BUSI2301 Business Law - Issue and Rule
fee.
Weitao checks the details at the top of the document but doesn't bother to read the smaller print at the bottom. He signs it and takes the projector home.
While using the projector Weitao accidentally scratches its casing. While returning the projector to the store the following week, he offers to pay to have the casing fixed. Evelyn insists that Weitao owes her $1000 to replace the entire projector.
1. Is Weitao bound by the note in small print about the $1000 replacement fee?
Evelyn is carrying out some improvements to the layout and decor of her store. She hires Warren to paint the internal walls of the store. Warren accepts the job, but says that the painting will take a full day to complete, and then a full day to dry. Evelyn agrees.
Over the next five weeks, every time that Warren calls Evelyn to suggest a date for the painting, she says that she can't close the store that week, due to important deliveries arriving or customer delays. She also refuses to suggest a future date for Warren to complete the painting.
Warren is upset. He complains that Evelyn is making it impossible for him to get the benefit of their contract, and that this is something all contractual parties must do.
2. Is Warren correct?
Ambreena comes into the store and speaks with Evelyn. 'I need a tablet that I can use to complete an important project while I am travelling overseas.'
'No problem,' says Evelyn. 'This tablet here is nice and light, so good for travelling. In my view it also has a lot of storage space compared with most tablets nowadays.'
Ambreena rents the tablet to take overseas. When she tries to install the apps needed to complete her project, she finds that the storage space on the tablet is actually quite limited.
3. Is it a term of Ambreena's hire agreement that the tablet has more storage space than most tablets on the market?
Jake comes to hire a laptop from Evelyn's store. After choosing a laptop, filling out the paperwork, and taking the laptop home, Jake realises that there is no charger cable in the laptop bag. He calls the store and speaks to Evelyn.
'Well, you never said you needed a charger as well,' says Evelyn. 'It will cost you extra if you want to hire the charger too.'
Jake says that he never thought to ask for the charger, as he assumed it would be included.
4. Is there an implied term in Jake's hire agreement, that a charger will be provided with the laptop being hired?
Answer
Issue 1
The issue is whether Weitao has to pay the replacement fee as given under the contract?
Rule 1
While forming a contract, the parties have the right to include an exclusion clause in the contract. Based on such clause, the party can eliminate his/her liability which is raised in case of breach of contractual terms. However, parties have to comply with the general rule of exclusion clause which provides that they must bring the clause into the attention of another party while forming the contract. It is also necessary that the clause brought into the attention while the contract is forming or before its formation. In Thornton v Shoe Lane Parking case, the claimant got a ticket to park his car in which it was written that the ticket is subject to terms and conditions which are written inside the parking. The court provided that the exclusion clause must bring into the attention of the party before or when the contract is formed, thus, the defendant cannot rely on the clause. However, the court provided an exception to this rule in L’Estrange v Graucob case by providing that in case of a written contract the parties are not required to bring the exclusion clause into the attention of parties.
Application 1
The exclusion clause was not brought into the attention of Weitao by Evelyn before or when the contract was formed. However, as per the exception of this rule given in L’Estrange v Graucob case, the contract was in writing, thus, the exclusion clause is valid. Weitao has to pay the replacement fee to comply with contractual terms.
Conclusion 1
Conclusively, Weitao has to pay the replacement fee as per the terms of the contract.
Issue 2
The issue is whether Warren can discharge the contract with Evelyn?
Rule 2
There are various ways to discharge a contract which include breach, agreement, performance, and frustration. As per the rule of discharge of the contract by performance, the party has the right to discharge it in case another party is preventing from performing the contractual terms. A good example was given in Planche v Colburn case in which a contract to write a book was formed between the claimant and the defendant. The claimant started the work, but the defendant cancelled the books and declined to pay the claimant for the work. The court provides that the defendant is preventing the claimant from performance based on which a claim for damages is valid against the defendant.
Application 2
After forming the contract for décor and improving the layout of the shop, Evelyn is not letting Warren performing the contractual terms. Warren has asked Evelyn many times, but she continued to decline the performance. Since the performance is declined by Evelyn, Warren has the right to discharge the contract as per the judgement of Planche v Colburn case. Moreover, he has the right to file a claim for recovery of compensation from Evelyn for non-compliance with the contractual terms.
Conclusion 2
Conclusively, Warrant can discharge the contract based on the decline of performance by Evelyn.
Issue 3
The issue is whether a suit for negligence can be filed by Ambreena against Evelyn?
Rule 3
If a false statement is made by a party to another in order to encourage such party to form a contractual relationship, then it is considered as misrepresentation. A contract formed based on misrepresentation is considered as voidable based on which the innocent party can either comply with the contract or set it aside. Personal opinion of a person is separate from misrepresentation; however, the person who is in the position to know the facts cannot rely on this defence. For example, a false statement was made by the seller of a house to the party regarding the tenant of the house being ‘most desirable in Smith v Land & House Property Corp case. It was later found out that the tenant was in the arrear of rent and on the verge of being bankrupt. The seller provided in the court that it was his personal opinion, however, the court rejected his claim by providing that he was in the position to know the correct facts and awarded compensation to the buyer.
Application 3
Evelyn told Ambreena that the tablet has a lot of space for applications to run whereas in reality the tablet had limited storage. In case a suit for misrepresentation is filed, then Evelyn can provide that it was her personal opinion. However, she was the store owner; therefore, she was in the position to know the facts based on which she can be held liable for misrepresentation as given in Smith v Land & House Property Corp case. The statement was made to encourage Ambreena to purchase the tablet, thus, Ambreena can demand damages from Evelyn.
Conclusion 3
Conclusively, a suit for misrepresentation can be filed against Evelyn by Ambreena to recover damages.
Issue 4
The issue is whether providing the charger with the laptop is an implied term?
Rule 4
The parties to a contract have to comply with the terms included in the contract which are divided into two parts: express and implied terms. The implied terms are not written inside the contract, but they are included by the statute or the court. The implied terms can be enforced based on law, custom or facts. The customs of trade are considered as implied terms of a contract. For example, a farmer was hired to manage the crops by the defendant in Hutton v Warren case. The farmer demanded the cost of work and seeds which is a custom in contracts formed for farming, but, the defendant declined to pay by providing that it is not included in the contract. The court provided that customs of trade are considered as implied terms, and the defendant is bound by them.
Application 4
Jake purchased a laptop from Evelyn, but, he did not receive the charge of the laptop. It is customary that while purchasing a laptop, the charge is included in the price as well since the laptop cannot work without the charger. Therefore, it is an implied term, and Evelyn has to give the charger to Jake.
Conclusion 4
Conclusively, providing the charger with the laptop is an implied term based on customs, therefore, Evelyn has to give the charger to Jake without any costs.
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