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LAW504: Business & Corporations Law - Application of Law- Assessment Answers

December 08, 2017
Author : Charles Hill

Solution Code: 1AAJH

Question: Business & Corporations Law

This assignment is related to “Business & Corporations Law” and experts at My Assignment Services AU successfully delivered HD quality work within the given deadline.

Business & Corporations Law Assignment Writing



Steve runs a car hire business. Steve is a sole trader - his business is not a corporation. He tells you about the following events:

Steve’s friend Tom runs a trucking company. Tom phones Steve and says ‘I need to hire a truck capable of carrying 10 tons of cargo’. Without checking the specifications of the vehicles he has available, Steve says ‘I have just the thing for you - a Hino Cargo Master - it can carry 12 tonnes’. Tom agrees to hire the truck at $ 200 per day, and picks it up. He loads it with 10 tonnes of cargo, but on its way to make a delivery, the suspension collapses. As a result, he is unable to use it and loses $ 5 000 per day in profits.

Pamela has often watered Steve’s garden when he (Steve) has been away on holiday. Pamela phones Steve and says ‘I’ve got a problem - my car is being fixed and I am going on holiday tomorrow, but I can’t afford to hire one. Can you help me out?’. Steve says ‘Sure - you looked after my garden last month, so I’ll lend you a car for the weekend because you did that’. When Pamela comes to collect the car, however, Steve tells her that he hired it to another customer. Pamela says that Steve has broken the contract she had with him and that she will be consulting a lawyer.

Danny telephones Steve and says ‘I would like to hire the Toyota Corolla I used last week’ Steve says ‘The charge will be $ 40 per day plus fuel and you can collect the car tomorrow’. Danny says ‘That’s great, I will be there at 9 am’. When Danny arrives at the car lot, Steve says that when he had been speaking to Danny, he was unaware that the vehicle had already been destroyed in a crash while being driven by another customer the previous day. Danny refuses to take a different car and says he will go to court to enforce the contract he had with Steve.

Steve is thinking of putting in a new airconditioning unit in his premises. He has been in negotiations with Cool It Aircon Ltd, owend by Trisha. One Monday morning he comes into his office and sees the latest draft contract from Cool It Aircon, with details of specifications of the airconditioners, price and installation date. The top sheet of the contract contains a space which says “I agree to these terms of supply” and with a space for a signature and date. Steve sets the contract aside on his desk, and it soon gets mixed up with piles of other paperwork. Later during the day, he signs the form, thinking that it was the front page of another contract he had been sent by a supplier of microchips. He gives it to his office manager, Tim, and says “Send this by fax”. A few days later a truck from Cool It Airon arrives at Steve’s business. Steve phones Trisha and says he never agreed to the installation. When Trisha tells him about the fax, he realizes his mistake and tells her that he had sent it by accident. She says “Toobad, we have a deal – I have already spent several thousand dollars making customized components for your system”.

Advise Steve on his legal position in relation to each transaction, backing up your answers with relevant rules of law.


This assessment item will allow you to demonstrate your ability to-

engage in legal research; identify the legal issues arising out of novel factual situations, to analyse the applicable law and to differentiate between which rules are applicable and which are not and then apply the law to the problem; explain and summarise the applicable law in such a way as to create a report for a client which states what liabilities arise from novel factual situations

And more specifically

your knowledge of the law of contract formation and the law relating to factors affecting the validity of contracts your ability to undertake an assessment task relevant to the workplace and professional practice.

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The major issues that are raised in the given situations are:

  1. Whether Steve can be held liable for misrepresenting and misleading Tom?
  2. Can Pamela sue Steve for not providing car to her even though the same was promised by him?
  3. Whether the contract between Danny and Steve is suffered by frustration?
  4. Whether putting of signatures by Steve will make a binding contract with Trisha?

Applicable Law

In Australia, the law of contract is a very important piece of legislation.

