Business Law Among Variety of Companies

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The issues presented in this scenario are relating to contract law. Whether the advertisement published has the capacity to form a contractual relationship? Did the forty customers that have come to the shop can claim their haircut for $10? Whether other ten customers can enforce Ming for the haircut, who have not brought the advertisement with them? Whether the advertisement can create a legal relationship and whether such relationship can be eliminated by putting a sign on the shop to terminate the offer?


The custom-based law standards give arrangements with respect to contract law and administration of the legally binding connection between parties. According to these arrangements, parties need to ensure that they make a separation between an offer and an invitation to treat. A contract can’t be built between gatherings by an invitation to treat as given in Harvey v Facey as it didn’t satisfy an essential component of a valid offer which gives that the gatherings must have the aim to make a lawful relationship once acceptance is gotten on offer. The involved parties did not have the aim to make a legal relationship, and they simply needed to welcome another party to have them make an offer through a challenge to treat that is normally the situation with ads as given on account of Partridge v Crittenden. Hence, parties can’t create legally binding connections by an invitation to treat; be that as it may, it’s anything but a flat out guideline, and a special case in regards to this standard was perceived by the court on account of Carlill v Carbolic Smoke Ball Co. This case gave different arrangements dependent on which an advertisement can be considered as an offer.

The court gave the idea of the one-sided offer, which can be made by a party, and it very well may be open for the whole world. For this situation, a commercial was distributed by an organization in the paper while advancing their drug. They made a guarantee in the notice that individuals who contracted flu in the wake of utilizing their drug will get a reward of 100 pounds by the organization. Mrs Carlill acquired and utilized the medicine according to the guidelines which were given in the promotions. Regardless of the way that a consumer utilized the medicine, she was affected, and she made a case for her reward; in any case, the organization dismissed the case by expressing that it was an advert as opposed to an offer. While giving the judgment, it was held by the court that it was a one-sided offer since the wordings and the activities of the organization to place cash in the bank demonstrates the earnestness of the organization to shape an agreement to form a contract. The organization asserted that for the entire world, the offer cannot be open, yet the court said that it was a unilateral offer which can be acknowledged by anybody. The correspondence of acknowledgment is made by parties when they agree to the directions which are incorporated into the promotion as held Carlill v Carbolic Smoke Ball Co. [5: Fitzpatrick et al., Business and Corporations Law, p. 85.] [6: J Poole, Casebook on Contract Law, Oxford University Press, Oxford, p. 4.] [7: Poole, Casebook on Contract Law, p. 14.] [8: Fitzpatrick et al., Business and Corporations Law, p. 91.]

On account of consideration, the court gave that it can be of any amount or value on account of Thomas v Thomas.[footnoteRef:9] In the presented situation, the consideration was the sum which was paid by Mrs Carlill when she acquired the item. Since every one of these components were available, the court built up that a legally enforceable relationship has developed between parties which tie them into a lawful understanding which was the given judgement in Carlill v Carbolic Smoke Ball Co. As in the case of Chappell  Co Ltd v Nestle Co Ltd[footnoteRef:10], the court gave that the consideration should be sufficient; in any case, it need not to be adequate, and it tends to be any value. Besides, the unilateral offer can’t be ended by gatherings simply like an ordinary offer. There are two situations in which a unilateral offer can be ended. The principal situation is the point at which the performance of the agreement has not begun by the involved parties after the advert is posted. The second component is if the exhibition isn’t finished by the parties inside a sensible time allotment. [9: (1842) 2 QB 851] [10: [1960] AC 87]


a) In the given situation, the primary issue is identifying the legitimacy of the commercial presented by Ming on be established as a legitimate offer. The standards talked about on account of Carlill v Carbolic Smoke Ball Co are important to be investigated so as to decide if a substantial unilateral offer has made or not. The aim of Ming was to post the notice so as to build the quantity of clients of his business.

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The notice was not an invitation to treat since he gave explicit guidelines to its clients, which they can follow so as to get a $10 haircut from him. The initial forty clients conformed to the guidelines given in the notice since they carried a copy of the commercial with them. The acknowledgment in a unilateral offer is provided by the parties consenting to the guidelines which are available for this situation. [11: Fitzpatrick et al., Business and Corporations Law, p. 157.]

b) According to the case, Chappell  Co Ltd v Nestle Co Ltd, although the normal charge for a haircut is $60 and not $10 as mentioned in the advertisement, a consideration is present in this situation on the grounds that consideration can be of any value and to create a legitimate contract, it doesn’t need to be adequate. So following this, the 40 clients have the right to enforce their legal rights on Ming to get their haircut for only $10 as the components of a contract are available.

c) However, this isn’t the situation with other ten clients as a contract isn’t created with them. The component of acceptance is absent for their situation on the grounds that the clients did not adhere to the guidelines which were referenced in the promotion by Ming. A unilateral offer isn’t ended by the sign that Ming put outside his shop through the notice isn’t enough because it can only be ended by two mediums: performance has not begun, or it isn’t done inside a reasonable time span. For whatever length of time that clients carried the copy with them, they can claim the $10 haircut. Therefore, a time span should be mentioned in the offer after which the offer will not be valid.


In conclusion, the promotion can be thought of as a valid offer that is open for the whole world to respond, and it was acknowledged by forty clients who can claim their $10 haircut from Ming. There is no acceptance from the other 10 clients; along these lines, an agreement isn’t shaped with them so there is no contract formed. The sign put by Ming outside his shop did not end the offer.

Types of Companies

Following is a list of different corporations which can be incorporated in Australia.

  • Proprietary company. The shares of these companies are held privately by few individuals, and they cannot issue them in public for the collection of further funding for their operations.
  • Public company. Shares of these companies are freely traded, and they can issue them to raise capital. For the public companies to issue their shares to the general public, they can list them on the stock exchange.
  • Public companies limited by guarantees. The members of these companies are liable up to the guarantee which they give in order to make payment when the company goes to liquidation.
  • Public companies limited by shares. As the name suggests, the liability of the members in these companies are limited by shares.
  • Unlimited proprietary companies. The members in these corporations have unlimited liability, and their personal assets can be used to pay off the debts of the compan
  • Unlimited public companies. In these types of companies, unlimited liabilities are associated with the members.
  • No liability companies. As the name suggests, the members of these corporations cannot be held personally liable for its debts. There are certain purposes for which these organizations are created as a general rule, for instance asset investigation activities or mining ventures.

Suitable type of Company

In the given scenario, the most suitable company as per the facts is the proprietary company. This is a suitable option since the initial investment of incorporation of the company is low.[footnoteRef:14] All the members of the company belong to the same family, which will allow them to easily handle their operations and also distribute the number of shares between each other. Furthermore, the parties will benefit from the legal framework of the enterprise that is more flexible than compared to other structures. The legal regulations which are imposed on public companies are relatively stricter.[footnoteRef:15] They have to comply with these guidelines since they issue their shares in the public to receive public money through continuous disclosures and preparing a range of books of accounts.[footnoteRef:16] The company also has to lodge them and also conduct an audit of them by appointing an auditor. The family members can agree in order to reduce their liabilities in the enterprise, and the court will not be able to use their personal assets with an objective to repay the liabilities of the enterprise. It will also be easier for the members to change the proprietary company into a public company in the future, which makes it the best option for the parties.

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