LAW81210 Business and Corporations Law Assignment Solution

This document provides a comprehensive solution to a Business and Corporations Law assignment (LAW81210). The assignment addresses two key scenarios. The first scenario involves a car purchase where misrepresentation occurs, and the solution analyzes the contractual rights of the buyer, focusing on fraudulent misrepresentation and the validity of consent and consideration. The second scenario examines the validity of an exclusion clause in a chairlift ticket, discussing the rules regarding the incorporation of such clauses and the potential liability of the chairlift operator. The solution includes an analysis of relevant case law and provides legal advice based on the facts presented in each scenario. The document is well-structured, including issue identification, rule explanation, application of rules to the facts, and a conclusion for each question, supported by case laws and other resources.

LAW81210
Running Head: Business Law 0
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Student’s Name

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Contents
Question 1........................................................................................................................................2
Issue 2
Rules 2
Application 3
Conclusion 4
Question 2........................................................................................................................................5
Issue 5
Rules 5
Application 7
Conclusion 8
Bibliography....................................................................................................................................9
Case laws 9
Books/Journals 9
Other Resources 9

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Question 1
Issue
The issue of the case is to discover and discuss the contractual rights of Belinda.
Rules
Common-Law of contract identifies a certain basic element that needs to exist in each contract.
Without these elements, a valid contract cannot be formed. These include offer and consent to
the same, consideration, and intention of all the parties to enter into legal relationship with each
other. As soon as all these factors come together, a valid contract is formed. Nevertheless only
the presence of these elements is not enough but the same must be valid also. Rules associated to
the validity of consideration and consent are discussed further. Firstly, to discuss rules related to
the validity of consideration this is to state that the same must not be illegal or invalid. It can be
anything and need not present in monetary form. Further, a consideration must be sufficient, no
matter whether the same is adequate or not as given in the case of Chappell v Nestle1 . It means
the amount of consideration cannot be judge based on the value of an article2.
Further to discuss the validity of consent this is to state that valid consent is the one that is free
from mistakes, fraud, and misrepresentation and so on. These factors affect the validity of a
contract, for instance, misrepresentation can held the contract voidable. Misrepresentation refers
to the wrong representation. It is a situation where a party makes a false representation of fact or
law to another person. It generally consists of a statement where a party mention something
about fact or law to another party which is not true and the first party does so to seek the consent
of others. Here it is clear that a confirmed statement must be there and only a statement of
1 Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
2 Mindy Chen-Wishart, Contract Law (Oxford University Press, 2018) 120.

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opinion or idea cannot be considered as misrepresentation as decided in the case of Bisset v
Wilkinson3 . Further, in the case of “Smith v Hughes”4 , it was decided that silence cannot be
considered as misrepresentation5. It means if a person does not say anything about a fact even
knowing the truth then it does not treat as he did misrepresentation. Different types of
misrepresentation need to be discussed as different remedies are available for them. Mainly three
types of misrepresentation are there such as “fraudulent”, “negligent,” and “innocent
misrepresentation.” For instance, if the misrepresentation is the fraudulent one then the claimant
may set aside the contract and can also demand damages6. As decided in the case of Derry v
Peek7, “fraudulent misrepresentation” is the one where knows that the particular statement is not
false or belief that the same is not true. In the case of innocent misrepresentation, a claimant may
only ask for damages and has no right to cancel the contract.
Application
If to discuss facts of the case, Belinda visited several car dealers and lastly decided to buy a 1998
Ford Mustang. The purchased this car from “American Car Sales” where the sales executive
Jaxson confirmed her that the car she wanted to buy has only completed 54000 km and also has
been manufactured in 1998. Relying on these facts, Belinda purchased the subjective car. The
problem initiated where this car demanded service after 3 months and Belinda took the same to
the local mechanic. This mechanic revealed some additional facts about this car. He classified it
as a 1994 model rather than 1998, which Belinda used to believe by this point of time. He further
stated that the car might have complete nearly 100000 km. This was a case of misrepresentation
as the facts related to the manufacturing year as well as completed km shared by American Car
3 Bisset v Wilkinson [1927] AC 177 Privy Council
4 Smith v Hughes (1871) LR 6 QB 597
5 Veronica E. Bailey, Cape Law: Text and Cases: Contract Law, Tort Law and Real Property (AuthorHouse, 2016)
6 lawhandbook.sa.gov.au, Misrepresentation (lawhandbook) <https://lawhandbook.sa.gov.au/ch10s02s06.php>.
7 Derry v Peek (1889) 5 T.L.R. 625

