2010年12月18日星期六

Business & Company Law Essay


Question 1
PARTIES
Mrs. Gold (Plaintiff) v Mr. Iron (Defendant)
ISSUE
This question is concerned with whether the advertisement can amount to an offer or an invitation to treat, and identification of fraudulent statement, mistake of fact, and condition of the contract.
LAW
l  An invitation to treat is not an offer and, unlike an offer, cannot be accepted. It is only an expression of a willingness to start the offer and acceptance process, which in time may produce an offer and acceptance. If the parties deal through advertisement as it is an invitation to treat not a valid offer, the parties are not intending to create legal relations.[1]
l  The courts will be more treat it as a term and not as a mere representation if the parties place considerable importance on the statement.[2]
l  A condition is a term that is vital to the contract. The parties consider it so important that its non-performance may be considered by the injured party as amounting to substantial failure to honour the contract at all and thus may be regarded as ground for setting the contract aside or suing for damages (or both).[3]
l  Where a mistake does operate, one outcome is to make the whole transaction null and void from the very beginning.[4]
l  Restitution may be granted when there is a payment for good or service received form the plaintiff under a mistake of fact.[5]
l  Fraudulent statement is a false statement of fact made knowingly, or without belief in its truth, or recklessly, or carelessly as to whether it is true or false, with the intention to induce a person to enter into a contract, and which did induce the contract, causing the innocent party to suffer loss.[6]
In the case of Common mistake, the parties acknowledge the existence of an agreement, but because of a fundamental assumption as to the existence or identity of the subject matter, they wish the court to treat the agreement aside

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[2] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[3] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[4] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[5] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[6] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
l  from the beginning.[1]
LAW AND FACTS
l  In the case Partridge v Crittenden,[2] the advertisement was only an invitation to treat. Upon which the facts of this question are based, the advertisement of Mr. Iron’s production nowhere was there any indication of an expression of intention to be bound.
l  In this case, the machine is very important to Mrs. Golf’s business as she was paid extra $50 to make it installed immediately. Since the machine failed to work properly, Mrs. Golf suffered economic losses. Hence, as Mrs. Golf relied much on it that she could hold the deal as a term of contract even though it is an invitation to treat
l  Since the statement of the deal has been considered a term, Mrs. Golf could hold there is a substantial failure to honour the contract, as the performance specification would be vital to the contract. In the common law case Associated Newspapers Ltd v Bancks,[3] upon which the facts of this question are based, the performance of the machine was a condition of the contract, Mrs. Golf would not have entered into the contract unless he had been assured that that there would have been at least substantial performance of the machine.
l  In common law case David Securities Pty Ltd v Commonwealth Bank of Australia,[4] upon which the facts of this question are based, the machine was made by mistake of fact as to quality and law, that the use of the machine should have been approved by Water Board. Therefore, the contract may be voidable due to Mr. Iron’s company is mistaken about a material fact regarding the subject matter of the contract, as no genuine agreement.
l  Refer to the case Commonwealth v McCormack,[5] since Mr. Iron had received an unjust enrichment that was at Mrs. Golf’s expense, the restitution is available for Mrs. Golf under mistake of fact as it is a unilateral mistake.
It is likely that Mrs. Golf as a representee did not have the knowledge of the untruth of the representation about the machine before the contract was entered into. Moreover, Mr. Iron as the owner of the company evidently knows the

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[2] Partridge v Crittenden [1968] 2 AII ER 421
[3] Associated Newspapers Ltd v. Bancks (1951) 83 CLR 322
[4] David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
[5] Commonwealth v McCormack (1984) 155 CLR 273
l  performance of his production. Hence, it is very possible to assert that the fraudulent statement about the machine had misled her.
l  Upon the case Leaf v International Galleries which the facts of this question are based,[1] the excess usage of water was the subject matter which caused by disapproved by Water Board. Mrs. Golf could hold this common mistake and ask the court to treat the agreement as having no legal effect and for the money that Mrs. Golf had paid to be recovered.
CONCLUSION
Mrs. Golf has lawful rights to sue Mr. Iron for restitution for the economic loss due to the fraudulent statement and breach of condition. Moreover, Mrs. Golf could set aside the contract from the very beginning due to common mistake and mistake of fact.

