- Internal Code :
- Subject Code : HI6027
- University : Holmes Institute
- Subject Name : Business and Corporate Law
Business and Corporate Law
Question 1-
Exclusive powers are those powers which the Australian constitution gives to the Federal government i.e., the Parliament. Examples are-
Section 90 gives power to the Parliament to entail the import duties on customs and excise and to grant bounties on production and regulate the export of goods, except any state which levies such duty or grant any bounty for production before 13th of June, 1898, shall be valid and irrevocable.
Section 114 gives autonomy to the Parliament over the naval and military force. No state government has the authority to call for any naval or military force, levy any tax on property belonging to the Commonwealth. Along with this, the Commonwealth too cannot tax any property belonging to the State.
Section 115 gives the authority of legal tender to the Parliament. It says that no State government shall coin any money, except gold and silver coins as a medium of legal tender.
Concurrent powers are those powers which are exercised both by the state governments and the commonwealth. The term concurrent means when both, state and federal government can pass laws on those subjects. According tosection 109, any contradiction in the laws or conflict of interest between the two governments, then the federal government powers succeed the state government’s powers making the power of the state invalid till the inconsistency.
Section 51 gives a list of the concurrent powers like trade and commerce with other countries; taxation without any discrimination between the States or any part of it; postal, telegraphic, telephonic services; quarantine, etc.
Residuary Powers are those which are reserved with the states. After the formation of a federation of states, some powers were given to commonwealth u/s 51 and the remaining statesu/s 108 such as law and order; commerce and industry; primary production; education; transport etc.
Question 2
Issues
- Was there a valid contract with the vending machine? and if yes, then whom did one enter into a contract?
Rule
- Contract law
Application
During the inception of common law, law of contracts was not that much of an importance. The lawyers did not judge a case on the basis of facts but on procedural law meaning what forms the cause of the action. Up till 19th century, contract law had no credibility. It was after that this law was recognized when a textbook was written on this subject. It was then that it came under the knowledge that there could be contractual disputes among the parties too. Classical contract theory gave a foundation to the modern contracts theory. The classical contract theory was based on three golden rules. First, that it is a bargain, meaning a reciprocal contract. Like I promise to do a thing for you and in return you promise to do a thing for me. Second was that a contract can only be formed if the parties are willing to do so meaning that there is no pressure from anyone and that they want to bind themselves in a contract.
Lastly, freedom of contract which means it is upon the parties to decide whether they want to enter into a contract or not. The law only plays a role in order to assure that there is no coercion or undue influence which compels either of the parties to enter into a contract (O’ Sullivan, 2018). According to modern law of contracts (common law), which recognized that there are six elements that constitutes a valid contract. First, there should be an intention to create a legal relationship. Second, there should be an offer. Third, there should an acceptance among the parties. Fourth, there should be a consideration. Fifth, there should a capacity to create a legal relationship. Sixth, the contract should be a legal contract.
Online portals are an invitation to offer. When one starts browsing and make payments, that constitutes acceptance and consideration respectively. Similar is the case with vending machines.In a leading Australia case, Thornton v Shoe Lane Parking Ltd [1971] QB 163 the court held that there was a valid contract the moment plaintiff bought the ticket from the vending machine for some amount. Hence it is the liability of the Shoe Lane Parking to indemnify him for the damages. It is an invitation of offer by the bus depot, when they make bus time-table.
The offer is made by the passenger when he enters the bus. An acceptance is complete when the bus conductor accepts the fare given by the passenger in exchange of a ticket. In a leading case Wilkie v London Transport Board [(1947) 1 All ER 258], Lord Greene held that an offer was made by the bus company and an acceptance when the passenger enters the bus platform or buys the fare (McKendrik & Liu, 2015). Therefore the first issue that whether there was a valid contract, there was a valid contract. The machine being placed on the platform is a standing offer. The plaintiff who went to the machine and puts in $3.50 gives his acceptance to the offer made by the machine. Therefore, a valid contract is formed between the plaintiff and the XYZ Vendsolutions Pty. Ltd.
