Principles of Business Law Notes BLAW10001
Lecture 1: Nature and Function of Law
• Rules of conduct recognised and enforced by state
• Purpose to achieve justice (fair outcome)
• Developed through:
o State enforcing originally non-legal rules o State developing new regulation
• Classified to allow laws to be manageable and orderly
• Rules of conduct not recognised and enforced by state but rather by moral/religious beliefs, nature or custom
• Works well in small groups but break down in large groups
• Moral and religious beliefs
• Nature
• Custom
o Long usage, peer pressure or convenience
• Elected legislatures (develop legislation) o Commonwealth
o States/ Territories o Local councils
• Courts (develop common law)
• Area of law related to business activities
• Civil Law: Creation and enforcement of private legal rights and duties between individuals
• Contract Law: Private agreements that give rise to legally enforceable rights and duties
• Consumer Protection Law: Legal protections for consumers in dealings with suppliers of goods and services
• Tort Law: Liability for harm wrongfully caused by one person to another or to property
• Agency Law: Use of representative to acquire or discharge legal rights or duties
• Property Law: Acquisition and transfer of private rights in goods and land
• Allows people to plan for future with reasonable certainty
• Lays down rights, duties and powers of members of different classes and groups
• Regulates behaviour by permitting, encouraging, forbidding or discouraging particular activities
• Controls use of force and forbids unauthorised violence
• Creates rights and duties that can be enforced and provides remedies when rights are interfered with or when duties aren’t discharged
Lecture 4: Contract Formation: Creating Legally Binding Contracts
• Legally enforceable agreement between two or more parties
• Creates legal obligations consisting of rights and duties o Discharged by performance
• Failure to perform contract results in a breach of contract o Basis for compensation or action to enforce agreement
• People tend to fulfil contracts due to convenience and to avoid lawsuits allowing parties to rely on agreements for planning
• Principles of contract formation determined by courts
• Capacity
• Agreement with sufficient certainty for all terms needed for workable transaction o Offer and acceptance
• Intention to be legally binding
o Objective approach is taken where court asks if reasonable person would see agreement as intended to be binding
• Consideration
o Both parties receive a benefit
• Contract can only be made by persons with capacity to acquire legal rights and take on legal responsibilities
• Adults of sound mind and artificial persons such as corporations have capacity
• Minors may be bound to pay a reasonable price for goods acquired pursuant to contracts o Necessities
§ Food and transport
o Agreements substantially to their benefit
§ Employment contracts
• Persons with mental disability or are intoxicated etc are bound by agreements reached in lucid periods, but not otherwise
• Minors can avoid contract with continuing obligations before reaching 18 or short time afterwards otherwise they have decided to continue with it so it becomes a permanent enforceable agreement
• Right to enforce contractual obligations
• Contractual obligations only exist between those who have agreed to undertake them (parties to contract)
o Third parties can’t intervene and claim on behalf of someone else o Courts only want to bind people to things they have agreed to
Facts
• Builder owed money to P but was unable to pay
• E and builder agreed builder would work for E and E would discharge builder’s debt by paying P
• E didn’t discharge builder’s debt to pay P Decision
• P wasn’t a party to agreement between E and building so he can’t claim against E
Lecture 8: Vitiating Factors
• Sometimes equity sets contracts aside
• Vitiated contract is invalid
• If contract is vitiated, parties must be restored to their pre-contractual position, reversing any performance made
o Different from valid contract where plaintiff put into position they would’ve been in if contract was performed
o Must be done within reasonable time
• Duress
• Mistake
• Undue influence
• Unconscionable dealing
• Misleading conduct
• Duress exists when one party uses or threatens illegitimate force to obtain other party’s agreement o Only doing it due to coercion. Not voluntarily
o Includes physical, economic harm and illegal actions over their goods (such as refusing to return goods)
• May be directed at party themselves or to members of their family or people close to them
• If illegitimate force is used to get consent, contract can be set aside
Facts
• A coerced B into buying shares by threatening to murder him
• B took these threats seriously Decision
• Contract vitiated due to duress
• Contract could be set aside
Facts
• H agreed to build ship for NOS for fixed price in USD
• USD depreciated so building ship was no longer profitable
• H said it wouldn’t build ship unless NOS paid higher price
• NOS needed tanker urgently and paid higher price Decision
• Contract vitiated due to duress
• Threat to terminate exploited NOS’s weak bargaining position
• Even though duress was established, contract wasn’t set aside as NOS didn’t exercise right to set aside contract in reasonable time
Lecture 11: Agency Law
• A principal can authorise agent to act in their place o Corporations can only act through agents
• Law of agency allows agent to represent principle
o Authorised acts carried out representative on behalf of principal has same effect as if done by principal directly
o Rights and obligations arising from transaction undertaken by agent directly accrue to principal
• Person being represented
• Person who acts as the representative
• Person who agent deals on behalf of principal
• Relationship between principal and agent normally contractual
• Agent requires authority to represent principal
• Express authority
• Implied authority
• Apparent authority
o Appears they have given authority compared to express and implied where they have given authority. Same effect
• Principal expressly authorise agent to act on principal’s behalf
• Can be general or specific
• Usually given orally or in writing
• Must be given in writing when:
o Appointing agent to buy or sell land or business o Appointing agent for more than one year
§ Deed must be executed to grant agent requisite authority if must be given in writing
§ Writing requirement is statutory requirement
Facts
• Kapoor formed company called BPP
• K employing FL to work for company
• When FL requested payment, BPP contested K’s authority to bind BPP
• K wasn’t managing director so K didn’t have authority to enter into contracts Decision
• K had no actual authority as there was no evidence company granting him such authority
• K had apparent authority
• Representation made to third party agent had authority to enter transaction
• K had actual authority to manage relevant aspects of company’s business
• FL induced to enter transaction by representation and relied on it
