Issue 1
To
Samantha
Departmental Manager
Subject: Letter of Advice on the Acquisition Case of Rigby Corporate
Dear
Samantha,
Hope this letter finds you in good health. I have come to know about the issues regarding the acquisition case of Rigby Corporate. I heard they want to back out of the sale and hence felt the sense of urgency to quickly inform certain key legal aspects about the case which might help the company to get upper hand in case law is the option. I shall use the ILAC method to describe the case and highlight these aspects properly.
To sue Rigby Corporate for breaching the contract it is extremely important to establish that the organisation got into a contract with Event Management Pty Ltd.
In order to establish the aspect of contract with Rigby Corporate it is extremely important to understand whether there was a contract established between the two company or not. According to the Australian contract law a contract is considered established when there is the presence of all the key elements of contract is there. In this case the availability of the clauses could be seen available that makes the contract partial. For instance the presence of offer and acceptance is there as both the company agreed upon a price to make the transaction. In this case the Event Management Pty Ltd put forward an offer to the organisation Rigby Corporate and they accepted it based on the consideration of a purchase price of $750,000. It is important to note that for a contract to get established it is important to make sure the offer is clear. The case of Smith v Hughes Court of Queen’s Bench [1871] LR 6 QB 597 showed that offer and acceptance are two elements to establish a valid contract. This is considered a cult case because it showed that even though subjective intention of parties could differ but the sole intention was to get involved in the transaction. Pretty similar to this case the parties in the present case agreed to get involved in the contract which clearly shows that they had clear intention of getting into a contract. Another major aspect is acceptance in this case which actually shows the intention and interest of other parties to get involved in the transaction. Pretty unlike the case of Crown v Clarke (1927) 40 CLR 227 showed that silence is not considered as acceptance to the offer and hence it is extremely important to note that in the present case the acceptance came pretty clearly which shows that the elements of the contract is clear. The consideration is also pretty clear in this case because Rigby Corporate agreed to sell the property along with assets for the amount of $750,000. Hence it is clear that consideration was also there which means that both the organisations were interested in making sure the sell process is smooth as no one had any objections regarding the transaction. There was a condition that Rigby Corporate’s managing director will be playing role of a consultant for a period of 12 months which have been agreed by the purchasing organisation. This acted as a condition for the selling organisation and it was agreed to which also seals the deal for the other organisation. Condition is considered to be an extremely important aspect in a contract as discussed in the case of Tramways Advertising Pty Ltd v Luna Park (N.S.W) the role of condition have been clearly discussed which showed that it is extremely important to make sure that condition is effectively managed and implemented to successfully establish a contract. In this case it is clear that offer, acceptance, condition and consideration are there. There was even intention to develop a legal contract as the Events Management Pty Ltd has already developed a rough contract to continue with the process of operation and enforce the acquisition effectively.
Law 1
From the present case it is clear that there are certain elements of a valid contract present in the case. Offer, acceptance, consideration, intention and condition are there which makes it a clear case of breach of contract. Rescission is only possible when there is misrepresentation from any party in an agreement but apparently it could be said that there is no issue which could actually breach the contract. The breach of contract would mean that a party has not gone with the process of establishing the contract in a transparent manner which is not true in this case. From the above presented rules considered suitable under the common law of Australia the contract could be considered valid. To conclude the present issue it could be said that there is no way it could be argued that the contract did not exist. The negotiations which took place during the initial period of business talk in this case involves the discussion of business worth, payment, transference of power, discussion on condition, offer and acceptance which clearly makes the negotiation enough to state that there was a valid contract developing between two companies.
Conclusion 1
Since Event Management Pty Ltd has a lot at stake in this case it could be said that it is clearly pretty unprofessional and illegal for the organisation Rigby Corporate to deny from the promises they made to sell the company to the formerly mentioned organisation as the elements of a valid contract are present in it. Hence it could be said that Rigby Corporate breached the contract as after all the negotiations they did not want to move ahead with the acquisition which is clearly a breach of contract and hence they should be legally penalised and the contract should be continued without further delay. A contract could only be rescinded when there is a misrepresentation from the offeree but in this case Event Management Pty Ltd did not misrepresent any information or scenario which is likely to make things worse for the organisation Rigby Corporate and are likely to face legal implications.
To establish that Rigby Corporate breached the contract it is important to establish that the business negotiations took place were serious enough to establish a contract existed.
Business negotiation is one complex aspect and it is extremely important to note that business involve in many layers of discussion before sealing a deal. The very first aspect of negotiation is good faith. Negotiations are always needed to be done in good faith. In this case it is clear that the offering party did not hold anything back which is important for a negotiation to establish a contract. Since there was offer, acceptance and even consideration it could be said that the negotiation was successful. Hence it is clearly illegal to not go ahead with the deal once the negotiation is done in good faith. It remains questionable that whether negotiation in good faith is enforceable or not because it is most of the time not considered as an obligation. As stated by an English court that negotiations might not end up being successful contracts which is clearly shown in the case of Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd where long negotiations failed even after discussions. It is important to note that the present case is slightly different because in this case negotiation process carried out involved offer, acceptance and consideration and in fact conditions have been effectively agreed upon by both the parties which clearly show that negotiation in this case has enough content to transform into a valid contract. In a case of Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service the Supreme Court of NSW stated that it is important to have a framework so that it is easier to ascertain the ability of negotiation to transform into a valid contract as the elements of negotiation are uncertain. This case also showed that it is important to act in an honest manner in a negotiation which is the primary obligation of the parties. In this case there is no evidence put forward which shows dishonesty in negotiation.
From the above discussion it is clear that negotiation not often form a contract as the elements in a negotiation process are not ascertainable which makes it complicated to understand whether a contract could be established or not. In the present case the negotiation that took place between the two companies contained all the key elements of contract where one party offered and the other accepted which clearly shows that the first stage of contract has been passed to validate it legally.
Conclusion 2
To conclude it could be said that a simple undertaking to negotiate in good faith is not likely to be held enforceable by the court of law until and unless there is an identifiable process through which the negotiation could be considered as a movement toward successful development of contract. In this case it is clear that the negotiation had key elements of contract which clearly makes the present negotiation different and provides a platform to understand that Rigby Corporate were wrong to rescind such a negotiation and hence it could be said that negotiation in this case led to existence of a contract.
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