Taylor v Johnson Case Study: Contract Law Analysis

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Part A
Taylor v Johnson (1983) 151 CLR
422

Issue
Whether Johnson has any right to deny the
performance of contract made with Taylor?

Law
• The offeror must communicate his desires to the offeree by words, actions
or n written mode.
• An offer should reach the offeree to hold complete
• When the offeree accepts the offer then it is an acceptance.
• The offeror should be aware of the acceptance to hold it valid and
enforceable.
• The promises made by the parties should be combined with some benefit
which makes the contract enforceable and is called consideration
• The parties must be capable and must have legal intention
• As per Smith v Hughes (1871). if one of the party to contract is under
some kind of grave mistake with respect to the contract and the other
party is aware of the same, then, the contract is considered to be voidable
and the contract can be repudiated by the aggrieved party.

Application of law
• Taylor was the plaintiff and Johnson was the defendant.
• An option was given by the defendant to the plaintiff to purchase land worth $15,000 for
5 acre.
• But, later the defendant refused to perform . He was under the belief that he was
entering into a contract for $150,000 ($15,000 per acre).
• The plaintiff then claimed specific performance.
• The defendant sought to set aside the contract of sale made amid the parties.
• The offer was duly communicated by the offeror (defendant - Johnson) to the (plaintiff-
Taylor) . Taylor has accepted the offer.
• The value of the contract was decided amid Johnson and Taylor was $15,000. Thus, the
contract was supported with valid consideration.
• Also, Johnson and Taylor have legal intention and have the capacity to hold the contract.
• The contract that is made Johnson and Taylor was based on account of mistake and thus
the contract must stand to be set aside.
• Thus, the court was right and held the contract invalid.

Conclusion
It is thus concluded that the contract that was
made Taylor and Johnson was not valid and
must be set aside on account of mistake.

Part B
ASIC v Vizard [2005] FCA 1037

Issue
Whether Stephen William Vizard was held to be
in violation of his duty as the director of the
company?

Law
• As per section 124 of the Corporation Act 2001 , a company is considered to be a separate
legal entity n the eyes of law. I
• The act of the company is undertaken in its own name with the help of its officers.
• As per section 9 of the Corporation Act, a director of the company is defined.
• AS per section 180 of the act, the directors of the company must act with all due care and
diligence and must act with proper purpose which is in the interest of the company.
• As per section 181 of the Act, the director of the company must act in good faith and in the
interest of the company which should not cause any advantage to the director himself and to
the disadvantage of the company
• As per section 182 of the Act, the director must ensure that non of his actions must be such
which cater the misuse of the position of the company at the advantage of the director and to
the disadvantage of the company.
• Further, one of the most prominent duty of the director of the company was embed under
section 183 of the Act, which submits that when any person attains the information of the
company mainly because he is the director of the company then it is his duty that he must not
misuse the said information for his own advantages and for the disadvantage of the company.

Application of law
• Stephen William Vizard was held to be in violation of section 183 (3) of the Corporation Act 2001.
• Telstra was the company and Stephen William Vizard was held to be the non executive director of the
company.
• Stephen William Vizard being the director have accessed to information of Telstra that are attained by him
by attending the board meeting of the company
• Stephen William Vizard was totally in violation of section 183 as Vizard was in knowledge of the
confidential discussion which was undertaken by Telstra with respect to the merger with another company.
• Mr Stephen William Vizard is aware that if the information will be open to public then the share price of
the target company would increase.
• Stephen William Vizard bought shares in the target company and thus he misused the information of the
company to his advantage and thus he is in breach of section 183 of the Act.
• also, Stephen William Vizard sold his shares in one of the company as he was aware that the price of such
company shres are about to decrease as Telstra is about to sell its shares in such company.
• Thus, the acts of Stephen William Vizard are based on the acts and information of Telstra and thus the
company was found to be in breach of section 183 of the Act.
• Thus, Stephen William Vizard was held to be in violation of section 183 (3) of the Corporation Act 2001. He
was banned from managing the affairs of the company for 10 years and pecuniary penalties of $390,000
were also imposed.

Conclusion
Thus, Stephen William Vizard was held to be
incorporation of section 183 (3) of the
Corporation Act 2001.