LAWS20058 Australian Commercial Law | Legal System Of a Foreign Countr

(a) Although the shopping village was busy on the weekends, it was very quiet during the week. In the first two months the turnover was only $13,000 per month. (b) There was a grocery store in the shopping village that sold a wide range of fruit and vegetables. (c) After six weeks, a man from a finance company arrived at the shop and repossessed the delivery van. It turned out that the van was only leased by the previous owner, and since Barry had not made the lease payments, the lease was in default. Barry’s expenses at the shop had been below $8,000 per month, but if he had paid the van lease, the expenses would have been on average about $8,500 per month. (d) The loader, which was a small motorised machine for putting pallets on and off the back of the van, was broken down and could not be fixed for less than the cost of replacing it.

You are providing a written report to your supervising partner. To impress him, you want to show that you worked hard at university by demonstrating your knowledge of law and your ability to use it. You need to provide a written report providing the following advices.

2.Advise how Barry might challenge the validity of the contract on the basis of the statements made by Angelo before the contract was entered into. You should consider both common law and statute law.

3.Assuming Barry does not get out of the contract, advise on the possibility of an action for breach of contract

Part C

In this part, your task is to take the advices you gave to your supervising partner in Questions 2 and 3 and present them to your client, Barry, in a way that he can understand. You DO need to explain to him what the law is and how it leads to your recommendations, but it must be presented in a way that a client without legal training can understand. The report must be done as a YouTube video and the link for the video must be included in your assignment. The video must be set so that the marker can view it. If the link does not work for the marker, you get no marks for this part.

Your face must appear in the video. You should not be reading from a script, but you can use notes to prompt your talking.

Answer:

Part A

1.The selected foreign nation for comparison with Australia is United Kingdom (UK). The analysis of this legal system with regards to the Hart’s description of a legal system is carried out below..

• Rule of recognition

This rule demands that there are identifiable sources which have the requisite authority to enact laws. This is adhered to in UK considering the three major law sources on which it is based. The first is the most exhaustive and comprises of statute law i.e. laws which are made by the legislation and enacted by those bodies which have been entrusted with making laws on various subjects. Also, important principles are provided by common law which are observed while making laws and judgements. Yet another source of law is EU law considering the historical reasons when UK was part of EU and hence expected to adhere to various regulations passed by the EU.

Australian also has a comparable legal system which complies with description given by Hart since the respective sources of law are clearly defined and tend to overlap with that of UK. The most critical difference between the two is that in Australian context, constitution tends to serve as a crucial law source which is not the case in UK since it does not have a written constitution and hence conventions are considered more important.

• Rule of Change

In the UK legal system, the system of changing law by forming new legislation and repealing of old laws has been clearly defined and outlined. The legislative process is quite standardised and is not arbitrary. Besides, changes in law can also be initiated by people through the use of petition system which create obligation on the lawmakers to consider various subjects that people may consider necessary. Also, unlike Australia and other countries with written constitutions, the power to change laws is more for the British Parliament.

The Australian legal system is also dynamic with regards to changing and repealing old laws. The procedure in this regards is well defined and adhered to. Further, during the enactment of new legislation, comments from public are also taken through draft legislations which allows the laws to be in line with the expectation of the people. Additionally, power to change laws is exhibited between the State and Centre in accordance with the constitutional separation of powers.

• Rule of Adjudication

It is natural to expect that there would be legal disputes since laws would be broken and hence well-defined adjudication mechanism must exist.  In this regards, a key role is played  by the judiciary which in case of UK till recent times was also supported by executive and legislature since separation of powers was quite loose. In the recent past, measures have been initiated which has led to higher independence of the judiciary system and to improve the efficiency of the adjudication system.

In case of Australia, the judiciary has exhibited more freedom from the other organs of the government. Further, there exists a defined and dedicated judiciary consisting of courts at various levels to deal with different matters. In addition, to aid in adjudication, there are alternative mechanisms such as administrative tribunals.

Part B

2.Issue

The key issue in this case is to determine whether the contract enacted between Angelo and Barry would be voidable by Barry based on the misrepresentation made by Angelo as per common and statute law.

Relevant Law

In the negotiation period (pre-contractual phase), the seller states several representations to the buyer in regards to bring the buyer into contract. In this phase, it may be possible that seller makes wrong representations to attract the buyer and these false representations would be termed as misrepresentations.  These misrepresentations can be intentional or by mistake in the wake of negligence of seller. When the seller does not want to make false representation to the buyer but by mistake or negligence of seller, he/she has made wrong representations would be categorized as negligent misrepresentation. While, the seller is aware about the validity of the representation and knowingly has made wrong misrepresentation, then it would be categorised as fraudulent misrepresentation. The contract which is made based on the fraudulent misrepresentation can be declared as void contract on the part of plaintiff. In such cases, the financial damages would be recovered on the part of innocent party from accused party.

There are two main aspects related to the presence of misrepresentation are highlighted below:

• The false representation must not be an opinion or futuristic estimation and hence, it must be related to factual information. This is because opinions are nothing but self-assessment and hence, it is difficult to establish the misrepresentation in such cases. Similarly, one cannot forecast the validity of the futuristic representation and hence, any futuristic estimation by the seller would not be considered under misrepresentation. Hence, only factual representations would be taken into consideration and would be used to check whether the seller has falsified the factual statements or not. In accordance with the judgement given by honourable court in the Smith v Hughescase, the misrepresentation by seller only for factual statements would be taken into consideration and also, any postulations on the part of buyer would not be considered under misrepresentation.

