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LAW2000 Business Law

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LAW2000 Business Law

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Course Code: LAW2000
University: Torrens University

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Country: Australia

Questions
Read the facts of each Case Study carefully.
Identify the area of law that requires discussion e.g. contract law.
Identify the legal issue in the Case Study e.g. Is there a contract? Has a contract been broken? Etc State the law. If you are stating a legal principle that comes from case law state the case and the citation that you are using as authority for the legal principle. If you are relying on a statute for legal authority then state the section number and name of the statute that is relevant.
1. Jennifer aged 25 years is the granddaughter of Betty who lives by herself in Mount Gambier. Jennifer has just completed a degree in Psychology at the University of South Australia. Betty promises Jennifer that if she leaves Adelaide and moves to Mount Gambier to live with her she will transfer her house into Jennifer’s name. Jennifer leaves her mum and dad, boyfriend and a job she held at the Service to Youth Council. She arrives in Mount Gambier and cannot find any work as a psychologist but she obtains work part time as a waitress in a café. Betty refuses to honour her promise regarding transferring the house to Jennifer who wants to sue her grandmother for breach of contract. Advise Jennifer.
2. On 1 February 2015 Sanche writes to Richard offering to sell him his 1974 Holden Monaro for $60,000, ‘the offer will remain open until 5pm on 3 February 2015’. Richard receives the letter at 10 am on 3 February and tries immediately to phone Sanche. He does not answer and Richard leaves a message on his Message Bank saying he was interested in buying the Monaro but was only willing to pay $55,000. At 10.30 am the same morning, Richard changes his mind about how much he is willing to pay for the car. He sends an email to Sanche saying, ‘Disregard, my earlier phone message. I accept your offer to sell your 1974Monaro car for $60,000’. Sanche does not check his email at all on the 3 February but doescheck his phone Message Bank. He listens to the voice message from Richard and Advise the parties.
3. Kevin is an antique dealer. He appoints Ravi to sell furniture on his behalf. One of the items Kevin wants sold is a twelve seater oak dining table. He instructs Ravi that he will not accept less than $7,000 for the table. Ravi places an advertisement in a local newspaper advertising the table for $7,000. Theresa responds to the advertisement. She has recently renovated a period home and the table would be perfect for the formal dining room. Theresa offers Ravi $6,500 which Ravi promptly accepts. All along, Theresa is unaware that Kevin is the owner of the table. When she takes delivery of the table there is large scratch on the top of the table. Theresa is furious and advises Ravi that she does not want the table now that it is not in the condition it was in when she inspected it previously. Ravi advises her that it is not his problem because he is not the owner of the table. Advise the parties.
4. Trevor composes music on his computer using a software program called ‘Sibelius’. He sometimes plays music he has composed to his friends before they are released for sale. After Trevor has composed music he sends it to a distributor who sells it in Europe. Trevor plays an unreleased composition to a group of friends including Declan. After hearing this composition, Declan goes home and composes a piece of music that sounds virtually identical to Trevor’s, particularly the chorus. Declan then sends it to a distributor who releases a CD in Europe. It is a huge hit and Declan makes a large amount of money from CD sales.
Trevor is furious and accuses Declan of stealing his composition.
Advise the parties.
5. Clare runs a very successful hairdressing business on Unley Road in Adelaide. It has taken her five years to build up the business. She decides to sell the business and enters into a contract of sale with Maddie. There is a clause in the contract that states that: ‘Clare will not for a period of ten years from the date of this agreement set up any business in Adelaide’. The contract of sale is finalised and Maddie takes over the business. Clare wants to operate another business and decides to open a café on King William Road, Hyde Park. Approximately one year after selling her hairdressing business she opens her new café. A lot of her old customers are now regulars at the new café.
Maddie is outraged and claims that Clare is in breach of her contract for the sale of the hairdressing business.Advise the parties.

