7159AFE Principles of Business and Corporations Law

7159AFE Principles of Business and Corporations Law

7159AFE Principles of Business and Corporations Law

Question 1: Is there a valid contract between George and Peaches Pty Ltd?

Issue: It is required to analyse whether the contract was formed between George and Peaches Pty Ltd.

Law:According to law of contracts a contract is said to be the relationship between the parties that leads to creation of an exchange of services at a certain price. Every contract shall have five basic elements for it to be a contract. The contract initiates with an offer that is presented by the offeror and the offeree is on the receiving end. The offer so made should be clear and express and be clear to understand. The offer may either be accepted or rejected. If the same is rejected the contract is not formed. If the contract is accepted an official relationship is established. The contract so formed shall be at a certain price so discussed at the time of entering into the contract. The price is paid by one party in order to make it certain that a contract is entered into by the parties. It established the legality of the contract. The parties to the contract need to be clear regarding the intent of the contract that is being entered into by them. If the contract is social it won’t be enforceable under the law unless mentioned. If the same is commercial then it will be enforceable regardless. The parties to the contract should be of legal capacity when entering into the contract. The capacity of the party is defined to be the mental capacity to understand the contract, the financial status of the contract and the legal age so attained in the eyes of the law. A contract with a minor may be voidable at the option of the other party so involved in the contract. (Corones, 2011)

7159AFE Principles of Business and Corporations Law Application:In the provided case study it may be derived that Peaches Pty Ltd was the offeror in the name of All Day Music. This is because when the company provided a button of Order your music here, it was making an offer to the world. When George pressed the button he had accepted the offer. He was then presented with the set of instructions that was again accepted by him.  The terms of the contract included a membership fee of $200 and a monthly fee of $50 that was paid by George through his credit card. The intent to enter into the contract is said to be official because both the parties came together for the purpose of the contract and had no knowledge of the other before the same. The parties to the contract are observed as being of capacity. The contract so formed was duly expressed and may be classified as a distance selling contract as the parties entered into the contract from a distance without any vocal communication. (Gibson and Fraser, 2007)

Conclusion: It may be concluded that George and Peaches Pty Ltd have entered into a valid contract as it contains all the necessary elements of the commercial contract.

Question 2: Is George able to reconnect to the website without paying the $2,000

Issue:It is to be determined that should George be able to reconnect to the website after having committed a breach of the contract according to the terms.

Law: The contract so entered into by the parties is on the basis of certain terms that are common to all contracts. Such terms may be condition, warranty, innominate terms, exclusion clauses, express terms and implied terms. The condition is considered to be an important part of the contract, as it identifies the purpose of the contract. When performing a contract it is important to identify the purpose of the contract in order to achieve the complete performance. If the condition is not performed the contract becomes invalid. A warranty is regarded as the secondary aspect of the contract. The warranties are important to the contract but not primary to its performance. The warranties if not performed would not result in invalidating the contract. The damaged party may only be able to claim for damages, injunction or specific performance. Sometimes the breach of a term is not certain for its different affect under different situations. These terms are known as innominate terms and are treated as either condition or warranty depending on the situation. The exclusion clauses restrict the liabilities of breach that the party may or may not commit while performing the contract. An express term is considered to be the one that is clearly expressed at the time of entering into the contract. The implied terms are not included in the contract but are still applicable to the contract through customs, previous dealings and laws. (Harris, 2013)

Application: George while accepting the terms and conditions of the contract had come across the terms stating that All Day Music has the right to suspend the download rights and access of the website at any time. It also stated that it may be able to charge for the unpaid services or such other reason as deemed fit by the company. If this happens the subsequent re-connection may lead to incurring a fee. The time so spent while suspension of such rights the charges will be liable unless the subscriber notifies the company regarding a dispute over this issue. When George had pressed the button stating I Accept, it would be stated that he had accepted the terms and conditions after carefully reading the same.  Therefore, when All Day Music had revoked the right of access by George it was done because of termination of his service. The reconnection as mentioned by the company in the letter would cost $2000 if the same is to be renewed. This was right because the same terms had been agreed to under the contract by him. (Monahan and Carr-Gregg, 2007)

Conclusion:It may be said that the termination and the fees so charged by the company for the unfair use of the songs so downloaded may be a valid and the reconnection costs may be charged as mentioned in the contract.

