Title: Business Corporation Law

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Title: Business Corporation Law

Question A

  • Is there an offer and acceptance of the offer in the case?

  • Does Raj accept the offer by ticking on terms and conditions online?

  • Did CSR forfeit their offer extended to Raj?

  • Is there validity of formation of contract between Raj and CSR?

  • Did CSR breach the contract?

Carlill vs Carbonic Smoke Ball Co [1893]1 QB 256-– Intention of creating legal relation, offer and acceptance


Any sane person can enter into contract except minors, some felons and people with unsound mind the contract has to involve two people or parties. The parties engaging in the contract have to agree on the offer that is presented by one of them and consequently accepted by the other party1. Moreover, something containing value has to be exchanged for another thing that has value. This is what is referred to as consideration. The parties have to gain from the contract. This entails goods, services, or a promise to exchange the items2. A contract cannot exist when there is no offer. The fundamental rule is one party makes an offer and the other party to accept it. A contract can be orally or in writing. A contract that is valid has to be out of free will and not coercion. It is should be mutual and well-articulated across all the parties involved. The offer can be withdrawn as long as the other party has not accepted it3.

Raj follows the due process online and ticks the requirement stating that he has to read, understand and agree to the terms and conditions in the document. Unfortunately Raj does not bother to read where one of the terms explains the risky nature of skiing. Coldham Ski Resort absolves itself from any harm caused to guest in any manner even that caused by negligence of the resort. Raj comes at the resort but ignores the section where novice skiers are being taught. Majority of those learning are old people and children. He goes to the experienced side where experienced skiers are using slopes to whiz about. He does not bother to attend the skiing lessons. He straps himself on a skis and get into a chair lift at it performs its cycle of rotation at the bottom side of the hill. As the lift travels on to the top of the hill, Raj makes a clumsy attempt copying the other skiers. A number of rubbish bins have been left close to the ski left exit by CSR. Raj crashes into them and tears his ligament in the knee. The staff at the resort takes him to their Medical centre where his knee is bandaged and he is advised to go back to Melbourne. The Medical Centre invoices him a medical bill of $500. He remains of crushes for twenty weeks during this time is unable to go to work. He incurs more medical expenses amounting to $5000.

In Carlill vs Carbonic Smoke Ball Co [1893]1 QB 256 in order for a transaction to amount to a contract there must be an intention to be bound. Carbon Smoke Ball Company offered a reward of £100 to anyone who contracted influenza after using the ball three times every day for a fortnight in accordance with the supplied directions. Mrs. Carlill used the smoke balls according to instruction and ended up catching flu. She claimed the reward of £100 from the company. The Court of Appeal determined That Mrs. Carlill was entitled to the reward since the advert amounted to an offer of unilateral contract that she has accepted through following the directions specified by the company. The court ruled against all arguments presented by the defendant. Raj created a legal binding contract online and paying the required amount of $600. CSR offered a holiday package of skiing that Raj successful applied.

A contract exists between Raj and Coldham Skiing Resort where the skiing package is the items of value. Raj is exchanging this package for his money. Raj is an adult of sound mind who agrees to the terms of the contract without coercion. Coldham Skiing Resort is providing a holiday skiing package that Raj is interested in. If CSR failed to provide the services they promised in document that Raj signed, it would have been a breach of contract and Raj can sue for compensation. Raj was willing to enter into the contract with CSR and the resort was willing to provide the services that they promised on their online advertisement that Raj used to reach them. The receipt offered to Raj whether online or in person is a confirmation of an existence of a contract between Coldham Skiing Resort.


There is validity of formation of a contract between Raj and CSR.

Question B

Is the exclusion clause valid in this case?

Can the defendant use the exclusion clause in his defense?

Can Raj be successful in a negligence claim against CSR?

Raj has to prove has to prove the element of duty of care, breach and damage in order for a negligence claim to succeed.

Donoghue v Stevenson case can be applied that calls for foreseeable injury to Raj as he goes for the skiing attempts. CSR failed to provide a safe environment for the skiers by leaving rubbish bins of the exit way. The resort should have foreseen cases of such injuries to skiers and ensured all the places are clear of rubbish bins. Raj tore his knee ligament due to the negligence of the resort’s staff. They failed to ensure that the environment was safe.

Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163-Raj has to show that the exclusion clause does not apply as part of the holiday package offer. The inclusion of the clause has to be emphasized before the offer is accepted. Raj did not even bother to read the exclusion claim during application.