Answers
1. Issue 1
Whether there has been a contract between Jennifer and her grandmothers despite the complications of domestic agreements or not?
Rules
Whether a contract has been formed in relation to a domestic agreement is determined through the analysis of the intentions of the parties to the agreement to establish a legally binding relationship. Where there is intention between the parties the domestic subjective or objective the agreement would be a contract which is binding legally. Where there is no intention between the parties the agreement would be deemed as social agreement.
In the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 the court ruled that a person would be deemed to have an intention to bind another party to the contract if a reasonable person would be induced by the expression to get into the contract.
Where there is a domestic relationship it is not presumed that a legally binding relationship exists between the parties unless it is rebutted as it was in the case of Balfour v Balfour [1919] 2 KB 571. In this case it had been held by the court as there was no intention to create a legal relationship between the parties there was no contract.
In the case of Simpkins v Pays [1955] there was a contract between a grandmother and a granddaughter in relation to sharing of profits in a lottery. Through the application of the objective test it had been ruled by the court that where a reasonable person would deem any expression as a legal offer there is intention of creating legally binding relationship.
Application
According to the above discussed rules it can be said that there is a valid agreement between Jennifer and her grandmother which is legally binding on both of them. This is because the relationship between the parties is not a purely domestic relationship. Upon the application of the objective test it can be said that a reasonable person would be induced by the expression made by the grandmother that she would be transferring her house if Jennifer moved to Mount Gambier to get into a contract. In addition the consideration which has been provided in the contract is the moving of Jennifer to Mount Gambier. She has also suffered significant losses for the move as she had to quit her job and she could not find similar jobs in Mount Gambier. This means that it would be unjustified if the contract is treated as a domestic agreement as it would cause immense hardship to Jennifer
Conclusion
Therefore it can be concluded that Jennifer has a legally binding contract with her Grandmother.
2. Issue
Whether there has been a contract between the parties with respect to the postal rule of acceptance and meeting of minds (offer and acceptance)  
Rule
In the case of Hyde v Wrench [1840] EWHC Ch J90 it had been ruled by the court that an acceptance has to be accepted in a way which can be considered as unequivocal. This means that an acceptance would only be completed when the offer has been accepted with the exact terms which it contains. In situation where an additional or a contrary term is accompanied by the acceptance it results in a counter offer. A counter offer has the effect of brining the original offer to an end through the principles of rejection. This means that once a counter offer has been made the original offer can no further be accepted.
In the case there had been sever correspondences and negotiations between the defendant and the plaintiff but the offer was never actually accepted by the plaintiff in a legal manner. Thus the court held that there is no contract between the parties and the claim of the plaintiff had been rejected.
The postal rule of acceptance had been discussed in the case of Adams v Lindsell (1818) 1 B & Ald 681. In this case the plaintiff had posted the letter of acceptance but it had not been received by the defendant. The plaintiff claimed that there is a contract between the parties. The court ruled that as soon as the letter has been posted and had been correctly addressed it accounts for a valid acceptance. It is irrelevant that it has when it has reached the plaintiff. In modern day electronic transactions the acceptance is said to be made as per the Electronic Transactions Act when the mail has reached the mailbox of the offeror.
Application
In the given situation it has been provided that an offer was made by Sanche to Richard for purchasing his car at $60000. A message had been sent by Richard on 3rd February which was not read by Sanche. Thus as per the above discussed rules of postal acceptance the acceptance is made. However the acceptance made by Richard is not unequivocal and therefore account to a counter offer rejecting the initial offer. The acceptance which was made latter and was unequivocal as it complied with the terms of the initial offer would not be a valid acceptance as the initial offer ended as soon as the counter offer had been made via email irrespective of whether it had been read by Sanche or not.
Conclusions
There is no contract between the parties
3. Issue
The issue is to determine the position of the parties based on the principles of agency.
Rule
The provisions in relation to an agency prescribe that in a principal and agent relationship the principal is liable for all the acts committed by the agent during the course of employment. Thus any contract which the agent enters upon into on behalf of the principal with any third party is binding on the principle (Zhou 2014).
In the case of ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242 it had been ruled by the court that even where no authority has been provided by the principal to the agent or where the agent has exceeded the authority provided to him by the principal the principal may still be liable for the actions of the agent. This will take place where the agent had an apparent authority and the third party did not have the knowledge that the agent has exceeded or does not have authority and relies upon such authority to get into a contract
Application
