The Legal Rights of Winnie - Case Study Example

Marriage Contract Law Problem Name: Affiliated University: Date: Introduction A contract refers to promise(s) which is legally binding. In Australia, contract law is regulated by ‘common law,' but this role is supplemented by statutes established for the purpose of protecting consumers’ rights. To Thampapillai, Dilan, et al. (2015), consumer contract can be defined as the contract for the supply of goods or services or sale/grant of land interest to a person. For a contract to be legally binding in Australia, it must meet some requirements. These, there must be an agreement involving an offer and acceptance, consideration, intention to create legal relations, compliance with legal formalities, and parties should have the legal capacity to contract. Agreement in a contract consists of an offer and acceptance. In this case, an offer refers to a communication that amounts to a promise. Once an offer is accepted, it means that the parties have reached an agreement, and the offer cannot be revoked or rejected. However, an offer can be terminated in some ways before it is accepted. Acceptance of an offer can be written, oral or by conduct by one who is receiving the offer agreeing to the offer. However, the general rule of consumer contract does not need to comply with any formalities, but they help consumers to proof their contracts easier (McKendrick, Ewan, 2014). This essay describes the legal rights of Winnie who made her wedding contract with Emerald Reef Hotel (ERH) and some terms of the contract were not clearly communicated and Winnie’s day plus her business was ruined, and Winnie pledged to sue ERH. Formation of the contract The agreement is the first requirement of a valid contract. In the case study, Winnie made an appointment with Eva who is the events planner of ERH. Eva promised Winnie that it would be her happiest day if she had her wedding there and Winnie was impressed. In their contract, the following clauses were agreed upon: ERH to provide the venue for Winnie’s 100 guests from 5 pm to midnight, the guests to be feed with Asian Finger Feast as described, the guests to be served with tropical punch for the first 2 hours and thereafter to purchase at a reasonable price, the entertainment to be done by Trolls and the song is ‘wild thing’, Winnie was to pay a 50% deposit and the balance to be paid one week after the wedding, if Winnie cancels the event the deposit will be forfeited, and EHR is not liable for any damage or harm even if it is by their negligence. However, during the contract, communication was not clear. According to Australian law of contract, a contract can only be effective if acceptance is clearly communicated (McKendrick, Ewan, 2014). This means that an agreement is to be made if and only if a communication of acceptance is received. Instantaneous mode of communication in acceptance is not regarded to be received. In the case of Winnie and ERH, Eva recommended the band “The Trolls” for entertainment, and she did not tell her that that was a death metal band. The general rule state that no contract should be made until communication of acceptance is made and therefore, the acceptance, in this case, was made mandatory. Winnie’s dress was ruined by the tropical hurricane and according to the contract, ERH is not responsible for any damage. During the appointment, Eva told Winnie that events are sometimes upset by tropical storms but she could not hear as she imagined how she would look in front of her guests. Manchester Diocesan Council of Education v Commercial & General Investments Ltd [1970] 1WLR 241; [1969] 3 ALL ER 1593 Facts: MD called for the tenders relating to property. C&G submitted an offer to buy. The tender stated that acceptance to be notified to the person whose tender was accepted through the address provided. MD accepted the offer of C&G and sent the notice to their solicitor which was not the address given in the tender. C&G were aware of the acceptance. Held: The court concluded that the method in the tender was not mandatory, and therefore method was equivalent, and therefore acceptance was effective. For Eva and Winnie, the communication was effective and therefore acceptance of the conditions was effective. The next element of the law of contract is a consideration which refers to the price of the contract. Consideration does not have to be in monetary but it can take any form, and it usually moves from the promise to the promise (O'Sullivan, Janet, and Jonathan Hilliard, 2016). A good consideration must come with the contract or after the contract is made. In the case of Winnie and ERH, she was asked to pay a total of $20,000 with a deposit of $10,000 for the wedding event. For a contract to be binding the parties engaged in the agreement are required to have the intention to create legal relations (O'Sullivan, Janet, and Jonathan Hilliard, 2016). Consideration acts as the evidence for the legal relations. For commercial contracts such as that of Winnie and ERH, the parties usually intend to be legally binding. However, if the parties do not want to make it legally binding, they usually use “honour clauses” which shows that the agreement is binding by honour only but not legally. In the contract of Winnie and ERH, the agreement is binding by honour because they used only clauses. Terms of the contract The terms of a contract can be express or implied. The terms of a contract are useful in determining the rights and obligations of the parties. Express terms of a contract can be written or oral, and they are articulated before a contract is concluded. In most of the cases, it is not easy to classify that are made before a contract is concluded. This is because a party A may induce another party B to enter into a contract and later it turns out that the statements made by A are false. When this happens, it might be difficult to determine whether there is a breach of contract. Statements which are made before a contract conclusion can be a classified term of the contract, collateral contract, sale puff, and mere representations. In the common law, a statement can fall into more than one category. Representations do not constitute contractual terms, but if they prove to be false, the party affected have remedies at the common law. In express terms, the parties can incorporate terms by a course of previous dealings between the parties without making specific reference to them. However, this is only valid if the parties have engaged in regular dealings over a reasonable period of the contract that they intend to enter into. Where the parties have never entered into a contract like in the case of Winnie and ERH, this is not possible. Winnie did not inform Eva that his wedding was going to showcase her wide range of designer off-the-shelf wedding dresses for her businesses where she expected to earn a profit of not less than $50,000. However, due to the storm this did not happen and on top of it, people mocked her wedding on the blog and since then nobody even wants to buy her dresses. Implied terms are those which the law implies into the contract even if not discussed by the parties. These terms are implied by the law or by statute. Implied terms must be reasonable and equitable, must give business efficacy and therefore not necessary if the business is effective, must be clear of expression, and it should not contradict any express terms of the contract. However, effective from 2011, Consumer Law replaced implied terms (Thampapillai, Dilan, et al. 2015). Terms of a contract must be clearly interpreted. The general rule requires that terms be given meaning as intended by the parties. If meaning is not attached, the court will try to attach a meaning and establish the intention. Vitiating factors The validity of a contract can be avoided because of some of the vitiating factors. The vitiating factors are caused by unfair dealing by one party. One of the vitiating factors that can occur in contracts is a mistake. General rule provides that being mistaken about some aspects of the contract will not provide a party with a right to escape the obligations of the contract even when such a mistake is vital. There are several forms of mistake in contracts but one of the applied in the contract of Winnie and ERH. This form of remedy is a unilateral mistake. Unilateral mistake occurs when one party to the contract is mistaken about some elements of the contract while the other one is not. Winnie knew that ‘The Troll’ music band was going to sing a romantic song but Eva knew that band was a dead metal band, and she did not tell her because the band included her song. Often, the common law provides a remedy for the unilateral mistake, but equity provides the remedy. Equity will establish the reason that stopped the unmistaken party from informing the mistaken party. There are two forms of remedies available for the unilateral mistake; rescission or rectification. Taylor v Johnson (1983) HCA 5 High Court of Australia Facts: Johnson gave Taylor the option to purchase two adjoining lots of land for a total of $15,000. Taylor believed the price was $15,000 per acre despite noting the misapprehension. Johnson was in the mistaken belief that $15,000 per acre would give a total of $150,000. Taylor claimed specific performance and Johnson rescind the contract. Held: the contract was void. Terms in consumer contract can be considered to be unfair if it causes an imbalance in the rights and obligations of the parties. In the contract of Winnie and ERH, the clause on drinks where ERH was expected to serve the guest with a tropical punch for the first two hours and later the guest were t buy the drinks at a reasonable price was breached. This is because the prices of the drinks in ERH bar were three times more than normal price and EVA knew this. This term of contract cause a financial detriment to Winnie’s guests and therefore it was an unfair term. Misrepresentation is another vitiating factor in a contract. It refers to a false statement that induces a party to enter into a contract. The common law states that if a contract is induced by false representations, the affected party has the right to rescind the contract (Butler, Desmond A., et al., 2013). In the case of Winnie and ERH, Winnie was induced by the photos of delicious ‘Asian Finger Feast’ and the descriptions. During the event, the feast turned out to be false because they were sourced by a freezer of a supermarket. Section 18 of Australian Consumer Law provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or s likely to mislead or deceive. When section 18 is breached, there are a variety of remedies available such as damages, contractual avoidance or variation. A contract can be void (no legal effect) or voidable which allows one party to escape it at their option. Voidable contracts occur when duress is established. In this kind of contract, one of the contracting parties must insert some ‘illegitimate’ pressure to the other party (weaker party) (Butler, Desmond A., et al., 2013). Duress relates to a person who threatens to kill another person if he/she refuses to enter into a contract. In the case of Winnie and ERH, Winnie was not forced to enter into the contract. Remedies In the contract between Winnie and ERH, there are several damages that Winnie experienced, and they mainly arise from the breach of contract. In the contract, the wedding event was to last from 5 pm to midnight, but it started from 7 pm, the prices of the drinks were extremely high, and the food was different from one described in the menu and pictures. There are remedies available at the common law for the damages caused by breach of contract. Winnie can seek these remedies. At the common law, damages for a breach of contract are considered to be ‘substitute’ for performance. The purpose of these damages is to place the plaintiff in the position she could have been if the contract was carried out effectively. To claim damages caused by breach of contract, the agreement must be enforceable. The enforceable