LAWS20058 Australian Law | Law of Contract and Property

-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.

Support your analysis with case and statute references where relevant.

Part E

Please note. In this question and answer you should consider only common law contract issues as set out in the Modules and text Chapters 9, 10, 11 and 12. Do not apply consumer law or other statute principles in your answer.

Pedro and Lisa were both retailers selling imported French jewellery in Melbourne, Victoria. Lisa sold her business to Pedro and in the contract agreed that she would not carry on or be engaged in the sa_le of imported French jewellery anywhere in Australia for a period of two years. One year after selling the business Lisa established a new retail business in Cairns, Queensland, selling imported French jewellery. Can Pedro enforce the contractual promise against Lisa?  

Advise Pedro using common law contract legal principles and the IRAC method as to what action Pedro can take and the possible remedies he could obtain. You do not need to discuss the essential elements and the formation of a contract topic here. Assume that a valid enforceable contract exists between the parties. Do not apply consumer law or other statute principles in your answer.

It is essential that you refer to relevant cases to support the analysis.

The IRAC method- Issue, Rule, Application, Conclusion and remedies- requires you to set out clearly and in an organised way these matters:

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

-Explain the principles of law, the rules, that apply and which are relevant to deciding the issue.

-Apply the relevant law to the facts. You may need to consider more than one approach here. There is not always one clear way.

-Conclusion and remedies- after the above stages reach a conclusion on the facts of the problem. Be sure to consider possible remedies for the innocent party.

Answer:

Part A

This part uses the early modules in which a constitution for the tribe had been described and discussed. In the new constitution rules are present in relation to providing protection to the tribe from violent actions of each other. The rules which have been deployed in the situation to provide protection to the people of the tribe from violent actions have been discussed in this section of the paper. There are various forms of violet actions which can be present in relation to a tribe. These include assault, battery, murder, grievous hurt, theft, robbery and sexual assault. These crimes are violent in nature because not only they have a physical impact on the victim but also the cause fear and chaos in the society and eventually the effects the mental well being of the tribe members. In the constitution it has been provided that the law making part of the tribe has the right to make law according to needs of the society with respect to criminal violent behaviour. This incorporates the rule of change provided by professor Hart. The constitution also provides that any person who has been accused of carrying out a criminal violent behaviour has to be prosecuted in courts and to be provided beyond reasonable doubt that such person has committed the crime, the incorporating the rules of recognition and rules of adjudication. The punishment which is set is in accordance to the severity of criminal activity committed by the person. If a person has committed theft for the first time and it is minor in nature than the punishment which is to be provided to him is comparatively less that if he had committed theft on multiple occasions. However this rule is not present in relation to more severe crimes like sexual assault or murder to promote deterrence in the society.

Part B

Criminal penalties in Australia are primarily governed by the provisions of the Crimes Act 1961. In this section of the paper the Australian legal system for prosecuting criminal activities is compared to the Indian system. In India criminal activities are governed by the Indian Penal code 1960. When a person commits an act which is of a criminal nature it is not beneficial for the society and thus such person is subjected to punishment. In India a criminal sanction has been set out for all kinds of criminal activities. These include assault, battery, murder, grievous hurt, theft, robbery, sexual assault, forgery, counterfeiting currency, abetment, conspiracies, defamation and malicious prosecution. Under section 377 of the IPC provisions in relation unnatural sexual offence is provided. The section  states that an person who voluntarily carnal an intercourse against the order of nature against an animal, woman or man is to be punished with an imprisonment for life or an imprisonment which can extend up to 10 years and is also liable to pay a fine. The provisions of this section have been modified on many instances taking into consideration the need of the society. This means that the rule of change provided by the three part legal system of professor hart has been incorporated into the system. On the other hand this form of crime is called sexual assault in Australia and is deal by the crimes Act. Different forms of sexual assaults have different penalties based on the severity of the offence. This means that the rule of recognition as provided in the three part legal system of professor hart has been incorporated into the Australian legal system. In both the systems there is a provision for appealing against the penalties imposed on a person and thus the rules of a adjudication provided by the Hart legal system are also incorporated.