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Sales were not true. However, the only fact of manufacturing years proved incorrect. This was a
fraudulent misrepresentation by the car seller to Belinda, as he seems in a position to know the
fact. As he was a car seller he seems able to know when the car was manufactured or how many
km the same has been completed. This misstatement made by Jaxson certainly affected the
consent of Belinda and therefore her consent cannot be treated as valid and free acceptance.
Another issue of the case is related to the validity of the consideration. When Belinda knew that,
the car she purchased was an old model she realized that she overpaid value for it. She
discovered that she made payment of $5000 over the actual value of the car and now wants to
approach “American Car Sales” for this issue. Here to state that the consideration she paid was
valid and legal. In addition to this, the same was also sufficient. The matter of an additional
$5000 is a matter of adequacy. Applying Chapple v Nestle this is to state that the adequacy will
not be checked and judge hereby. In this case, the validity of the consideration is not a matter of
debate and consideration paid by the Belinda is a valid consideration.
Conclusion
Belinda purchased the car relying on the statement made by Jackson and therefore to state that
her consent was influenced by the same. It was not only a statement of advice but was a matter of
fact and therefore applying Bisset v Wilkinson, it shall be considered as misrepresentation.
Further, Jackson believes to know the true situation yet stated wrong. Due to the presence of
fraudulent misrepresentation, Belinda seems to have two remedies as an option where she can
first cancel the contract and can also demand damages. Nevertheless, she cannot challenge the
validity of consideration.

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Question 2
Issue
Whether the exclusion clause inserted under the contract was valid or not. Further to check can
Larry sue Chairlift Pty Ltd.
Rules
As soon as parties of a contract enter into the same, they become bound with the terms and
conditions of the same. They have to act according to these terms and fulfill their liabilities to the
other party. Failure to do so creates an issue of breach of contract and therefore many times,
parties to the contract limit their liabilities by inserting an exclusion clause. As the name implies
it is a type of unfair term, which parties use to exclude their liability under a contract. For the
validity of exclusion, it is necessary to insert the same in a contract according to the provisions of
contract law. These rules outline the manner in which an exclusion clause must be inserted into
the contract. The first condition states that the same must be inserted before the formation of the
contract. It means the party who wants to rely on this need to ensure that exclusion clause exists
at the time when parties enters into. It can better understood by the decision of Olley v
Marlborough Court8. Here, the claimant booked a hotel and later on her fur coat stolen. When
she made a complaint to the hotel staff, she was told that the hotel had no liability for it as the
same exclude through the exclusion clause attached to the back of the hotel room's door. When
the matter when into the court, the clause held invalid as the clause has not brought into attention
of claimant at the time of entering into the contract9. The rationale behind this rule is that parties
must be aware of all the conditions and their decision to develop a contract or not doing so must
be fair. Further, the second condition states that the party who wants to rely on this clause must
8 Olley v Marlborough Court [1949] 1 KB 532
9 James Marson, Business Law (OUP Oxford, 2013), 155.

