Laws20058 The New Constitution Protect Assessment Answers

By contrast, felonies carry sentencing of more than a single year of incarceration and the guilty are locked up in state prisons (Portman, 2015). The most heinous crimes mostly see jail sentences which are served in federal prisons.

While Australia also deals with criminal offenders in an almost similar fashion, it is important to note that fines are based on a system called penalty units. Such are calculated by multiplying the value of one penalty unit by the number of penalty units set for that crime (Queensland Government, 2018). There are also additional options for sentencing in Australia which include rehabilitation, honing and boot camp.

PART C

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

Issue

1. Whether the defendant was liable for arrears of a sublease.
2. Whether the plaintiff was justified to terminate a lease agreement on the basis of failure to pay for a shortfall.

Rule

The rules applied by the court and relevant to the case were as follows:

1. The court will warn itself from disturbing an express provision of a lease agreement that deems an intermediate or innominate term essential.
2. Where a lessee commits a breach of an essential term in a lease agreement or repudiates the lease, the lessor is at liberty to not only terminate the lease and be entitled to arrears of rent in the process, but also recover damages for plausible and possible future alleged losses.

Application

Duffy Bros –the defendant- had leased 20% of Transit Management Property for 15 years intended to operate a market. The base rent was $243,343 annually. A year after the deal, the Piscuineris agreed a guarantee to pay all occupational costs or any other costs that would arise from a breach of the lease agreement. Five years later the defendants were experiencing a rough patch and had fallen into rent and outgoing areas prompting an agreement between the defendant and Transit to reduce the rent to $156,000 and a sublease on part of the premises. Two years later, Transit sold the premises to Gumland Property Holdings –the plaintiff- and transferred all its rights contained in the Piscuinerris’ agreement with it.

Meanwhile, the defendant subleased a portion to Woolworths Ltd., which expired a year later. However, Woolworths continued occupying despite not renewing the sublease and there was a shortfall not paid for as a result. The defendant did not pay for the shortfall and the plaintiff terminated the lease citing the failure to pay as a breach of contract. Two years later, the plaintiff instituted a suit seeking arrears of rent up to the date of termination and damages. 

The court opted to look into the details of the lease agreement and was not guided by statutory provisions. In other words, the court treated the lease as a contract agreement and thus applied the general rules of a contract when deciding. It was realized that the conduct of the defendant of failing to pay the shortfall was sufficient breach that would allow for termination. The defendant was found to have breached an essential part of the deed and as a result, the plaintiff was entitled to institute an action against them for rent pay absconded by Woolworths.

When Transit sold the property to the plaintiff, he conferred rights and responsibilities to them. The defendant had an obligation set out in the Piscuinerris’ agreement and once the part of the store was subleased to Woolworths, they (the defendant) were liable for the rent and outgoings. In essence, the deed was not a suspension of the lease or even a side agreement to the lease, but rather, a variation of it. Therefore, a failure to pay and the accumulated areas meant a failure to comply with the lease covenant. The lease covenant being an essential term in the contract, its breach entitled the lessor to terminate the lease and still obtain remedies.

Conclusion and Remedies

The court held that the lease termination was valid on the account that the lessee had breached a contractual term by failing to undertake its obligation of paying rent. As a result, the court ordered that unpaid rents and outgoings be reimbursed to the plaintiff.  Additionally, the lessor was entitled to damages coming from reinstatement damages (the costs of reletting the premises) and loss of bargain for the rest of the 15-year term.

PART D

Issue

Whether a party to a contract may ask a court to cancel the contract due to fraudulent misrepresentation.

Rules

1. Fraudulent misrepresentation makes a contract voidable on the part of the misrepresented party to a contract.
2. Section 18 of the Australian Consumer Law in the Competition and Consumer Act 2010 provides that “An individual must not, in trading activity or commerce, engage in conduct that is deceptive or misleading or has the potential of misleading or deceiving the other party into contracting.”

Application

Both common law and Australian consumer legislation require that parties enter into agreements freely, voluntary and in full understanding of the product they are purchasing. The principle of fraudulent misrepresentation was portrayed in the case in ACCC v Telstra Corporation Limited (2007) 244 ALR 470. The defendants advertised their network to be having ‘coverage everywhere you needed it’ when in reality, it did not. Despite even referring to a disclaimer on the company’s website, the defendant was held liable for misleading and fraudulent conduct to her consumers, contrary to section 18 of the Act.

The plaintiff was entitled to rescinding the contract as it was voidable since he did relied on a fraudulent term to center the contract. Fraudulent misrepresentation in contracts occur when a false statement is made by a party –be it in writing, verbally by the use of even a simple gesture or by keeping silence- to induce another to enter into a contractual relationship. There are a number of aspects that make statements made in contracts misrepresentations. The statement is i) made by a seller who ii) has knowledge that it is false but still iii) makes it carelessly and recklessly despite the fact that he or she does not believe in its truth (Corones, 2014).

The onus to prove misrepresentation lies on the plaintiff. With this regard, the complaining party will be required to show all the three elements evident in the case. However, it is also noteworthy that while proving a statement amounts to misrepresentation, the plaintiff has a burden to demonstrate some facts that would otherwise be used as a defense. First is that the statement in question was false in nature. Secondly, the plaintiff has to show that the statement was more than a mere trade puff. Trade puffs allow salespersons to make exaggerated statements or expressions without being legally bound to them (Gibson, 2010).

