Business Law Issues - Assignment Example

Business Law: Short Answer Questions Student’s Name: Institutional Affiliation: Tutor’s Name: Date: Question One a) No. Although the roads authority was fully aware that the information they were giving concerns a very serious matter, they had a duty to exercise reasonable care given the fact that it was is the only body that knew of any proposed developments on land. Also, the advice they gave was to be used by the recipients (Megan and Dylan) to form a basis for their action. This means that Megan and Dylan would not have proceeded to buy the land if they had been informed of any proposed development on the land by the roads authority as in the case of MLC v Evatt. Despite the above background, Megan and Dylan cannot take any legal action against the roads authority since it is six months now since the advice was given and the information is outdated. b) The Continental Bank can sue the Savings Bank for their incorrect advice. This is because there was there was a special relationship between the Plaintiff (Continental Bank) and the Defendant (Savings Bank) in the sense that the Defendant was the only bank that could give the credit history for the Megan and Dylan. Continental Bank incurred pure economic loss, it needs to establish and it can establish the existence of special relationship with the Savings Bank. The plaintiff in this case can rely on mere foreseeability of economic loss and the existence of special relationship. Financial losses are experienced due to competition from worthy competitors. The competition is legitimate and this means that all commercial activities would be affected if the law was to impose a duty to take care so as to prevent that loss (Mann et al., 2009). This implies that there was a duty of care on the part of the defendant as seen in the case of Adelaide Chemical v Carlyle). Although, the Savings Bank ought to have exercised reasonable care given the fact that it was being relied on to give the best of its advice and information regarding the credit history of Megan and Dylan, they were not obliged to give the information at all since it was a request and not a condition. In determining the reasonability of reliance, it is evident that the negligent words were meant to advice the Continental Bank to lend money to Megan and Dylan. The banker at Savings Bank, though misinterpreted Megan and Dylan’s credit history, said that he was confident that the two would payback mortgages given to them by the Continental Bank. The fact that the banker at Savings Bank wrote to Continental Bank saying that Savings Bank was confident that Megan and Dylan were going to repay any sum of mortgages given to them implies that the purpose to which the negligent words were meant for does not make a difference, hence Continental Bank Can sue Savings Bank for not advising accordingly. Use cases to support your answer. Question Two In the first place, this was an offer made to the general public meaning anybody could accept or reject the offer. For a legally binding contract to be made, an offer, acceptance as well as Consideration has to exist (Mann & Roberts, 2013). Also, a proper and reasonable means of communication between the parties that wish to enter into a contract must be there (Twomeyet al., 2011). James has not breached the terms of the offer because Peta has not confirmed her acceptance of the offer. Peta has neither rejected the offer through writing or counteroffer. If she had given another price that she would wish to by the car from James, it means that she would have automatically rejected the offer. On the other hand, James would be obliged to accept or reject Peta’s offer in the new agreement. Therefore, he could withdraw the offer any time prior to Peta’s acceptance (before 14th March). If Peta had accepted the offer, it means that the James would not be in a position to revoke the offer since one party cannot be bound without the consent of the other party. If Peta had confirmed her acceptance of the offer then promise to pay the amount say on or before 14th March, then the James would not have been bound to keep the offer open until the expiry of the date. Keeping an offer open for a certain period is not legally binding except if considerations were given for the offer (Emerson, 2009). The offeror (James) is free to revoke his offer, even if he had given Peta a period of time to consider accepting or rejecting the offer. If the offeror wishes to make sure that there is sufficient time for the offeree to consider his offer, there must be an agreement that is legally supported by consideration for the period it will take for the offer to be revoked (Abbott et al., 2007). On the other hand, if Peta had written the mail letter to James on 9th March, James would have breached the terms of the contract. This is because the mail letter would indicate Peta’s acceptance to buy the car and pay the amount to James by 28th March. A binding agreement would have been made between James and Peta. This would have indicated that the agreement had been reached and that the offer was no longer revokable. To avoid any fears and worries of being force to resell his car to Peta, James could just inform Peta that he was entering into a new agreement with Paul and the offer she was giving her had been revoked either by writing or oral means. Clarkson et al., (2012) postulates that the effectiveness of revocation can only be realized after a communication has been made to the offeree. However, the communication is not necessarily made by the offeror. What matters is if the offeree has been brought to notice concerning the revocation through the use of reliable communication channels (Bagley & Dauchy, 2012). Therefore, it is true to say that James is within the legal provisions of the law to sell his car to Paul; hence he should not worry about being obliged to sell his car to Peta. Question Three No, Bob cannot recover his money. The fact that Anne was able to pay $10000 instead of the agreed $ 20000 means that a counteroffer has been introduced. Therefore, the initial contract is disregarded and now the two are entering into the new agreement. Bob’s acceptance of Anne’s offer to pay him $10000 signals that he has agreed to the terms of the new contract. Once an acceptance has been made, revocation of the offer is not possible any more. The fact that Anne has just won $1 million in the lottery does not change the initial terms of the contract. She is not obliged to pay Bob the initial amount of $20000 for the landscaping service he provided her since the two had entered into a new contract through oral agreements. Also, it is not possible to determine whether any statement(s) was made relating to any possible source of income on Anne’s side in the future would see her pay Bob his money. All statements made before the completion of the contract are considered terms of the contract (Twomey& Jennings, 2010). Therefore, the issue of lottery was not part of the terms of contract since it came late after the contract had been sealed (Roscorla v Thomas). Bob’s acceptance of Anne’s commitment to pay $10000 means he cannot change his mind afterwards. He can only do so by entering into a new contract again with Anne since the terms of the previous contract cannot be used to claim compensation with the current contract. Reference Abbott, K., Pendlebury, N., & Wardman, K. (2007). Business law. London: Thomson. Bagley, C. E., & Dauchy, C. E. (2012). The entrepreneur's guide to business law. Mason, Ohio: Southwestern. Clarkson, W., Miller, R., Cross-, F. B., & Clarkson, W. (2012). Business law: Text and cases: legal, ethical, global, and corporate environment. Mason, OH: South- Western Cengage. Learning. Emerson, W. (2009). Business law. Hauppauge, N.Y: Barron's Educational Series. Mann, A., & Roberts, S. (2013). Essentials of business law and the legal environment. Mason, OH: Southwestern Cengage Learning. Mann, A., Roberts, S., & Smith, Y. (2009). Smith & Roberson's business law. Mason, OH: Southwestern Cengage Learning. Twomey, P., & Jennings, M. (2010). Business law: Principles for today's commercial environment. Mason, OH: Southwestern Cengage Learning. Twomey, P., Jennings, M., Fox, I., & Anderson, A. (2011). Anderson's business law and the legal environment. Mason, Ohio: Southwestern Cengage Learning. Read More