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Contract and Corporation Law Problem Questions

2522 words (10 pages) Essay in Law

18/05/20 Law Reference this

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Contract Law

OPTION 1

Facts

• The total sales are decreasing in the SOO burgers. To improve their total sales the SOO burgers had provided a promotion named “Fair Dinkum deal”.

• As per the promotion if the customers had collected total 50 tokens could be redeemable at the burger counter with a golden scratch ticket and if the ticket reveals a golden car, then the customers will be going to win the Mazda CX-9.

• SOO burgers said that because of printing error, incorrect golden tickets were added in the deal and declared that the promotion was void.

Issue

The issues that are required to be assessed involves:

Q 1: Whether the claims established by both Mickey and Brett in relation to non-performance of the offer against SOO burgers are maintainable?

Q 2: Whether SOO Burgers shall be held liable to provide all winner of golden tickets with the grand prize as per the offer terms?

Rule

Keeping in view the issue that is required to be taken into consideration application of the principles of Australian Contract Law would be required. Based on the principles of Contract Law prevailing in Australia it can be said that for the purpose of establishing a legally enforceable contract between the parties there is the necessity of pre-existence of a three essential elements which involves agreement, intention to create legal relations between the parties and lastly consideration. In order to form an agreement an offer is required to be placed by the offeror to the offeree which further requires an unqualified acceptance of the same. The terms of offer clearly states about the intention of the offer to become bound by the same upon its acceptance by the recipient. This was being further adjudicated upon in the case of Australian Woollen Mills Pty Ltd v The Commonwealth [1954] whereby it was being declared by the learned court that offer shall be construed as a manifest intention on the part of the offeror to create legal obligations. Once the acceptance of the concerned offer has been communicated by the offeree both the parties become bound by the same and therefore are required to perform their part of promise.

Moreover, an offer can be made either expressly or impliedly on the part of the offeror and that it can also be a public offer which is being made to the public at large. This has been the case of SOO burgers as they declared their promotional offer that was being accepted and partly performed by customers like Mickey and Brett. In addition to this it can also be said that revocation of an offer can only be made prior to the acceptance and performance of the contract by the promisee. After acting on behalf of the agreement by the promisee the promisor becomes bound by the same and on its non-performance application of the principle of promissory estoppel can be carried out.

The first case the researcher will be going to talk about the guy Brett Culture who had been beguiled by the SOO burgers because the announcement about the printing error or incorrect golden scratch included in the deal were not being posted to any newspaper or media. The SOO burgers posted the news when Brett had shown the tickets to the receptionist after that the company posted the notice in front of office, which is not at all well played by the store Soo burgers. There were nowhere written in the first promotion that only one Mazda CX-9 will be provided to the customers. The promotion is clearly written that the customer will be going to receive Mazda CX-9 if they get a golden car in the golden ticket.  The tickets that had been provided by the Brett is not at all faulty because there is no suck kind of proof or details given by the SOO burgers about the faulty golden tickets (Adriaanse, 2016).

Application

 SOO burgers must have identified the problem and should post in the media channels to let the customers know that some of the tickets are faulty. The customer who came before Brett had won the car that was carrying the same ticket as him. The sign was being posted when Bret was waiting in the reception area, which is not at all acceptable (Cartwright, 2016). The Brett has the right to file a case against the Soo burgers due to the Breach of contract because the fast-food snacks bar had tricked Brett. The SOO burgers need to provide punitive damages to Brett due to the breach of contract had been provided by the SOO burgers (Lan, Pickles, & Zhu, 2015).In another case whose name was Mickey had ordered 50 burgers in Soo burgers in Fitzroy and ate all the 50 burgers. 

