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Assignment Cover Sheet When submitting your assignment it must be accompanied by this Assignment Cover Sheet. Please make sure that you complete all of the details correctly.  Provide ALL details requested on this form.  Use one form for each assignment.

Given name

Abigail

Surname

Purichjaroenpong

Student number

19967628

Email

[email protected]

Unit name

Business Law 100

Unit code

11011

Assignment title

Case Study Analysis

Date submitted Student’s comment to tutor

Marker’s comments Recorded mark Marker Comments

Question 1. 1. Us i n gt he4s t e ppr oc e s s , d i s c us sa n da ppl yt hee l e me n tofa gr e e me ntr e q ui r e df ort hef or ma t i on ofal e g a l l ye n f or c e a bl ec ont r a c ti nt h ea bo v es c e na r i oi n v ol vi n gCl i ffa n dRi c k.

The principle of law requires both sides to be in agreement for a legally enforceable contract to be created. For a legally enforceable contract to be formed, three elements be must fulfilled: intention, agreement and consideration (Lambiris and Griffin 2017). Agreement is the chosen element for this case study, which is the most important part of a contract (Graw et al. 2015) Agreement needs to be willingly made by the parties, and is legally enforceable when the parties intend for it to be legally bound (Graw et al. 2015). Under agreement, there is offer and acceptance. Offer is giving an announcement that indicates readiness to contract, while acceptance is an announcement or action acknowledging terms of offer (Graw et al. 2015). For an offer to be made, the basic details must be outlined and it must be promissory, meaning that the offer must deliver the offeror’s inclination to follow the terms if accepted (Graw et al. 2015). In the case of Harvey v Facey [1893] AC 552, Harvey telegrammed Facey inquiring about the lowest price of a Bumper Hall Pen and a request to purchase it. Facey immediately replied, stating, “lowest price for Bumper Hall Pen £900”. Harvey assumed that Facey was willing to sell it, hence he telegrammed back agreeing to buy, only to have Facey refuse him, leading to Harvey sueing Facey. The court had to decide whether or not Facey’s statement: “lowest price for Bumper Hall Pen £900” was an offer or response to Harvey’s telegram. The court concluded that it was not an offer. It was only Facey responding to Harvey’s first telegram, hence it could not be interpreted as Facey promising to sell the Bumper Hall Pen. Pure expression of curiosity in conducting business is an invitation to treat, not an offer (Graw et al. 2015). Examples of invitations would be advertisements and displays, where it piques one’s interest in the product but there is no legal obligation to buy it. Patridge v Crittenden [1968] 2 All ER 421 saw Patridge put up an advertisement in a magazine stating, “Bramblefinch cocks and hens 25/- each”. This caused the RSPCA to sue Patridge for illegally offering to auction wild birds. The issue for the court was whether or not the advertisement was an offer or invitation to treat. The court concluded that it was an invitation to attract potential buyers who were interested and willing to negotiate. Thus, it was not an offer.

In Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401, the statute required prescriptive medicine to be sold under the supervision of a pharmacist. However, Boots converted their chemist into a ‘self-service’, where they displayed goods on a shelf. Pharmaceutical Society argued that the display was an offer and customers legally accept the offer when they pick goods off the display. The court had to decide if the display of goods was an offer or an invitation to treat. They decided that it was not an offer but an invitation, as the display’s purpose was to attract attention. The customer’s choice to take the good to checkout was an offer to buy, and the cashier may accept or reject the offer. An offer can also be made to the entire world (Graw et al. 2015). In the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, the advertisement for Carbolic smoke balls promised that £100 pounds will be paid to anyone who contracted influenza from using the balls. To prove its sincerity, the company deposited £1000 into the bank to pay the rewards. Mrs Carlill bought and used the smoke balls accordingly and caught influenza. When she went to claim the reward, the company refused to pay as it claimed that it was not an offer, but an invitation to treat. The court had to decide if the advertisement was an invitation or an offer to the entire world, in which they concluded that it was an offer. This was because the language used in the advertisement was highly detailed, defining terms of acceptance in which Mrs Carlill accepted. Termination of an offer happens when it is revoked or lapsed over time before acceptance (Graw et al. 2015). There is also the option to leave the offer open for a period of time of there is no indicated time. Rejection of an offer annuls the offer, and it cannot be reoffered. A counter-offer is also a rejection of the initial offer. Death of either offeror or offeree also terminates the offer. Acceptance happens after an offer is made, when an offeree agrees to the terms of the offer (Graw et al. 2015). Acceptance has to be the same as the offer, conditional acceptance is disallowed. Only the offeree can accept, and it must be communicated with the offeror. Once it is accepted, the agreement is sealed. The general rule for effective acceptance is that it happens when the offeree communicates it with the offeror. The agreement is made at the time and place of communication. The rule applies to acceptance by email, with special legislation to determine the time and place of the dispatch and receipt of email (Lambiris and Griffin 2017). The Electronic Transactions (Victoria) Act 2000 states that once the electronic communication, in this case an email, reaches the receiver, acceptance occurs regardless if the email was read or not. The time of the receipt is the time when the receiver is aware of and able to access the email. It is also assumed that the receiver is able to

receive the email. Regarding the place of dispatch and receipt, unless the addressor and receiver has agreed on the place, the electronic communication is assumed to have occurred at the addressor’s and receiver’s place of business. Otherwise, the fact that someone utilises an email address related to a specific country does not form a presumption that the business location is in that country.

An agreement is legally enforceable if the parties intend it to be legally bound. Special rules apply to acceptance by email to determine whether or not agreement is made by email. The question is whether or not a legally enforceable agreement was made by email between Cliff and Rick. To enforce that the agreement was made, Cliff needs to provide information to prove that offer and acceptance between him and Rick was made. Rick emailed Cliff an offer at 11am Monday, promising Cliff with a schedule of his trip to the United States and he listed a price of $11900 for FirstBase’s services. The email had sufficient information in which Cliff was inclined to accept the terms, making the email promissory. The email was not mere expression of interest, as it specifically listed the schedule and price that was solely for Cliff. Additionally, Rick requested Cliff to email him back a reply to the offer. Therefore, Cliff can argue that it was not an invitation to treat, but an offer. Rick and Cliff communicated offer and acceptance through email. Rick’s offer was valid until 12 noon Wednesday, and Cliff replied his acceptance at 1130am Wednesday. This was within the time period of the offer, hence there was no termination or counter-offer to reject the original offer. Effective acceptance must be communicated between offeror and offeree. Rick is the offeror while Cliff is the offeree, and Cliff electronically communicated acceptance of Rick’s offer to Rick by email. The email did reach Rick at 1130am Wednesday even though his internet access was cut off on Tuesday and Rick only opened the email a few days later. Hence, regardless of whether or not Rick had internet access or read the email, Cliff’s acceptance email did reach Rick’s email address at 1130am Wednesday, and acceptance occurred at the time the email reached Rick. It is unclear if the email address Rick used was from his place of business. However, Rick’s email offer used his company’s name as the company promising to service Cliff. Thus, it can be assumed that Rick’s email address was used by Rick to conduct business, thereby occurring at his location of business. Cliff, unaware of Rick’s problem with his internet provider, assumed that the agreement was bound and went to book other tours online by credit card. Rick only opened Cliff’s email after Wednesday,

and claimed that he could not sell at $11900 anymore, indicating that the offer had lapsed. Cliff can argue that Rick’s negligence in paying for his internet access was not a valid reason to deem the offer terminated. The fact that Cliff’s acceptance email was sent at 1130am Wednesday before 12 noon proves that acceptance occurred at the time and place it was received by Rick’s inbox and therefore agreement was made and legally bound then. Under these conditions, there is an element of agreement as there is offer and acceptance. In conclusion, it is possible that agreement was made as Rick sent an email promising Cliff his air ticket and accommodation, and Cliff accepted by sending back an email as requested by Rick. Cliff’s email was sent before the offer’s deadline and it reached Rick before the deadline, thus acceptance and agreement was made at the time and place Rick received the email. A contract was created and Cliff can enforce the agreement between himself and Rick to have Rick undertake his promise on getting the payment.

