eSignature Legitimacy for Business Termination Contract in Australia

How to eSign a document: eSignature legitimacy for Business Termination Contract in Australia

hello and welcome to this session in which we will keep working with the elements of the contract to have a valid enforcable legal contract we the contract will have to have three elements which are an offer and an acceptance an offer made by the offerer and an acceptance made by the offer simply put there's a mutual Ascent mutual agreement between the two parties there's an exchange of value which is an exchange of consideration between the two parties and the there's no defense to the contract in other words the contract is enforceable there is no reason for the court not to enforce it and we'll talk about no defense in a separate recording in this session we will focus on the offer and the acceptance in what sense because to establish a contract you have the contract has to be accepted before it's withdrawn or terminated so how about if the contract is terminated and how the contract can be terminated this is what we will focus on in this session before we proceed any further I have a public announcement about my company forat lectures. for hat accounting lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses my CPA material is aligned with your CPA review course such as Becker Roger Wy gleam miles my accounting courses are aligned with your accounting courses broken down by chapter and topics my resources consist of lectures multiple choice questions true false questions as well as exercises go ahead start your free trial today so let's talk about the contract termination well action by either party can terminate the contract well the person that's making the offer the offerer can do what can decides to withdraw I'm no longer interested in making this offer they can do this at any point before the offer is accepted guess what the other person that's receiving the offer the offer or the person receiving the offer can also terminate by saying I'm not interested in this offer or it can be terminated by operation of law simply put this refers to automatically terminating due to legal reasons like death of either the offerer or the offeree due to the illegality of the offer and few other exceptions we'll look at those later on in this session so in this session we'll focus on each each one separately revocation or by the offerer basically the per the person making the offer can basically say I'm no longer interested in making this offer can be made directly or indirectly so the offer can be withdrawn by the person who made it before it's accepted by the recipient this withdrawal known as revocation that's the technical word and can happen either directly direct revocation or indirect revocation let's take a look look at what does that mean direct and indirect in direct revocation when the offerer explicitly informed the offer that the offer is withdrawn again we're assumed before acceptance for example the offer might call or email the offer to say well they no longer wish to uphold the offer or it can be then indirectly indirectly is a little bit mean kind of this happens when the offer learns from a reliable source that the offerer has taken action Inc inconsistent with the offer for example the person making the offer already sold this item to someone else indicating that they no longer intend to keep it open okay if the offerer sells the item to someone else and the offer finds out well it's considered an indirect revocation it's not nice but it's legal well Lisa sent an email to John offering to sell her vintage car for 20,000 that's an offer in her email guess what Lisa mentioned that John have 5 days to think about the offer and during this period she would not revoke the offer well what do you think can Lisa revoke the offer within the next 5 days and the answer is yes she can sell it without even telling John the very next day Lisa received an offer from someone else willing to pay 25,000 for the same car well guess what she sold it excited by this offer Lisa immediately called John to inform him that she has withdrawn her previous offer hold on a second didn't you didn't you tell me Lisa gave John 5 days well she doesn't have to this action by Lisa constitute an effective revocation of her offer to John Lisa did not even have to call John maybe John later on will find out that the car is sold okay exception to the rule how can John protect this offer okay get an option there's an important exception to the rule that offers can be revoked the existence of an option contract in an option contract the offerer agrees to keep the offer open for a specified period in exchange for some form of payment or consideration from the offer if John sends Emily after he receives the email a check um or some money through zali PayPal somehow sends her some money some consideration to keep the offer open for five days then guess what guess what Lisa will have to comply this type of agreement legally binds the offerer Lisa to keep the offer open for the agreed upon duration making the offer irrevocable during that period now be careful on the CPA exam watch out for misleading answers claiming that the offer is irrevocable or an option the key is unless consideration was exchanged to keep the offer open it's not legally binding so remember I told you sends her money through Z PayPal checked then we are good to go so to summarize here the offerer can withdraw the offer before it's accepted the other way to terminate a contract is to get to for the offer to be rejected by the person the offer being made to well rejection by the offer effectively ends an offer and prevents it later from acceptance so you cannot reject and say you know what I change my mind I accept once you reject it's done and this can be done uh in two different ways you can express expressly rejected Express rejection or you can make a counter offer in an Express rejection pretty straightforward you refuse the offer the offer directly State you know I don't accept the offer for example if someone offer to sell you a car for a certain price you could say no and the offer is terminated if the offer later decides they want to accept the offer it's too late once you reject that's it what does that mean if you said that I want to buy it again now you're making the offer any subsequent acceptance is actually a new offer or it can be done through a counter offer what's a counter offer it's a little bit more complex than the express re rejection here the offer you respond by proposing different terms now when you when you propose a different term it's a rejection coupled with an offer so the original offer is rejected and you are making a new offer for example if someone offer to sells you a car for 450 $ and the other party said no but I will give you $425 well this is a rejection coupled with an offer now you're offering to buy it for 425 the original offer is gone that 450 that original offer is is gone and the roles are reversed now the original offerer is now the offer who can either accept or reject the new terms now bear in mind mere inquiry or inquiries is not a counter offer so if the other party says would you accept for 25 this is not a counter offer how about I pay 425 is not an offer is 425 acceptable those are inquiries question marks those are not counter offer mere inquiries are not let's assume Sam offers to sell his bicycle to Rita for $300 and Rita replies no I'm not interested that's it it's an Express rejection it's done the offer is terminated Frita later decides she wants the bikes and tells him I I accept your off offer it's gone Sam don't have to accept because Lisa isita is essentially making a new offer to Sam now Rita offers to buy the bicycle for 300 and Sam's respond I cannot sell it for less than 350 here what happened is Sams reject the offer and made a counter offer it means I'm not going to accept less than 350 this is how much I will accept Rita can now accept or reject the counter offer of how much at least 350 50 when is the rejection effective when is the rejection effective in contract law a rejection of an offer becomes effective only when it's received by the offerer so if I reject the offer it's not rejected until the person made the offer received that rejection it's going to be different than acceptance we'll talk about acceptance separately in this timing can have significant implication how let's take a look at this example on February 10th Lisa emails offering to sell her paintings for $500 two days later Mar mails a letter to Lisa saying I'm not interested citing the price is too high that's two days later on February 13 Mark learns that the painting is worth much more and what did he do quickly he quickly called and emailed Lisa said you know not I accept the offer so notice he mailed the letter on February 12th now Lisa did not receive the letter until the rejection letter until the 14th guess what that letter that that Mark sends it's no longer uh valid what's valid now is the acceptance because the rejection is effective when it's received when it's received on the 13th Mark accepts the accepts here basically makes the rejection that took place on the 12 n because Lisa did not receive the rejection if Lisa received the rejection on the 12 and Mark emailed her then yeah it'll be there'll be a new offer but that's not what happen Okay so in this case even though Mark initially sends a rejection letter Lisa had not received it by the time Mark called and accept the offer therefore Mark's acceptance is valid and a contract for the sale is formed the rejection arriving later does not negate the contract so what else how can else how else can we terminate a contract termination by law there is few issues we have to deal with here so termination by operation of law occur in specific circumstances where an offer is automatically rendered void that means it's no longer valid without any action by either parties remember the offerer can re revocate the offer the offer he can reject this is how we can terminate an offer or a contract or the contract can be terminated by law well under what circumstances death or incompetence if either of the offerer or the offer or become legally incompetent before the offer is accepted the offer is terminated this termination happens automatically without the need to inform the other party okay now bear in mind that in case there is an option contract where the auor has paid for the right to keep the offer open for a certain period of time do you guys remember we said what should you do offer some money to keep the to keep the offer open and valid well then the offer remains valid despite the death of either party in such a scenario the offer can be accepted on behalf of the deceased party's estate within the option period so simply put the person that passed away legally still exist through their state and the option contract is valid for example D offers to sell a piece of land to sue for 300,000 if either D or Sue dies before Sue accepts it automatically ends but if Sue has paid the an option to keep the offer open then sue or her estate could still accept accept the offer during the option period forming a contract with the or D's estate that will keep it open another way a contract can be uh terminated is destruction of the subject matter if the item or subject of the offer is destroyed before acceptance the offer automatically ends for for example if a car is offered for sale but it's total in an accident before the offer is accepted the offer is nullified Emma for example offers to lease her apartment to Jake for a year before J can respond a fire destroys the apartment well that's it it's gone the offer for the lease terminates automatically as the subject matter is no longer available Jak cannot accept the offer since the apartment no longer exists in the original state also termination can be due to illegality of the contract this occurs when the offer becomes invalid because the subject matter of the offer becomes illegal before it's accepted in those circumstances the laws the laws changes rendering the offer void and it can no longer be accepted okay for example luyou offers Vegas a share of his business well good before Vernon can accept the offer a new law passed in that state Banning s guess what as a result of the new law the offer from Lou to Vernon is automatically terminated since operating a is now illegal so the agreement to share in such a business cannot be legally upheld therefore Veron can no longer accept the offer because it's an illegal activity just to summarize well a contract can be terminated through by revocation by the offerer the person that made the offer rejected by the offer or by law by law operation of law those are the three reasons let's take a look at this McQ from farat lectures when can an offerer revoke an offer when can they do it okay because they can do it but when can they do it at any time even after acceptance not at all if it's accepted it's too late the is out after the offer he has accepted the offer well no after the offer he has accepted it's also late as well so Been A and B can they revoke it any time before acceptance unless an opt unless it's an option contract and the answer is yes they can they can revoke it any time unless we have an option contract unless the option contract means the other party paid you some money to keep it open a is correct only within the first 24 hours after making the offer there's no such a thing what should you do now you want to go to for hat lectures look at additional mcqs that's going to help you prepare for the CPA exam prepare for your business law classes invest in yourself invest in your career good luck study hard and of course stay safe