Mickey was very ill after eating SOO burgers, he has to carry the bill of the 50 burgers he had bought on the first day, and he got ill after eating it. Mickey needs to file a complaint against the SOO burgers due to a false promotion provided by the company SOO burgers because he did acted upon the same. SOO burgers did not fulfill the promise they made and would be going to provide to people like Brett and Mickey the grand prize of car (Visser, 2015).Therefore Mickey has the right to gain the liquidated damage from the SOO burgers because he had invested a total 50 burgers on the first day of the promotion and has unqualifiedly acceped the terms of offer that were being made with the promotion of SOO burgers (Howells & Weatherill, 2017). In this regard it can be said that although Brett did not personally purchase any of the burgers but could collect the wrappers and thereby submitted the same before the counter to redeem two of golden tickets. Hence it can be stated that both the claimants did performed their part of obligation in regard to the promotional offer thereby making the defendant that is SOO Burgers liable to perform their part of promise.

Conclusion

Mickey has the ability to cancel the contract and can able to sue for all the restitution if Mickey has given benefits to the breaching party like buying 50 burgers and eating it one day is great challenging. Restitution act as the remedy for the contract where all the no breaching party is being put back in the position, which is being prior to being breached by the SOO burgers, and cancellation of the contract voids always relieves all the parties due to the presence of obligation under the agreement.

Reference List

Adriaanse, M. J. (2016). Construction contract law. Macmillan International Higher Education.

Cartwright, J. (2016). Contract law: An introduction to the English law of contract for the civil lawyer. Bloomsbury Publishing.

Howells, G., & Weatherill, S. (2017). Consumer protection law. Routledge.

Lan, T., Pickles, J., & Zhu, S. (2015). State regulation, economic reform and worker rights: The contingent effects of China’s labour contract law. Journal of Contemporary Asia, 45(2), 266-293.

Visser, D. (2015). The Open Access provision in Dutch copyright contract law. Journal of Intellectual Property Law & Practice, 10(11), 872-878.

Part B: Corporations Act

Option 2

Facts

Joytronics Pty Ltd while operating as a retail store that sells electronics kits and components at Sydney was not being able to gain the desired profit margin.

• For the purpose of accomplishing greater profit Felix decided to move at a bigger warehouse that is being situated at Parramatta and thereby proposed the same to other two directors.

• The other two directors  of the company that is Mercedes and Gregg also consented and approved to the decision undertaken by Felix.

• Even after moving to a bigger warehouse the company was not being able to achieve the desired amount of profit and thereby faced financial crisis.

Issue

The issue that requires being assessed in this case involves:

Q1: Whether the directors Mercedes and Gregg could undertake their general duty of care and diligence against the company?

Q 2: Whether being Non executive and warehouse manager at Joytronics both Mercedes and Gregg shall be held liable respectively in regard to the company’s stressful financial position?

Q 3: Whether Mercedes can be held liable along with Felix under Sec.588G of the Corporations Act 2001 if Joytronics becomes insolvent?

Rule

Directors within a particular corporation are being entrusted with a fiduciary position in respect the affairs and business that are being carried out within the same.  In this regard the corporations Act 2001 certain duties and liabilities are being enlisted that makes sure that the director’s extent of accountability rises and which are completely in conformity to fiduciary position of the same. Section 180 (1) of the corporation act 2001, deals with care and diligence that are required to be exercised by the directors of a corporation while performing their duties and powers in regard to corporate affairs. This general duty of care and diligence is also being considered as civil obligation and thereby its non fulfilment will make a director liable under the provision of Sec. 1317E of the concerned legislation (Tombs & Whyte, 2015). Clause (2) of Sec180 of the Corporation Act 2001 states about the judgment rule which are required to be taken into consideration for the purpose of making any kind of decision relating to business of the company.  This particular clause makes it clear that directors or other officers of any corporation while making any business judgments should ensure that the same has been done in good faith and that there he reasonably believe it to be rational enough. In relation to the degree of care and diligence that must be exercised by a director it was being declared in the case of Fisheries Development Corporations of SA Ltd Vs. AWJ Investments Pty Ltd [1980] the nature and type of business influences the extent of care and diligence that should be performed while undertaking the fiduciary position. In addition to this in the case of AWA vs. Daniels it was being declared by the court that each and every director of a corporation has the responsibility of fulfilling their general duty of care and diligence but in regard to difference in responsibilities and powers the standard of the same varies. Henceforth the non-executive directors are having lesser standard of care and diligence in comparison to that of other executive and managerial directors of the same (Blair & Stout, 2017).