Question 2. Consider whether the remaining formation elements of intention and consideration have been satisfied in the above scenario The issue of law requires intention to be legally bound by both sides in order for a legal contract to be created (Graw et al. 2015). The issue of law also requires consideration to be provided when both sides agree to enter into a legally enforceable contract (Graw et al. 2015). The elements of intention and consideration are essential in contract forming, and they are the elements to be discussed here. If both parties intend to be legally obligated to fulfil the agreement, the agreement becomes legally enforceable. The court judges intention objectively. They question if a reasonable person would see the agreement as intended to be legally binding. They also analyse the circumstances of the situation to judge if there is intention to be legally bound. For family or social relationships, it is assumed that the agreement has no intention of forming a legally binding contract. The presumptions can be refuted if evidence opposing them are presented in court. Three aspects are taken into consideration when rebutting the presumptions: whether obligations were stated, whether a party suffers inconvenience or whether it is predicted that a party will claim damages (Graw et al. 2015).

In the family case of Woodward v Johnston [1992] 2 Qd R 214, Mr Woodward promised his wife 10% of his gravel supply business when she agreed to help him do work. She mostly worked for him on weekends for 18 months, but Mr Woodward solely profited from this work and did not keep his promise to his wife. Mrs Woodward sued him, and the court had to decide if the agreement between the couple had the intention to be legally bound. They concluded that there was no intention and it was a domestic arrangement, as Mrs Woodward willingly did the work and no evidence interest was formalised. Todd v Nicol [1957] SASR 72 rebutted the presumption. Nicol asked her family, the Todds, to move from Scotland to Australia to live with her. She promised free accommodation and a change in her will to have her house be under the Todds’ ownership after Nicol’s death. Mrs Todd agreed and resigned so that she and her daughter could move to Australia. However, Nicol evicted the Todds after they had an argument. This was brought to court and the court had to decide if the agreement between Nicol and the Todds had the intention of being legally binding. They decided that the intention existed, thereby rebutting the domestic presumption. Mrs Todd depended on Nicol’s promise and there was severe expense and inconvenience for the Todds moving from Scotland to Australia. The presumption regarding parties in a business relationship is that they intend to form a legally binding contract (Graw et al. 2015). In Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117, Esso promised to reward motorists with a ‘free’ coin for every 4 gallons of petrol bought. Commissioner of Customs and Excise brought this to court as they felt the coins were for sale and hence subject to purchase tax. The court had to decide if Esso’s action of rewarding a coin to motorists who bought the petrol was an intention to be legally bound or was it just a gift. They concluded that from a business perspective, there was intention and the agreement was a business agreement. Consideration is the price paid for the other party’s promise (Graw et al. 2015). It only needs to be provided for informal contracts. The party desiring enforcement of the contract must demonstrate provision of consideration. The law requires consideration to be of sufficient value in order to be valid (Graw et al. 2015). In the Thomas v Thomas (1842) QB 851 case, Mr Thomas wanted his wife to live in his house until her death. After his death, his executors had an agreement with Mrs Thomas where she could live in the house in exchange for £1 a year and a promise to maintain the good condition of the house. The court had to consider if the consideration of £1 was enough, and they decided that it was as it was

not required to be adequate. There was no criteria for the consideration to be of equal value to the terms of agreement. As long as it had some value, it was enough consideration. Valid consideration has to be executory or executed. Consideration for a promise that has been performed is invalid as it is already past (Graw et al. 2015). Using the Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 case, the issue for the court to decide was whether Carlill provided consideration in response to the company’s promise to perform their current obligations. The court decided that her act of purchasing and using the smoke ball was executed consideration as it was performed with the expectation that the company’s promise in exchange for this act would become legally binding. A promise to carry out a current obligation is not valid consideration (Graw et al. 2015). Stylk v Myrick (1809) 170 ER 1168 had 2 sailors desert a ship, leading to the captain promising his crew that they would receive the deserters’ pay if they got the ship home. However, the ship-owners refused to pay the extra amount. The court had to decide if the crew had provided consideration for the captain’s promise, in which they concluded that the crew did not give anything of value. Hence, no legal contract was formed, and no extra pay was given.

