Contract Law
Whether Joe had entered into a valid contract with Annie for the sale of the single core CPUs? Whether Joe would have access to any remedies under contract law?
A contract is a legal document which contains terms which are mutually decided by the parties in order to comply with the promises that are exchanged amid them.
Offer is the first requirement to make a contract. In Gibson v Manchester City Councilit was submitted that when a proposal or statement is made by the offeror which contains the desires of the offeror which he wants the offeree to comply with, then, it is an offer in law. An offer can be in any offer, that is, written oral or by conduct but as per Carlill v. Carbolic Smoke Ball Co it must be in knowledge of the offeror to make to complete.
An acceptance is the second requirement to make a contract. The approval to the terms of the offer by the offeree is an acceptance in law. Oral, written or by conduct are the modes in which an acceptance can be communicated but as per Felthouse v Bindley silence is not an acceptance. An acceptance must be made in the mode that is specifically submitted by the offeror and is held in Latec Finance Ltd v Knight. Acceptance in any other mode is invalid but slight variations are permissible. As per Crown v Clarke when an acceptance is made, then, it is binding on the parties only when it is received by the offeror.
But, as per Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd any acceptance made by post is valid when the letter is posted. There is no need that the letter must reach the offeror to make a binding contract.
When instead of acceptance, changes are brought in to the offer terms, then, it is not an acceptance but is counter offer which has the capability to terminate the offer.
As per Stevenson Jaques & Co v McLeana request for further information or enquiries are not counter offers and the offer still prevails and any acceptance to the offer is valid and makes a binding contract.
An offer and acceptance along with consideration, legal intention and capacity makes a binding contract.
If the contract terms are not violated then the aggrieved party can sue for damages.
The facts submits that,
Connect Computers (“CC”) is a computer store that is operated by Joe. The main specialty of Joe was the repair work of computers. A contract was made by Joe with Whittlesea Primary School (“WPS”) wherein 150 computers are to be delivered @ $45,000. One of the terms of the contract was that the computers are required to be delivered and installed by 31 June 2018.
In order to comply with the contract with WPS, Joe needs 75 CPUs and thus he decided to call his friend Annie. Annie and Joe were friend for past 20 years. Annie was owning and managing an IT supply company.
Joe had been good friends with Annie for over 20 years and he was sure that she would be able to give him a good price. Annie was excited for Joe and told him that she would send an email with further information the next day.
Valid Contract with Annie
On 12 February 2018, Joe received an email from Annie quoting a price of $4,000 for 75 single CPUs. In the email, Annie advised Joe that this was the cheapest she could go for the singe core CPUs.
It is submitted that when Annie emailed a price quote to Joe then at that time she also sent an order form along with the mail which specifies that if Joe wants to accept the quotation, then, he must print and sign the attached order form and must return the same by post. The form also submits that the quotations are valid for 7 days.
As per Carlill v. Carbolic Smoke Ball Co an offer is made by Annie to Joe. The offer is made by Annie to Joe wherein she also submitted that the offer so made by her is open for 7 days. The offer is valid as the same is made by Annie and is received by Joe.
Now, a contract can only be made provided Joe confirm the offer so made by Annie and communicates the same to her.
Joe is aware that the single core CPUs will not be have enough power to comply with the school needs so he write back to Annie on 12th February 2018 itself specifying his concerns and asked the cheapest price that she can offer for quad-core CPUs. He submitted that he might go with single core CPU but wants to compare the prices of the both. He also requested that the original quote must be kept open for 14 days till the time he does his calculations.
Now, as per Stevenson Jaques & Co v McLean, the request that is made by Joe was a request for further information and to seek enquiries. Thus, there is no counter offer that is made by Joe to Annie. So, the offer that was made by Annie on 12th February still prevails for 7 days.
On 16t February, Annie sends an email to Joe wherein she quoted $12,000 for 75 Quad-core CPUs akong with the order form. On 17th February morning, Joe reads the email and decided that the quad-core CPUs are very expensive. He then prints the order form which was attached with the mail of 12th February, signs the same and pots it to Annie on the same day.
Now, the reply by Annie on 16th February was only a reply to the query that was made by Joe. There was no new offer that was made by Annie cancelling the previous offer. So, Joe has the right to accept the offer. As per Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd the acceptance by Joe was valid as the same is made by post and the acceptance is made when the letter is posted.
In the meanwhile, Annie received an order from Pear to the entire stock of single core CPUs and she sells the stock to Pear. On 18th February, Annie writes an email to Joe submitting that she had sold the entire stock to Pear and thus she now cannot supply the stock until August.
Claims against Joe
It is submitted that a valid contract is made amid Annie and Joe when the letter of acceptance is posted by Joe to Annie on 16th February.
