Company And Commercial Law: Capacity

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Company And Commercial Law: Capacity

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Company And Commercial Law: Capacity

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Discuss about the Company and Commercial Law for Capacity.

A contract is a legally binding agreement between two or more persons. A contract derives its binding nature from its elements or essentials. The essentials of a valid contract include; offer, acceptance, consideration, capacity, certainty of terms and intention to create legally binding agreement. All the elements must exist for a contract to have the force of the law such that an innocent party in case a breach occurs can move to court to claim damages or specific performance.
Contract Formation
Whether there was a Contract Between Vanessa and Li Wu and John
In determining whether a contract existed between Vanessa and Li Wu and John, the essential elements for contract formation have to be analysed. The Advertisement put by John is not an offer. It is an invitation to treat. It is Vanessa and Li Wu who made an offer by booking through the website. Their offer is accepted by John and communication of the acceptance is done through email which they receive.
In Partridge v Crittenden[1] , where the defendant through an advertisement in the magazine offered  for sale bramble finches contrary to section 6 of the 1954 Protection of Birds Act. The court of appeal quashed the defendant’s conviction on the grounds that the said advert was an invitation to treat and not an offer for sale. Courts use the literal rule to interpret and determine whether a valid offer has been made or not.
The communication of acceptance has been made by John through mail and therefore, the postal rule as to communication of acceptance is applicable. Communication was deemed to have occurred at the time when the email was received by both Vanessa and Li Wu.
An advert can in certain circumstances amount to an offer. For instance, in the case of Carllil v Carbolic Smoke Ball Company[2], it was held that the advert could be construed as an offer as the plaintiff performed the conditions contained in the advert and any reasonable man could have used the smoke balls and that acceptance of an offer can be through performance or conduct. This scenario is distinguishable from Carllil case above as there was no complete performance of the conditions in the advert. It is an invitation to treat to which they made an offer which John accepted and communicated his acceptance.
Generally, in contracts for commercial purposes, the intention to be bound is presumed to exist. The contract between Vanessa and Li Wu and John is of a commercial nature and therefore, the parties had intention to be bound by the terms of the contract.
Another essential element of a valid contract is the consideration. Consideration refers to a benefit to the offeror or a detriment to the offeree. It is measured through monetary value. Love and affection has been held to amount to consideration. In this case Vanessa and Li Wu both paid the price of $ 80.00, an amount which is considered as the consideration.
Therefore, a legally binding contract existed between the parties as all the elements of a valid and legally enforceable contract existed. The contract was made when Li Wu and Vanessa made a booking in Johns Website and paid the $ 80.00 and John accepting their offer through communication by email. Their signing of the form signified that they agreed to be bound.
Whether John is Liable for Breach of Terms of the Contract
A contractual term can be said to refer to what the parties agreed on during the negotiation of the contract. Terms are either express or implied. An express term is what is contained in the contract document. It is what the parties agreed on. Implied terms however are not contained in the contract document; parties might have not agreed on them but are implied under common law through custom or statute.
John is in breach of both the express and implied terms in the contract. The advert stated that there was a reward of a certificate, a pair of bathers and a bottle of sunshine. The rewards contained in the advert are express terms that might have induced both Vanessa and Li Wu to enter into the contract. John by representing that he was joking by promising a pair of bathers and bottle of sunshine is a breach of an express contractual term.
The court can imply a term into the contract if that term or practice is common in a particular trade. For instance, the contract between John, Vanessa and Li Wu is one related to tour guidance and operation. In this type of contract to provide tour and skating services, there are approved standards required of safety equipment to be used. Tour operators are also required to register and obtain license to operate. The tour operators are required to obey warnings on the safety of a river especially after heavy downpour. These are implied terms that are not contained in a contract and they are included by the court especially where damage occurs. They are common in the practice and contained in the statutes.
 In Hutton v Warren[3], the  court held that where it was a common practice in a particular trade for certain terms to exist, such terms would be implied in any contract in that trade.
John is therefore in breach of the terms of the contract and cannot claim protection from the exclusion clause. John did not take steps to bring to the attention of the parties, the existence of the exclusion clause and therefore cannot seek protection from the same. He is liable for the injuries sustained by Vanessa the signature notwithstanding.
Whether John is Liable for Breach of Statutory Guarantees
Consumer guarantees on the provision of services are provided by part 3-2-1 of the Australian Consumer Law. The first statutory guarantee relates to provision of services with due care and skill. John is in breach of this statutory guarantee as he acted with a lot of carelessness as regards to the safety of both Vanessa and Li Wu. He failed to provide standard safety gears and a failure to adhere to the warning that the river would be unsafe after a heavy down pour.
John is not registered as a tour operator. The authorities therefore did not have the opportunity to interrogate and ascertain his skills, expertise and experience as a tour guide. His skills cannot be therefore ascertained; he is in breach of the statutory guarantee as a result.
There is also a guarantee as to the fitness for purpose. That the service provided or the implements for the provision of the intended services should be fit to achieve the intended results. John used cheap safety gears which could not protect the applicants from incurring injuries and enable them get out of the river unhurt. He is therefore in breach.
While one may not exclude the guarantees contained in the consumer Law, liability for personal injury resulting in death are however exempted under the law. They are categorized as injuries occurring from a sporting activity which require the exertion of physical force. They are however liable if it is established that the implements were of a lower quality. In this case therefore, John is liable for breach of the statutory guarantees and is liable to pay damages and the prayers for breach of contract.
List of Cases

Partridge v Crittenden
Carllil v Carbolic Smoke Ball Company
Hutton v Warren

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