Part C

Issue

The issue is related to the law of contract and property. There were three primary issues in this case. These are as follows

• Whether a part can terminate the contract for breach and claim damages
• Whether the lessor has the right to recover bargain damages for the breach
• Whether the right of claiming damages for breach of covenant touches the land in context

Rules

Section 117 of the Conveyancing Act 1919 (NSW) is in relation to Rent and benefit of lessees’ covenants to run with reversion.

In the case of   Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd, it had been ruled by the court that where there is a serious breach in relation to a non-essential term, the other party has the right to rescind the contract and claim damages.

In the case of Lombard North Central plc v Butterworth  it had been provided by the court that where there is a pre agreement between the parties to the contract in relation to a term being classified as an important part of the contract, then such breach would be considered as an essential breach of contract and would allow the aggrieved party to claim damages as well as rescind the contract.

In the case of McDonald v Dennys Lascelles Ltd, it has been stated in the case that when the essential condition of a contract has been breached by the parties to it, the aggrieved party has the right to claim damages and also repudiate the contract.

Application

In this case Transit Management Pty Ltd was the owner of a shopping centre which had been leased to Duffy Bros Fruit Market (Campbelltown) Pty Ltd. The Lessee because of business difficulties was not able to pay the rent of the lease. In this situation the lessor allowed the Lessee to reduce the rent and to appoint a sub tenant in the property. While doing so the Lessee added to the terms that in case of any further breach by the Lessee, he would be liable to pay damages to the Lessor and the lease would be terminated. The property was subjected to the provisions of Real Property Act 1900 (NSW). The sub-tenant had left the property and there was again a default payment by the Lessee. The Lessor claimed breach of contract and demanded recession and damages. The trial court awarded such damages to the Lessor. However the damages were overturned by the court of appeal. The Lessor made an appeal in this case.  In this case the court allowed the appeal. In addition the court granted a special leave to cross appeal, which had been heard instanter and dismissed. In addition the court overturned the judgment provided by the court of appeal in favour of the appellant against the respondent and awarded damages worth $2,096,514, plus interest which had been awarded by the trial court. The court had also set aside orders in relation to the cost of proceedings and awarded the cost to the appellant which was to be paid by the second and the third respondent.

Conclusion

The Lessor has the right to repudiate the contract and claim damages from the Lessee

Part D

Case Selected : ACCC v TPG Internet Pty Ltd

Issue

Whether there was a misleading and deceptive conduct on the part of the defendant company according to the Australian Consumer Law and whether there was a fraudulent misrepresentation in relation to common law provisions.

Rules

Under the provisions of section 18 of the Australian consumer Law which is provided by the Australian Competition and Consumer Act 2010 (Cth), schedule 2, a person in the course of trade and commerce must not indulge in an act which can be considered as misleading and deceptive or any act which is likely to mislead or deceive (a consumer or other business).

A fraudulent misrepresentation under common law takes place when there is a statement of fact made by a party which is to the knowledge of the party false or misleading and the party to whom such representation had been made relies on the misrepresentation and gets into a contract.

The principles of a fraudulent misrepresentation had been discussed in the case of Derry v Peek. The court identified that a few elements have to be satisfied to give rise to a fraudulent misrepresentation. These principles are as follows:

• The person making the statement has to known that the statement is misleading, deceptive or false, or,
• The person has no belief in the statement or,
• Is reckless in relation to the trust
• The other person relied on such statement to get into the contract

Application

In this case an advertisement campaign had been carried out by the defendant company. In that advertisement the company promised that it would be providing "Unlimited ADSL2+ for $29.95 per month". However in reality the price which had to be paid in relation to the service was actually a total of $59.95 per month. In this case the Australian Competition and Consumer Commission brought a claim against the company that the advertisement which had been made by it is to be considered as misleading and deceptive in the course of trade and commerce.  In this case it had been held by the court that the defendant company had violated the provisions of section 18 of the Australian consumer Law which is provided by the Australian Competition and Consumer Act 2010 (Cth), schedule 2, according to which, a person in the course of trade and commerce must not indulge in an act which can be considered as misleading and deceptive or any act which is likely to mislead or deceive (a consumer or other business). In relation to the breach the court stated that the company is liable to pay a fine of $2 million. However the federal court overturned the decision of the trial judge and imposed a penalty of only $50,000. Thus in order to be a conduct of fraudulent misrepresentation or misleading and deceptive conduct the person who is making it has to know that the conduct is fraudulent. In this case the company did not know that as they had provided the additional price required in small letters, which were although not properly visible, but were present in the advertisement. Thus the court stated that the conduct would not be a breach as the law does not protect those consumers who do not take care of their own interest. This is the same as fraudulent misrepresentation which is not applicable if the other party had reasonably known the truth.