L’Estrange v F Graucob [1934] 2 KB 294, Court of Appeal (UK)-validity of exclusion claim


A negligence of legal duty involves elements such as duty, breach, and resultant damage. For any claim of negligence to arise, it has to be demonstrated that the defendant owed the plaintiff a duty of care. A breach entails failing to abide by the needed duty of care. Damages require that some elements of real ascertainable damage were as a result of negligence.4 Negligence is inability to exercise care that a reasonably prudent person would in the same circumstances. It has to be established that the defendant owed the plaintiff a duty of care. Duty of care is conducting oneself self in a way that a reasonable person would have acted. The court looks at the actions by the defendant and tries to determine whether a reasonable individual would have acted the way the defendant acted. If the behaviour by the defendant matches the behavior of a reasonable man then the defendant has automatically fulfilled his duty of care5. If the actions by the defendant fall below what a court establishes the actions of a reasonable man would have been then the defendant would have breached the duty of care. Once the existence of duty of care has been established, it has to be determined that the defendant breached his duty6. A defendant can breach the duty of care by acting in a certain manner or failing to act in a certain manner. Once the duty of care has been demonstrated and defendant breached his duty of care, it has to be proved that the actual as well as proximate cause of the harm to the plaintiff. Finally, it has to be proved that the plaintiff suffered harm due to the breach of conduct by the defendant7. If the plaintiff has not suffered any harm, he cannot sue for negligence. In Negligence the plaintiff has the burden of proof. The plaintiff has to prove the defendant did not act as a reasonable person would have done in the circumstances.

Raj does not bother to read the document and one of the terms excludes Oldham Skiing Resort from any liability in case of any harm caused to guests due to their resort’s negligence. The clause emphasizes the risky nature of skiing. When he goes to the skiing resort, Raj does not go through skiing lessons since he wants to appear cool. Unfortunately he is involved in an accident tearing a ligament on his knee. The accident is caused by the dust bin left on the ski lift exit by CSR. He is charged $500 for being bandaged at the resort medical centre. CSR should have foreseen such injuries and tried to prevent them in advance.

By ticking at the end of the document agreeing to the terms and conditions of the package does not mean that Raj read and understood everything since the document is in print and not written by him and the company. The validity of the exclusion clause is in contention. Raj was not aware of its existence since he did not read the document. He was excited to have the holiday package and enjoy his winter holiday. Coldham Ski Resort should have emphasized the importance of the exclusion clause by telephoning Raj or rejecting to receive his money until he had read and understood the terms and conditions on the document before ticking at the end agreeing to the terms. CSR cannot absolve themselves from liability using the exclusion clause while they did not do anything in their power to make sure that the plaintiff was aware of the exclusion clause and its consequences. In the case of Thornton vs. Shoe Lane Parking Ltd8 the plaintiff entered the multistory car park of the defendant and obtained a ticket from a machine. The ticket had some conditions of issue found inside the premises. The plaintiff went into the car park and suffered personal injury due to fault by Shoe Lane Parking Ltd. The defendant denied liability following the terms of an exclusion clause displayed on a pillar within the car park. The court established that the exclusion clause was not part of the contract and hence did not offer any form of protection to the defendant from liability. The court argued that no sufficient notice had been given before concluding the contract. In the same manner, Raj has a right to sue for damages since he was not aware of the exclusion clause. He was more interested in the skiing package. The company should have been stricter in admitting people at the resort. It is important to learn about an individual skiing experience and first-timers should not be left unsupervised despite how they feel about the skiing lessons. Skiing lessons should have been a must for anyone without skiing experience.

In L’Estrange vs. F Graucob9 the plaintiff entered into contract for buying a cigarette vending machine. The contract was spelt out in a printed document that the plaintiff signed. However, the machine did not work. The plaintiff sued for the breach of an implied warranty that the product was fit for its purpose. The defendant sighted the exclusion clause within the contract that excluded such implied warranties. The plaintiff did not know that the contract he had signed contained the exclusion clause. The clause was in very small print but quite legible. The Plaintiff it was determined by the court was not bound by the exclusion clause since he did not know it existed in the printed document and the defendant did not in any way to notify the plaintiff of the existence of exclusion clause. Raj did not realize that the exclusion clause existed and the defendant did not notify him of the importance of the exclusion clause. The resort had dust bins on the skiing exit while it is in charge of the entire place and has to provide exemplary service. More effort should be done to inform the skiers of the existence of exclusion clause and emphasize its importance.

In Donoghue v Stevenson10 the plaintiff went to a café in Scotland where a friend purchased a bottle of ginger-beer for her. The bottle was opaque and sealed hence obscuring any effort to inspect the contents in the bottle. As Mrs. Donoghue poured herself another drink a decomposed snail fell from the bottle. Mrs. Donoghue claimed that she suffered from nervous shock and gastroenteritis. She sued the manufacturers of the beer for negligence. The court established that the manufacturers of the products owed a duty of care to consumers in the course of preparation of the product11. Raj tore his knee ligament when rammed into rubbish bins that have been placed in the ski lift exit. The rubbish bins had been left there by the staff of Coldham Skiing Resort. The resort owed Raj a duty of care. By providing skiing holiday packages CSR had to ensure the skiing environment is ideal and there are no objects that cause accidents. The resort breached their duty of care by leaving rubbish bins on the ski lift exit. Without these rubbish bins on the way, Raj would not have suffered bodily harm or injury12. Raj incurred losses and medical expenses as a result of the injury to his knee ligament. He is charged $500 in the medical centre and spends a further $5000 on medical expenses. He does not go to work for 20 weeks hence losing the wages that he was earning. The exclusion clause is not valid considering the precedents that have been reviewed.


