Foundation of Business Law: Whether There Was a Contract between Jane and Dan - Assignment Example

FOUNDATIONS OF BUSINESS LAW STUDENT NAME PROFESSORS NAME COURSE TITLE DATE Question 1a) Jane’s situation in relation to Dan Issue 1: Whether there was a contract between Jane and Dan Law: The creation of a contract occurs when there is a mutual agreement between two or more parties. The elements of a contract are; offer, acceptance, consideration, intention to create legal relations, capacity and legality (Gibson & Fraser 2013). A bilateral contract is one whereby two parties assume obligations that is; one party promises to pay whereas the other promises to deliver. An offer is an indication of willingness to enter into a contract on certain terms and creates a power to create a contract by a unilateral action as stated in Carlill v Carbolic Smokeball Company [1892] 2 QB 484. Acceptance is the final and unqualified expression of assent to the terms of an offer actually communicated to the offeror. Authority: Carlill v Carbolic Smokeball Company [1892] 2 QB 484 Gjergia v Cooper [1987] VR 167 Application The relationship between Dan and Jane that is they had an intention to create a legally binding contractual relationship. That is Jane pays for the renting of the Barn for the party. There exists a binding contract and therefore a breach would amount to damages or repudiation of the contract. Issue 2: Whether there Jane relied on the statements made by Dan to her detriment Law: The situation in which it applies as stated in Verwayen (1990) 170 CLR 394 is that a person induced by implied or express representation to; 1. Enter into the contract with the party with conventional basis of the assumption, 2. Exercised against the other party, other rights this would exist if the assumption were correct, 3. Knew the other party would be labored under the assumption and ceased from correcting the party when it was his duty in his conscience to do so The case of Waltons Stores [Interstate] Ltd v Maher [1988] 164 CLR 387 establishes the doctrine of equitable estoppel in Australia following the ruling of Central London Property Trust Ltd v High Tress House Ltd [1947] KB 130. That is the creation or engorgement by a defendant that creates an assumption that a contract will come into existence by the defendant (Vermeesch and Lindgren, 2011). In the case of Dunlop Pneumatic Tyre Co v Selfridge [1915] AC 874 it was held that ‘the doctrine of promissory estoppels is applicable when a person makes a promise that has been relied upon to another’s detriment may be enforced by that other despite lack of consideration’. It is unconscionable conduct for a party to renege on the promise of ore-contractual negotiations. Promissory estoppel does not need consideration in return to the promisor by promising ‘not to’ determine the detrimental effect with no need of formal contract. Authority Central London Property Trust Ltd v High Tress House Ltd [1947] KB 130 Dunlop Pneumatic Tyre Co v Selfridge [1915] AC 847 Waltons Stores [Interstate] Ltd v Maher [1988] 164 CLR 387 Application Application Dan had agreed to rent the Barn to Jane at $2000 for the weekend with a bond of $6000 in case of damages. Jane did not have the amount at hand but promised to pay the amount as soon as she took out a small loan. After a week, Dan tells her that he had already rented the ban to a group of businesspersons. In this case, there exists a valid contract, since the consideration was payable in the future. Jane relied on Dan’s statement and went ahead to secure the amount required for the barn and to her detriment the Barn, awarded to businesspersons contrary to their agreement. The reliance doctrine is applicable when one party goes back on their words having known that the person receiving the information would act upon their words. Question 1b) Jane’s Situation in relation to Disco John Issue 1: Whether Jane is entitled to pay Disco John $1000 despite cancelling the event Law: In the case of Currie v Misa (1875) LR 10 Ex 153 the court held that a valuable consideration can be a right, interest, profit, or benefit accruing to one party or some forbearance , detriment or loss or responsibility given, suffered or undertaken by the other’. An executor consideration is one where a party undertakes to do something in the future but has not yet been undertaken. Anticipatory breach of contract occurs when a party fails to perform his obligations in a contract and announces it in advance. In the case of Hochester v De La Tour the court held that in an anticipatory breach a party is entitled to damages. In Ermogenous V Greek Orthodox Community of South Australia Incorporated (2001) 209 CLR 95 it was stated that assessment of the relationship that exists between the parties and the contract. In Edwards v Skyways Ltd [1964] 1 WLR 349 the court held that in a business or commercial relationship there is an implied intention that the