Contract Law: A Mere Puff in Law - Case Study Example

Contract Law PART A What is a ‘mere puff’ and how is a puff different from a misrepresentation? A “mere puff” in law refers to a promotional claim or statement, which, rather than express objective views, expresses subjective views that a reasonable person is not expected to take literally. Such a claim or statement serves to “puff up” an exaggerated image that the specific entity is seeking to describe, particularly with regards to testimonials (James, 2014: p20). Legally, this term originated from the Carlill v Carbolic Smoke Ball Company in the Court of Appeal in England. In this case, the manufacturers contended that their statement that money would be reimbursed should their device aimed at preventing flu fail was a “mere puff”. As a result, they did not expect the consumer to take them seriously. A misrepresentation, on the other hand, refers to a false statement of fact that a party makes to another party to influence them into entering a contract, even though the statement is not part of the contract. In effect, this makes the contract voidable and the innocent party could repudiate the contract, as well as claim damages (James, 2014: p22). Where a person making the statement knew the real facts and it can be proved, they could not have held their views reasonably as a result, their opinions are taken as statement of fact. Explain how duress is different from undue influence. In order for a contract to be valid, both parties must make it freely and there should be mutual assent. However, it is possible that pressure to enter into the contract or coercion could affect mutual assent. Undue influence and duress are situations that impact on mutual assent, rendering contracts voidable or void. Duress refers to the exertion of wrongful pressure on a party to coerce them into making a contract that they would not ordinarily enter. It involves threatening to use force or using force intentionally to induce the party to assent to the contract (Carter, 2013: p32). Whether the coercion is mental or physical, it must be to an extent to which the other party does not have freedom of choice or free will, leaving them no reasonable alternative than to assent to the contract. On the other hand, undue influence refers to taking advantage of the other party during the formation of contracts. In this case, the two parties have a relationship, for example, one is superior to the other. Unlike duress that involves the use of direct threats; undue influence involves the use of excessive pressure by a dominant party for the subordinate to assent to the contract, although persuasion alone does not constitute undue influence (Carter, 2013: p33). As a result, the wrongfully influenced person who makes a contract can void it and choose not to enforce the contract. Identify the elements that constitute unconscionability A court of law could consider a contract or even a clause in the contract as unconscionable, limiting application of the clause or enforcement of the contract to avoid any unconscionable result. For a court of law to find a contract or a contract clause to be unconscionable there must be two main elements present; substantive unconscionability and procedural unconscionability. To show procedural unconscionability, there must be inequality in bargaining power, which can be evidenced by a plaintiff who has lower education, hidden terms in a contract, and unreasonably favourable terms to one party (Gibson & Fraser, 2013: p43). In addition, procedural unconscionability can also be evidenced by unfair surprise that is shown by terms that are hidden in prolix documents. However, the element of procedural unconscionability, even though present, can be defeated where the party making a complaint had other supply sources at a price that was not unconscionable. The second element of unconscionability is substantive unconscionability. This element can be evidenced by great disparities in price, for example a price that is 3-4 times more than the fair value in the market (Gibson & Fraser, 2013: p44). In addition, this element is also evidenced by overly unfair or harsh allocation of costs or risks that the circumstances cannot justify. If I was under 18 years old, explain the types of contract that may be enforceable against minors in Australia The fundamental principle of Australia’s current law is that, because of their immaturity, minors must be protected during dealings with other parties. In addition, the policy of current laws seek to mitigate various hardships that parties dealing with minors may have imposed on them, particularly so as to encourage these other parties to make contracts that are to the benefit of the minor (Turner & Trone, 2013: p44). A person who is not yet 18 years of age are considered minors and are bound by contracts for services or goods that are appropriate or usual, also called necessaries, for their way of life, while contracts made for beneficial contract of service or employment contracts are also binding. With regards to the initial category of binding contracts, necessaries include such essentials as clothing, food, and clothing, while dental and medical services are also considered as necessities. In the latter category of binding contracts, contracts of service or apprenticeship that are for the overall benefit of minors are enforceable (Turner & Trone, 2013: