Business And Corporate Law : Limitations Of Economic Reasoning

Describe about the Business and Corporate Law for Limitations of Economic Reasoning.

 

In the given case of Jane and Jack, Jane offers her care to Jack and he accepts, however, no exact value of the offer is given. It is provided that the market value of the car is $25000.

Rules:

Consideration means somewhat in return. In simple words, consideration is a cost or value which is paid by the buyer to the seller for the purchase of goods or services. As illustrated, goods, services, and money is some of the consideration of an agreement. Consideration is loss faced by a person who offers benefit conferred towards another party which should be in economical measurable terms (Bainbridge, 2015). It is one of the important aspects for validating the contract in a contract law. The reason behind this is that in contract, bargaining power of the parties is developed by the consideration of the other party’s performance or for exchange return promise.

Application:

There should be something in return for both the parties namely promisee (Jack) and promissory (Jane) as per the Australian contract law. In addition to this, as in the given case, the agreement is moving from one person to another which also indicates the presence of consideration. Jack has accepted the offer presented by Jane; however, there is no exchange of money (value). As there is no exchange of value, it can be said; the consideration is not present in the given situation (Burrows, 2013).

In the given case, the agreement is unenforceable between Jane as well as Jack. It is because, from the side of Jack, no act or promise is performed for the agreement. Additionally, no return or oral consideration is given by Jack in terms of price or goods. So, consideration is not present and agreement is not enforceable. 

b) Issue:

In the given situation, Jane offers to sell her lotus super 7 sports car to Jack for $25000 and Jack accepts this offer.

Rules:

As per the contract laws, consideration is present in an offer, when there is exchange of some value from one person to another. In the situation of valid consideration, the contract is enforceable.

Application

The value of an agreement is $2500 which again make contract enforceable due to its price. Both Jane, and Jack, agreed upon the same point and views which indicate that agreement is enforceable. As illustrated, Jane has offered jack to buy her car for $2500 and jack has accepted the offer given by Jane. Therefore, by accepting the car of Jane in the same price makes this agreement enforceable (Wegen, Barth and Spahlinger, 2016). The contract is valid too as no legal defenses are found against it. Moreover, both Jane and Jack agreed to perform some action in return and exchange of something which again makes this agreement enforceable to Jack and considerable in the eye of law.

Conclusion:

It can be said that consideration is present in the agreement. It is because sufficient amount of money value or cost ($25000) for the sell of the car is offered by Jane towards Jack. Beside this, it is a legal value that helps both the party to make the agreement legal in the eyes of the law. Along with this, the value of good makes agreement considerable too.

In the given case, Jane offers her car for $2500 to Jack. The market price of Jane’s car is $25000. There is huge difference between the market price and price offered by the Jane to Jack. It is to be evaluated whether the considertation is present or not.

Consideration rules state there should be some value exchange, it is not required that value should be adequate as well. According to Australian law regarding consideration is to have sufficient consideration in the contract.

This case is similar to the case of Biotechnology v. Pace (Griffiths, 2014). In this case, the court has found unequal consideration in value offered by the party to other in an agreement by fair acts. Additionally, the unwise situation is faced by Jack by acceptance of car valuing $25000 in $2500 only. However, the agreement which has taken place among Jake and Jane has not breach civil law or public policy (Cartwright, 2016). Along with this, it is identified that adequate agreement was presented to both the party namely Jane and Jack with full enforceable and enforcement of law.

The legal value of agreement indicates that there is an adequate consideration among the party that provides the rights to Jack to enforcement the agreement as per the Australian law (Wegen, Barth and Spahlinger, 2016). Moreover, mutual consideration is found in the given situation of a contact. However, sufficient amount of mutual consideration is missing in the case. In the case of Jack and Jane, sufficient consideration is found as Jane agreed to sell her car to Jack. Along with this, the agreement also has a value which indicated that the agreement is considerable in the eyes of Australian Law (Gordon and Ringe, 2016). On the other hand, if there is no consideration or legal value in agreement, insufficient consideration is considered in the Australian law.

In addition to this, state and federal laws, never defend any of the persons from getting entry into an unwise contract. Hence, adequacy of consideration is never considered by the court. On the other hand, if the promise is illusory, then an agreement can be unenforceable in the contact act (Gibson and Fraser, 2013). In the given case, the agreement is unenforceable because the conditions of the enforcement of an agreement are not fulfilled properly. A valid offer of an agreement is not found among the party namely Jane and Jack. Because Jane was selling her car to Jack for $2500 only which is very low as compared to market value of the car ($25000) which is not valid offer and in this way, the contract becomes unenforceable in the law.

