TLAW 101 Business Law

Mojo Beverage placed the following advertisement in a local newspaper on 25 January: ‘Come one, come all! Fishermen and women of Lake Tranquil. We are offering to pay $100,000 to any person who catches Lord Harry, a trout which we have tagged and released into the lake.’

The following day was the Australia Day holiday. Lake Tranquil was crowded with people fishing both from the bank and from boats. At about lunch time, a rumour spread among the people on the bank that there had been an error in the advertisement: that the true amount should have been $1,000 and that Mojo Beverage had announced that the prize would be the lower amount. The rumour was in fact true. Ben heard this rumour from the stranger fishing
beside him, minutes before catching Lord Harry. A Mojo Beverage representative was on hand to certify the catch before Lord Harry was released back into the lake, but did not say anything about the amount of the prize.
Ben is claiming that Mojo Beverage owes him $100,000.
Advise Mojo Beverage, explaining applicable legal principles and citing relevant authorities.

(a) Dorper Sheep Sellers Pty Ltd was negotiating the sale of a number of dorper sheep to a firm called Livestock Brokers, which intended to on-sell the sheep. On 1 June Dorper Sheep Sellers sent a letter to Livestock Brokers, setting out the number of sheep for sale and the price per head. It asked Livestock Brokers to reply within 14 days.Livestock Brokers sent a letter by reply dated 6 June, inquiring whether the sale could be financed on the ‘usual terms’. Dorper Sheep Sellers did not reply. 

On 14 June, at the opening of business, Livestock Brokers sent a fax stating: ‘We accept your offer of 1 June for the sale of sheep’. The same day Dorper Sheep Sellers faxed back, saying: ‘You’re too late. We’re just in the process of selling the stock to another purchaser. Formalities will be completed by tomorrow’.Advise Livestock Brokers as to the rights and liabilities of the parties in the light of the commercial interactions taken place between them.
(b) Presume in (a) above Livestock Brokers sent the fax on 14 June but because of a transmission error Dorper Sheep Sellers did not receive it. Advise Livestock Brokers under these circumstances.

Stuart had a 5-year written lease of a shop in the Prince Mall. He entered the lease at $1000 per week at the end of 2010 and ran a successful music business for about two-and-a-half years. In 2013 the business was affected by decreased sales in CDs as a result of the increased ability of people to access music through the internet.In December 2013 Stuart asked the lessor, Westphalia Marts Pty Ltd, for a reduced rental of $700 per week until the business improved. He told the lessor about his business problems and plans to diversify and indicated that he might have to terminate the lease early. Westphalia Marts agreed to allow Stuart to pay the reduced rent and in January 2014 Stuart
began to pay the new agreed rent of $700.

In December 2014 Westphalia Marts decided to sell the Mall, including all the shops. They wanted the income from the Mall to look healthy, and asked Stuart to pay the full amount of $1000 per week rental beginning in January 2015 and also demanded the shortfall of $300 per week for each week of the year 2014.Advise Stuart, with reference to the relevant principles. 

 

You will have shown evidence of the following:
• the written expression is poor and difficult to understand
• the answer is poorly organised
• referencing is generally inadequate
• lack of familiarity with the legislation and its application
• failure to identify and address the issues in the question
• reasoning and application demonstrated is poor. 

Issue

Can Ben is liable to bring a claim of $100,000 against Mojo Beverage?

Relevant Law

The law of contract establishes the relationship between two parties. To prove any contractual relationship to be valid, the main contractual essentials are: (The Law Handbook 2016)

An offer – An offeror initiates an offer through which he transfers his wishes of any act or omission to an offeree with a hope that such an offer will be approved (Smith v Hughes (1871). An offer is valid when it is communicated by an offeror and comes within the notion of an offeree. (Moles R 1998)

An acceptance – The offeree when approves the offer made to him, then, such approval is called acceptance (Crown v Clarke (1927). It is only when the acceptance made by the offeree reaches the notion of the offeror, then, the acceptance is said to be complete and valid (Powell v Lee (1908). Any acceptance made without knowledge of acceptance is invalid in law.

Further, when the person does not make any kind of offer but acts in order to receive offers, such as by advertisements, tenders, auctions, etc, then it is called invitation to offers where the person making the invitation is an offeree who receives the offer made by the public (offeror) (Partridge v Crittenden (1968)).

