Australian Contract Law Issues - Assignment Example

Your name: Student Number:   Course name: Course code:        Referencing Style: APA Due Date: Question 1 Legal Issues George was able to see Malcolm’s two pets, and thereafter they discussed the rates of taking care of the two pets. In the conversation, Malcolm mentioned he was going to present the rabbit at a show in Melbourne where, the winner will walk away with 10,000 dollars. George told Malcolm he was able to take care of the two pets, and even quoted the rate of taking care of the pets at $100 per day (700 dollars per week). The following day George emailed a standard form contract which contained a clause which states that George is not liable for illness or death of tropical fish due to their specific vulnerabilities.1 Unknowingly, Malcolm signed the contract and while he was away the tropical fish died and the rabbit lost his all its hair. There are two legal issues to be discussed in this case. The first issue is whether the warranty was given before or at the time of making of the contract or whether it was given after the contract had been made? The second issue is if the agreement is legally binding in order to be an enforceable contract? Rules Three legal issues arise in this case study. The first pertains to whether George is liable for damages if the tropical fish died. A second issue which is evident in this case study is whether warranty was given before or at the time of making of the contract or whether it was given after the contract had been made”. A third issue which is evident in this case study is whether Malcolm is entitled for damages. Regarding the possible legal liability, George need to understand that he own fiduciary duty to demonstrate diligence and care when taking care of pet similar to the standard that is provided for under Competition and Consumer Law Act 2010.2 Similarly, under s.4 of the Misrepresentation Act 19713, Malcolm was misguided to enter into a contract by George. This case can be related to that of Roscorla vs. Thomas (1842) 3QB 234 case.4 In the case, Roscorla bought a horse from his master (Thomas) for 30 pounds. On the following day, Thomas was paid the agreeable amount, and in return Thomas gave Roscorla a memorandum which stated that the horse was perfect in vision, sound in limb and wind, and free from vice. Roscorla was able to sue his master for breach of warranty claiming the horse was vicious and restive. Regarding the possible compensation, ‘fundamental breach of a contract” will apply in this case study.5 Analysis According to the Australian contract law, a contract can be termed as a promise that is legally binding. In other words, if one person promises to do something then that promise will be legally binding as long as certain criteria are met. They must be an agreement that comprising an offer and acceptance.6 In the case study, Georgia accepted the offer of taking care of the two pets but during the negotiation with Malcolm he never mentioned that contention clause that he will not be liable if the tropical fish died or became sick. According to the traditional approach in contract law, offer and acceptance have been used to determine whether an agreement exist between two parties. If a person accepts an offer, then that means, that person is willing to enter into a contract on agreeable terms without any further negotiations.7 A contract is then formed if there is implied or express agreement between two parties.8 In the case, the two parties only agreed on the rate at which the two pets would be charged for the one week Malcolm will be away. But upon entering into an agreement, George and Malcolm never discussed or agreed on liability clause because that particular clause was never discussed between two parties. For example, in Stilk v Myrick [1809] case on the subject of consideration, the preceding judge,9 Lord Ellenborough decided that in a situation where a person was bound to execute a duty under an existing contract, that duty will be considered valid consideration for a new contract. Regarding possible compensation for the damage Malcolm incurred. A contract may have certain terms which are essential or fundamental.10 When these terms have been breached, the agreement in the contract will not be followed. A fundamental term in a contract forms the ‘core’ of the contract, and therefore cannot be affected by any exclusion clause in the contract.11 While entering a contract and a person fails to perform the fundamental responsibility, then that person will be termed to have breach the contract which has been agreed upon whether or not there is an exempting clause in the contract which protect that person.12 In Alderslade vs. Hendon Laundry Ltd case, Hendon Laundry Ltd lost the Alderslade cloth.13 The term upon the laundry company accepted its client’s clothes included a clause which stated that: the maximum compensation for the damaged