In the given situation it Ravi has been appointed by Kevin to manage the sale of his furniture. This means that there is a principal agent relationship between Kevin and Ravi. However Kevin has only provided authority to Ravi for selling an oak table for no less than $7000. Ravi sells the table to Theresa for $6500 which was outside her authority. Although Theresa was did not know that Kevin was the owner, she cannot make a claim directly from Ravi. This is because Kevin had provided expressed authority to Ravi for selling the oak table. Under the principals of agency Kevin would be liable to the contract which has been entered upon between Ravi and Theresa. Therefore where Theresa wants to return the table because it is not up-to the standards she had accepted she has to make a claim from Kevin as he is the actual owner of the table and Ravi was a mere agent who was acting on behalf of Kevin.
Conclusion
Theresa has to make a claim against Kevin for returning the table and not Ravi
4. Issue
To determine the position of the parties under the Copyright Law
Rule
A Copyright is free and is created as soon as an original work is created by an author. The work need not be registered or published for the purpose of being protected under the provisions of the copyright laws. However copyright is only applicable on those works which are original and have been given effect. An idea of a unique work cannot gain protection under the copyright laws (Joyce et al. 2016).
In Australia the law of copyright is governed by the Copyright Act 1968 (Cth). According to section 31 of the act the creator of music is provided specific copyright in relation to the reproduction of the work, publication of the work, communication of the work to the public and to perform the work in public. According to section 32 of the Act the copyright exists to an original dramatic, literary, artistic or musical work where the author is a qualified person which means a citizen of Australia.
In the famous case of The Beach Boys vs. Chuck Berry (1963) the plaintiff had been provided compensation as the defendant has violated the copyright of the plaintiff by using his unpublished musical work without proper authorization from the plaintiff.
Application
In the given situation it has been provided that Trevor had composed a music using a software. According to the above discussed laws a copyright has been provided to Trevor as soon as the music has been composed by him and therefore Jack has the right to publication and use of such composition all by himself. It has been provided in the scenario that Trevor had played the music before it is given for publication in front of his friends. Declan, As per the facts of the case copied the music and gave it for publication and thus infringed the copyright of Trevor. He made huge profits through the composition. As discussed in the case of Beach Boys vs. Chuck Berry where a copyright is infringed the aggrieved party is entitled to compensation. Here the copyright of Trevor can be said to be infringed as the composition which has been produced by Declan is very identical to what had been composed by Trevor. Even if the work was not copied the identical nature of the work would infringe the copyright of Trevor and make him entitled to compensation.
Conclusion
Declan has to pay Trevor compensation for copyright infringement.
5. Issue
The issue in this case is to determine whether the restraint of trade clause imposed by Maddie on Clare is reasonable or not
On various occasion a restrictive covenant is imposed on an ex-employee for business interest. According to such covenants the employee or any other person is restricted to carry on business activities for a particular period or in a particular field. In order to be effective these covenants have to be on the party on which they have been imposed (Bildfell 2015).
In the case of Buckley v Tutty (1971) 125 CLR 353 at 380 it had been ruled by the court that where an restraint imposed on a party is unreasonable it cannot be enforced by law as it is not in the interest of public welfare to restrict a person unreasonably from earning a livelihood in whatever lawful way chosen by him and also to deprive the public from his services unlawfully.
Even where a person has signed the restraint clause the clause cannot be enforceable merely because it has been signed. Where it is found that the clause is unreasonable the court would not enforce the clause on the parties as provided in the case of Lloyd’s Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505.
Application
In the given situation it has been provided that Maddie has imposed a restraint of tread clause on Clare who has sold her business. It has been provided through the clause that Clare is not allowed to carry on any trade in Adelaide for a period of 10 years. The agreement has been signed by Clare. However she carried on a café which is not at all connected to the hair dressing business in only one here. As per the above discussed rule the clause would not be enforceable even if it has been signed where it is unreasonable in nature. Here to not allow Clare to do any business that to for a period of 10 ten years cannot be justified as reasonable under any situation. If the clause is enforced it would be unreasonably depriving Clare from making a lawful livelihood. This the clause is unreasonable and cannot be enforced
Conclusion
No breach of contract has been committed by Clare as the clause was not reasonable.
References 
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Balfour v Balfour [1919] 2 KB 571
Buckley v Tutty (1971) 125 CLR 353
Lloyd’s Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505.
Copyright Act 1968 (Cth)
Adams v Lindsell (1818) 1 B & Ald 681
ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242
Hyde v Wrench [1840] EWHC Ch J90
Joyce, C., Ochoa, T.T., Carroll, M.W., Leaffer, M.A. and Jaszi, P., 2016. Copyright law (p. 85). Carolina Academic Press.
Zhou, Q., 2014. Limits of mandatory rules in contract law: An example in agency law. N. Ir. Legal Q., 65, p.357.
Bildfell, C., 2015. The Case for Broadening the Ambit of Restraint of Trade and for Focusing on Reasonableness. Alta. L. Rev., 53, p.681.

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