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BHM 104 Business Law

Published : 07-Sep,2021  |  Views : 10


Case Study

Bob Broke runs a company which manufactures and sells computer equipment. He relates the following set of facts to you On 1 January Bob receives an email from Mike Jones which reads: “I offer to purchase 30 Toshiba Satellite laptops for $ 300 each, inclusive of GST, delivery and insurance. In response, on 2 January Bob sent an email to Mike saying I accept your offer, but the price would have to be $ 300 plus GST. On 3 January Mike sends an email back saying No, I can't agree to that On 5 January Bob then sends an email saying , I accept your offer of 1 January however when he sends the computers to Mike with an invoice for $ 9 000, Mike sends the computers back and refuses to pay for them, saying that he has purchased computers elsewhere.

On 10 January, Bob sends a letter to Tom stating “Please send me 200 Pentium 5 hard-drives at $ 50 each. On 12 January Tom puts a letter into the post stating I will deliver the hard-drives before the end of the month. Bob subsequently finds that he no longer needs the hard drives, and on 14 January sends Tom an email saying Please cancel my order of 10 January. Tom letter reaches Bob on 15 January, and the hard-drives are delivered a few days later with an invoice for $ 10 000, which Bob refuses to pay.
Steve has done favours for Bob, such as looking after Bob cat when he (Bob) went on holiday. On 1 February, Steve says to Bob need a new computer for my travel agency. Bob says , because you looked after my cat, give you a new computer. Bob then changes his mind and says to Steve: Sorry, mate, trading has been bad these last few weeks  I just can afford to give you the computer.
Bob is thinking of buying a delivery van. He has been in negotiations with Capital Motors, whose sales manager is Mary. One Monday morning he sees a form sent by Mary in which she offers to sell him a Toyota Hilux 3000 automatic with airconditioning for $ 33 000. The top sheet of the form contains a line which says agree to the purchase of this vehicle as specified in this document and with a space for a signature and date. Bob sets the document 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 he receives a call from Mary asking him when he will pick up the vehicle. He tells Mary that he did not order a vehicle from her. When Mary tells him about the fax, he realizes what happened and tells her that he had sent it by accident and that he never intended to agree to the contract. She says  bad, we have a deal  I have already ordered another vehicle to replenish my stock Assume that you are Bob legal adviser and that he has asked you for legal advice. Advise him as what contractual liability, if any, he has in the above circumstances, citing relevant statute and case law authority, using the ILAC format.

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.


In this case study there are several facts which show issues regarding the performance of contract of both parties entering into the contract. Being a legal advisor to the Bob, there are several recommendations and legal advices have been given in determined approach.


Bob runs a manufacturing company and sells computer equipments. In this Case study order has been placed by Mike and accepted by Bob via email. It is a binding contract to both the parties. Now the issues are aroused related with performance of contract by parties to contract.


In this case postal acceptance rule will be implemented to force the parties to perform their liabilities. Bob and mike enter into valid contract. In order to prepare a valid contract between parties there should be offer, acceptance and consideration for the same. As per the case law of Taylor v Caldwell (1863) 3 B & S 826 it was held by the court that a contract is formed when it meets all the conditions given in contract law.


It is observed that Bob in the starting made offer to Mike who was rejected by Mike. Then later on Mike made offer to Bob to buy 30 computers at certain amount. Bob accepts Mike offer at the same consideration. On 5th January this offer become contract between both parties and both are liable to perform their liabilities.


Now Mike at the time of performing contract refuses to perform his part. Therefore, it result into breach of contract and Bob would be considered aggrieved party (Hoye, et al. 2015).Now in the end it would be said that Mike has been charged for non performance of his liabilities under the binding contract. Now Bob could ask for specific performance of contract from Mike or could also ask for compensation for non performance of contract (Amini and Haghani, 2014).


The main issue in this case is related with cancelation of orders by Bob before the performance of contract by one party.


Termination of contract will be applied in this. However, parties to the contract have entered into contract. Now when there is mutual consent of parties then only contract could be terminated. In this case, after accepting the contract now Bob has sent cancelation orders to Mike.


There is valid contract between Bob and Mike. Now Bob do not want to perform his liabilities to pay for his orders. In addition to this, Bob has communicated his message for cancelation of orders. Therefore, until and unless the cancellation order is accepted by Mike the contract would be enforced on both parties. Mike could ask for specific performance if Bob fails to perform his contract (O'Sullivan and Hilliard, 2016).


In this case Mike could force Bob to perform his liability to pay off its due as per the contract terms and conditions. However, Bob has communicated his intention to cancel the orders. As per the contract law parties to the contract could terminate the contract only with the mutual consent. Now Mike could ask for specific performance of contract as remedy to the contract if Bob refuse to perform his liabilities (Lee, Chaudhry and Tekleab,  2014).


In this case the main issue is related with valid contract between Steve and Bob. The issue arises whether Steve and Bob have entered into valid contract or not.


As per the contract law this case is related with past consideration in which one party to the contract has performed his acts without taking any consideration and after that other party determine the consideration for the same. Therefore, this would be related with performance of contract based on the past consideration.


In this case there is no formation of contract between both parties due to its past consideration. In this case Steve has performed his liability on volunteer basis and after that Bob has promised him to give computer. As per the case law held in Antons Trawling Co Ltd v Smith, Baragwanath j, it was held that on the basis of past consideration no contract could come into existences.


Steve has done his work on volunteer basis without asking for any consideration. Therefore, there is no contract between parties and there will be no legal liabilities imposed on Bob for performance of his promise (Fried,  2015).


This case has issue of forming contract by mistake. In this case parties to the contract has entered into contract and one party is denying to perform the contract on the basis of fact that contract is entered by mistake.


This case is related with operative mistake or unintentional mistake to form contract by Bob with marry. Now Marry wants Bob to perform his duty which he has accepted by signing the contract.


In this case Bob has entered into contract with Marry to buy delivery van by mistake. It is observed that due to unilateral mistake in a contract Bob has entered into contract with Marry. Now Marry is asking for specific performance of contract by Bob. On the other hand, Bob has pleaded that he unintentionally signed the contract and want to make it null and void contract. As per the case law Bell v. Lever Brothers it was held that contract formed by operative mistake would be void and parties to the contract cannot enforce it by law.


Now it is given that Bob after giving clear justification about all the facts and figure could easily justify that he was not having any idea about the contract. This contract is null and void from the beginning.  Marry could not force Bob to perform the contract and there will be no legal liabilities imposed on Bob for non- performing of contract (Corones,  2014).


In this report several recourse have been given which justify the acts of Bob and what bob should do in order to avoid legal penalties. All the case study given in this report is related with contract law.


Amini, M. and Haghani, S., 2014. Evolution of right of termination for non-performance of contract: Implications for Iranian legal system.

Corones, S.G., 2014. Competition law in Australia. Thomson Reuters Australia, Limited.

Fried, C., 2015. Contract as promise: A theory of contractual obligation. OUP Us.

Hoye, R., Smith, A.C., Nicholson, M. and Stewart, B., 2015. Sport management: principles and applications. Routledge.

Lee, J., Chaudhry, A. and G. Tekleab, A., 2014. An interactionist perspective on employee performance as a response to psychological contract breach. Personnel Review, 43(6), pp.861-880.

O'Sullivan, J. and Hilliard, J., 2016. The law of contract. Oxford University Press.

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