Application

In accordance to the present case scenario it can be stated that with the objective of accomplishing greater profits from the market therefore decision of shifting to a bigger ware house was being undertaken by Felix singlehandedly (Guo et al., 2015). The same was being informed and proposed to other two directors that are Mercedes and Gregg who were not at all active in their part to investigate the rationality behind this decision. Moreover, the fact that Felix had only searched a single area at Parramatta and had not seen any other sites was also not being disclosed before the other two directors at the meeting.

In addition to this despite of having suspicion on the stated proposition of Felix, Mercedes did not took initiative to evaluate the concerned decision even being a non-executive director of the same. This show that the business judgment rule provided under Clause (2) of Section 180 was not been resorted to by Mercedes while consenting upon the decision as she herself did not believed the decision to be rational or reasonable enough thereby losing the protection that is being accorded by the concerned section.  Sec.588G requires the director to protect their corporations from any form of insolvent trading with the application of reasonable prudency in its management but neither of the other two directors that is Mercedes and Gregg undertook their responsibility of exercising the desired amount of care and diligence. Being directors at Joytronics and thereby serving for a period of seven years it was paramount on the part of Mercedes and Gregg to fulfil their civil obligation of care and duty (Stephens, 2017).

Conclusion

Mercedes

In regard to Mercedes it can be very well stated that in respect of the general duty of a director to undertake due care and diligence he has not carried out the same, Thereby, making him liable for the same under the above-mentioned Sections of the CA 2001. Apart from this his decision about consenting the same could not be said to be protected under Clause (2) Of Sec.180 as she had suspicion in respect of the idea about shifting to Parramatta. Moreover, being a director of the corporation, it was his responsibility under Sec.588G to avoid any form of indulgence by the company on to insolvent trading that might put the financial position of the company at stake. But Mercedes did not look upon the aspect of reasonability of the taken decision by Felix thereby making liable for the financial breakdown of Joytronics Pty Ltd.

Gregg

Where as in regard to Gregg it can be stated that being a director and a warehouse manager at Joytronics and thereafter serving there for a period of seven years it was being incidental on his part to exercise the general duty of care in respect of company affairs but the same was not followed (Westbrook, 2015). Although he did not possessed the desired amount of qualifications that could analyse the impact of any such decision but it cannot be put forwarded as a defence as this was being adjudicated in the case of Daniels vs. Anderson. Henceforth making him liable for the worsened company’s financial position as well as there was breach of general duty of directors imposed by the Corporations Act 2001(Kraakman, 2017).

Reference List

  • Blair, M. M., & Stout, L. A. (2017). A team production theory of corporate law. In Corporate Governance (pp. 169-250). Gower.
  • Guo, W. F., Zhou, J., Yu, C. L., Tsai, S. B., Xue, Y. Z., Chen, Q., … & Wu, C. H. (2015). Evaluating the green corporate social responsibility of manufacturing corporations from a green industry law perspective. International Journal of Production Research, 53(2), 665-674.
  • Kraakman, R. (2017). The anatomy of corporate law: A comparative and functional approach. Oxford University Press.
  • Stephens, B. (2017). The amorality of profit: transnational corporations and human rights. In Human rights and corporations (pp. 21-66). Routledge.
  • Tombs, S., & Whyte, D. (2015). The corporate criminal: Why corporations must be abolished. Routledge.
  • Westbrook, A. D. (2015). Does Banking Law Have Something to Teach Corporations Law about Directors’ Duties. Washburn LJ, 55, 397.
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