[1] Leaf v International Galleries [1950] 2 KB 86 (‘Leaf)
Question 2
Mrs. Boss cannot sue Mr. Bung as lapse of time under the Statute of Limitation legislation, in which limits simple contract within 6 years.[1]

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
Question 2
Mrs. Boss cannot sue Mr. Bung as lapse of time under the Statute of Limitation legislation, in which limits simple contract within 6 years.[1]

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
Question 3
PARTIES
Ms Ant (Plaintiff) v Bring it on Bank (Defendant)
ISSUE
This question is concerned with whether the conduct of Bring it on Bank could be regarded as unconscionable, and whether had Ms Ant taken “special disadvantage” of her position for her commercial loss.
LAW
l  The conduct of the parties should factual set fairness and good faith in a transaction. If the defendant abuses his or her superior bargaining position in dealing with the plaintiff, in equitable jurisdiction, court will regard this conduct as unconscionable.[1]
l  Under Part IVA (ss 51AA, ,51AB, 51AC, ss 52) of the Trade Practices Act 1974 (Cth),unconscionable conduct are prohibited, as well as in Fair Trading Acts legislation of NSW.[2]
l  The basis of contract is agreement or consensus ad idem. If a party has entered into a contract because of unconscionable conduct by one party as a result of their superior bargaining position, then there is no genuine consent.[3]
LAW AND FACTS
l  In the common law case Commercial Bank of Australia Ltd v Amadio,[4] upon which the facts of this question are based, the bank had superior bargaining position and tried to gain more profit in the deal with Ms Ant who took disadvantage caused by lack of education and business experience.
l  In Louth v Diprose,[5] the defendant is in special disadvantage position. Upon which facts of this question are based, as a result of Bring it on Bank did not tell Ms Ant the increment of interest rate for the second year, Ms Ant who was 18 years old and lack of business experience, was in a position of ‘special disadvantage’ at the time of the contract and Bring it on Bank was conducting unconscionably since they did not intend to provide fully information and advises.

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[2] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[3] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[4] Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447
[5] Louth v Diprose (1992) 110 ALR 1
l  In Henjo Investments Pty & Ors v Collins Marrickville Pty Ltd,[1] upon which the facts of this question are based, the conduct of Bring it on Bank being silenced is likely to mislead and deceive.
l  Since the contract between Ms Ant and Bring it on Bank was an unconscionable contract, and then there is no genuine consent.
CONCLUSION
Due to Bring it on Bank imposed Ms Ant who was lack of commercial experience to induce her to enter disadvantageous contract, the contract between Ms Ant and Bring it on Bank can be set aside as unconscionable. As Bring it on Bank took a higher trading position in dealing with Ms Ant and engaged in unconscionable, the conducts of Bring it on Bank had offended the Trade Practices Act (ss51 AA, 51AB, 51AC, ss 52), hence, the contract could be discharged wholly or a partly.

[1] Henjo Investments Pty & Ors v Collins Marrickville Pty Ltd (1988) 79 ALR 83
Question 4
PARTIES
Don (Plaintiff) v Dave (Defendant)
ISSUE
The question is concerned with consideration and in particular payment of a lesser sum in discharge of the full debt and the application of the principle of promissory estoppel, and whether the conducts of Don can amount to economic duress.
LAW
l  Where there is a payment of a lesser sum in discharge of a debt, there usually not sufficient consideration as the debtor is not promising to do anything more than they are already contractually bound to do.[1]
l  In Foakes v Beer, one of which was that if payment could be supported by good consideration caused by the payment were in a unlike form to required by the creditor.[2]
l  Promissory estoppel will permit to be enforced if the promisee has not provided consideration for that promise.[3]
l  Duress is the use of violence or illegal threats against a person, their goods or economic interests to force them to enter into a contract against their will, which only has to be one of the reasons and the effect on the contract is that it will be voidable at the option of the injured party.[4]
l  If one party indicates that they will not be performing their part of the contract prior to the time for performance, the innocent party can immediately treat the contract as at an end and sue for breach.[5]
LAW AND FACTS
l  The question arose in Central London Property Trust v High Trees House Ltd,[6] upon which this question is based, a fact that defendant had given no consideration for the promise of plaintiff not to demand the full entitlement.
The issue arose in Universe Tankships Inc of Monrovia v International Transport Workers Federation,[7]upon which this question is based, Dove was facing