They are just commendations and nothing more. Saying that a car is in good shape is a trade puff. Stating that a business would be a gold mine easily qualifies as a trade puff owing to its ambiguity and its unspecific nature. The statement also has to be one of fact and not just an opinion. The general rule is that mere opinions do not amount to misrepresentations. Finally, the repudiating party will have to show that he or she indeed relied on the statement to make up his or her mind on reaching a contractual agreement.

Conclusion and Remedies

A party to a contract may ask a court to cancel a contract that has been subject to fraudulent misrepresentation. Such contracts are voidable on the part of the misrepresented party and he or she can seek damages available. Such include compensatory damages and rescission: where the parties are reinstated to their positions prior to getting into the contract.

PART E

Issue

Whether Pedro can enforce a contractual promise on Lisa that bars her from engaging in the sale of imported French jewelry anywhere in Australia a year after buying from her.

Rule

A seller of a business’ covenant to not set up a similar business within a certain geographical area so as to protect a buyer’s business is valid in common law.

Application

A restraint intended to block a seller of a business from setting up a similar business next door is prima facie void. This was the position in the case of Leather Cloth Co. v Lorsont (1865) 11 HL Cas 523, where it was held that every individual should be at liberty to engage himself or herself in any kind of trade or business and utilize his skills and resources in consistency with the good of the community. However, as it was held in the case of Gujarat Bottling Co Ltd. V Coca Cola Company 1995 SCC (5) 545, the application of the restraint is considered if the restriction has been negotiated after the termination of the contract just like it is the case in the agreement between Lisa and Pedro. Such a restraint stands to be enforceable if it is deemed to be reasonable.

It is the burden of the promisee –in this case Pedro- to prove that the restraint is reasonable (Murray, n.d.). When determining reasonableness, a number of factors are taken into consideration. First is the type or nature of the business. This consideration mostly applies in businesses that are pivotal to the welfare and health of the public such as pharmaceutical businesses: whereby restraining the sale of an important drug would be considered unreasonable. In this case both retailers were involved in the business of selling imported French jewelry, which is a luxury, and such does not pose any course of unreasonableness.

Secondly, the duration of the constraint is also taken into consideration (Murray, n.d.). While it rests on the judge’s discretion on what amounts to reasonable timeline, the nature of the business will be a factor in assessing the duration of the restraint. In the case of Fitch v Dewes [1920] 2 Ch 159A, a lifelong restraint of trade was considered to be reasonable. In the foregoing case, the duration agreed in the covenant between Pedro and Lisa was two years.

Thirdly, the size of the geographical area covered by the restraint can be looked at in determining reasonableness (Murray, n.d.). The geographical location agreed by the two parties covered the whole of Australia. While the courts have discretion to determine what stands as a reasonable area of restraint, very large geographical cover can be deemed to be rational. In the case of Nodenfelt vs Maxim Nordenfelt Guns and Ammunition Co.[1894]AC 535, it was held that area covenants in trading restraint cases are readily enforceable even if the area is worldwide. Going by this, the whole of Australia is equally reasonable.

Lastly is the interest of the public in relation to the issue. This burden is laid on the promisor –in this case Lisa- who will have to prove that her actions were in the interest of the public. Public interest touches on issues of creating a competitive environment, market demand, curbing monopoly among others. For instance, if Lisa is starting the jewelry business to meet a market demand that Pedro has failed to fully sort, then the lack of compliance with the restraint would be deemed reasonable.

Conclusion and Remedies

Having ascertained all the requirements of reasonableness, it is evident that Pedro can enforce a contractual promise on Lisa that bars her from engaging in the sale of imported French jewelry anywhere in Australia. He will thus be entitled to damages for lost customers as a result of the breach and equitable remedies in injunction from acting in breach of the covenant.

References

ACCC v Telstra Corporation Limited (2007) 244 ALR 470.

Competition and Consumer Act (Australian Consumer Law) 2010

Corones, S. G. (2014). Competition law in Australia. Thomson Reuters Australia, Limited.

Gans, J. (2016). Modern criminal law of Australia. Cambridge University Press.

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

Gibson, A. (2018). Value pack business law + myBusLawLab with etext (10th ed.). Melbourne.

Dean, R. L. (2013). Unraveling restraint of trade clauses. Sydney, NSW: Law Society of New South Wales.

FindLaw. (n.d.). Fraudulent misrepresentation. 

Gujarat Bottling Co Ltd. V Coca Cola Company 1995 SCC (5) 545

Hart, H. L. A. (1977). Is law a system of rules? The philosophy of law, 38-65.

Hart, H.L.A. (1994). The Concept of Law. Oxford: Clarendon Press.

Lacey, N., & Soskice, D. (2015). Crime, punishment and segregation in the United States: The paradox of local democracy. Punishment & Society, 17(4), 454-481.

Leather Cloth Co. v Lorsont (1865) 11 HL Cas 523

Murray, J. (n.d.). Common restrictive covenants in business contracts.

Nodenfelt v Maxim Nordenfelt Guns and Ammunition Co.[1894]AC 535

Payne, M. (1976). Hart's concept of a legal system. William & Mary Law Rev., 18, 287.

Portman, J. (2015, April 09). How are crimes punished? 

Queensland Government. (2018, July 05). Sentencing fines and penalties for offences: Types of crime.