parties intended to create legal relations. In Walton Stores [Interstate] Ltd V Maher [1988] 164 CLR 387 in determining whether the doctrine of equitable estopel will apply, the court will take into consideration; 1. Whether one was encouraged by the defendant in the assumption that a contract will come into existence 2. The plaintiff relied on the assumption to their detriment 3. The circumstances that a party departs from the assumption would be unconscionable (Silovi v Barbaro(1988) 13 NSWLR 467) Authority Currie v Misa (1875) LR 10 Ex 153 Edwards v Skyways Ltd [1964] 1 WLR 349 Ermogenous V Greek Orthodox Community of South Australia Incorporated (2001) 209 CLR 95 Hochester v De La Tour Silovi v Barbaro(1988) 13 NSWLR 467 Walton Stores [Interstate] Ltd V Maher [1988] 164 CLR 387 Application The performance of the contract between Disco John and Jane was not complete since, Jane cancelled it due to non-availability of a venue to host the party. Disco John has not cancelled any commitment on the same night the party was to occur and therefore he was not unfairly disadvantaged. John, a brother to Jane, runs disco John; however, the relationship created is a commercial one hence they intended it to be binding by the contractual relationship rather than any other form of relationship. Disco John has failed to demonstrate the detriment, or loss suffered by him due to the cancellation of the contract by Jane. Disco John still has an open offer to make a guest appearance at a popular nightclub for $500. There is no loss or detriment and therefore the contract was not binging before performance. Question 2) What claim can be made against Max for Poor sanitation and production of beers Issue1: Whether Max owes a duty of care to Jackie and Philip for severe poisoning after ingesting ‘Brew U’ finest products Law: The test applicable is that of negligence. That Max owed a duty of care towards Jane since he ought to have supplied beer fit for human consumption and of high quality. People owe a duty of care towards their neighbor a principle reiterated in The duty of care test as stated in Donoghue v Stevenson [1932] AC 562 is whether; 1. The defendant owed the claimant a duty of care 2. The defendant breached that duty of care 3. Reasonable foreseeable damage was caused by the breach of duty (Donoghue v Stevenson [1932] AC 562) Further, in determination of whether the duty of care exists then 1. The harm or loss incurred was reasonably foreseeable 2. Was there a sufficient proximity or relationship between the claimant and the defendant for the imposition of the duty of care? 3. In all circumstances is it fair, just and reasonable that the law should impose the duty on the defendants. The other issue is the magnitude of the harm, that is would it have occurred (real likelihood) and the magnitude of the injury or harm suffered (Patterson et al 2005). In examining whether a duty of care exists then the chain of causation or link should not be broken. The item that caused the loss or damage must have reached the consumer the same way it had left the manufacturer without any interference. In Cork v Kirby MacLean Ltd (1952) 2 All ER 402 the court stated that the ‘act or omission of the defendant caused the damage or loss suffered by the plaintiff’. A defendant is liable for damage that is reasonably foreseeable because of the breach. Authority Caparo v Dickman 1990 Cork v Kirby MacLean Ltd (1952) 2 All ER 402 Donoghue v Stevenson [1932] AC 562 Application Brew U entered into a contract with Jane to supply beer to the party and this meant there was a relationship creating a duty of care on both parties. The duty of care to supply beer that was fit for human consumption was breached the moment Jackie and Philip who ingested large quantities of the beer were admitted for food poisoning. As a result, the two will not be able to sit their FBL examination and not graduate on time. They are entitled to damages, repudiation of the contract as well as breach of contract since its performance was not according to what the parties contemplated. LIST OF REFERENCES Carlill v Carbolic Smokeball Company [1892] 2 QB 484. Central London Property Trust Ltd v High Tress House Ltd [1947] KB 130 Cork v Kirby MacLean Ltd (1952) 2 All ER 402 Currie v Misa (1875) LR 10 Ex 153 Donoghue v Stevenson [1932] AC 562 Dunlop Pneumatic Tyre Co v Selfridge [1915] AC 847 Edwards v Skyways Ltd [1964] 1 WLR 349 Ermogenous V Greek Orthodox Community of South Australia Incorporated (2001) 209 CLR 95 Gibson, A. & Fraser, D. (2013). Business Law. 7th ed. Pearson Education Australia. Gjergia v Cooper [1987] VR 167 Hochester v De La Tour Patterson, J., Andrew , R. Heffrey, 2005, Principles of Contract Law Lawbook Co, Sydney Silovi v Barbaro(1988) 13 NSWLR 467 Vermeesch and Lindgrens’s Business Law of Australia Lexis Nexis Butterworth 2011 Verwayen (1990) 170 CLR 394 Waltons Stores [Interstate] Ltd v Maher [1988] 164 CLR 387 Read More