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the content covered in Weeks 4 and 5 (Contract law).
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BUSINESS LAW 2
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Advice to Dorothy
Dorothy does not have a binding contract with Brian. A contract is a written or verbal
agreement which meets particular conditions thereby making it enforceable at law (DiMatteo,
2013). The conditions are as follows: (i) offer and acceptance; (ii) each term of the offer has
to be agreed upon; (iii) each party has to intend to be legally bound to the contract; and (iv)
there has to be consideration – a valuable something has to be exchanged during the
BUSINESS LAW 3
transaction (LaMance, 2011). Dorothy and Brian did not agree upon all of the terms of the
contract. Dorothy wanted Brian to pay cash of $1,500,000 in one lump sum on settlement but
Brian insisted on paying the amount in 4 instalments. However, Dorothy has a binding
contract with Lionel since they both agreed upon the terms of the offer, that is, $1,750,000 in
cash for the family home. Moreover, with Lionel, there was offer and acceptance but with
Brian, there was no offer and acceptance.
Advice to Rachel
Although Rachel denies that Fang’s temper was ever a term of the contract, it in fact
was. The promise that Rachel made to Emily – that Fang is even tempered – is binding. If the
parties in a contract exchange promises, in contract law, every promise is a consideration for
the other promise. Failing to fulfil a promise in a contract is an infringement of the contract,
for which the other party might take legal action for damages and/or performance
(Weitzenbock, 2012; Mathews, 2015). When Rachel promised Emily that Fang is even
tempered, this promise is binding and Emily may sue her since Fang turned out not to be even
Phillip cannot sue the ferry company
The ferry company had an Own Risk clause and this clause applies to the contractual
relationship between the Ferry Company and Phillip. This clause is effective (Howard, 2015).
It relieves the Ferry Company from liability for negligence navigation by its captain that
resulted in the ferry colliding with an underwater obstruction marked by a warning buoy. If
there was no Own Risk clause, then the Ferry Company perhaps would have been liable for
Phillip’s damages in this case (Clarke & Yates, 2013).
BUSINESS LAW 4
Clarke, M. A., & Yates, D. (2013). Contracts of carriage by land and air. American Business
Law Journal, 34(2), 67-75.
DiMatteo, L. A. (2013). Fifty Years of Contract Law Scholarship in the American Business
Law Journal. American Business Law Journal, 50(1), 105-158.