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LAWS20058 Commercial Law Of Australian

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Question:

The report should use the IRAC method as a structure- Issue, Rule, Application, Conclusion and remedies. This structure requires you to set out clearly and in an organised way these matters arising from the court’s decision:

-Identify the common law legal issues in dispute. What were the broad areas of contract law that are relevant here?

-Explain the principles of law, the rules that the court applied and which were relevant to deciding the issue.

-Apply the relevant law to the facts. Explain how the court applied the relevant law.

-Conclusion and remedies- after the above stages how did the court reach a conclusion on the facts of the problem. Be sure to consider the remedy or remedies for the successful party

The key legal issue raised in this case is whether Pedro can enforce Lisa to comply with the terms of the contract?

 

Answer:

Introduction

A tribe situated in the jungles of South Africa did not have a legal framework to provide a judgement for violent actions of a tribe member against another. A constitution has been introduced in the tribe which provides formal guidelines for holding tribe members liable for their violent actions. The objective of this constitution is to provide a clear way in which criminals can be punished while at the same time promoting peace in the tribe by holding guilty members liable for their actions. The rules given in the constitution provides rights to each tribe member which protects them from the violent acts of other members. Based on such rights, members who use violence against another member can be held liable for their actions, and they can be punished by imprisonment. The duration of prison increases based on the seriousness of the crime committed by the tribe member.

 


The constitution also provides provision regarding financial penalties on the tribe members in case they use violence against other members who suffered injuries due to such violence. In such financial punishments, the land or possession of the guilty tribe member is given to the innocent member. The constitution complies with the provisions given in Hart’s three-part legal system. The constitution applies equally on all members and all parties know their rights based on which the rule of recognition is present. Furthermore, appropriate policies are included in the constitution to amend, change, add or remove any laws based on which the rule of change element is present in the constitution. The procedure to the trail is also mentioned based on which the punishment is given to the guilty tribe members by giving him the opportunity to heard, thus, the rule of adjudication element is present as well. Thus, the constitution of the tribe complies with the provisions of Hart’s three-part legal system.

The criminal law applies in the United Kingdom provides provisions regarding holding a person liable for his/her criminal acts. The criminal actions are considered as wrongs which affect the society as a whole rather than a single individual. The power is given to the state based on which it can provide provisions regarding controlling and handling of crimes in the nation. The Criminal Justice Act is a key regulation which provides penalties regarding the criminal conduct of individuals in the United Kingdom. The act provides various penalties which imposed by the court on people who found guilty of criminal acts. Another key act is the Criminal Law Act which also deals with the penalties imposed by the court in guilty person. The penalties for criminal acts of people include monetary penalties, discharge, custodial sentences, and life imprisonment. The court awards these penalties after giving a proper trial to the guilty party.

Hart’s three-part legal system provisions apply to the criminal law in the United Kingdom. The criminal laws apply over the country, and they are the same for everyone which avoid uncertainty based on which they comply with the rules of recognition. Furthermore, the procedure for changing, adding, amending and deleting the laws is clearly defined as well to comply with rules of change provision. Lastly, the procedure of adjudication is given as well based on which different courts are authorised to entertain different cases relating to criminal matters, thus, rules of adjudication provision is present as well. The Australian criminal laws are borrowed from the English criminal laws, thus, they are similar to each other. The Crimes Act provides provision regarding penalties which imposed by the court on individuals who found guilty of criminal offenses. The penalties include community sentence, monetary penalties, custodial sentences, and life imprisonment. The Australian criminal laws also comply with Hart’s three-part legal system similarly as the English criminal law.

 

Issue

The key issue raised by Gumland Property Holdings Pty Ltd. V Duffy Bros Fruit Market (Campbelltown) Pty Ltd case is whether the landlord of the property has the right to end the lease agreement based on non-payment of rent and whether the landlord can demand loss of bargain to non-compliance with an essential term of the deed?

Rule

A lease agreement which is formed between the landlord and the tenant contains a range of terms and conditions which apply to both parties. The lease document is similar to a commercial document and the term regarding payment of rent is determined as the consideration of the contract. The rent is considered as the consideration of a lease agreement, thus, it is an essential term of the contract based on which the landlord can terminate the contract. Thus, the lease agreement is similar to a commercial agreement based on which the contract can be repealed on non-fulfilment of an essential term. Furthermore, any deed formed by the parties based on the lease agreement is also considered as a crucial part of the contract based on which the landlord can demand loss of bargain.

