nominated player of football. Wilson cannot sue the football club for breach of contract as
he was not given the prize because of the existence of a particular clause in the coupon while
states clearly that any agreement entered into was binding in honor only. The court will not
enforce the agreement and will allow it to take effect.
Conclusion
No, Wilson cannot sue the football club for breach of contract because of the ordinary clauses
inserted in the coupon.
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