Question 3: Can George seek compensation for the ongoing subscription payments of $200 and the loss of revenue totalling $40,000 resulting from the suspension of his membership?

Issue: It is required to be determined whether George be able to claim for the compensation for the charge of $200 in subscriptions. Also, to determine whether he would be able to claim the loss of revenue from suspension of the membership.

Law: The terms and conditions so determined in the contract, when signed by the parties to the contract are binding on each party. It is essential that the parties have read and agreed to the contract knowing the consequence of the performance and the breach of the contract. The signing of the contract demonstrates that the parties have the common intention and are willing to abide by the contract so entered into by each party. The terms of contract may be in any form such as express or implied. In case of exclusion clauses the parties so adding the clause should make sure that the same is brought to the other parties notice in order for it to be fully disclosed and in information of the party before entering into the contract. (Paterson, 2011)

Application: In the provided case study the contract so entered into by the parties is for the purchase of the songs. It is clearly stated under the terms and conditions of the contract that the songs are to be downloaded for the domestic and personal use. It is provided that George had used the music for marketing the business and made the songs available at $10 per year with two songs a week to the client on subscription to the website. It may be determined that the use of music had been for the professional purposes and not domestic. This would be considered as a breach of contract for which the contract was entered into. The company thereby, terminated the contract as the right persisted under the contract. Also, the reconnection could be charged by the company. As George had breached the contract by misusing the product or service so provided under the contract he may not be able to claim the damages so suffered from the inability to use the songs illegally. (Gibson and Fraser, 2007)

Conclusion:It may be concluded that since George had breached the contract the charge of reconnection is fair and informed under the contract. Also, George will be unable to claim the loss so suffered costing $40,000 as it would not be for an act that was forbidden under the contract.

Question 4: Is there any action that George can take regarding the false testimonials on the Facebook page of All Day Music?

Issue: It is required to determine whether George will be able to claim the damages for the misleading testimonials so posted on Facebook page of All Day Music.

Law: It is required to understand when a contract is entered into, the parties make certain statements that may or may not be part of the main contract. The term so discussed before the contract are known to be representations that the parties make while negotiating or presenting the basis or purpose of the contract. The representations so made if they lead to making a decision to enter into the contract form part of the contract and if not then it’ll only be considered as a misrepresentation. The misrepresentation are regarded to be terms that lead the parties to believe that the contract is being entered into on complete honesty but in reality the misrepresentation is not as accurate as portrayed. If the same leads the party to believe that it’ll be as represented and enter into the contract then it will be a breach of contract condition and if not then it will merely be a misrepresented term made before entering into the contract. (Corones, 2011)

Application:In the given case study it is mentioned that the George before entering into the contract with All Day Music had visited their Facebook page in order to gain insight of the company’s working. The company had posted fake testimonials on the page in order to lure in the customers. However, it was found out that the actual customers had posted unhappy testimonials. George had entered into the contract with the company on the basis of testimonials and reviews posted on the page. Thereby, the testimonials were misrepresentations and not a term because the same were made by the fictional customers and not the actual customers. Such a misrepresentation will only be misrepresentation for which damages may be claimed as the same led George to enter into the contract. (Harris, 2013)

Conclusion:George may be able to claim for the damages so suffered from entering into the contract derived on a misrepresentation of false testimonials. The contract may not be breached as the same was not the primary part of the contract nor was it discussed in the contract between the parties.  


Corones, S. (2011). The Australian consumer law. Rozelle, N.S.W.: Thomson Reuters (Professional) Australia.

Gibson, A. and Fraser, D. (2007). Business law. Frenchs Forest, N.S.W.: Pearson/Prentice Hall.

Harris, J. (2013). Australian corporate law. Chatswood: Butterworths.

Monahan, G. and Carr-Gregg, S. (2007). Essential contract law. New York, NY: Routledge-Cavendish.

Paterson, J. (2011). Unfair contract terms law in Australia. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia.