University Business Law Assignment: Contract and Liability Analysis

This document presents a comprehensive solution to a business law assignment, focusing on contract law principles and legal liability. The assignment addresses two problem-type questions, employing the ILAC/IRAC method to analyze scenarios involving offers, acceptance, consideration, and exclusion clauses. The first question examines the formation of contracts between multiple parties, evaluating whether valid agreements were established based on the exchange of offers and acceptances, and the presence of consideration. It explores issues of past consideration, invitations to offer, and the impact of communication methods. The second question delves into the rights and liabilities arising from a business transaction, analyzing the enforceability of exclusion clauses and the terms of a contract. The solution meticulously applies legal principles from relevant case law to determine the rights and obligations of each party involved, providing a detailed analysis of the legal issues presented.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Issue
The concern that can be drawn out of this situation is whether any legal liability as
well as rights has been created with respect to Gino, Kate, Marcel, Hang, Lin and Singo.
Rule
The institution of an agreement when becomes legally enforceable between two
parties depicts the creation of a valid contract. An offer, which is valid as well as an
acceptance, which is absolute needs to be present between the parties to the contract while
making a valid agreement as can be illustrated with the case of George Hudson Holdings Ltd
v Rudder (1973) 128 CLR 387.
A valid offer requires the person making the offer to express his motive of binding the
offering to a legally enforceable contract. In response to that for making the contract binding
the offeror needs to accept the same in an absolute manner without any alteration of the
conditions of the contract. The formation of a valid agreement is an essential elements
required to form a valid contract. As per the principles established in the case of
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6,
invitation to negotiate a contract does not depicts and offer it is just to be treated as an
invitation to the offer. Mere displaying of objects for sale in a shop window does not depends
offer itself, it points towards invitation to make an offer. Again, ask for the contents of the
Court established in the case of Partridge v Crittenden [1968] 1 WLR 1204, any
advertisements provide in the newspaper as well as hoardings are not to be treated as offer
and the offer in this case has the discretion of refusing to sale the same.
It has been held in the case of Spencer's Pictures Ltd v Cosens [1918] NSW that and
acceptance needs to be absolute and not conditional. There needs to be an express
communication of the acceptance to the offeror to make the acceptance valid. However,
increase of communication by letter the postal rule will be applicable, which requires the
communication of the acceptance to be effective when the letter has been posted. This can be
supported with the case of Tallerman & Co Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957]
HCA 10. As per the system of electronic communication a contract is said to be formed at the
time of the receipt of the acceptance. No contract will be formed in the absence of the
acceptance of the offer.
One of the most important elements of a valid contract is the consideration that each
of the parties on by virtue of the contract. The contract which has not earned any
consideration for any or both of the parties, will lose its legal enforceability. As per the
principles provided under the case of Roscorla v Thomas [1842] EWHC J74, past
consideration is not treated as a consideration in front of the court of law. There are certain
instances where past consideration can be treated as a valid one. However certain
requirements have been enumerated by the case of Pao On v Lau Yiu Long [1979] UKPC 17
that needs to be treated as an exception to the general rule that past consideration does not
form a valid consideration. Firstly, such an act is required to be done at the request made by
the offeror. Secondly, there was an agreement between the parties that the service provided in
the past has been done with the prospect of being remunerated later. Thirdly, there was a
promise to compensation for the past acts that has been rendered.
On the other hand, revocation depicts the withdrawal of an offer made by the person
making the offer prior to the acceptance. The revocation will only be valid if it has been made
on a date prior to the acceptance as has been established in the case of Payne v Cave (1789) 3

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TR 148. The revocation needs to be communicated expressly or impliedly to the person to
whom the offer has been made as has been made evidence with the case of Byrne v Van
Tienhoven & Co [1880] 5 CPD 344.
Application
In the instant scenario, Kate made an offer to Gino to give him her old car. However,
Gino appreciated the offer and stated that he has been facing certain financial distress and
receiving his car by way of gift would relieve him from the same to some extent. This needs
to be considered as a valid offer which has in turn been accepted by Gino. This has resulted
in a valid agreement being created as for the principles established in the case of Australian
Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20. However the consideration that
has been moving from Gino was a past consideration. Gino has assisted Kate in advising
regarding her computer programs as well as the names of the individuals engaged in a similar
type of business and the potential clients he maim make while the initial days of the business
started by Kate. However, it does not satisfies the three requirements that are required to be
there for the purpose of rendering a past consideration to be a valid consideration. This is
because both of them were aware of the fact that the services rendered by Gino was not under
any compulsion of the remunerated subsequently. This can be supported with the case of Re
McArdle [1951] Ch 669. Hence no contract has been created among Gino and Kate owing to
lack of consideration.
The advertisement that Gino has given in the newspaper for the sale of his Holden
X22 car for a price of 20000 dollars the car being in excellent condition can be treated as an
invitation to offer. Gino has also provided in the advertisement that responses can be made
via phone call, email or letter. He has also provided the option of calling him over his home
address. He has kept the sale to be first come first serve basis. This implies an invitation to
make an offer and negotiating a contract. It does not itself depicts and offer. It can be stated
that the offer made by Gino was an invitation to offer and not an offer in itself as per the
principles established in the case of AGC (Advances) Ltd v McWhirter (1977) 1 BLR 9454.
Again, there has been a letter posted by Marcel that contained his willingness to
purchase the car that has been advertised for by Gino. However he added with a question
whether the car has been manual or automatic. This has resulted in an offer made by Marcel
to Gino and In response to such an offer Gino failed to reply. This cannot be treated as an
acceptance. As Gino has failed to accept the offer made by Marcel the same will not amount
to a legally enforceable contract as can be supported with the case of Tallerman & Co Pty Ltd
v Nathan's Merchandise (1957) 98 CLR 93. Therefore, no contract has been created between
Gino and Marcel.
On the other hand, another letter has been posted by Lin expressing his willingness to
buy the car and inquiring the time at which we can pick up the car. This amounts to an offer
that needs to be accepted by Gino to make it a legally enforceable contract. Again, Gino has
failed to reply to the same. As Gino has failed to accept the offer made by Lin the same will
not amount to a legally enforceable contract as can be supported with the case of Tallerman
& Co Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93. Therefore, no contract has been
created between Gino and Lin.
Again, an offer has been made by Singo to purchase the car and he has made the offer
over. However, Gino failed to receive the phone. An offer would only be valid over the
telephone if the same has been communicated to the person to whom the same has been. As
nothing can be heard from the side of Singo from Gino, no contract has been created between

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them as can be illustrated with the case of Tallerman & Co Pty Ltd v Nathan's Merchandise
(1957) 98 CLR 93.
Hang has also made an offer via email regarding his desire to purchase the car. He
also mentioned that he made a call in his home address where no one responded and a check
of $2,000 has been left as a deposit in his mailbox as a security for the $20,000. He also
inquired whether the cheque is acceptable in this case. In this case, the email has been
received by Gino who has refuse to reply and rejected the offer by tearing the cheque. This
can be treated as a valid offer as per the principles established in the case of Tallerman & Co
Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93, but the same has not been accepted by
Gino and to be more precise has been rejected by him. Hence, no contract has been created
between the two.
Later on, the promise made by Kate towards Gino has been revoked by her as she has
been requiring the car for or her business purpose. In this case as no agreement has been
created validly in the prior incidents, the question of revocation does not comes into play.
Conclusion
There has been no legally enforceable contract between Kate and Gino. Singo, Lin,
Marcel and Hang does not have any rights against Gino as none of their offers has got
accepted. The revocation made by Kate is irrelevant as no contract has been validly created.
Question 2
Issue
The concern that can be drawn from the given scenario is whether any rights and
liabilities had been created with respect to Lily and Doall Pty Ltd or even the D Co.
Rule
The institution of an agreement when becomes legally enforceable between two
parties depicts the creation of a valid contract. The terms of the contract as well as the
conditions incorporated in the same is binding upon the parties involved in the contract. The
entitlements as well as the obligations of the parties to a contract is to be e info from the
terms contained in a contract. Again, there are certain cases where one of the parties to the
contract restricts his liability with respect to certain aspect of the contract by the insertion of
an exclusion clause within the terms and conditions related to the contract. Such a clause
needs to be a numerator as a condition within the contract.
It can be stated that for the purpose of enforcing an exclusion clause it needs to be
ensure that the exclusion clause has been brought to the attention of any party who has been
intended to be imposed with that prior to the creation of the contract. This can be illustrated
with the case of Causer v Browne (1952) VLR 1. An exclusion clause cannot be in force until
and unless it has been expressly brought to the notice of the person upon whom it needs to be
imposed prior to the contract. This cancellation be illustrated with the case of Thornton v
Shoe Lane Parking Ltd (1971) 2 QB 163. Any terms and conditions that has been
incorporated in a contract cannot be altered without the prior consent of the parties to the
contract. This can be illustrated with the case of Interphoto Picture Library v Stiletto Visual
Programmes Ltd (1988) 2 WLR 615.

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It has been made clear with the case of L'Estrange v Graucob [1934] 2 KB 394 that
any exclusion clause that has been incorporated in a contract by way of signature needs to be
treated as a valid exclusion clause and would be imposed upon the party effectively.
In case of an infringement of a right of a person under the contract for the breach of
the contractual obligation by the other party, the aggrieved party would be awarded with
damages as a remedy for his losses. This can be elucidated with the case of Addis v
Gramophone [1909] AC 488. For the purpose of awarding damages, the main motives of the
court is to consider the foreseeability of the damages with the perspective power of a
reasonable person. The relationship between the breach of the contractual obligations and the
injury caused needs to be proximate. No damages will be available for a remote injury caused
by the alleged breach. This can be explained with the case of Hadley v Baxendale (1854) 9 Ex
Ch 341.
Application
In the given scenario, a legally enforceable contract has been validly formed among
the D Co. and Lily. A “memorandum of terms of the contract” has been provided to Lily
enumerating the details regarding the job, the price of the job, the date of the completion of
the job. This depicts the agreement that has been created among these two parties. Again two
clauses has been included in the back side of the document. These clauses are:
“Clause 1: The company accepts no responsibility for personal injury to the customer during
performance of the contract.
Clause 2: Liability for any damage to the customer’s home is limited to the sum of $3000 and
no liability can be accepted for the loss of, or damage to, the customer’s goods.”
The two clauses does incorporated can be treated as and exclusion clause and the rules
enumerated within that depicts of limitation. However, the insertion of search closes behind
the paper was a deliberate attempt of not bringing the same to the attention of Lily. This can
further be supported with the case of Thornton v Shoe Lane Parking Ltd (1971) 2 QB 163.
Moreover, the clause has been put with a rubber stamp and no signature has been made with
respect to the clause. Moreover no side with respect to the clause has been availed from Lily.
Hence, this cannot be treated as a valid exclusion clause.
Again, there has been a collision between the truck and Lily which resulted in her
wrist to be broken and her car to be damaged entirely. The loss suffered by Lily has
approximate relation with the negligent acts of the company. This cannot be treated as a
remote cause. The company will be held liable for making payment for the injuries caused to
Lily with respect to her broken rest. The companies also liable to p for the damaged car.
Hence, the amount of $3000 will be received by Lily from the company.
This is because no exclusion clause has been created validly and has not been
incorporated in the contracts between Lilly and the company.
Conclusion
Hence, it can be stated that Lily can recover the damages from the company.

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Reference
Addis v Gramophone [1909] AC 488
AGC (Advances) Ltd v McWhirter (1977) 1 BLR 9454
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20
Byrne v Van Tienhoven & Co [1880] 5 CPD 344
Causer v Browne (1952) VLR 1
George Hudson Holdings Ltd v Rudder (1973) 128 CLR 387
Hadley v Baxendale (1854) 9 Ex Ch 341
Interphoto Picture Library v Stiletto Visual Programmes Ltd (1988) 2 WLR 615
L'Estrange v Graucob [1934] 2 KB 394
Pao On v Lau Yiu Long [1979] UKPC 17
Partridge v Crittenden [1968] 1 WLR 1204
Payne v Cave (1789) 3 TR 148
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6
Re McArdle [1951] Ch 669
Roscorla v Thomas [1842] EWHC J74
Spencer's Pictures Ltd v Cosens [1918] NSW
Tallerman & Co Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10
Thornton v Shoe Lane Parking Ltd (1971) 2 QB 163
Vermeesch, Robert Bryan, and Kevin E. Lindgren. Business law of Australia. Butterworths,
1990.