Whenever any contract is made then such contract must comply with the legal requirements in order to make such a contract valid and enforceable in law. In order to make a valid contract there are few contract essentials which must be present. The same are:

  1. Offer – An offer is the first essential in contract formation. An offer is made when an offeror transfers his intention to an offeree and expects that such intention will be approved by an offeree. An offer can be made unilaterally or bilaterally (Carlill v. Carbolic Smoke Ball Company (1892).
  2. Acceptance – When an offer is made to an offeree then such an offeree must approve the offer without any changes and such an act is called an acceptance. An acceptance must be communicated by an offeree to an offeror in order to be valid. If an acceptance is made without any intention then such acceptance has no validity in law and cannot be enforced against the parties and is held in R v Clarke (1927). (Moles 1998)
  3. Consideration – Consideration is the benefit which moves from one party to another in order to support the promises which are exchanged between them. A consideration must be real and sufficient. Also, a consideration should always be given in exchange of the promises which is of present or future scenarios. Any consideration which is given for a past promise or an action is not good in law and is not legal (Stewart v Casey (1892)). UnistudyGuide, 2016)
  4. Legal intention – The parties must have legal intention when an offer and acceptance is made. If the intention is not legal then such contract is domestic is nature and is not enforceable.

Now, whenever a contract is made with the help of contract essential then such contract is valid. But, even a valid contract can be later rescinded by a party provided the contract is misrepresented by another party. In the law of misrepresentation, when one party intentionally compel another party to make a contract with him and thus makes statements of facts which are untrue then the contract can be rescinded as the same is based on misrepresentation. The misrepresented party may cancel the contract and sue the defaulting party for the losses suffered by him (Alati v Kruger (1955)). (Moles 1998)

Further, when a valid contract is made by the parties, then such contract is enforceable amid them. Such a contract ceases to exist when the parties perform their contractual obligations. However, at times the contract ceases to exist even when the same is not performed by the parties. This can be done when the contract is frustrated. A contract is said to be frustrated when because of some supervening event, natural calamity, war, destruction of the contractual matter, etc, the parties to the contract is not able to perform their contractual obligations and thus the contract stands terminated. In such scenarios, no party can compel the other party to abide by the contractual obligations as the same cannot be performed in any manner (Taylor v Caldwell (1863) & Brisbane City Council v Group Products Pty Ltd (1979). (Clark 2016)

Now, the law is applied to the given scenarios.

Application of law

Now, in the given scenarios,

A valid contract was made amid Steve and Tom. However, Steve has made a statement a fact that the truck has a capacity to hold 12 tons of cargo. He made such a statement so that he can compel Tom to make a contract with him. Thus, Steve has misrepresented Tom, so, Tom has right in law terminated the contract and sues Steve for his losses.

Now, as per the facts, Pamela gave water to the garden of Steve though the same was never asked by him. When Pamela sought help from Steve, Steve promised to give his car in exchange of her acts of taking care of his garden. Now, the promise which is given by Steve was for an action which was already performed by her without any request from Steve. Thus, the promise was Steve was supporting a past act and thus the consideration is past in nature which is invalid in law. Thus, Pamela cannot sue Steve as there was no contract that was made amid them.

Further, a contract was made between Danny and Steve wherein Danny agrees to take the car of Steve @ $ 40 per day plus fuel. However, when the contract was made the parties are not aware that the same was already destroyed in a crash by some other customer. So the car which is the main contractual object was already destroyed and thus is suffered by frustration. So, Danny cannot sue and force Steve to provide him with a car which was already destroyed in a crash.

Now, a draft contract was send by Trisha to Steve. When a contract is signed by the parties then such signed contract is binding upon the parties. However, every contract must be accepted with an intention to abide by the same. If there is no intention to accept the contract then such communication of acceptance is invalid in law. Thus, the confirmation sent by Steve was never intended by him and thus there is no contract that was made amid the parties.


It is thus concluded that there is no contract amid Steve and tom as the contract is supported by misrepresentation. Further, Pamela has no contractual relationship with Steve as the consideration is past in nature and is not enforceable. Also, Danny cannot sue Steve as the contract is frustrated and Trisha cannot sue Steve as there is lack of legal intention.

SO, no one can sue Steve under the law of contract.

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