MGSC01 : Law of Commerce : Misleading or Deceptive Nature

Discuss with reference to any relevant case law.
Instructions: You must write your answer in one sitting, in one hour, at a time of your choosing. You must submit your answer through turnitin

Answer:

Issue

Whether Roger can refuse to make any payment to Felicity and whether he has any further remedy available against Felicity.

Rules

Two types of terms are there in a contract. One is expressed, the other one is expressed, and the other one is implied. An express term is that which parties to the contract decides mutually in an expressed manner and address the same to each other. An implied term is that which parties do not decide, but such terms exist there because of the nature of the transaction. Implied terms are not expressly be agreed by the parties, but they implied by the statue. The court recognizes the implied terms in a contract. In order to identify this kind of terms, a court can use three ways, and therefore there can be three types of implied terms in contracts. These are

1. Terms implied by trade usage or custom,
2. Terms implied by statute or general law and
3. Terms implied by facts.

The decision was given in the case of BP Refinery (Westernport) Pty Ltd v Shire of Hastings UKPC 13, UKPCHCA 1, (1977) 180 CLR 266, is an important one to study when the topic is about implied terms. In this case, it has been given that for while considering a condition as an implied term, such condition must have the following features

• The terms must be equitable and reasonable
• The terms must be of nature that makes the same necessary to provide the contract, business adequacy.
• Such terms must be of obvious nature that is assumed to be there without saying.
• It must have the capacity to make clear expressions
• It must not be in contradiction of any expressed term of the contract.

Therefore, this can be stated that if there is a condition that has not been clearly expressed by the parties but is of obvious nature, then such condition will be treated as an implied term of the contract.

Section 18 of Australian Consumer Law:- Australian Consumer Law (ACL) is prescribed as schedule 2 of Competition and Consumer Act 2010 No. 51, 197. Section 18 of ACL says that a person must not make a false representation under a contract. Further, the section demands that in the course of commerce and trade, a person must not be a part of a conduct that is of misleading or deceptive nature.

Remedies

Section 236 and 246 provides remedies in respect to a breach of Section 18 of ACL. Under section 236, it is stated that an innocent party can claim the damages from a liable person; further section 246 says that a victim under section 18 can demand ancillary orders. However, a person can seek these remedies only in that condition when he/she completes his/her promises.

Application

In the given case, a person named Felicity was required to install a central heating system in the house of other person named Roger. They have decided $20000 as a consideration for this contract. Nothing else about terms and condition is mentioned in the case. However, applying the provisions of the case BP Refinery (Westernport) Pty Ltd v Shire of Hastings, it was an implied term of this contract that the heating system will give heat. As the lead purpose of installation of the heating system was providing heat into the house, therefore this was very obvious and was an implied term.

Later on, when Felicity was done with his installation work under the contract, Roger started the heating system installed in his house by Felicity. The same did not heat. Now the provisions of Section 18 of ACL come into light. As this section requires that a person must not represent anything falsely, this can be stated here that Felicity has breached the provisions of Section 18 of ACL. By providing a fantastic looking heating system, he represented to Roger that the same is ready to use, which was not actual. However, before moving to seek remedies, Roger is required to make the payment to Felicity.

Conclusion:

Roger can sue Felicity for making misrepresentation under section 18 of ACL and seek the available remedies under section 236 and 246. In such a manner, he can ask for the damages and also can ask for the ancillary order. Further, before moving to receive remedies under ACL, roger need to fulfill his commitment, it means he needs to make the payment to Felicity first.