First Principles of Business Law - Assignment Example

Part A Question 1 Assume that the elements of intention and consideration required for the formation of a contract exist. Using the four-step process, discuss whether the element of agreement required for the formation of a contract can be established. Is Chickens Galore obliged to provide Christian and Brian each with a Mazda CX-9? Step 1: The legal principle in this question is that: The elements of intention and consideration required for the formation of a contract exist. The parties in this case are Chicken Galore as the defendant and Christian and Brian as the plaintiffs. The plaintiff is the person that takes the case to court and the defendant is the accused party. Step 2: Rules of law relevant to this legal principle There are three main requirements for the formation of a legally enforceable contract, intention, agreement and consideration (Lambris, 2011). The element that requires discussion here is the agreement by the parties to enter into a legally binding agreement. There are two elements that make an agreement valid, offer as well as acceptance. An offer is an invitation from an individual to another to buy something or do something. Acceptance is the act of taking another party’s offer to do something or buy something (Lambris, 2011). An agreement is valid if one party makes an offer and the second party makes an acceptance by taking the offer. A valid offer has to satisfy the following elements, promissory, sufficiently complete, it should not be expired, intention to result into a contract if accepted and have to be addressed to a specific person or a group (Lambris, 2011). For acceptance to be valid the following rules has to be satisfied, must be in the same terms as the offer, made before the deadline, addressed to who made it and made in acceptable form (Lambris, 2011). The court objective is to assess if there was a promise between the parties involved. This is to decide whether this promise would have led to an agreement resulting to a contract. The other rule of law is the court to decide assess if the offer sufficiently complete. If it states all the necessary requirements, such as the price of a commodity, the mode of accepting the offer and there is a deadline for the acceptance of the offer. This is a rule which should be followed and observed in making agreements. The rule of law also states that for an offer to be valid is should be directed to a specific group or a person. Therefore, court should assess if this requirement is fulfilled. The other rule of related to an offer is that an offer should be made within a given time frame. This is to ensure the deadline has not passed which would make the offer invalid. The law requires acceptance of the offer to be made to the same party who made an offer. This is to avoid conflicts in reaching an agreement. The other rule of law is that acceptance should be made using the stated mode in the offer. The modes include fax, email and post. In the case Carlill vs. Carbolic Smoke ball Co [1893]1 QB 256 during an Influenza epidemic Carbolic Smoke ball company produced smoke balls that would prevent one from getting influenza. It advertised in newspapers that anyone who purchased the smoke ball and used it in the right manner and contracted influenza will get a reward of $100. The company went ahead to deposit $1000 in a bank. Carlill so the advert and bought the smoke ball but contracted influenza. She claimed the $100 reward but the company refused to pay her saying there was no enforceable contract. The issue was the promise to pay $100 reward intended to result into a contract. The court decided there was sufficient reason to lead into a contract. Another issue was that is any offer made to the public lead to a contract. The court held that an offer made to the public can be accepted by anyone. The advertisement was an offer that called for acceptance. Another issue in the case is that had Carlill accepted the offer because she had not communicated to the company. The court held that by buying and using the product as directed was acceptance of the offer. In the case Esso Petroleum Ltd v Commissioner of custom [1976] 1 ALL ER 117 Esso Petroleum produced coins as gifts to its customers for every four gallons of Esso petroleum so as to promote its sales. The commissioner of customs argued that the free coins were produced in plenty for general sales and should be subjected to a tax. The issue was that was the Esso company offer intended to lead into a contract. The court held that the terms of the promotion were intended to legally binding. Step 3: Application of the law Court’s objective in deciding if there was a valid agreement An agreement is only legally valid when it satisfies all elements of an agreement that is, offer and acceptance. There is need to objectively assess if the present circumstances could amount to an agreement between Chickens Galore and Christian and Brian. The question is whether, the circumstances present could lead to a valid agreement that would result into a contract between the parties. The fact that the