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[2] Foakes v Beer (1884) 9 App Cas 605
[3] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[4] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[5] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[6] Central London Property Trust v High Trees House Ltd [1947] 1 KB 130
[7] Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 66
l  economic duress which from Don. As Dove needed the yacht delivering on time, Dove was forced to accept the $120000 as an increment for Don’s salary. Therefore, the conducts of Don could be considered as economic duress.
l  As Don had the intention to breach the contract as he refused to finish the work. Hence, the contract could be voidable and remedy for breach of contract is available.
l  Furthermore, as the result of Don accepting the smaller sum which Dave paid Don in cash in full settlement without asking anymore money in the future, Don and Dave entitled into a promise. Dave could defense action relied on their promise which because of reliance of promissory estoppel to avoid the payment of remaining money.
CONCLUSION
Under the equitable principle of promissory estoppel, Don can not claim for the remaining money from Dave, as Don had accepted the extra $50,000 in full settlement depends on that Don would not ask for more money in the future, if Don break the agreement, it will be unfair to Dave. Moreover, Don had the intention to breach the contract, and Dave was enforced to establish the contract since Dave was under illegitimate pressure that as a result of Don’s threats, hence, Don’s conduct can be considered as economic duress, and the contract could be voidable. 
Question 5
PARTIES
Mr. Chops (Plaintiff) v Joe Cuts (Defendant)
Principal: Joe Cuts
Agent: John
Third party: Mr. Chops
ISSUE
This question is concerned with the duty of agent to principal, did Joe breach the warranty of authority, and whether John or Joe is liable for the debts.
LAW
l  An agency in relation to one person (the agent) is authorized by the other person (the principal) to do certain conducts that affect the legal rights of principal and duties to third parties.[1]
l  Based on the duties of agent to principal, agent must follow principal’s instructions and act in person; the agents have right lawful carrying out principal’s instrument for liability and expense.[2]
l  The agent has a fiduciary relationship to bring the best benefit of principal; the agent must act in the principal’s interests (in good faith).[3]
l  Based on the general rule, an agent cannot sue or be sued on a contract between a principal and a third party where the agent discloses the agency relationship and whether or not name the principal.[4]
LAW AND FACTS
l  Joe Cuts as a principal creates authority to John who is under his employment as an agent. As Joe Cuts hired John to help him during the time he is away, so Joe had passed authority to John to act to. To determine the actual extent of agent’s authority, John is under the general agency, has actual authority, this is allow John to so anything this is incidental.
l  According to the duties of agent, John failed to follow Joe’s instructions which only allowed John to use less than $2000 per week. Since John broke the contract with Joe, it will leave John to be sued for any losses that Joe would incur.

[1] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[2] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[3] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
[4] Andy Gibson and Douglas Fraser, Business Law (4thed, 2009)
l  In Hewson v Sydney Stock Exchange,[1] the agent was not to promote personal interests. As Joe’s retail butchers shop has an excellent reputation, in the purpose of keeping the reputation, John was under duty to act in the Joe’s interests to purchase same amount of meat to meet those customer’s need as usual.
l  Refer to Lloyd v Grace, Smith & Co,[2] upon which the facts of this question are based. Joe Cuts was liable for John as the conduct of John was committed within the scope of his actual authority.
l  Panorama Developments (Guildford) Ltd v Fidelis Furnishings Fabrics illustrates that principal have to pay third party because appeared to have authority to enter into acting arrangement.[3] Since Joe Cuts is one of Mr. Chops’s customers, the conduct of John could reasonably let Mr. Chops believe that they could rely on authority depend on trade usage and impression of authority.
CONCLUSION
The conduct of John ordered meat to the value of $4000 could regard as his apparent authority. Mr. Chops has legal rights to get the balance of $1800 from Joe Cuts since Joe is liable for the conduct of John.

[1] Hewson v Sydney Stock Exchange (1967) 87 WN (NSW) 422
[2] Lloyd v Grace, Smith & Co [1912] AC 716
[3] Panorama Developments (Guildford) Ltd v Fidelis Furnishings Fabrics [1971] 3 WLR 440
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