The second issue, with whom did plaintiff enter into the contract, so the contract was between the plaintiff and the XYZ Vendsolutions Pty. Ltd. Reason being that the vending machine had that written on it that it is their property. Therefore, any inconsistency that arises with the customers, that has to be dealt with the company whose property it is. With their permission only can the chips company sell their chips through the vending machine. Therefore, it is the chips company, the XYZ Vendsolutions and the plaintiff that entered into the contract.
Just like in the above-mentioned case, there was a contract between the party and the parking lot committee since the vending machine was their property and that they issued tickets to their customers to allow them to park. Hence, any damage that occurs to the plaintiff or his vehicle in the parking lot is on the parking lot committee.
Conclusion
As per the essentials of the contract law, there was a valid contract between the plaintiff, XYZ Vendsolutions and that the chips company.
Question 3
A minor is a person who ages below 18 years. Under common law, a minor does not hold the capacity to understand the legality of a contract, therefore termed as incompetent to contract. However, certain countries legalize such contracts and term it as valid. Like in Australia, under of Section 7 of Goods Act, 1930 a minor if enters into a contract to buy or sell necessities, then that contract is binding on both the parties. The term 'necessities' means any item that is suitable for minor's life or is an adequate requirement at that time. If any item found to be beyond the necessity of minor, then that agreement shall stand void. In Nash v Inman [(1908) 2 KB 1]a minor contracted to purchase expensive clothing and that was held to be void.
Under common law contract with minor is termed to be voidable. Reason being, a contract is void only until the minor is under the age of majority. The instant he attains majority, the contract he signed when being minor backs a legal sanctity until and unless the minor did not do anything to invalidate the contract while being a minor. Many countries follow this concept when it comes to a contract entered by a minor. Like in Sultman v Bond [1956] St R Qd 180 the court held that it is up to the minor if after attaining majority he wants to legalize the same contract or renew it.
Under the Supreme Act, 1933 section 49 talks about a certain contract with minors as void. Contracts like repayment of money lent; contract of payment of goods supplied, other than necessities; accounts stated, such contracts are void. The proviso says that nothing mentioned in the section affects the contract for the sale of land or of employment or essential goods and services.
Question 4
The meaning of contra proferentem rule means that if there is any ambiguity in the terms of the contract, then what is looked upon to save the parties from that ambiguity is the position of the parties to understand the terms of the contract and upon whose shoulders should that burden be pinned upon (Jha and Mehta, 2018). It is a legal doctrine in the contracts determining the guilt of the drafter. This rule has been a part of English law for over 600 years. The common law rule of construction 'verba chartarum fortius accipiuntur contra proferentem' means to resolve any ambiguity in the draft of the agreement, shall be done against the drafter.
In the current era of business, this rule has been quite disreputable and hence its application quite narrow. Having clarity and no ambiguities in a contract is a very difficult task for a drafter since he has to acknowledge the interests of both the parties. Therefore, blaming the drafter for any inconsistency, is not just. Therefore, many industries have now invalidated this rule. Like insurance contracts, since they are more reliant towards the judiciary for any inconsistencies, they have overthrown this rule. Sale and purchase agreements have nullified this rule by stating a common phrase in their agreements that no burden shall be put on the drafter. It also prohibits any ambiguities to be resolved against the drafter. Loan contracts, bankruptcy contracts, merger and joint ventures these all are immune to this rule (McCunn, 2019).
In Smith v South Wales Switchgear Co Ltd [(1978) 1 WLR 165 (HL)], clause 23(b) of the services contract saves the contractor from the customers for any negligence done. Therefore, it was held that just by mere mentioning such a clause does not save the contractor for his negligence due to which the customer suffered injuries. The contract was not that wide enough to point out on who the onus shall be, if not the contractor. Hence, the contractor was held liable for the damages to the customer (Courtney, 2014).
Question 5
Brief facts
Amina hired Bryan as a delivery man. He was supposed to join his job from 1st September. On 1St October, Amina wrote to him saying that she cannot recruit him due to slump in the economic conditions.