company made advertisement in the media to the general public meant that the company was making an offer by promising to give a car as a reward for gold tickets. This led to acceptance by the public including Brian and Christian. Acceptance purchasing of the Chickens Galore products and accumulating the tickets as required in the adverts. The elements of an agreement have been fulfilled in this scenario thus leading to a valid contract between the parties. The reason behind this is that elements of an offer have been fulfilled and those of acceptance has also been fulfilled. Step 4: Conclusion In conclusion, the agreement was present because chicken Galore made a promise to reward its customers with a car if they possessed a gold ticket. The advertisement was an offer to the general public and, therefore, Christian and Brian accepted the offer by doing as required in the advert. The company was also ready to honour its promise because it had already purchased a Mazda CX-9 that was to be given out as the reward. Therefore, the Chicken Galore was in a contractual obligation to award Brian and Christian their rewards. Question 2 Using the four-step process, discuss what terms are expressly agreed in relation to the contract. In your answer be sure to discuss whether Speciality Printers can rely on the exclusion clause in the contract. You will also need to determine the status of any relevant terms, including whether they are a warranty or a condition. Step 1: The principle issue The principle issue to determine express agreed terms and reliance on exclusion clause. The parties in this case are Chicken Galore as the plaintiff and Speciality Printers as the defendant. The plaintiffs feel they have been offended by the defendant. Step 2: Rules of law to the legal principle Express terms in a contract are the elements that have been included in the agreement by declaration or being stated either in writing or by word of mouth. There is need to identify all the terms of the contract to ensure the involved parties know their obligations (Lamabris, 2011). Exclusion clause help a party to avoid liability or limit it this should clear and precise and should be brought to the attention of the other party before coming into an agreement (Lambris, 2011). Conditions are terms that are of fundamental importance in the agreement. Warranties are terms which are of lesser importance than conditions. In the case Causer v Brownie [1952] VLR 1Causer took his wife’s dress for dry cleaning to Brownie who gave Causer a docket written that Brownie was not responsible for damage or loss whatsoever. The dress was stained during dry cleaning and Causer asked for damages. Brownie refused and relied on the clause on the docket. The issue was whether Brownie could rely on the statement on the docket to avoid liability. The court held that the statement had not become a term of the contract. The reason behind this was that the document did not appear to be a contractual document and it was not brought to Causer’s attention. Step 3: Application of law It is important for the involved parties to understand the terms of the contract both express and implied. This will help in case there are problems with the parties. It is also important for exclusion clause to be brought to the attention of the other parties. Speciality Printers will not succeed in their quest to be excluded in the liability because quality was an express term and a condition in the contract because Chicken Galore made it clear that it will only enter into a contract if the materials were to be free of errors. Speciality Printers confirmed that their materials are proof-read before delivery. The exclusion clause was not brought to the attention of the Chicken Galore during the contract negotiations. If the clause had been brought into the negotiation table the results of the contract would have been different. Step 4: conclusion In conclusion, it is possible that the Specialty Printers will need not succeed in its quest because delivery of its faulty materials was a breach of the conditions and terms of the contract. PART B – Short answer question Explain how to determine if a judge from a lower court has to follow the decision made by a judge in a higher court in Australia. This principle is called the precedent principle where a lower court has to follow the rulings of a higher court in deciding similar cases. This principle requires decisions of the superior courts in the same hierarchy be followed to decide the cases of similar nature. This is only possible if the facts are relevant in legal terms (Lambris, 2011). The scenario where a lower court must follow the decision of a high court is called ratio decidendi which consist of the legal principle, rule or reason that the court should to the material facts so as to decide if to follow the decision (Lambris, 2011). Reference List Lambris, Micheal. 2011. ‘First Principles of Business Law’. Sydney: CCH Australia. Legal authorities Causer v Brownie [1952] VLR 1 Carlill vs. Carbolic Smoke ball Co [1893]1 QB 256 Esso Petroleum Ltd v Commissioner of custom [1976] 1 ALL ER 117 Read More