p44). In every other circumstance, for contracts to be enforceable against minors, they must affirm or ratify the contract once they get to 18 years of age for them to be enforceable. PART B Smith’s Paper Trail 2 Holt Street Surry Hills NSW 2010 Our Reference: #123-214 9/27/2014 To: John Wilcox, Esq. 35 Stirling Highway Crawley WA 6009. Perth, Australia Dear Sir, Re: Request for Legal Assistance and Guidance His letter is regarding the case number referenced above and concerns an incident of a contract with a minor that occurred on 13th September, 2014. I work for Smith’s Paper Trail Company as the Human Resource manager, and was approached by my employer with a problem regarding contractual concerns with his son, who is a minor. He has authorized me to go through the issue and give him advice on the issue. It is my hope that you can help me understand our position in relation to the issue. On the 8th of August, 2014, my employer Mr. Smith offered his son a managerial position in the company, which he was supposed to take up on the 1st of September. The offer was not accepted right away and his son replied that the opportunity was a good and rare one. However, Mr. Smith met a highly qualified manager for the same position, Mr. Simon, three days later and offered him the job, which Simon accepted. Mr. Smith called his son the next day to tell him that the job was no longer available, which his son did not receive. However, his son sent him a message confirming his acceptance the next day, to which his son held that a contract hand been made and he would sue his father for repudiating it. To smooth things over, Mr. Smith offered his son $25,000 for him to drop the issue. My employer would like to know whether a contract exists between him and his son, as well as whether his son could still accept the money and sue him. In my advice to Mr. Smith, I began by telling him that, generally, minors are not allowed to enter into contracts that are legally binding. The only contracts with minors that are enforceable include those for supply of necessities and those that are for their benefit. I told him that the first instance did not apply since the contract did not involve provision of necessities like shelter or medical treatment access. However, I have also mentioned that courts have a wide interpretation as to what supply of necessities is, one of which could include a contract of apprenticeship (Wilmot et al, 2013: p51). Still, I also noted that an apprenticeship may be concluded by either Smith or his son for a good cause, as long as there were no specified terms of service. In addition, the contract of apprenticeship could also be terminated by dismissing the apprentice or by mutual consent (Wilmot et al, 2013: p51). In this case, it was my opinion that, since Mr. Smith’s son had not accepted the offer from his father before Mr. Smith decided to offer the same opportunity to Simon, there was no contract of apprenticeship and he could dismiss his son. With regards to whether the contract was of benefit to Mr. Smith’s son, it is obvious that the opportunity offered more advantages to his son than disadvantages and, therefore, the employment contract was beneficial to him. I advised Mr. Smith that the employment contract could be considered as beneficial to his son because it gave him a means to support himself, as well as to gain instruction from other company managers, which could help him earn a living in future from the managerial profession (Wilmot et al, 2013: p53). However, I still noted that there was no contract made with his son, as despite his father making an offer, the offer had not been accepted prior to him offering the job to another ore qualified individual. There were also no terms in the agreement that a court could enforce apart from the offer of $87,500 pa, which, still, was not accepted by Mr. Smith’s son and, therefore, was not enforceable (Wilmot et al, 2013: p53). Therefore, it was my opinion that, even if his son does sue, there was no contract to enforce. Given the fact that courts have a wide interpretation of contracts made with minors, especially with regards to what can be termed as necessary and what is of benefit to the minor, I still find it important to get legal advice from a lawyer on the issue. I would be grateful if you could go through the facts of the case and the opinion I offered Mr. Smith to affirm or correct my take on the issues at hand. In addition, I would also like advice as to whether it is possible for Mr. Smith’s son to collect the money offered by his father and still sue. In this case, would this be considered as being of benefit to his son as compensation for not offering him an opportunity to support himself? Your counsel on this subject will be of immense help in aiding the company to resolve what could turn out to be an unfortunate and difficult matter. Yours Sincerely, HR Manager. References Carter, J. W. (2013). Contract law in Australia. Chatswood: LexisNexis Butterworths. Gibson, A., & Fraser, D. (2013). Business law. Frenchs Forest, N.S.W: Pearson Australia. James, N. (2014). Business law. Milton, Qld: John Wiley and Sons Australia. Turner, C., & Trone, J. (2013). Australian commercial law. Pyrmont, N.S.W: Thomson Reuters (Professional) Australia. Willmott, L., Christensen, S., Butler, D. A., & Dixon, B. (2013). Contract law. South Melbourne, Vic: Oxford University Press. Read More