loss cloth is 20 times the amount paid by the customer. In this situation, the appellant was protecting itself by relying solely on that particular clause in the contract. The preceding judge in that case found that the loss was due to carelessness on the company’s part, therefore the clause that limit liability for the company did not apply in this situation.14 Another example which can be cited with regard to “fundamental breach of a contract” can be found in Davies v. Collins case.15 The plaintiff took entrusted a cleaning company to clean his uniform. The company has the following clause in its contract: all orders are accepted at the owner’s risk and that the cleaning company cannot be held responsible for shrinkage, damage, color developed in necessary handling or defects.16 The loss of any item will not exceed ten times the amount paid by the customer. After entrusting his item to be cleaned, it was never returned. The plaintiff in this case claimed to be compensated for the full value of the item, but the defendant refused. Repudiation is whereby the contract between two parties stops to exist owing to a breach of duty which invalidates the contract. In repudiation, the injured party is allowed to treat the contract as discharged and sue for damages caused. If fundamental terms in a contract have been breached, the innocent party in the contract has the right to terminate it and sue for damages. In the case study, Malcolm has every right to stop payment and immediately sues for damages. Conclusion According to the Unfair Contract Terms Act 1977,17 a party who has breach a contract cannot be protected by any clause in the contract or limits his liability. George was bound by the contract to take care of the two pets but failed. Therefore, where a breach of contract has occurred, Malcolm is entitled to damages as a matter of right. Malcolm has every right to sue for damages. Question 2 Legal Issue One legal issue arises in this case. The issue pertains to the possible legal ramification or liability on the part of George. Regarding the possible legal liability George was to understand that he is supposed to demonstrate diligence and care in his work similar to standards provided for under Competition and Consumer Law Act 2010.18 Rules Several laws are applicable to this case study. To start with Competition and Consumer Law Act 2010,19 if there is a liability arising from a contract therefore the person who has suffered from the loss will be provided with comprehensive protection against unfair terms in the contract.20 In addition, the defendant (George) will not be entitled to claim the protection of the exemption clause and would be liable for any loss suffered by the plaintiff (Malcolm). Misrepresentation Act 1967 may also be applicable in the case. Misrepresentation is a false statement of law or fact which induces a party to enter into a contract.21 Analysis The doctrine of fundamental breach of a contract found in Competition and Consumer Law Act 2010 has simplified contract law. If a party in a contract fails to perform fundamental obligation, he will be termed to be guilty of a breach of the contract whether or not there is an exempting clause in the contract that purports to protect the defendant.22 In the case, George is not protected by the inserted clause of not taking liability in case of death or illness of tropical fish. Regarding Misrepresentation Act 1967 George falsely claimed he was in a position to take care of the two pets. Under the Act, if there is a breach of a contract, the contract can be made voidable, giving the innocent party in the contract the right to rescind the contract and sue for damages.23 Conclusion The only option of Malcolm is to find the best remedy to the issue as provided for under the Competition and Consumer Law Act 2010 and Misrepresentation Act 1971 (Cth).24 25In this case, one of the best remedies would involve rescission of the contract and sue for damages incurred due to his loss. It upon the court to consider whether defendant is protected by the liability clause, whether the defendant false made the plaintiff to enter into a contract, and whether the plaintiff sustained some loss as a result. In this regard, If Malcolm took this matter to court, the defendant will be ordered to pay for damages incurred due to the loss of the fish and rabbit losing some of its hair. Bibliography 1. Articles/Books/Reports P Luther, ‘Campbell, Espinasse and the Sailors’ (1999) 19 Legal Studies 526 Poole, Jill (2004). Textbook on Contract Law (7th ed ed.). London: Oxford University Press. McKendrick, Ewan (2007). Contract Law (7th ed ed.). London: Palgrave Macmillan 2. Case Law Alderslade vs. Hendon Laundry Ltd Davies v. Collins case Roscorla vs. Thomas (1842) 3QB 234 case Stilk v Myrick (1809). 3. Legislation Competition and Consumer Law Act 2010 Misrepresentation Act 1971 (Cth) Unfair Contract Terms Act 1977 Read More