Also, an offer can be unilateral, where promises are made by one party and the same is accepted by another by conduct. Whereas, in bilateral contracts, both the parties exchange promises to make a binding contract ((Australian Woollen Mills Pty Ltd v The Commonwealth (1954). (Gibson & Fraser 2014)

Legal intention- The parties exchanging the promises must have legal intention to abide by the contract (Merritt v Merritt [1970]. (Lucke, 2017)

Consideration- The promises which are exchanged amid the parties must be supported by some benefit which makes the contract enforceable and is consideration (Coulls v Bagots Executor & Trustee Co Ltd (1967). (Clark, 2015)

Capacity – The offeror and offeree should be mentally sound and must have attained the age of majority.

All these essentials make a valid contract.

Application of Law

Mojo Beverage, on 25^th January had placed an advertisement inviting the entire fisherman’s and women of Lake Tranquil to catch a tagged trout in return of a reward of $100,000.

Normally, an advertisement is an invitation but in the given case, the advertisement published by Mojo Beverages is a kind of unilateral offers wherein Mojo Beverages has made an offer to the people at large and any person who is willing to accept the offer must do so by carrying the desired acts of the offeror.

Now, the offer must be accepted by only such person who is aware of the offer. The offer of Mojo Beverages was though advertised as  $100,000 but the actual offer was of  $1,000 of which Ben was aware off.

Thus, when Ben had actually caught the trout, then, the offer made by Mojo beverage was accepted by Ben by conduct.

Also, both Ben and Mojo beverage are capable to make offers and acceptance and the promises are supported by the consideration of $1,000.

Conclusion

Thus, a unilateral offer was made by Mojo beverage which was duly accepted by Ben, thus, there is a valid contract amid the two. So, Ben is liable to bring a claim of $100,000 against Mojo Beverage.

Issue

1. To analyze the contractual relationship amid Dorper Sheep Sellers Pty Ltd (DSSPL) and Livestock Brokers (LB)?
2. The situation amid DSSPL and LB if the fax of 14^thJune is not reached to DSSPL?

Relevant Law

In Australia, the presence of offer, acceptance, intention, capacity and consideration are required to make a valid contract. An offer is an act by an offeror wherein he transfers his wishes to an offeree with a hope that the same will be approved ((Carlill v Carbolic Smoke Ball Co (1893)). An offer is valid when it is communicated by an offeror and comes within the notion of an offeree. Further, when the approval of the offer is made by an offeree, then, such approval is called acceptance (Crown v Clarke (1927). (Moles R 1998)

Now, when the acceptance which is made by the offeree is not in correspondence with the offer but deviates from the terms of the offer, then, it is counter offer and such counter offers cancels the original offer and cannot be accepted again. The only offer which is now valid is the counter offer made by the original offeree to the original offeror. (Hyde v Wrench ((1840)). But, a query is not a counter offer (Stevenson v. McLean (1880)). (Alex Kikik, 2016)

Also, a valid acceptance is one which is made by an offeree and which reaches to the knowledge of offeror (Powell v Lee (1908). But, when acceptance is made by post, then, the acceptance is presumed to be complete immediately at the post of the letter. There is no need that the letter should reach the offeror (Adams v Lindsell (1818)). However, in other modes of communication, that is, fax etc, the acceptance is complete only when the offeror is aware of the contents of the acceptance (Entores Ltd v Miles Far East Corporation (1955). (Hill S 2001)

The law is now applied.

Application of law

1. DSSPL sent a letter to LB on 1^stJune wherein an offer is made to sell sheep at certain price per head. The offer was kept open by DSSPL for 14 days. Now, if LB wants to accept the offer then the same must be down by LB within 14 days. However, on 6^th June an inquiry is made by LB. However, an enquiry is not a counter offer which can cancel the offer of DSSPL. So, the offer of DSSPL is still valid. Thus, when the fax is sent by FB to DSSPL regarding the acceptance of DSSPL, then such acceptance is valid because the acceptable was sent at the time when the offer was still open and is read by DSSPL.

So, there is a valid contract amid DSSPL and FB.  

