1

QUESTION 1

Part A

Soo burger restaurant

Issue

Soo burger offered a Mazda-cx-9s as gift to promote their burger sale; the condition was to
collect 50 tokens attached to wrapper of double decker emu burger. Mickey morrow a customer
who was quite interested to join the promotion, he joined the promotion and buy 50 burgers and
ate them. The activity caused him stomach disorder, which took him to hospital. On the other
hand another customer Brett vulture took some tokens from rubbish, he collected 100 tokens and
got golden scratch tickets in which he found cars. Now the contractual context between mickey,
soo burger and Brett is desired to be explored, if they have an enforceable contract or not. The
status of the promotional activity as there was an error found in printing of golden scratch tickets
in which every second ticket contained the car. Now the issue is if mickey and Brett can file suit
against soo burger.

Rule

To make a contract legally binding and legal enforceable, it should contain all elements of a
contract. Offer is the first element, which should contain the terms of the contract and
consideration. The offer to win a car had been made in consideration of wrappers collected as in
case of chapple vs. nestle 1960, and acceptance by the customers had made when they took part
in promotional activity. the activity of the promotion comes under bait trading, under section 32
(1) (2) consumer act 2010, an individual or company should not offer an item as gift, prize for
which they have no intention to provide or for which they have no capacity to provide. Because
of violation, a pecuniary penalty may be imposed. Section 32(3), if an individual failed to fulfill
the section 32(2) due to some uncontrollable event or omission or act of someone else then
section 32(2) will not be applied. In addition to that, company could include an exclusion clause
to decrease their liability or add some terms and conditions. However in this case only tokens
and golden ticket was required so the terms of the offer met by mickey and Brett as in case of
carlill vs. carbolic smoke ball company 1893. In the case of chapple vs. nestle 1960 the company
offered shilling record in consideration of only wrappers of chocolate to enhance t the sale of
chocolate the offer had been made however the consideration level and rights of shilling were
challenged in court where court held that the consideration of wrappers was sufficient. Here the
consideration of burger wrapper was sufficient. In case of carlill vs. carbolic smoke ball
company, the offer to contact influenza as result of using smoke ball was challenged and offered
to public, no exclusion clause had been made part of promotion. A woman carlill contacted
influenza after consuming smoke balls so she was held in court to be entitled to gift offered by
the company. She was woman from public and did not tell company about the acceptance of
challenge, court held in promotional activities where prize is offered to public, there is no need to
 2

tell the company about acceptance of the offer. Mickey and Brett listened about the offer,
accepted it as they collected the tokens, scratch the golden ticket and found a car. However due
to a printing error company cancelled the offer and announced that as void. Under section 32, an
individual is given relaxation for an uncontrollable event, which caused cancelation of a
promotional offer, but no relaxation for company had been made. So company may be required
to pay damages to mickey and Brett.

Analysis

Mickey and Brett followed the instructions made by the company to achieve a car gift; the offer
terms had been met by both but due to an uncontrollable error, the offer was cancelled. Under the
rules, companies had not been given waiver in case of error due to someone else’s mistake
however the car prize given to an individual who came first, showed company had intention to
give the prize. The provision of prize shows good intention and no fake promotion to mislead the
public however due to negligence of company mickey suffered loss of money, time and the
company will should not cover health, which should be made good by the company however, the
damages for health disruption. Loss to health was caused by mickey’s own carelessness for
which company should not be held liable. However, the damages for loss of money spent upon
purchase of burgers and the company should pay time wasted to participate in promotion.

Conclusion

The act of mickey and Brett was an act of acceptance to the offer of promotional activity to win a
prize. The offer was valid as shown by the company’s actions and mickey and Brett were serious
about the promotional activity participation. The collection of token and golden scratch ticket to
win a car was consideration of the prize. The contractual terms were met, however due to
uncontrollably event of misprinting caused loss to parties and other customers hence company is
oblige to make good of the damages suffered by the public due to their negligence. The
negligence in distribution of erred tickets was due to company’s management who should act
responsibility as it damaged the repute of company and caused disruption to mickey and Brett.

Question 2

Part A

Issue

Sparkling pty limited liability arised due to the exceeding from authority, a managing director
Sarah who was not allowed to sign any contract above the limit of $20000. To enter into
contract of more than $20000 she was oblige to take permission from higher management.
However, the higher management was not informed about a loan contract made with bank of
$30000. When the agreement came into company’s notice, sparkling limited refused to make
 3

repayment of the loan. However bank file a sue against sparkling pty limited. It is desired to
explore if sparkling pty ltd can refuse repayment of long under the law or if bank can recover the
loan value. What can be the outcome of the case?