Application

Transit Management Pty Ltd (Transit) gave its property on lease to Duffy Bros Fruit Market (Campbelltown) Pty Limited (Duffy) for a period of 15 years. After a few years, Duffy finds it difficult to afford the rent of the shopping complex, thus, a deed was formed between the parties to sub-let the property. The property was sold by Transit to Gumland Property Holdings Pty Ltd (Gumland) along with the rights of the lease. In 2002, the sub-lease on the property was expired. However, the sub-tenant did not want to extend the period of the lease, therefore, no contract formed between the parties. Furthermore, the sub-tenant did not vacate the property and decided to only pay half rent of the property. Gumland demanded arrear in the rent from Duffy, and no action was taken by it. Later, Gumland filed a suit against Duffy for payment of arrears in the rent along with interest and the loss of bargain. Gumland also terminated the lease agreement between the parties.

Duffy argued in the court that payment of rent is just a term of the lease agreement based on which the entire contract cannot be rescinded by the landlord. Furthermore, the landlord cannot demand loss of bargain because the term was included in the deed rather than the lease contract. The court provided the judgement in favour of Gumland by providing that payment of rent is an essential term of the lease agreement, and the landlord can terminate the contract on violation of this term. Furthermore, the deed was a part of the lease agreement, and breach of its terms gives the right to the landlord to demand loss of bargain from the tenant. This case is relevant in Australia because it identifies the rights of the landlord to end the lease agreement on non-payment of rent. Furthermore, it also highlights the rights of the landlord to demand loss of bargain in case an essential term is violated by the party.

Thus, the landlord has the right to rescind the lease contract on non-payment of the rent because it is an essential term of the contract and it can also demand loss of bargain in case of violation of the terms of the lease. The remedies in this case which issued by the court include the arrear rent amount along with interest and the payment of the loss of bargain to the landlord.

The legal issue raised in ACCC v Gary Peer & Associates Pty Ltd case is whether the party can hold the company liable for fraudulent and misleading advertisement under the Australian Consumer Law and whether the contract can be set aside by the customers?

The Australian Consumer Law (ACL) restrict the corporations from making false and misleading claims regarding their products or services while offering them to the customers. The companies can be held liable for fraudulent misrepresentation if they made a false statement in order to induce other parties to form a contract. The party making the fraudulent misrepresentation must know that fact that the statement made by him is false as given in the case of Derry v Peek. Furthermore, the purpose of the untrue statement is to induce another party to form a legal relationship with him. The party who suffered a loss due to relying on the fraudulent misrepresentation by a party can file a suit to recover damages from him. Section 18 of the Competition and Consumer Act provides that parties are prohibited from making misleading and deceptive claims regarding their products or services or statement which are likely to mislead or deceive parties. Section 30 of the Act prohibits the parties from making a misleading or deceptive statement regarding sale or promotion or possible sale of an interest in land.

 

Application

In ACCC v Gary Peer & Associates Pty Ltd case, a real estate agent advertised the house for an auction and the price guide for such advertisement displayed the price of the house $600,000. Furthermore, the revised price guide displayed the price of the house is $650,000, and it was also mentioned that the buyers should inspect regarding the price. The agent represented to the customers that the price of the house is approximately $600,000 or $650,000. The vendor later instructed the respondent that they did not want to sell the proper for less than $780,000. Later the vendor told the real estate agent that they did not want to sell their property for less than $800,000. The market value of the property at the time was $805,000 and the purpose of the real estate agent to attract more customers by focusing on the fact that a proper worth $805,000 is for sale in just $650,000.

Thus, the real estate agent knew that the statement made by him is false, and he included it in the advertisement to induce parties into signing a contract with him. The court held him liable for misleading and fraudulent misrepresentation based on the false advertisement issued by the party. Furthermore, the court provided that the real estate agent has breached section 30 of ACL (previously section 53A of the Trade Practices Act) because the advertisement issued by the party is to mislead and deceive the customers. Thus, the court held the real estate agent liable for misleading and fraudulent misrepresentation based on which parties have the right to set aside the contract formed between them. This case has a significant role in Australian law because it is a reminder for the parties operating in the real estate industry that they have to be ever vigilant and compliant with the guidelines issued under the Australian Consumer Law regarding advertisement practices.

