Thursday, December 5, 2019

Business and Corporation Law Australian Council of Law

Question: Describe about the Business and Corporation Law for Australian Council of Law. Answer: 1: Contract: An exchange of promise between the parties which is legally binding on the parties is known as contract. A promise made by one party to another party to do something or refrain from doing something and in exchange another party promise to do something or refrain from doing something. In Australia following elements are necessary for valid contract: Agreement- agreement is an important element for valid contract which includes offer, acceptance and also involves meeting of minds. Offer: there is no particular form of offer. It is a communication between the two persons, one party promise to do something if the other party to whom offer is given do or not do something. There is a company named Carbolic Smoke Ball Co which engaged in the production of carbolic smoke ball. Carbolic smoke ball is produced so that users can be prevented from influenza or disease which is similar in nature. An advertisement is issued by the company in which company grant reward of 100 pounds to any person who used the ball for two weeks at least 3 times a day by following the directions given to the user with the ball and even after using the ball suffering from the disease influenza, disease which is similar in nature or any disease caused by taking cold. By showing their sincerity company deposited amount of 1000 pounds with the Alliance Bank, Regent Street. Mrs Louisa Elizabeth Carlill, after seeing this advertisement purchased the ball and used it as per the directions from 20/11/1891 to 17/01/1892, even after using the balls as per directions she caught with the disease of influenza. She claimed for the reward which is mention in advertisement issued by the company and company refuses to pay the reward. Mrs Louisa Elizabeth Carlill sued the copany for award. Court held that award must be granted to Mrs carlill and company is bound to pay her because there is a valid contract between both the parties which includes offer (advertisement issued by company), acceptance (mrs carlill performed the conditions mention in the offer). All the essential elements of valid offer are mentioned, offer is made to the whole world, and company is sincere about the offer it was not mere a sales advertisement language of offer is clear. There is valid acceptance also because Mrs. carlill perform the directions mention in advertisement and there is no need to communicate the intention to the company. Consideration is an essential element of a valid contract, in this case problems suffered by Mrs Carlill is a sufficient consideration (Carlill v Carbolic Smoke Ball Co, n.d.) Acceptance- it is a statement by the person to whom offer is made for agreeing to the offer. It can be done orally, in written form or by conduct. Government of WA offered a reward which is monetary in nature to the person who gives information which results in arrest of people who are involved in the offence of the murder of police officers. Clarke was arrested by the police officers in charge of the murders and he made a statement which helps the police officers and his statement results in arrest of other person who involved in the case. After released from the custody of the police officers he claimed for the reward. In this case court held that no reward is grant to the clark from the government because he gave information for his own security, to secure his own release and not as response to the offer made by the government. There is no effective acceptance in this case (crown v Clarke, n.d.) Consideration- it is very essential element of a valid contract. Consideration means price paid by the parties in exchange of a promise. In many places consideration is not essential for valid contract, it is valid if it is binding on parties but in common law consideration must be present in contract otherwise it is not binding on parties, it must be in some kind it is a price determined by the promiser. It need not be in monetary terms or it can be in monetary terms as well. Consideration requires some damage on part of promise. For example in case of carlill court held that there is a proper consideration because Mrs. carlill suffer sufficient damage from using the balls of Carbolic Smoke Ball Co received and court conclude that even company also had benefit by sales. It is required that consideration must give by the promise and received by the promise. Consideration can be anything but it must not be illegal. There must be some value of the consideration in the eyes of the law. Intention intention of the parties must be to create legal relations. Capacity- for a valid contract parties must have contractual capacity. Following persons are not capable for a valid contract nad those are person who is mentally challenged, minor, bankrupts, etc. (Australian contract law, n.d.). There are three essential elements of a valid contract: offer, acceptance consideration. In this case Jane made an offer to jack for giving her sports car Jack accepts the offer. In this contract offer is there acceptance is there but there is no consideration, therefore it is not a valid contract. In contract law consideration is the compulsory for an enforceable contract. It is necessary for each party to the contract that is promisor and promisee and they must receive some benefit from the contract and also suffer any loss due to contract, any kind of damage and benefit related to contract can be considered as consideration. In case of Carlill v Carbolic Smoke Ball Co court held that there is a proper consideration because Mrs. carlill suffer sufficient damage from using the balls of Carbolic Smoke Ball Co received and court conclude that even company also had benefit by sales. In this case only market value of the car that is $25000 is given but consideration is not given. Consideration is not present in this contract therefore Jack cannot enforce the contract. As abovementioned valid contract is one in which offer, acceptance and consideration is present and in this case Jane offers to give her sports car for $ 25000 to Jack and Jack accepts the offer, therefore it is a valid contract and jack can enforce the contract. Jane offers her car to Jack for $25000 that is consideration which is present in the contract. Consideration must be in nature that it moves from the promisee to the promisor. Consideration must be stipulate by promisor, consideration is not valid if it is decided by the promisee, but consideration decided by promisor must be legal. As we mention consideration