An objective judgement has to be made when analysing intention to be legally bound. The question is whether or not a reasonable person would regard the email between Rick and Cliff as intended to be legally binding. Rick and Cliff are brothers, and Cliff made a call directly to Rick which led to Rick directly emailing him the offer and Cliff accepting it via email. Based on the facts, the court will presume that Cliff and Rick did not intend to be legally bound when the agreement was made. However, the agreement was in a business context, as Rick emailed Cliff stating that his company would provide the service and even listed the price of the company’s services. The email itself was a written legally binding contract in which Cliff was willing to accept. Looking at the facts, the court will then presume that the agreement was intended to be legally bound when it was made. To enforce the business agreement, Rick will have to provide evidence to refute the presumption that the agreement was made in family context. Rick began the email with his company’s name, and he was the one who sent the email as he was representing as the boss of his company. The email stated the terms of the agreement and the price, in which Rick then advised Cliff to reply an answer by email.

However, Cliff seems to see this as more of a family agreement than a business one. Cliff will have to provide evidence to rebut the presumption regarding the lack of intention to be legally bound. Cliff relied on his brother’s expertise as seen when he telephoned Rick as he knew that Rick ran a travel agency specialising in sports tourism. Rick emailed the offer to Cliff, stating the terms. This shows that there were obligations to be fulfilled. Before receiving a proper confirmation from Rick, Cliff booked other tours, showing that he unconditionally trusted his brother to obtain what was promised in the offer. Due to Rick’s negligence, the offer became invalid and Cliff lost money from other tours that cannot be recovered. This indicates contemplation to recover damages from Rick as Cliff suffered expenses from Rick’s negligence. To rebut this, Rick can argue that his negligence was unrelated to Cliff’s loss from his tours, as Cliff went to buy them without waiting for a confirmation of the agreement from Rick. Therefore, Rick is not liable to pay for the damages to Cliff regarding the other tours. Rick is only liable for the $11900 payment. In this case, there was intention to be legally bound.

Consideration must be provided to enforce a contract. The question is whether or not valid consideration was provided. Valid consideration needs to be of sufficient value, not adequacy. Rick offered his company’s services in exchange for a fee, which is not of equal but of sufficient value. There was also no criteria for consideration to be of equal value in the email, hence it is valid consideration. Past consideration is invalid. In this case, the promise from Rick was to provide Cliff the services and in return, Cliff would pay Rick $11900. It is unclear when Cliff had to make the payment, but the offer did state the payment amount, therefore it is not past consideration. Cliff had already agreed to pay $11900 in exchange for Rick’s services. However, because of Rick’s negligence, Cliff lost from his other tours. As mentioned, valid agreement was made, hence Rick is responsible for fulfilling the promise. If Cliff wants to demand Rick to get payment for his other losses, it is invalid consideration as this current obligation is unrelated to the original offer. Hence, valid consideration is provided in the email offer as Cliff had to pay for Rick’s services.

In conclusion, the agreement is likely to be legally binding as there was intention to be legally bound when the agreement was made. A valid contract was created and Cliff can enforce it to get payment

from Rick and have Rick fulfil his promise. Valid consideration is likely to have been provided as there was a price paid for the promise, it was not past consideration and it was of sufficient value.

REFERENCES

Lambiris, Michael, and Griffin, Laura. 2017. First Principles of Business Law 2017. Melbourne: OUPANZ. Accessed September 9, 2019. ProQuest Ebook Central. Graw, Stephen, David Parker, Keturah Whitford, Elfriede Sangkuhl and Christina Do. 2015. Understanding Business Law 2nd edition. Australia: LexisNexis Butterworths....