Conclusion

The allegations of fraudulent misrepresentation and misleading and deceptive conduct in this case had been overturned.

Part E

Issue

The issue in this case is that whether Pedro is provided the right by to impose, the term of the contract on Lisa under which she is not allowed to carry out jewellery business in Australia.

Rule

When two people get into a contract with each other they are legally bound to the terms of such contract. This signifies that in case there is a breach of the terms of contract the person who has suffered from the breach can file a case against the other person and seek the remedies available at contract law.

Not all terms in a contract can be enforced by the parties to it as some terms can be rendered unfair by the courts. This may happen in relation to an exclusion clause or a restraint of trade clause.

There have been various cases in which the courts have determined the validity of a restraint of trade clause. The case of Nordenfeldt v Maxim Nordenfeldt Guns and Ammunition Company, is one such case where the provisions of a restraint of trade clause had been discussed by the court. The court described the clause as a term through which one party to the contract prevents the other party from carrying out a specific business activity within an area for a particular time.  In this case it has been provided by the court that the primary purpose of the clause is to ensure that there is reasonable protection provided to the business information according to the case of Stenhouse Australia v Phillips. The court clarified that a clause in a contract which is incorporated to prevent a person from indulging into trade activities is void.  The exclusion clause would only be considered as being valid if the court comes to the view that the clause is necessary to provide reasonable protection to the legitimate interest of the business.

The clause had also been discussed in the case of Lindner v Murdock's Garage it had been stated by the court that the party who has incorporated the exclusion clause into the contract has to show that it is added to provide reasonable protection to the legitimate interest of the business.

Application

The case study states that Lisa and Pedro carry out a jewellery business together. The primary place which in which the business is carried out is Melbourne, Victoria. Lisa had agreed to the sell her business to Pedro and under the agreement of sale she had decided that she will not be carrying out a business to sell jewellery in Australia. However she had started the business of selling jewellery after a period of one year in Cairns, Queensland. According to the primary terms of the contract, this would be considered as a breach of contract. However as per the case of Stenhouse Australia v Phillips, the court clarified that a clause in a contract which is incorporated to prevent a person from indulging into trade activities is void.  In addition as per the case of Nordenfeldt v Maxim Nordenfeldt Guns and Ammunition Company, such clause would only be considered as being valid if the court comes to the view that the clause is necessary to provide reasonable protection to the legitimate interest of the business. In the present situation it cannot be stated that the clause which have been imposed on Lisa is reasonable and has been added to protect the legitimate interest of the business. This is because she is operating in Cairns, Queensland and Pedro’s business generally operates in Melbourne, Victoria. Thus the clause is unreasonable.

Conclusion

Pedro cannot enforce the restrictive covenant on Lisa

References

ACCC v TPG Internet Pty Ltd [2013] HCA 54

Australian Competition and Consumer Act 2010 (Cth)

Conveyancing Act 1919 (NSW)

Derry v Peek [1889] UKHL 1

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

 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 82 ALJR 345

Lindner v Murdock's Garage (1950) 83 CLR 628

Lombard North Central plc v Butterworth [1987] QB 527

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457

Nordenfeldt v Maxim Nordenfeldt Guns and Ammunition Company [1894] AC 535

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827

Stenhouse Australia v Phillips [1974] AC 391

Tebbit, Mark. Philosophy of law: An introduction. (Routledge, 2017).

Waldron, Jeremy. "Is the rule of law an essentially contested concept (in Florida)?." (2017) The Rule of Law and the Separation of Powers. Routledge,. 117-144.