Issue
- Whether Bryan can sue Amina?
Legislation
- Contract law
Application
As per the general rule of contract, six elements count a valid contract. First, there should be an intention to create a legal relationship. Second, there should be an offer. Third, there should an acceptance among the parties. Fourth, there should be a consideration. Fifth, there should a capacity to create a legal relationship. Sixth, the contract should be legal. If any of the above elements get breached by the parties, then that constitutes a breach of contract. An innocent party cannot claim to repudiate a contract if he had the knowledge of repudiation but continued to form a contract; if the contract has been partially performed; if ‘restitutio in integrum’ is not between the parties meaning the where restoration to its original form is impossible (McGarvie, 2017).
In Nikolich v Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784, the court held that Goldman Sachs had breached the terms of a contract made with Nikolich which were quite expressive terms of the contract. In Tiago v John Hopkins Property Pty Ltd [2014] FCCA 2822, it was held by the Federal court that if an offer is made by the employer to the employee for a job, and if the employee did not sign the contract, then it does not mean that there was no such offer made. What matters is that the employer and the employee have the knowledge about the job and the employee shows his willingness to accept that offer.
What constitutes major breaches of contract are first if there is some material breach of contract, meaning when the key element of the contract is not fulfilled. Secondly, a minor breach in contract meaning that there was a breach of contract but it was not much grave. Third, anticipatory breach meaning that one of the parties put a condition that they shall not perform their part of the contract unless compelled to do so, which is quite uncommon but does amount to remedies to the plaintiff and lastly, actual breach when the time arises for the parties to perform their part of the contract but they refuse to do so (Legal vision, 2015).
In the given problem, Amina hired Bryan as a delivery man which he was supposed to join from 1st September. On 1st October, she wrote to him that his services shall no longer be required due to a slump in the economic conditions. Bryan is eligible to sue Amina for breach of contract since they entered into a valid contract when Amina hired him. Whether the contract was oral or written, that is uncertain but even though being an oral contract, it is binding until and unless Bryan falls under the exceptions to form a valid contract. The moment Bryan accepted Amina’s offer, that agreement turned into a contract. Had Bryan not given his acceptance, then Amina would have the liberty to cancel the offer. Merely due to slump into the economic conditions is not a valid justification to cancel a contract.
Conclusion
Bryan has a right to sue Amina and claim damages for the breach of contract. The actions of Amina are nowhere justified as there was a valid contract between the two. Had Bryan misrepresented himself or shown any misconduct from his part, then Amina could have been immune from breach of contract as that would have been legal.
References for Business and Corporate Law
Commonwealth of Australia Constitution Act, 1901
Courtney, W. (2014). Contractual Indemnities. Bloomsbury.
Goods act, 1930
Jha, S. & Mehta, S. (2018). Contra proferentem: A necessary evil. Indian Journal of Law & International Affairs, 2(2), 64-78.
Legal Vision, (2018). 4 types of breach of contract in Australian law. Retrieved from https://legalvision.com.au/4-types-of-breach-of-contract/
McCunn, J. (2019). The contra proferentem rule: Contract law’s great survivor. Oxford Journal of Legal Studies, 39(3), 483-506.
McGarvie, R.E. (2017). The common law discharge of contracts upon breach. Melbourne University Law Review, 4, 305-327.
McKendrik, E. & Liu, Q. (2015). Contract law: Australian edition. Macmillan International Higher Education, 2015.
O’ Sullivan, J. (2018). O'Sullivan and Hilliard's the Law of Contract. Oxford University Press, 2018.
Nash v Inman [(1908) 2 KB 1]
Nikolich v Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784
Smith v South Wales Switchgear Co Ltd [(1978) 1 WLR 165 (HL)]
Sultman v Bond [1956] St R Qd 180
Supreme court act, 1933.
Thornton v Shoe Lane Parking Ltd [1971] QB 163
Tiago v John Hopkins Property Pty Ltd [2014] FCCA 2822
Wilkie v London Transport Board [(1947) 1 All ER 258]
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