DescriAnswer all 4 questions.
HA2022 Business Law, Tri 3, 2011
1. Margaret owned an antique store that specialised in rare porcelain dolls. When she
opened the business in 1989, it was at a shop in an eastern suburb of Melbourne. In 1999
she started to advertise on the Internet and by 2006 the business had grown to the point
where she needed help to keep the business going. After a family discussion one night at
the kitchen table in July 2006, it was agreed that Margaret would probably keep the
business going for another couple of years and then retire. Emily, her youngest daughter
and aged 16, would work in the shop as long as was needed and in return, she would
receive any unsold dolls. When Margaret retired at the end of 2009, she decided that she
would give the unsold stock to charity and they could auction it and keep the proceeds.
Advise Emily.
2. Richard, an impoverished university student, and his millionaire father enter into an
arrangement where Richard agrees that he will keep the front- and backyards of the
family property mowed, and he will ‘do a bit’ to keep the gardens looking tidy. In return,
his father agrees to pay him a weekly allowance of $200. His father had previously used a
garden contractor to do the job and paid him $350. They live on a one-hectare property,
and the mowing alone takes half a day a week. After four weeks, Richard’s father tells him
that he can’t afford to pay $200 a week. He says that Richard should be doing the work
for nothing, as it is the responsibility of the whole family to look after the property;
besides, he says, Richard is getting free board and lodging. Advise Richard.
3. Jenny received a circular from Beauty and the Beast Hair Salon advertising massages and
manicures for $10. Realising that this was an exceptionally good deal, but not surprised
because she knew that they had only just opened and were running a number of good
opening specials, she rang and made a booking. When Jenny arrived at the salon she was
told that there had been a mistake on the circular and it should have said $100. The
manager of the salon explained that this was still a good price because normally a
massage and manicure would have cost $150. Jenny was furious, as it had taken her 30
minutes to get to the shop by car and if she had known it would cost $100, she would
never have made the booking. Advise Jenny. Would your advice have been any different if
Jenny had the massage and manicure before being told that the cost was $100? Would
she have to pay the full price?
4. Bruce, while he was so drunk that he didn’t know what he was doing, bid successfully at
an auction for the purchase of a house. It was clear to the auctioneer that Bruce didn’t
know what he was doing. However, after Bruce sobered up he confirmed the contract
with the auctioneer. He then subsequently refused to complete the contract. Is Bruce be bound your assignment

SOLUTION

Answer 1

Emily cannot get the action and decision taken by Margaret reversed and cannot ask her to give her the unsold porcelain dolls instead of giving them to charity for auction as when the family discussion took place wherein it was decided that Margaret would handle the family business for few more years and then retire and after her retirement Emily, her youngest daughter which was aged 16 years can work in the shop and in lieu of her work she would get all the unsold dolls, at that time Emily lacked capacity. The Contract Act states that to enter into an enforceable agreement the parties should have the capacity and an agreement with a minor (person below 18 years of age) is a voidable agreement and cannot be enforced in the court of law. In the matter of  Nash v Inman (1908) 2 KB 1 it was held that a minor lacks the capacity to enter into a contract but only in cases where the person has supplied for the necessities of the minor then he can claim back the money he spent as the contract in such cases is enforceable.(Lambris,2011) In these matters of necessaries as well the claim made by the supplier of necessities is not contractual but an obligation on the minor to pay for the satisfaction of needs.  Keeping in view the above it can be advised to Emily that there is no contract between her and her mother as she lacked capacity at the time when family discussion took place.

Answer 2

It is a legal necessity that to enter into an enforceable agreement it is required that the parties to the contract have an intention to create a legal relationship. In commercial matters intention to create a legal relationship is presumed and anything against it need to be proved whereas in matters of personal relations like husband and wife, father and son it is presumed that there was no intention to create the legal relationship and anything against it needs to be proved in the court of law. In the matter of Balfour v Balfour (1919) 2 KB 571 the husband did not take his wife with him to Sri Lanka because of her medical condition but made a promise that he will send her £30 per month for her maintenance in England till the time he joins her back there. Instead of this promise the husband failed to make the payment to her and she brought an action against him. It was held by the court of law that the promise was between husband and wife and it is presumed that there was no intention to create the legal relationship. The principle of this case is applicable to the present situation in our hands as the agreement between Richard and his father fails to satisfy the criteria of intention to create the legal relationship. It can be advised to Richard that he cannot claim the money for mowing the land around his house as there was no intention to create the legal relationship and if he brings an action against his father it will fail in the court of law as there is o enforceable contract.(Latimer,2012)

Answer 3

When a person gives some information about his products in the form of a catalogue or a circular and invites others to make offers to buy the product then it is considered as an invitation to treat. In such cases the buyer is making an offer to buy and upon the acceptance of such offer by the seller that an enforceable agreement can arise between the parties. In the matter of Harris v Nickerson (1873) L.R. 8 Q.B. 286 there was a sae advertisement by the defendant through auction. The plaintiff saw the advertisement and reached to the place of auction. He came to know after reaching the auction site that the auction has been cancelled and thus brought an action against the defendant. It was held by the court of law that the advertisement notice was just an invitation to treat hence the plaintiff cannot claim his travel expenses from the plaintiff. The circular of Beauty and Beast Hair Salon is an invitation to treat on which Jenney acted and made a booking. She came to know the real price upon reaching the salon and thus had an option to reject the offer made by her to avail their services. She needs to pay $ 100 if she gets the massage and manicure done by the salon. The situation would have been different if she would have got the massage and manicure done without knowing the real price as in that case the offer by her was on the circular price and had been accepted by the salon thus giving rise to a contract between the two of them. In the second scenario she can pay just $10 as the price quoted in circular.

Answer 4

When a person is intoxicated and is not a position to understand the terms of the contract and the other party to the contract is aware of his situation then the contract made by such an intoxicated person is voidable. But later when the person is in a position to understand the terms and the implications of the contract and accepts it then he is bound by such a contract. In the matter of Blomley v Ryan (1954) 99 CLR 362 there was a contract between Ryan and Blomley which was entered by Ryan when he was 78 years old and was under the influence of alcohol. Ryan later refused to oblige the terms of the contract and thus Blomley brought an action against him. The court held that contracts entered into in an intoxicated condition and thus not in a condition to understand the terms of the contract and hence the contract cannot be enforced.( www.austlii.edu.au/au/cases/,2012) Bruce was drunk when he was bidding for the purchase of the house and the auctioneer was aware of his drunken condition. The agreement till that time has not become enforceable but upon his becoming sober he confirmed the contract and after this confirmation the contract becomes alive and is enforceable. It can be concluded that Bruce is bound by the agreement.

References

Books

1. Lambiris, M. 2011. First Principles of Business Law. Sydney: CCH Australia
2. Latimer Paul 2012, Australian Business Law ,31^st edition ,CCH Australia Ltd.

Cases laws

1. Nash v Inman (1908) 2 KB 1
2. Balfour v Balfour (1919) 2 KB 571
3. Harris v Nickerson (1873) L.R. 8 Q.B. 286
4. Blomley v Ryan (1954) 99 CLR 362

Others

1. Australian Cases, viewed on 21^st may 2012, www.austlii.edu.au/au/cases/
2. The Overview of Australian Contract Law, viewed on 21^st may 2012

www.australiancontractlaw.com/law.html

 LE85

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