In the given case, the main issue is that a contract was made between two of the parties namely Shipbuilder Company and North Ocean Tanker. The contract was undertaken to build tankers for Shipbuilder Company. Due to, the devaluation of currency in the United States by 10 percent the Shipbuilder demanded extra US$3 million else they will stop the construction work for the Ocean Tanker. Also, a demand for paying extra US$3 million to shipbuilder was raised by the company towards North ocean tanker. Although, there was no provision made for any currency fluctuations in the contract (Haeri, 2016).

Besides this, the North Ocean Tanker had booked a charter for delivery as it has to deliver the tankers on time. Ocean tanker was unwillingly agreed to pay the amount to shipbuilders. Now, in the given case issue raised is that whether the North Ocean tanker (buyers) will be able to succeed in recovering the excess money after nine months of delivery or not from the Shipbuilder Company (seller).

In the given case Duress law will be applied (Engle, 2011). In the contract law, duress is a term use to define the person who enters into the contract due to threats such as physical harm or violence. The contract can be set aside by the court when a person enters into a contract due to the threat of physical violence in a contract. Originally, unlawful physical violence threat was recognized in the common law (Wilson, 2016). However, nowadays economic duress is also recognized by the court because of an increase invalid claim. In a case of the threat to goods, the court has less willing to interfere, although similar claims in restitution mention that there may be some or the other changes in the law.

One of the basic vitiating factors in contract law is that there is no free consent for the parties. Additionally, it uses to work or functions at a common law. However, there may be an increase in an action for undue influence through pressure not amounting to duress. Moreover, the finding result of undue influence as well as duress is that the contract is voidable (Cartwright, 2016). The blameless party may claim the damages and has a right to withdraw the contract. There is basically three type of duress in the contract act which includes duress to the person, duress to the goods, and economic duress (Li, 2015). These are as discussed below:

Duress to the person: The contract can be set aside by the court when a person enters into a contract due to the threat of physical violence in a contract.

Duress to goods: A threat to damage of the property or destroy of property can be duress in a case of goods (Virgo, 2015). It also includes control or grabs of goods for an unnecessary reason, cause or wrongfully is all said to be duress to goods in the contract act.

Economic duress: This explains that the consent of a party to a contract can be taken by financially treating the party (Zamir and Teichman, 2014). Further, the illegal use of economic pressure is made by one party in order to force another party to get involve, enter, and sign the contract.

Essentials of the doctrine of economic duress include illegitimate pressure which means there is no choice left for the applicant instead of choosing contact entry. Moreover, an important cause of pressure which is responsible for entering into a contract by the side of the applicant is another essential of the doctrine of economic duress (Stone and Devenney, 2015). The elements of economic duress involve improper or wrongful threat and having no reasonable alternatives.

In the concern to the given case study, it is found that the case is related to the economic duress of a contract act. Because the shipbuilder forced the North Ocean Tankers to pay them an extra amount of US$3 million due to the currency devaluation loss in the country by the government. Along with this, it is found that shipbuilder illegally threatens the North Ocean Tanker to be involved in the contract. It is identified from the case that there was pressure on North Ocean Tankers to pay money to seller namely Shipbuilders which can be easily identified by the court (Burrows, 2016). As discussed above, there are three types of duress namely to the goods, to person, and economic duress. Hence, in the given case, economic duress is addressed as it is analyzed that the shipbuilder (seller) made the economic pressure or duress on the buyer (North Ocean Tankers) to enter into the contract (Poole, 2016).

It is noted that threat to breach the contract is not considered illegitimate by the court due to demand reasonability as well as circumstances changes. As illustrated, in the case of North Ocean Shipping Co v Hyundai [1979] QB 705, an owner was not paying additional payment as compensation to shipbuilder because of a devaluation of the dollar (Bayern, 2015). Hence, the court ordered the Shipbuilder to break the contract with the party. However, the given situation is not the exactly as the shipbuilding company applied pressure and economic duress to pay for the additional amount.

In the case of North Ocean Tankers and shipbuilder extra payment demanded by a seller is paid by the buyer for US $3 million under the protest. This will further result in the economic duress of the contract along with the right to the North Ocean Tankers to recover its surplus or extra payment from the seller namely the shipbuilder after nine months of the delivery

In the given case, a seller (shipbuilder) has asked buyers (North Ocean Tankers) to pay US$3 million in consideration to the devaluation of currency by the government. It is examined that the buyer has the right to recover the excess money from the shipbuilder. Further, the contract becomes voidable if duress is found in the contract (Cartwright, 2016). Infected applicant has a right to cover losses suffer by the party in terms of goods or the money. In concern to the case, it is said that the contract is voidable as shipbuilder act will be considered illegal because an unlawful use of economic pressure is found in the case. Furthermore, threatening to break the contract given by shipbuilder again makes the contract voidable and the North Ocean Tankers are given the right to recover its excess payment after the delivery.

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