The exclusion clause is not valid and Raj can succeed in a negligence claim against CSR.

Question C

The quantum of damages will involve several expenses that Raj incurred. Raj was billed $500 by the medical centre at the resort. He further spent $5000 on medical expenses following a knee ligament tear. He remained on crutches for twenty weeks and hence was unable to resume work at MCG. Fortunately his studies were not interrupted. He will be refunded the money he paid for the holiday package of $600. He has to be paid the money he will lose while recuperating. He works for 15 hours per week at a rate of $18.1 per hour.

Total hours to be lost 20×15 = 300 hours

Total amount of money to be lost 300×18.1 = $5430

Quantum damages

Amount ($)

Medical centre charges

Resort package

Medical expenses

Work lost

Total amount

The quantum damages will be $15,530

Is there a valid contract between Jesse and Raj?

Is there acceptance of the offer to Jesse that legally binding?

Is Jesse responsible for the money lost?

Will Raj succeed with a claim against Jesse?

Using Harvey vs. Facey precedent, Raj has to prove the existence of an offer that is legally binding. Unfortunately for him, there is no evidence of acceptance of the offer by Jesse in their case.


Raj is not sure how to invest his payout. He understands that the mother of his fellow student runs a financial advice firm known as Shark Financial. He seeks advice from the mother of the student as a friend of his son. Jesse wonders where a student like Jesse has found money to invest. Jesse advises that a student can invest his millions through buying shares in Shady Ltd. Raj goes ahead to buy shares in Shady and within a matter of weeks the company goes into liquidation and he realizes that he has lost his entire fortune.

It is not possible for Raj to have a successful claim against Raj. Jesse provided information as a suggestion and not professional advice. There is not contract that exist between Jesse and Raj. For a contract to exist there must be the consent from the two parties and exchange of something valuable13. Raj wanted free advice from Jesse on where best to invest his money. There must have been terms and conditions binding Raj and Jesse in the contract. There is no breach of conduct on the part of Jesse since Raj has the responsibility to do his own personal investigation on the credibility of information provided to him14. In Harvey vs. Facey, it was noted that in order to amount to an offer it must be demonstrated that the offeror had the intention of being bound15. The Privy Council observed that there was no contract between the two parties because Facey had not directly responded to the question asked by Facey. Harvey had sent a telegram asking about the lowest price of Bumber Ball pen. Facey quoted the lowest price at £900. Harvey agreed to buy the pens at that price but added another question that Facey did not respond to.

For any successful claim by Raj to be filed against Jesse there must be a valid contract between the two parties. An offer has to be present that is accepted by the other party. There must be a consideration in place, that is, there must be something valuable that is being exchanged16. The parties involved in the contract have to be of sound mind and adults. The contract has to be entered into without coercion of force but willingness of the parties involved.

Jesse does not owe Raj duty of care. Raj suffered losses from his own negligence and carelessness. A contract has to be accepted by both parties. There is no indication that Jesse accepted the offer to provide advice to Raj. Jesse is not responsible for the liquidation of Shady. Shark Financial can provide financial advice but it is not responsible for actions happening in the other company. Jesse is not bound by any contract to provide financial advice services to Raj17. In the first place Jesse did not believe that Raj did not have the money to invest.


There is little or no probability that Raj will succeed in claim that he files against Jesse in a court of law.

1 Feinman, J., 2010, Law 101. New York: Oxford University Press

2 Deakin, S., Angus J., and Markesinis, B., 2003, Markesinis and Deakin’s Tort Law, Oxford University Press.

3 McKendrick, E., 2015, Contract Law, Palgrave Macmillan, Melbourne

4 O’Sullivan, J.A., & Hilliard, J. 2014, The Law of Contract, Oxford University Press

5 Steven, E., & Lazar, E., 2008, Torts, Aspen Publishers Online, London.

6 O’Sullivan, J.A., & Hilliard, J. 2014, The Law of Contract, Oxford University Press

7 Fleming, The Law of Torts, 9th ed at 24.

8 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163; [1971] 1 Lloyd’s Rep 289; [1971] 2 WLR 585; [1971] 1 LLR 289; [1970] EWCA Civ 2; [1971] RTR 79; [1971] 1 All ER 686

L’Estrange v F Graucob [1934] 2 KB 294, Court of Appeal (UK)

Donoghue v Stevenson 1932 AC 562

11 O’Sullivan, J.A., & Hilliard, J. 2014, The Law of Contract, Oxford University Press

12 Okrent, C, 2014, Torts and Personal Injury Law, Cengage Learning, New York

13 McKendrick, E., 2015, Contract Law, Palgrave Macmillan, Melbourne

14 Steven, E., & Lazar, E., 2008, Torts, Aspen Publishers Online, London.

15 Harvey vs. Facey [1893] UKPC 1 Offer

16 McKendrick, E., 2015, Contract Law, Palgrave Macmillan, Melbourne

17 Scott J. Burnham, 2011, Contract Law For Dummies, John Wiley & Sons, Melbourne.