agreement will be used as the basis for the bargain. In the contract of Winnie and ERH, the breach came about because of failure to perform to an agreed standard or specification. For example, Asian Finger Feast was supposed to be made up of salmon, sushi, prawns, and spring rolls among many other things. However, during the wedding, the feast was sourced from a freezer. In addition to this, Winnie suffered losses from her designer dresses which she had invested $10,000 and therefore she should be compensated. The wedding was supposed to take place on the ‘edge of the ocean’, but this did not happen. Winnie will receive the compensation if it is proved that it was caused by the breach of contract. Royal v Smurthwaite (2007)47 MVR 401. Facts: the appellant and the respondent vehicles had collided at the junction of the Pacific Highway in March 2001. Smurtwaite sued Royal and the Roads and Traffic Authority (RTA). Held: Royal had breached his duty of care and Smurtwaite was contributory negligent. The case against RTA was dismissed. In the case of Winnie and ERH, ERH can claim that the contract stated an exclusion clause. In Australian law of contract, an exclusion clause can be included. Exclusion clause usually limits or eliminates the liability that arises as a result of a breach of the contract. The liability, in this case, can be due to negligence or breach of contract that leads to damages. When a party is found guilty of breach of contract, the charges are normally not more than $500 if the party has included an exclusion clause. In the contract between Winnie and ERH, clause 6 states that ERH will not be liable for any damages or harm caused, even if caused by its negligence. Exclusion clauses which are drafted properly are effective but some statutory provisions limit the use of such clauses (Andrews, Neil, 2016). Therefore Winnie can sue ERH for the damages she encountered during her wedding. The court will investigate the intention of the contract between the parties to know what the exclusion clause was related to. The court normally interprets the clause against the party the party that is relying on it if the clause is unfair to the other party. In this case, ERH clause is unfair to Winnie and therefore the clause is ineffective (Andrews, Neil, 2016). Consumer protection laws cannot be exempted by any exclusion clause or disclaimer. Section 18 of Australian Consumer Law (ACL) prohibits misleading or deceptive conduct that occurs in commercial practices. Therefore, the disclaimer of ERH is not effective because it is misleading because and it cannot limit their liability for the damages and therefore ERH is liable. Also, these damages could have been avoided if ERH had adequately warned Winnie of the risks of tropical storms that were common in that place. Despite the fact that Eva mentioned to Winnie, Eva was aware that Winnie was admiring the place and therefore she should have emphasized the risk to her again. According to the law of negligence, any person who refrains from acting where it is reasonably foreseeable that the other party will suffer from damages. Curtis v Chemical Cleaning Co (1951)1 KB 805 Facts: The plaintiff took a wedding dress to be cleaned by dry cleaners. The plaintiff signed a receipt after the assistant told her that it excludes the cleaners from the liability to damage of beads and sequins. On return, the dress was stained. Held: The cleaners could not escape liability for the damage to the dress by relying on exclusion clause because the scope of the clause had been misrepresented by the assistant. Conclusion In conclusion, all contracts are assumed to be valid unless proven otherwise. To prove the validity and whether a contract is binding, the following elements are considered. First, there must be an agreement between the contracting parties, and the agreement involves an offer and acceptance of the offer. For the offer to be accepted, it must be well-defined and clearly communicated. The other element to be considered is the intention of the parties to create legal relations and in the most consumer contract, consideration acts as the proof of the existing promise. Consideration must be paid for the promise made between the parties and it must be something of value (O'Sullivan, Janet, and Jonathan Hilliard, 2016). In commercial contracts, it is usually a price of monetary value, for example in the case of Winnie and ERH, she was required to pay a deposit of $20,000 for the service with a deposit of $10,000 before the wedding. In general, Winnie and ERH contract is only binding by the honour of clauses not legally. Terms of a contract can be express or implied, and these terms determine the rights and obligations of the parties. The implied terms in the consumer law require that the existence of a custom or usage justifies the implication of a term into a contract. In consumer contracts, there are some vitiating factors such as duress, misrepresentation, undue influence, and mistake. In the case of Winnie and ERH, the vitiating factor was misrepresentation where Eva induced her to enter into the contract, and later Eva’s statements proved to be false. There are some remedies available when a contract is breached, and a party can claim compensation for damages and liquidated claims. The party that suffers a loss caused by damage must be compensated once the court proves the terms of the contract. For example, in after Winnie's wedding, an article appeared on the blog mocking her wedding and from that nobody wanted to buy her dresses. Work Cited O'Sullivan, Janet, and Jonathan Hilliard. The law of contract. Oxford University Press, 2016. McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014. Thampapillai, Dilan, et al. Australian Commercial Law. Cambridge University Press, 2015. Butler, Desmond A., et al. Contract Law Case Book. Oxford University Press, 2013. Andrews, Neil. "Sources and General Principles of English Contract Law." Arbitration and Contract Law. Springer International Publishing, 2016. 165-175. Read More