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This write up shall examine various aspects of the law; inter alia, the law of contracts and the application of various principles in the law of contracts. Using the case scenarios presented, the writer shall discuss the principle of formation of a contract and more particularly the aspect of instantaneous communication of acceptance and liability in case of breach.
Further, the common law position of the subject of exclusivity clauses which tend to exclude the liability of the service provider or trader shall be discussed and the principle’s applicability shall be evaluated pursuant to the provisions of the Consumer Protection Law of Australia.
Finally, the Australian law on competition and consumer protection shall be analyzed to extrapolate the various protections afforded to consumers under the law with regards to protection against unconscionable conduct and unfair contract terms and also the subject of misrepresentations as regards the origin of goods.
This case scenario represents parties during the initial stages of contract formations engaging in negotiations through various modes of communication. Unfortunately, the parties’ different preferences of different modes of communication lead to a major miscommunication that occasions the failure of forming a contract. The issue arising therefrom is whether there was in fact a contract in existence which could then entitle Brenda to Steven for breach of contract. More particularly, it is important to determine whether the acceptance was communicated properly.
Assuming that all the other requirements for a formally valid contract were in existence, it is necessary to determine whether the very basic requirements for the formation of a contract had been fulfilled i.e. offer and acceptance. Quilter (2014) writes that a contract is concluded where one party makes (offeror) an offer to do or provide something and the other party (offeree) accepts the offer unconditionally and communicates that acceptance to the offeror.
By stating that the fabric was available to be delivered by 12 March and specifying the price at which he would sell it, Steve had made the offer to Brenda which had to be accepted before a binding contract could actually be formed. In the letter of offer, Steve had specified the favored mode of communicating the acceptance but Brenda opted to respond using a different mode of communication.
Clarke (2016) has written about communication of acceptance. She propounds that the communication of the acceptance must be received by the offeror for the agreement to be effective. In this regard, there are instantaneous and non-instantaneous modes of communication. If the offeree communicates the acceptance via instantaneous mode, such as an email, then the communication is deemed to have been received even if it is not read by the offeror. In that case, the contract is deemed to have been formed and binding and in case of a breach, the offeree can sue the offeror for compensation. Having sent the email to Steven, then Brenda could have successfully brought an action against Steven for breach of contract.
However, for the case at hand, Steven clearly and unequivocally specified that the acceptance was to be made by return express courier. In the case of Manchester Diocesan Council for Education -vs- Commercial & General Investments Ltd, the Plaintiff called for tenders for its property, stating that acceptance would be notified by postage of a letter in the address given by the tenderer. The Plaintiff sent an acceptance letter to the Defendant’s solicitor which was not the address given by the Defendant. Given that the Defendant knew of the acceptance, it was held that the prescribed mode of communicating the acceptance was not mandatory because the offeror was made aware by an equally effective method.
From the above, it is therefore important to determine whether the communication was received or whether Steven was aware of the acceptance. Steven has stated that he had never received Brenda’s email though he had checked his email inbox daily. The Electronic Transactions Act, 1999, provides that an electronic communication is deemed to have been received at the time when the communication becomes capable of being retrieved by the addressee.
Considering that Steven never received the communication and that he had specified the mode of communication, thee only logical conclusion is that there was no contract and therefore Brenda cannot successfully maintain an action against him for breach of contract.
On the other hand, if the circumstances could have allowed Brenda to successfully maintain an action against Steve, the remedies available would be damages.
From the facts of the case scenario herein, it is clear that Giovanni was not able to read or interpret the meaning of the particular clause of the authorization. Even QRZ Motors’ tow truck driver did not bother to explain the meaning of the particular term of the authorization. As a result, Giovanni signed the authorization without understanding the meaning and consequences attached thereto. Be that as it may, QRZ Motors seeks to rely on the clause to vindicate itself from liability for the damage sustained by Giovanni’s car as a result of a fire caused by the negligence of one of the company’s mechanics. The issue arising is whether QRZ Motors can successfully rely on the exclusion clause and thereby exonerate itself from liability.
Quilter (2014) rightly states that the law of contracts as it exists today is a by-product of common law which has been developed overtime through precedents as opposed to legislation. In his book, Quilter discusses the doctrine of exclusivity clauses. He propounds that these clauses are most often employed to shelter the
Exclusivity clauses exist in documents that are either signed or unsigned. If the clause is in an unsigned document, the service provider seeking to rely on the clause must prove that the existence of the clause was brought to the attention of the consumer. On the other hand, if the clause is contained in a signed document, then it forms part of the contact and it becomes binding on both parties.
Therefore, from the point of view extrapolated above, and without giving regards to any other legal view, it could then mean that QRZ Motors can successfully avoid liability for the damage caused to Giovanni’s car given the fact that the authorization was signed.
However, referring to the Competition and Consumer Protection Act it is expressly stated therein that any person it trade must not engage in “unconscionable conduct” while trading or offering services to another (a consumer). Further, the Act gives the Courts unfettered powers to take into consideration various matters in determining whether a trader has engaged in unconscionable conduct. These include, inter alia, the bargaining power or position of the supplier/trader and the consumer and “whether the customer was able to understand any documents relating to the supply …of… services.” In addition, the Act makes provisions for unfair contract terms and among them are terms that are not transparent and those that tend to limit the liability of the supplier.