must not be illegal and any illusionary undertaking is not falling under the definition of good consideration. It can be well understand with the case Biotechnology Australia Pty Ltd v Pace in which pace sign a contract with the company in which company gives him option to participate in the scheme initiated by the company for the senior staff that is known as equity sharing scheme, but at the time or during the employment period of pace there is no such scheme issued by the company. pace sued the company for breach. Main issue in the case is whether consideration is illusionary and in this court held consideration is considered illusionary if it payment depends on the discretion of promisor (Biotechnology Australia Pty Ltd v Pace, n.d.) In this case Jane offers her car for $ 2500 to Jack and Jack accepts the offer. In this contract there is offer, acceptance and consideration is present therefore it is an enforceable agreement. Market value of car is $ 25000 but Jane offers this car to Jack for $ 2500. Consideration for which car offers to jack is less than the market value of car but this reason does not results in invalidation of contract. As per contract act consideration must be legal and it has some market value. This statement can be understand with the help of case law that is Chappel v Nestle in which nestle make an advertisement for the promotion of chocolate sales in which company give record to the person who submit 3 chocolate wrappers and money. Main issue in the case was that whether chocolate wrappers are part of consideration or not. Lord Somervell of harrow held that condition for submitting the chocolate wrappers are part of the consideration. it is clearly shown in the advertisement that wrappers get hit recordings. Company argued that a wrapper has no value but court held it irrelevant. It is clear from the discussion that consideration can be anything stipulated by promisor (Chappell Co Ltd v Nestle Co Ltd, n.d.). So it is clear from the above example that if consideration is legal and less than the market value then the contract is valid and can be enforced by Jack. 2: It is necessary that parties to the contract mutually agreed on the terms and conditions of contract. Consent of the parties to the contract is must be genuine. Where genuine consent is not mention in the contract then the contract is not binding upon the parties. Following are the points from which consent is affected: Mistake-contract can be executed in case if mistake can be ignored by the parties and there is no effect on the execution of contract. But in case if mistake effect the execution of contract then in such case contract is void or voidable. Examples of such mistakes are: common mistake, mutual mistake, unilateral mistake Non est factum. False statements- as the name defines consequences of false statements are serious. Consequences flow on the seriousness of false statements. There are two factors which determine the level of seriousness in false statements which are : The false statement: a condition or a warranty? Or what type of false statement was made? There are three types of false statements: Fraudulent mispresentation Innocent mispresentation negligent misrepresentation Duress- when person enters into a contract but there is no free will and he enters under some threat. In case of duress there is no free will of the party for the contract. Such violence may be of some economic nature also. Undue influence-in this one party which is dominant takes advantage of weaker party. In this weaker party suffers disadvantage of specific nature (The Law Handbook 2016, n.d.). In this case the main issue is that whether buyer would succeed in recovering the extra amount paid or he can claim any relief by way of return. Buyer claimed that money paid by him was under protest and no mutual consent is present. It is stated that buyer is not freely give his will for the payment of extra amount to the shipbuilder. This case involves question of duress. Before discussing this case there is a very similar case North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd[1979] in which facts are similar: MOCATTA J held that a particular amount was finalized as consideration. Later on, due to the devaluation of US dollar, the parties agreed that the consideration be raised there is a mutual agreement between the parties on the terms of consideration which is increased. So the validity of contract cannot be questioned on the basis of mutual agreement. There is a shared understanding between the parties, terms of contract were changed when parties agreed to the change. Next point considered by court is duress in which it was held that threat to break the contract can be considered as economic duress and any contract in which economic duress is present then such contract id void or voidable(North Ocean Shipping co ltd v Hyundai construction co ltd and another the atlantic baron, n.d.) In our current case buyer demand relief on the basis of economic duress which is a reasonable ground but court does not grant the relief to the buyer because of ignorance on the part of the buyer. Judge held that when contract is on the basis of economic duress, buyer had to take actions on immediate basis. The delay in filing for relief proves that economic duress is not present in the case. Therefore court refused the claim of the buyer. References: Australian Contract Law. Carlill v Carbolic Smoke Ball Co, Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1. Retrieved on 20th august from: https://www.australiancontractlaw.com/cases/carlill.html. Australian Contract Law. Crown v Clarke. . Retrieved on 20th august from: https://www.australiancontractlaw.com/cases/crown.html. Australian Contract Law. Overview of Australian Contract Law. Retrieved on 20th august from: https://www.australiancontractlaw.com/law.html. Doyles. Biotechnology Australia P/L V. Pace (1988) 15 NSWLR 130. Retrieved on 20th august from: https://www.doylesconstructionlawyers.com.au/public/casewatch/BIOTECHNOLOGY_AUSTRALIA_P-L_V._PACE_(1988)_15_NSWLR_130.pdf. https://www.icab.org. North Ocean Shipping Co Ltd V Hyundai Construction Co Ltd And Another The Atlantic Baron. Retrieved on 20th august from: https://www.icab.org.bd/images/stories/icab/campus/study_materials/knowledge_level/The%20Atlantic%20Baron%20Case%20QB%20.pdf. The Law Handbook 2016. Elements of a contract. Retrieved on 20th august from: https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/. Webstroke law. Chappel v Nestle [1960]. Retrieved on 20th august from: https://webstroke.co.uk/law/cases/chappel-v-nestle-1960.

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