• Only those factual statements would be taken as decision making variables, those are having significance importance for the buyer. It means that misrepresentation of any insignificant factual statements would not make a contract voidable. In this regards, it is noteworthy that before the enactment of the contract, if buyer has the position to verify the made representation, then it is essential that buyer must verify and do not behave negligently. The decision of Redgrave v Hurd case is the evidence of this aspect where the negligent behaviour of the buyer is enforced by the contract.

In accordance with common law and Australian Consumer Law, the Competition and Consumer Act 2010 would be taken into consideration. As per s. 54, an inherent consumer guarantee is extended to the buyer that the seller must disclose any pending security.  Violation of this guarantee would extend a right to the buyer to claim for the damages from seller. Also, as per s. (18) of Australian Consumer Law, the deceptive conduct of the concerned seller would be taken into consideration. The requisite aspects of this section are highlighted below:

• Presence of commercial transaction
• Real deception is not required, only the intention and conduct of the seller would be enough to satisfy the aspect of s. (18)
• According to Perre v Apand Pty Ltdcase, the perspective of seller in regards of deceptive view would be sufficient for the validity of s. (18)
• It is essential that buyer must suffer actual financial losses.  

Application

It can be said that seller (Angelo) has made false representation to buyer (Barry) in regards to the financial performance of the business. Also, Angelo was well aware about the case that potential financial status of the business is key expected factor for any buyer and therefore, he made an attractive advertisement regarding the financial performance such as revenue, number of potential competitors of the business and related expresses. Angelo made this false advertisement because the business was worth much lesser than what he stated in advertisement. Barry wanted to earn high revenues and hence, the attractive advertisement lured him to enter into contract with Angelo. Further, Angelo did not give any revenue report to Barry and hence, the factual representation of Angelo would be the only source for Barry to trust on. Also, it is apparent that Barry does not act negligently and due to the fraudulent misrepresentation of Angelo, Barry has enacted a contract. However, the actual figures related to financial status of business are false and hence, as per s. 18(1), Angelo is liable to pay the damages to Barry and also, Barry had position to declare the contract as void contract.   

Conclusion

Based on the above analysis, the conclusion can be made that the enacted contract would become voidable because Angelo has made fraudulent misrepresentation to Barry. According to Australian Consumer Law, Barry has the legal right to demand for the damages from Angelo besides demanding a refund for the van.

3.Issue

If the contract cannot be declared void by Barry, the central question that arises is whether there is any breach of contract on account of any terms being violated based on false representations.

Relevant Rule

To prevent the breach of contract, it is necessary that no contractual term should be violated by either of the parties. A part of these terms would be in the form of explicit or express terms and hence would have been clearly stated or captured in the enacted written contract. However, there is another class of terms which is referred to as implied terms and these are those which are derived on the basis of representations taking into consideration the underlying circumstances. Both express and implied terms have the same importance for a contract. However it is imperative to segregate the terms from the various representations made as terms can be enforced legally unlike representations .

For separating a term from a representation, a number of factors need to be taken into consideration. A key aspect is the expert knowledge that the representor has with regards to the representations made. The thumb rule is that the representations (related to the product being sold) made by representor having high expert knowledge would quite likely be considered as a term considering the knowledge deficit between the representor and representee. As a result, the representee tends to rely heavily on the representor leading the representation to be considered a term in, light of the decision made in Perre v Apand Pty Ltd case.

Yet another key aspect to be considered is to consider the importance accorded to the representation in the given circumstances leading to the contract. If the given representation is critical for the representee with regards to taking a decision to enter the contract, then same should be treated as a term. This has been highlighted in the Bannerman v White case where the sulphur treatment of hops was considered to be a term. For the buyer in the given case, this treatment was imperative to the decision of enacting the contract. Thus, the supply of hops lacking sulphur treatment constituted breach of contract and rightly so. It is imperative to consider the given circumstances so as to determine the significant elements that potentially can be terms. Besides, parole evidence rule also needs to be considered as per which the representations captured in the written form of contract would be terms as the representations which are worthy to be terms for the contract are mentioned in the written contract.

Application

Keeping in mind the above factors to segregate the terms from representations, the suitable representations must be chosen which can serve as implicit terms. In accordance with the facts provided, there is no denial that it was the financial numbers related to the business which first directed his attention to the business. However, the same has been represented incorrectly. Also, the valuation of the business is dependent on the financial performance of the business.  As a result, the false data about the revenue and expense data clearly impacts the decision making in this case. Additionally, the significance of these representations tends to enhance in the wake of Barry lacking any information about the grocery business and Angelo having complete information about the same.  Besides, it would not be wrong to assume that if the correct figures were stated by Angelo, then Carry would either have not entered into contract or the consideration amount would be significantly lesser.

Additionally, in the given case, the written contract enacted tends to contain express terms  that relate to the value of the van along with the loader. The contract states the price of van as $ 15,000. However, the van is not owned by Angelo or business since it is on lease and besides, liability in form of outstanding lease payment is also present. Thus, it is apparent that the $ 15,000 figure is not true. Further, the poor condition of the loader also implies  that the express term related to both van and loader have been violated.

Conclusion

In wake of the breach of the express terms along with the implies terms, it would be fair to conclude that there has been breach of the contract and hence Barry can sue Angelo for the same and recover damages.