From the foregoing, the conclusion to be drawn is that under common law, QRZ Motors is only required to prove that the exclusivity clause was brought to the customer’s attention or is contained in a signed document. However, under consumer law, QRZ Motors will not evade liability because the term is considered unfair and in addition, QRZ Motors’ conduct will be termed as unconscionable.
In this case scenario, it has been revealed how Gary made a misleading statement that the bicycles sold by BikeHike Ltd are manufactured in Australia and they meet the set standards of the regulatory body. The reality, however, is that they are imported from China. The issue emanating is whether ToughMount can bring an action against Gary for the publicized misrepresentation and further, whether BikeHike can be held liable for Gary’s actions.
Various provisions of the Competition and Consumer Protection Act outlaw the engagement of persons in trade in misleading and deceptive conduct. Under section 29 (1) (k), it is illegal to make a false or a misleading representation that particular goods are of a particular origin when in reality the goods are from a different origin. Further, Part 5-3 of the Act makes particular rules that address the issue of representations as to origin of goods which must be abided by strictly.
The case of ACCC -vs- Marksun Australia Pty Ltd is one such similar case wherein goods made in China were misrepresented as having been manufactured in Australia. In holding the Defendant liable, the judge stated that such a misrepresentation not only harms buyers but also impacts honest traders and further impacts the reliability and value of the goods actually made in Australia.
As per the Australian Competition and Consumer Commission, any person claiming a trader has misrepresented the origin of the goods can take action to court for breach of the ACL. Therefore, it is conclusive that ToughHike has a right of action against Gary under the ACL.
Whether BikeHike can be vicariously liable for Gary’s actions depends on various factors inter alia whether Gary had the authority to act for the company. An employer can be vicariously liable for acts of an employee under the principles of agency law. BikeHike Ltd being a company, it is governed by the Corporations Act, 2001. Under section 190, directors are held responsible for the actions of their subordinates. This is so because in companies, it is directors who are regarded as agents of the company. Therefore, BikeHike will not be liable for Gary’s actions because the misleading information was published without the consent or authority of the Marketing Manager.
From the foregoing, the conclusion to be drawn is that an acceptance of an offer must be unequivocally and unconditionally communicated to the offeror. Further, the communication must be received by the offeror or the offeror must have knowledge of the acceptance for the contract to be formulated.
If a specific mode of communication is expressed, then, for convenience, it is necessary to use that mode; otherwise, the courts may not necessarily hold that the contract was not formed if it is proved that the offeror received the communication of the acceptance.
On exclusivity clauses, the position of the law is that the same must be disclosed to the consumer/customer for it to be binding. Otherwise, under the Competition and Consumer Protection, failure to fully disclose the consequences of exclusivity clauses will be considered unconscionable conduct for which the customer will be remedied.
Finally, misrepresentations as regards to the origin of the goods is illegal and such misrepresentations not only harm buyers but also impacts honest traders and further impacts the reliability and value of the goods actually made in Australia.
Electronic Transactions Act, 1999 (cth)
Competition and Consumer Protection Act (2010) (cth).
Corporations Act (2001) (cth).
ACCC -vs- Marksun Australia Pty Ltd (2011) FCA 695
Council for Education -vs- Commercial & General Investments Ltd  1 WLR 241;  3 All ER 1593
Quilter, M. (2014) The Law Handbook YOUR PRACTICAL GUIDE TO THE LAW IN NEW SOUTH WALES. [online] Thomson Reuters. Available at: https://www.legalanswers.sl.nsw.gov.au/guides/law_handbook/pdf/Ch12_contracts.pdf [Accessed 24 Aug. 2016]
A Guide to Business Law (2015) 21st ed. [e-book] Available at: https://legal.thomsonreuters.com.au/product/AU/files/720506676/chapter_summary_21e___ch_5.pdf [Accessed 24 Aug. 2016]
Australiancontractlaw.com (2016). Australian Contract Law | Julie Clarke. [online] Available at: https://www.australiancontractlaw.com/law/formation-agreement.html [Accessed 24 Aug. 2016]
Australiancontractlaw.com (2016). Australian Contract Law | Julie Clarke. [online] Available at: https://www.australiancontractlaw.com/law/remedies.html [Accessed 24 Aug. 2016]
Australian Competition and Consumer Commission (2014). Country of origin claims and the Australian Consumer Law - Blatant misleading and deceptive conduct. [online] Available at: https://www.accc.gov.au/publications/country-of-origin-claims-the-australian-consumer-law/country-of-origin-claims-and-the-australian-consumer-law/labelling-issues/blatant-misleading-and-deceptive-conduct [Accessed 24 Aug. 2016]
Anon, (2016). [online] Available at: https://www.cbs.sa.gov.au/assets/files/business_practices_guide.pdf [Accessed 24 Aug. 2016].
Anon, (2016). [online] Available at: https://www.humanrights.gov.au/sites/default/files/GPGB_vicarious_liability.pdf [Accessed 24 Aug. 2016].
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