Business Law Case Study on Module-1

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Module-1 CASE STUDY Margaret owned an antique store that specialized 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.Answer -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 ofNash 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.Module-1 CASE STUDY

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 agarden 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, Richards father tells him that he cant 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.Answer 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 ofBalfour 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)Module-1 CASE STUDY

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?Answer 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 ofHarris 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.


Bruce, while he was so drunk that he didnt know what he was doing, bid successfully at an auction for the purchase of a house. It was clear to the auctioneer that Bruce didnt 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 assignmentAnswer 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 ofBlomley 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.(,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.Module-1Case based on Quasi contracts A minor Naughty who had enough assets to fulfill his obligations bought eatables to consume as lunch from a mess and refused to pay on the basis of contention that being a minor he was not bound towards any liability , mess owner is finding himself cheated and is asking you for an advice in this case, explain his rights to him. Solution Naughty is indebted towards the payment for the eatables he had consumed under the light of Indian contract act 1872. more precisely the case is covered under the provision 68 of the said act . There exist the Quasi contract between the mess owner and Naughty , as Naughty has consumed the eatables in the nature of necessity (i.e food).




Vishwanath agrees to print a book for Balu for a consideration. The book contained certain defamatory and derogatory matters against some important person. But Vishwanath never knew about it. After printing a part of the book he discovered that it contained such libelous matter. Can Vishwanath lawfully refuse to print the remaining part of the book and claim for the work done by him?

Facts of the case:

1)Vishwanath agrees to print a book for Balu for a consideration.

2)Vishwanath came to know that the book contained certain defamatory and derogatory matters against some important person.

3) Vishwanath came to know about it after printing a part of the book that it contained certain defamatory and derogatory matters.


The above case is an example of consideration. Vishwanath agrees to print the book for Balu for consideration. He will discover that the book contains certain defamatory and derogatory matters about an important person which may affect hisreputation in general public.

InterpretationThis case has two interpretations,

1. As per the contract Vishwanath can complete the work of printing the book as per the direction of Balu and can claim the amount as per the contractual obligation.

The second interpretation would be,

2. Since the book contains certain defamatory and derogatory matters against some important person it may lead to legal complication and the affected party may take legal recourse by initiating both criminal and civil action for the publication of the book, in such an event Vishwanath will also be liable and answerable for the actions committed by Balu. If the matter to be published in the book is defamatory and derogatory damaging the reputation of important person in general public, then the person who prints the book knowing well that such defamatory and derogatory matters affect the reputation of a person, the person who prints also will be liable for punishment under the criminal law and also liable to pay damages to the affected person for the damage caused along with the person who publishes.In the view of above Vishwanath can lawfully refuse to print the remaining part of the book in order to escape the liability and can claim the amount for the work done by him from Balu lawfully.


Though Vishwanath agreed to print the book for Balu for the consideration and acontractual obligation cast upon vishwanath to complete the work but the work which is agreed by Vishwanath , if unlawful and opposed to public policy and the law of land does not permit, then the contractual agreement itself is null and void and Vishwanath is at liberty to cancel the contract and claim the amount for the work done.


CASE STUDY COERCION The exact medication and dosage is uncertain in this case but an assumption will be made regarding both. Mr. Jones, a 70-year-old man, had been to his doctors office complaining of dizziness and lightheadedness for several days after taking his new prescription of diltiazem hydrochloride, 180-mg once a day. Mr. Jones told his doctor, Dr. Smith, that his lightheadedness had become so severe that he collapsed hitting his head in the process. After this incident Mr. Jones discontinued taking his new prescription thinking it was responsible for his lightheadedness. Dr. Smith ordered a twelve-lead electrocardiogram (EKG) and diagnosed Mr. Jones as having third-degree atrioventricular (AV) block, a potentially life-threatening bradycardia. Third-degree AV block is not a stable pacemaker, and episodes of ventricular asystole are common (American Heart Association, 1994, p. 3-15). Mr. Jones was admitted to the telemetry unit of a metropolitan teaching hospital for monitoring and tests. One day later Tracy, the night shift nurse, received report that Mr. Jones was diagnosed with third-degree AV block. However, Tracy did not recognize Mr. Jones cardiac rhythm as being third-degree AV block. A subsequent twelve-lead EKG revealed Mr. Jones as having a right bundle branch block (RBBB), a condition that does not indicate treatment. At that time, Mr. Jones heart rate was seventy to eighty beats per minute with an underlying sinus rhythm: not third-degree AV block. Curiously, Tracy asked Mr. Jones why he had been admitted and diagnosed with third-degree AV block; so, Mr. Jones told his story leading up to his doctors appointment. Because Mr. Jones was hemodynamically stable, Tracy told Mr. Jones that his heart was working fine other than some minor abnormalities in his heart rhythm. Later, Dr. Brown, the cardiologist on call, sat down with Tracy and explained that Mr. Jones third-degree AV block was temporarily induced by his medication. Dr. Brown also said Mr. Jones RBBB, although benign in itself, made him extremely susceptible to the medications adverse effects. That morning Mr. Jones, feeling well and no longer in third-degree heart block, told his doctor he wanted to go home. On the contrary, Dr. Smith insisted he must stay to have a permanent pace maker inserted in his chest to counter the effects of diltiazem. Upon hearing Dr. Smiths plans, Mr. Jones refused to have the pacemaker. But Dr. Smith threatened to inform the State License Bureau that Mr. Jones was unfit to drive if he did not agree to have the pacemaker. Dr. Smith stated that Mr. Jones would be a danger to others if he were to pass out and loose control of his truck due to the diltiazem; he gave no reason why Mr. Jones mus...


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