Discuss about the Business Law for Intention and Capacity of the Parties.
The two major issues that are raised in the given situations are:
Every valid contract requires presence of contract essentials, that is, offer, acceptance, consideration, intention and capacity of the parties. If any of the elements is not present then such contract is not valid in law. (The Law handbook, 2016)
Further, the parties must be capable to make a valid contract. The capacity of the parties requires that they must be major and mentally capable (Nash v Inman (1908). But, a minor can make a valid contract if the same is for the necessity, employment or benefit of minor. (J Clark, 2013)
But, every valid contract can be cancelled if the same is based on misrepresentation. When one party makes a statement of factual nature which are not true, with a hope that the other party will rely on such untrue statement and will make a contract with him and the relying party actually makes a contract, then, there is presence of misrepresentation and the aggrieved party then has right to terminate the contract and claim damages (Smith v Land & House Property Corp. (1884) & Lambert v Co-Operative Insurance Society [1975]. (The law Teacher, 2016)
Also, when a restrain clause is made part of the contract wherein one party is prohibited to carry on the similar business or a certain time period the clauses are valid when they protect the legitimate interest, goodwill and confidentiality of the party who is relying on the clause. But, if the clause is against public policy or for long duration then the same is invalid. In AGA Assistance Australia Pty Ltd v Tokody (2012) duration up to two years is considered to be valid and any restrain beyond that is invalid unless legitimate interest is proved. (Hopgoodganim, 2016)
The law is now applied to the facts.
It is submitted that Jill is 22 years old and is thus major. But, Bill is 15 years old and is a minor. Thus, a contract amid Dodgy Pty. Ltd and Bill can be held valid when the contract is for necessity, employment or benefit of Bill. It is assumed that the contract is for necessity/employment/benefit of Bill and thus the contract with Dodgy Pty. Ltd is valid in nature.
But, Dodgy Pty. Ltd while selling his café to Bill and Jill has made factual statements that the weekly taking of the café is $10,000 (since last five years) and the cost is $3000 per week. But, the statements are false as the weekly taking was on an average $2000. Thus, false factual statements are made to persuade Bill and Jill to make a contract and the contract was actually made by them. Thus, Bill and Jill can terminate the contract based on misrepresentation and claim damages from Dodgy Pty. Ltd.
Further, the restrain on Dodgy Pty. Ltd is for five years which is very lengthy and can be considered as valid only when Bill and Jill can prove that the clause is required for the protection of their legitimate interest, goodwill and confidentiality of the business.
Conclusion
Thus, Bill and Jill can rescind the contract based on misrepresentation and the restrain clause is valid only when the same protects the legitimate interest of Bill and Jill.
The major issues that are raised in the given situation are:
The law of negligence is a very important piece of legislation. The law of negligence emphasis that every person must indulge in such actions or omission because of which no injury is caused to any other person. This duty of avoidance of harm is captured under the law of negligence. In Donoghue v Stevenson [1932] the concept and the elements of the law of negligence were established. The same are: (P Latimer, 2012)
In Donohue case, this duty of care is imposed upon the manufactures so that no manufacturer should produce any product which may cause harm to the consumer berceuse consumers are his ultimate customers are in proximate relationship with him.
Once a defendant is held out to be negligent, then, the plaintiff has every right to sue such defendant under the law of negligence and claim damages in the form of money. If the damage is extreme then penal actions can also be undertaken.
Further, The law of partnership is also applicable. A partnership is said to exist when two or more than two person’s intent to carry out a business of a continuous nature with the main motive of earning profits, once a partnership is established, then, the act of one partner will make the other partner liable under the law of agency (Smith v Anderson (1880). (Sydney, 2016)
Thus, the applicable law is now applied.
In the given situation, High runs a pizza service and later appoints his son Theo to use his car for deliveries. The service of Hugh was not registered but they have advertised it in the name of UberPizzaDelivery. In ……………….it was held that a manufacturer is under a duty of care towards his consumers as they are their ultimate neighbors. However, both Theo and Hugh are making pizza for the ultimate consumption of the customers. Thus, they have a duty to make the pizzas of such a quality is that no harm is caused to the consumer by consuming the pizzas. But, this duty is violated when Hugh advertised that fresh ingredients are used for the formation of pizza but in reality stale and outdated ingredients are used for the production of pizza. Thus, the level of care that is expected from the manufactures of pizza, that is, Hugh, is violated which has resulted in many injuries to his customers and death of one of his customer. Thus, the level of
Thus, the level of care that is expected from Hugh is not met and hence he is in violation of his duty which has caused losses to his customers. So, Hugh must be held liable under the law of negligence. The customers can take both civil and criminal actions against Hugh.
Also, Hugh and Theo are working not as a registered business but the intention of both of them is to run the business in continuity with the aim to earn profit. Thus, there is a presence of partnership amid the two and an act of one will make the other liable. So the actions of Hugh will also make Theo accountable for the same and hence Theo can also be held under the law of negligence.
Conclusion
Thus, both Theo and Hugh are liable under the law of negligence as both of them are partners and thus the actions of one will make the other liable.
Reference List
Books/Articles/Journals
P Latimer. 2012. Australian Business Law 2012. CCH Australia Limited.
Case laws
AGA Assistance Australia Pty Ltd v Tokody (2012).
Blake v Galloway (2004).
Carroll v Fearon (1999)
Chapman v Hearse (1961).
Donoghue v Stevenson (1932).
Grant v Australian Knitting Mills (1936).
Nash v Inman (1908).
Lambert v Co-Operative Insurance Society [1975].
Smith v Land & House Property Corp. (1884).
Smith v Anderson (1880).
Online material
Julei Clark. 2013. Capacity to contract. Online. Available at: https://www.australiancontractlaw.com/law/formation-capacity.html#minors. [Viewed on 24th September 2016].
Hopgoodganim. 2016. Restrain clause. Online. Available at: https://www.hopgoodganim.com.au/page/Publications/Industrial_and_Employment_Law_Alert_Recent_court_case_provides_clues_to_successfully_enforcing_non-compete_restraint_obligations_-_31_Aug_2012/. [Viewed on 24th September 2016].
Sydney. 2016. Partnership. Online. Available at: https://webcache.googleusercontent.com/search?q=cache:rKTyb6YyI70J:sydney.edu.au/lec/subjects/associations/notes/Summer%25202010-11/Topic%25203%2520-%2520Partnership.doc+&cd=1&hl=en&ct=clnk&gl=in. [Viewed on 24th September 2016].
The Law Hand Book. 2016. Elements of a contract. Online. Available at: <https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/. [Viewed on 24th September 2016].
The law teacher. 2016. Misrepresentation. Online. Available at: https://www.lawteacher.net/lecture-notes/contract-law/misrepresentation-lecture.php. [Viewed on 24th September 2016].
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