Later, Joe searched for the CPUs from another supplier but the same are purchased but Joe @ 7,000. Now, Joe is paying extra $3,000. So, Joe can claim the extra amount
Conclusion
A valid contract exists amid Annie and Joe on 16th February when the letter of acceptance was posted. Joe can sue Annie for $3,000.
Whether Florence would be successful in any claims against Joe, and if so, what remedies might be available to her?
The Australian Consumer Law is the applicable law that must be applied in the given situation. The law is framed to prot4ect the consumers from the actions of manufacturers or sellers or supplier and must make sure that the goods and services so provided must be safe and as per requirement of the consumer.
The ACL is applicable to those good and services which are purchased by the consumer for house hold reasons and the worth is not more than $40,000and is held in section 3 of ACL.
Some of the implied guarantees that are incorporated in ACL and are binding on the sellers or manufacturers or supplier includes:
As per section 18, no supplier must make any false statement regarding any goods or services that are supplied by him in his usual trade or commerce in order to induce the consumers to establish a contractual relationship him. if such act is carried out then the supplier has indulge in deceptive and misleading actions and thus has violated section 18 and is held in Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd;
That as per section 20 -23 of ACL submits that no supplier must engage in any kind of unconsiousable conduct while selling any goods and services to the supplier. When the supplier because of his dominant position mainly because of his knowledge, age, trust etc misguides the weaker party, so that the weaker party is not able to make an independent decisions of entering into contract then there is breach of section 20-23 and is held in Kailash center for personal development Inc, v Yoga Malik Pty limited.
As per section 54 the good so supplied by the supplier must be such that are fit for the purpose for which they are supplied and is held in ACCC v Valve Corporation(No 3).
As per section 64 of the ACL the consumer guarantees that are made part of ACL cannot be excluded by any clause made part of the written contract amid the parties.
As per the facts of the case,
Joe visited ‘door knocking’. He knocks a door f a 70 year old lady, Florence Nightingale and sold a computer to her for $2, 000. Thus, as per section 3, the implied guarantees that are imposed o the supplier is applicable as Florence has purchased the computer for personal purposes. However, there are several implied guarantees that are breached by Joe. The same are:
Business Expansion
It is submitted that Florence was not literate in English and not have much compute knowledge. Joe told Florence Nightingale that he offering free services on computers. On inspection, Joe tells Florence Nightingale that her computer is filled with dangerous viruses and thus the computer must be upgrade. Florence Nightingale is worried because the computer is only 6 months ole but relied on the expertise of Joe considering him trustworthily. Joe also tells her that since she uses the computer for emails and for vide calling, there is a perfect machine that he can offer. he also submits that a specifiable price can be given if she makes an offer today.
Thus, there are statements of facts that are made by Joe which he knows to be false. The statements are made so that Florence makes a contract with him. The statements are made by him in his trade. Thus, the acts are deceptive and misleading in nature causing breach of section 18 of ACL (Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd).
It is submitted there is clear breach of section 20-22 of the ACL as Joe was aware that Florence was a 70 year old women who is illiterate and also does not have any knowledge of computer, Joe on the other hand has full knowledge of the compute took advantage of the position of Florence and thus acted in the manner which no man of good conscious will incur, Thus, there is breach of section 20-22 (Kailash center for personal development Inc, v Yoga Malik Pty limited).
Also, there is clear breach of section 54 as the computer that was delivered by Joe was without any operating system or applications and Florence is unable to use it. So, the goods are not fit for the purpose for which they are supplied.
It is also submitted that a contract was signed amid then for $2,000 which is to be paid by Florence Nightingal to Joe on delivery and contains a disclaimer that ‘Connect Computers does not warrant or guarantee that any products sold or provided will be fit for any purpose, howsoever described or disclosed. The contract was signed by Florence without reading.
Now, the disclaimer is not valid as per section 64 of ACL and thus is not brining.
Conclusion
Thus, section 18, 20-22 and section 54 of ACL are violated and so Florence can sue Joe. The disclaimer is not applicable because of section 64 of ACL.
2.Letter of Advice
To
Joseph Brunetti
Subject: Advice of the best business structure considering the strength and weakness of every business structure.
Hello,
Through their letter of advice I would like to submit before you some of the business structures that can be opted by Joseph Brunetti for their new venture. It is submitted Joseph Brunetti owns a successful business store and is now looking to expand the business. At this stage he is running the business on its own. The present business structure that is operated by Joseph Brunetti is a sole trade ship kind of business structure.