Rule

Section 128-129 corporation act 2001, the company’s liabilities towards its representative
activities and principles of representative are explained. Section 129 further explains the
activities of an individual acting on behalf of the company. Section 129 (3) (c) explained the
issues regarding a representative acting on behalf of the company. Under section 129(3), (c) an
individual acting on behalf of the company can exercise the powers delegated to him on behalf of
the company. As in case of brick and pipe industries vs. accidental life nominee pty ltd, and
freeman and Lockyer vs. Buckhurst park properties, 1964, in these two cases the problem arised
due to the agreement made by the managing directors of the company. The decision of the court
was that company should be liable for the activities of their employees as they appointed them as
their representative. Company has liability to make payments for liabilities incurred by their
employees on their behalf. The authority to enter into contract was given to them by the
company and the appointment method and terms of employment does not constitute any relieve
from the liability to company. However here a doubt about the authority of an individual’s
capacity is, present, the section 128(4), 129, 129(3) will not be applied.

Application

In the present case where the authority to represent the company was delegated to Sarah, she was
acting as managing director; such a position may let anyone to assume that they have authority to
enter into contract with bank. The limits to enter into contract and terms decided between
company and employee are always confidential matter. Therefore, it is an obvious assumption
which bank took while entering into contract that Sarah has authority to make a binding
agreement on behalf of the company. Sparkling pty limited is liable for the payment of loan as its
employee on behalf of the company raised the loan.

Conclusion

Sparkling pty ltd appoint Sarah to ct on behalf of the company and other stakeholders assume her
as representative of company due to the authority delegated to her to act as managing director.
Now bank can recover whole amount of loan, principle and interest. The authority to act within
the terms of the employment was breached by Sarah and the company may hold Sarah liable
internally but to bank sparkling pty ltd is liable.

B What should be the results of the case?

Issue
 4

Sparkling pty limited liability arised due to the exceeding from authority, a managing director
Sarah who was not allowed to sign any contract above the limit of $20000. To enter into
contract of more than $20000 she was oblige to take permission from higher management.
However, the higher management was not informed about a loan contract made with bank of
$30000. When the agreement came into company’s notice, sparkling limited refused to make
repayment of the loan. However bank file a sue against sparkling pty limited. It is required to
explore if sparkling pty ltd can refuse repayment of long under the law or if bank can recover the
loan value. What should be the outcome of the case?

Rule

Under corporation act 2001 section 128-129 as mentioned above the representative of the
company can bound the company by the contract made by them. Sarah breached her duty to act
in best interest of the company as she violate the terms of the contract and cause disruption to
company. Under the director’s duties as mentioned in corporation act 2001, Sarah should be
held liable for breach of her duty. She also did not act with due care and diligently as the sue file
by the bank will damage the repute of company, the act lead Sarah.

Application

Externally as per the rules of representative of company and company’s liability towards his or
her acts constitute that sparkling pty ltd is responsible to make payment of the loan value
however the internally Sarah should be held liable. Sarah should be penalized for breach of her
authority.

Conclusion

Sparkling pty ltd should make full payment of loan to bank as their representative entered into
contract on company behalf. However internally Sarah’s act may be called into question and she
can be penalized.

Issue

If Sarah acquired the loan for the refurbishment of the company shops what will be the
consequences of the case.

Rule

The corporation act 2001 section 182, 183 require directors to act in best interest of the
organisation. if the loan was used for refurbishment then the interests of the company, it may
cause reduction in the penalty charged to her by the company but as she breached her duty to act
diligently and with care, she may be penalized.
 5

Application

Under the corporation act 2001 directors’ duties, she had breached her employment contract
term, which may lead her to loss her employment, however the penalty level may be reduced due
to positive intention to raise loan.

Conclusion

The penalty charge will be reduced due to the intention of the director

Issue

If the loan provider knew the capacity of Sarah to enter into contract then what will be the
consequences.

Rule

As mentioned above a doubt about the authority of an individual’s capacity is, present, the
section 128(4), 129, 129(3) will not be applied. The law of representative and company liability
towards acts of representative will not be applicable and sparkling pty ltd will not be liable to
make payment of loan

Application

In such a case, sparkling pty ltd will not be liable to make payment to the bank

Conclusion

Sparkling pty limited can claim nonpayment on basis of the information available to bank about
Sara’s capacity to enter into contract.

Works Cited
Carlill v Carbolic Smoke Ball Co [1893]. (2019). webstroke,
https://webstroke.co.uk/law/cases/carlill-v-carbolic-smoke-ball-co-1893.

Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 97. (2019). Webstroke Law,
https://webstroke.co.uk/law/cases/chappel-v-nestle-1960.

Freeman and Lockyer v Buckhurst Park Properties [1964]. (December 2014). webstroke,
https://webstroke.co.uk/law/cases/freeman