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bring the same into the notice of another party. In the case of “Thompson v London, Midland and
Scotland Railway Co”10, the plaintiff argued that she could not read or understood the exclusion
clause inserted by another party. In addition to this, the clause was not properly incorporated as
at the time of entering into the contract, the other party did not make any efforts to bring it in
attention to her. The decision was made in favor of the defendant stating that there was only a
requirement to take the same in the attention of the other party11. The defendant was not liable to
ensure about reading of the statement by other party.
An exclusion clause may be incorporated through two types of documents, namely signed and
unsigned documents. Different rules govern these types of documents. Nevertheless, in the case
of the signed document, the facts and the decision of L'Estrange v Graucob12 seems necessary to
discuss. In this case, the claimant wanted to buy a cigarette vending machine and to do so he has
signed an order form. This form contained a clause excluding liability. After some time, the
claimant initiated an action against the defendant (seller) where the machine stopped working
properly. The court rejected her claim and held that she signed a document in which an exclusion
claus was presented e and therefore was bound with it. In the case of a signed document, the law
assumes that the person who has signed the document has read all the terms and conditions
mentioned under the same irrespective of the fact that what happened in the future13. In this
manner, it can be stated that the signed documents are an exception to the rule of reasonable
notice.
10 Thompson v London, Midland and Scotland Railway Co [1930] 1 KB 41 Court of Appeal
11 Ewan McKendrick, Contract Law (Macmillan International Higher Education, 2015), 155.
12 L'Estrange v Graucob [1934] 2 KB 394 Court of Appeal
13 Elawresources.co.uk, L'Estrange v Graucob [1934] 2 KB 394 Court of Appeal (Elawresources) < http://e-
lawresources.co.uk/L%27Estrange-v-Graucob.php>.

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Application
In the case given hereby, Thelma and Larry have purchased the ticket of Chairlift and signed the
same. The ticket contained the exclusion clause. Hereby this time, Thelma and Larry have not
entered into any contract with Chairlifts Pty Ltd. It means applying the provisions of “Olley v
Marlborough Court”, the condition i.e. the existence of the clause before the formation of the
contract seems to be fulfilled.
Moving to the next condition i.e. of reasonable notice this is to state that the attended did not
bring the conditions into the notice of Thelma and Larry as she forgot to mention that the terms
are mentioned on the ticket. Nevertheless, in this case, tickets were not unsigned document and
therefore the decision of “L'Estrange v Graucob” seems to be applied rather than the
requirement of reasonable notice. Thelma and Larry both have signed their tickets and applying
the provisions of “L'Estrange v Graucob”, it will be assumed that they have read all the terms
mentioned on the tickets. The exclusion clause was also mentioned on an unsigned document
which was an old notice containing several terms and conditions. The notice was placed On the
last pylon before alighting from the Chairlift. Further, the notice was obscured by the tree as well
as was faded. Here applying Thompson v London, Midland and Scotland Railway Co, the
exclusion clause through this notice does not seems to be properly inserted. The reason for it that
the party did not take reasonable steps to bring the clause in the notice of passengers through this
old notice. In addition to this, the passenger could see the notice after buying a ticket which
means it was not there at the time of developing the contract and therefore cannot be held valid.
The issue of the case started when Larry got injured during hiss adventure and sustained an
injury. Owners and operators of Chairlifts have refused to take any liability of such injury

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Conclusion
The exclusion clause inserted through the notice board was not valid. Nevertheless, Chairlifts Pty
Ltd can escape the liability relying on the exclusion clause mentioned on the tickets as the same
was properly incorporated.

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Bibliography
Case laws
Bisset v Wilkinson [1927] AC 177 Privy Council
Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
Derry v Peek (1889) 5 T.L.R. 625
L'Estrange v Graucob [1934] 2 KB 394 Court of Appeal
Olley v Marlborough Court [1949] 1 KB 532
Smith v Hughes (1871) LR 6 QB 597
Thompson v London, Midland and Scotland Railway Co [1930] 1 KB 41 Court of Appeal
Books/Journals
Chen-Wishart Mindy, Contract Law (Oxford University Press, 2018)
E. Bailey Veronica, Cape Law: Text and Cases: Contract Law, Tort Law and Real Property
(AuthorHouse, 2016)
Marson James, Business Law (OUP Oxford, 2013)
McKendrick Ewan, Contract Law (Macmillan International Higher Education, 2015)
Other Resources
Elawresources.co.uk, L'Estrange v Graucob [1934] 2 KB 394 Court of Appeal (Elawresources) <
http://e-lawresources.co.uk/L%27Estrange-v-Graucob.php>.
lawhandbook.sa.gov.au, Misrepresentation (lawhandbook)
<https://lawhandbook.sa.gov.au/ch10s02s06.php>.

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