Thus, the court held that party liable for fraudulent and misleading advertisement as per the provisions are given in ACL based on which parties can set aside the contract formed between parties based on fraudulent misrepresentation. The remedies available for the parties include termination of the contract and damages for the loss suffered by them.

The contract gives the right to the contracting parties to legally enforce each other to comply with its terms. It binds them into a legal relationship based on which they have an obligation to ensure that the conditions of the contract are fulfilled. On non-fulfilment of contractual terms, the party has the right to legally enforce another party to comply with them and also demand damages for the loss suffered by them. However, it is important that the contractual relationship between the parties is valid without which the parties cannot legally enforce each other to comply with the terms of the contract. The first element of the contract is a valid offer which must have the capacity to bind the offeror into its terms as given by the court in Harvey v Facey case. Furthermore, the acceptance of the offeree is a key element which must be communicated by the party. In Entorres v Miles Far East case, the court provided that the acceptance of a party must be received by the offeror before the offer is effective.

Moreover, the acceptance must match the terms of the offer because any changes in the terms resulted in creating a counter offer which terminates the original offer as given in the case of Hyde v Wrench. The parties who are forming the contract must have the capacity to form a legal relationship since minor, insolvent and unsound mind person cannot enter into a contract. A valid consideration is another key element of the contract. It is considered as the bargain of the contract in which one party suffered a loss, and another receives a gain. The consideration must have certain value in the eyes of the law, and it must be sufficient for the contract, however, it need not be adequate as given by the court in the judgement of Chappell v Nestle case. Furthermore, the parties who are forming a legal relationship between each other must have the intention to bind each other to its terms. Generally, the agreement or promises made by parties in a social setting did not have intention to form a legal relationship based on which a contract cannot be formed as given in the case of Jones v Padavatton.

In the present scenario, Pedro and Lisa have entered into a contract regarding the purchase of French Jewellery business of Lisa. One of the terms of the contract was that Lisa could not establish another French Jewellery business in Australia for a period of two years after forming of the contract. After one year, Lisa opened a new business in Cairns, Queensland. The contract for purchasing the business of Lisa was valid because all the elements were present in the contract. Thus, both parties are legally obligated towards each other based on which they can enforce each other to comply with the terms of the contract.

 

Conclusion

Thus, Pedro has the right to legally enforce Lisa to shut down her business because she has breached the term of the contract formed between them. Pedro can demand damages for the loss suffered by him due to the business of Lisa. He can also demand the remedy of specific performance of the contract since Lisa has breached the term of the contract.

 

References

Articles/Books/Reports

Courtney W, Contractual Indemnities (Hart Publishing, 2014)

Kramer MH, Grant, C, Colburn, B and Hatzistavrou, A, The Legacy of H.L.A. Hart: Legal, Political, and Moral Philosophy (Oxford University Press, 2008)

Poole J, Textbook on contact law (Oxford University Press, 2016)

Stephen JF, A history of the criminal law of England (Cambridge University Press, 2014)

Turner C and Trone J, Australian Commercial Law (Thomson Reuters, 2017)

Turner C, Contract Law (Routledge, 2013)

ACCC v Gary Peer & Associates Pty Ltd (2005) FCA 404

Chappell v Nestle (1960) AC 87

Derry v Peek (1889) 5 T.L.R 625

Entorres v Miles Far East (1955) 2 QB 327

Gumland Property Holdings Pty Ltd. V Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237

Harvey v Facey (1893) UKPC 1

Hyde v Wrench (1840) 49 ER 132

Jones v Padavatton (1969) 1 WLR 328

Competition and Consumer Act 2010

Crimes Act 1914

Criminal Justice Act 2003

Criminal Law Act 1977

Trade Practices Act 1974

ACCC, Gary Peer & Associates found to have misled buyers (2005) ACCC < https://www.accc.gov.au/media-release/gary-peer-associates-found-to-have-misled-buyers>

ACL, Australian Consumer Law (Cth) (2018) ACL < https://www.australiancontractlaw.com/legislation/cthacl.html>

Jade, Australian Competition & Consumer Commission v Gary Peer & Associates Pty Ltd [2005] FCA 404 (2005) Jade < https://jade.io/article/110420>

Lethlean J, A Landlord´s Right To Recover Loss Of Bargain Damages (2008) Mondaq < https://www.mondaq.com/australia/x/62514/landlord+tenant+leases/A+Landlords+Right+To+Recover+Loss+Of+Bargain+Damages>

OR

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