Minimizing Tax Liabilities
But, I would like to state that a sole trader ship kind of business structured have few disadvantages such as the trader is himself personally liable for all the liabilities of the business. Also, there is lack of expertise and it is very difficult to raise finance for any kind of investment purposes. Most important the life of the business is very limited as the business cease to exist when the trader dies.
Thus, apart from sole trader ship there are two other options that can be looked into by Joseph Brunetti for the purposes of expansion of business. The same are partnership and company.
A partnership is a kind of business structure which can be established by two or more persons who carry on the business on continuous basis with common object and mainly to earn profits. Some of the advantages that can be associated with a partnership are that it is very easy to formulate, since there are no outside parties thus the confidentiality can be maintained, the management is under the control of the partners, capital can be easily raised by bring in the money by the partners theses.
But there are few disadvantages, that is, the partnership cease to existing on the death or retirement of any partner, there are chances of conflict, if the partners are unable to raise money then it is very difficult to secure finance and the liability is unlimited.
On the other hand, a company is a business entity which comes into existence on incorporation, once a company is incorporated then it is separate legal entity in the eyes of law and the acts of the company are carried on its own name.
Some of the advantages of a company are that it has separate legal existence, the liability is limited, a company can sue and be sued in its own name, there are tax benefits, employees can be appointed who is the expertise in their filed.
But, there are few disadvantages, that risk it is expensive to set up a company, high repotting requirements, profits can be taxed, etc.
It is now important to understand as whet is the best business structure for Joseph Brunetti:
The foremost requirement of Joseph Brunetti is minimize the overall, tax liabilities. If the partnership is operated then Joseph Brunetti be taxed both initially and on the profits. But, if Joseph Brunetti operate by way of company then a fair rate of tax is imposed which is beneficial when compared with partnership;
Joseph Brunetti intent to raise capital. In partnership the capital can only be raised when the partners bring in the money. bit, in company, capital can be raised by issues shares or raising debentures, thus, the chances if raining capital is quite high in company;
Right kind of employees can be kept and who are not be part of the company considering the separate legal entity of the company;
- If a company is operated then people of expertise in their respective filed can be appointed who are not the owners of the company and thus it is ensured that the company can be protected from any poor management decisions of his partners;
- By establishing a company he could ensure control over the day-to-day decision of the business can be maintained.
- Since Joseph Brunetti needs bigger warehouse and fleet of vehicle to support his service contracts, then, a company is the best choice as a company can hold property in its own name. The cost of the same will be $600,000 but this finance issue can be resolved by raising capital in the form of issuing shares and by raising debentures in the name of the firm. Joseph Brunetti is not liable for the liabilities if any as a company ahs limited liability to the extent of the shareholding of Joseph Brunetti. Since Joseph Brunetti only has $100,000 worth of equity and $20,000 in cash, thus, his financial needs will only be met when he operate by way of a company
- Joseph Brunetti can also hire more staff to support the anticipated increase in workload by nit making them as part of the management.
- He can also offer part-ownership in exchange for some of the capital required by selling the shares of the company;
Is friends Sarah and Malcolm are interested in investing, but Joseph is concerned with the number of failed businesses that Malcolm has been involved in. Sarah can provide $300,000, Malcolm $180,000, and Joseph the remaining $120,000. Thus, if the friends invest in company then any liability if raised will be borne by the company. But, in partnership any wrong decisions will make all the partner liable for the liability personally.
It is thus advice that the business structure that should be operated by Joseph Brunetti is by way of a company and not by way of a partnership.. By operating company all the requirements of Joseph Brunetti can be met in a profitable and secured manner.
Reference List
Books/Articles/Journals
Adams, Michael ,Australian Essential Management Law, (Routledge, 01-Jul-1997)
Carter , John , Contract Law in Australia (LexisNexis Butterworths, 2013).
Eliza, MIK, ‘The Effectiveness of Acceptances Communicated by Electronic Means, Or – Does the Postal Acceptance Rule Apply to Email’ (Journal of Contract Law, 2009).
Gillies, Peter , Business Law, (Federation Press, 2004)
Morandin, Nicole and Smith, Joshua 2011, Australian Competition and Consumer Legislation 2011. Australia: CCH Australia Limited.
Case laws
ACCC v Valve Corporation (No 3) [2016];
Carlill v. Carbolic Smoke Ball Co (1891).
Crown v Clarke (1927) 40 CLR 227
Gibson v Manchester City Council – CA [1978] 1 WLR 520.
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
Felthouse v Bindley (1862).
Hyde v Wrench (1840) Beav 334.
Kailash center for personal development Inc, v Yoga Malik Pty limited (2003).
Latec Finance Ltd v Knight (1969)..
Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993);
Stevenson Jaques & Co v McLean (1880)
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