1. Now, if LB has sent a fax on 14^thJune but the same is not received by DSSPL because of the transmission error, in such situation, the contract amid DSSPL and LB is invalid. When acceptance is made by fax then there is no applicability of postal acceptance rule and the fax must reach within the knowledge of DSSPL to make valid contract.

So, there is no valid contract amid the two.

Conclusion 

The contract amid DSSPL and LB is valid in the initial case because the fax was read by DSSPL. But, when the transmission error was incurred, then, there is no valid contract because the acceptance is not complete against the offeror to make a binding contract.

Issue

Whether Stuart should pay the deficient rent of $30 per week from 2014  to Westphalia Marts?

Relevant Law

As already submitted, in Australia, the presence of offer, acceptance, intention, capacity and consideration are required to make a valid contract. Every contract, whether written or oral guides the acts of the parties depending upon the terms that are decided by the parties. When the parties mutually decide their obligation then the terms are express and when the terms are imposed upon them under custom, law, usage etc then the terms is of implied nature. Both express and implied terms are binding upon the parties.  (Legal Service Commission 2016)

Parties pre-decide their mutual obligations and then enter into a contract. But, if any term is added or any pre decided term is altered by the parties orally, then, it is important to determine whether such oral variations are valid in law. The first basis to alter the terms is that the alterations must be made by the wish and will of both the parties. Also, if the contract is written then alterations should be made in written form only. But, in Australia, terms can be altered orally as well and vary the written terms only when is incorporated by the both the parties mutually. (Hubble 2016)

Application of law

A five year written lease was entered amid Stuart and Westphalia Marts Pty Ltd at a lease of $1000 per week.

So, a written contract was entered amid the parties wherein both the parties must abide by the terms of the contract.

But, in 2013, Stuart asked Westphalia Marts Pty Ltd to reduce the lease @ & 700 because of decrease in business. The decrease in lease was asked by Stuart until the business improves.

Thus, oral alterations are made to the written terms of the contract. This alteration is valid because the same is brought by both the parties mutually. Also, oral contracts are valid in the Australian contract law.

Now, later when Westphalia Marts Pty Ltd asked for the original lease of $ 1,000 and the balance deficient of $ 300 per week since 2014, then, such claim of Westphalia Marts Pty Ltd is invalid as the terms of the contract are legally valid by both the parties wherein Stuart is liable to pay $ 700 per week (as per the new oral agreement).

Conclusion

Thus, Stuart is not obligated to pay Westphalia Marts Pty Ltd any balance amount and is only liable to pay $700 per week.

Reference list

Books/Journals/Articles

Alex Kikik, 2016, The Law of contract 

Clark J, 2015, consideration-Australian Contract Law. 

Gibson & Fraser, 2014, Business Law 2014, Pearson Higher Education AU, 11-Oct-2013.

Hill S, 2001, "Email Contracts - When is the Contract Formed?" < http://www.austlii.edu.au/au/journals/JlLawInfoSci/2001/4.html#fn8>. Accessed on 28^th March 2016.

Lucke, 2017, The Intention to create legal relations. 

Case laws

Adams v Lindsell (1818) 1 B 

Australian Woollen Mills Pty Ltd v The Commonwealth (1954).

Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460.

Carlill v Carbolic Smoke Ball Co (1893).

Crown v Clarke (1927).

Entores Ltd v Miles Far East Corporation (1955).

Hyde v Wrench ((1840).

Merritt v Merritt [1970] 1 WLR 1211

Partridge v Crittenden (1968).

Powell v Lee (1908).

Smith v Hughes (1871).

Stevenson v. McLean (1880).

Online materials

M Hubble, 2016, Contract Modification, http://contracts.lawyers.com/contracts-basics/contract-modification.html. Accessed on 28^th March 2017.

Legal Service Commission, 2016, Express and implied terms of the contract, < http://www.lawhandbook.sa.gov.au/ch18s02s01.php>. Accessed on 28^th March 2017.

Moles R, 1998, Contract Law Lecture - Formation of Contract - Offer and Acceptance < http://netk.net.au/Contract/02Formation.asp>. Accessed on 28^th March 2017.

The Law HandBook, 2016, Elements of a contract < http://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/>. Accessed on 28^th March 2017.