Australian Business Law - Essay Example

? BUSINESS LAW …………………. College/ ………….. …………. Introduction The law of contract is perhaps one of the most important dimensions of the whole legal systems of any country. In Australia, a contract of Law, as in other countries, is concerned with the regulation of agreements, especially in relation to the exchange of goods and services for money or other considerations like goods or services. The law of contract, an important branch of Common Law, plays vital role in vesting legally enforceable rights in each party against the other party. The law of contract also states about the corresponding liabilities of both the parties and its impacts on both parties’ legal rights as well. This piece of paper presents a law-case analysis in relation to the main elements of contract including offer, acceptance and breach of contract. This paper analyzes whether a person, who entered in to contract and unknowingly breached the contents, will be legally rightful to claim and the other party will be legally liable for it. Draft of the Case Anthony kept his laptop valued $3000 in a cloak room while he visited a casino. When he gave it to the cloak room, he was given a document. He signed on the bottom half of the document and top half has been given to him. He noticed that the bottom half of it has writing below the area identified for his signature, but he didn’t read it. He placed the top half of the document in his pocket and was lost while walking around the casino. When he claimed his laptop from the cloak room, he was told that his laptop has already been taken by somebody else. The writing, which he hasn’t read while signing, was stating that “The casino takes no responsibility for any loss incurred by the person(s) depositing goods into this cloak room whether by any act or omission of the casino, its employees or agents”. There has been a valid contract between Anthony and cloak room, including offer and acceptance. Anthony has accepted that cloak room is not responsible for any loss due to his mistake. While both these parties entered in to the contract, Clock room offering the safe-custody service and Anthony accepting it, clock room put a condition and Anthony signed on it, without carefully noticing what in it. The legal perspectives of this case will be detailed below: Case Analysis The elements of the law of contract The contract usually consists of basic three elements, offer and acceptance, consideration and intention to enter in to the legal relation between the parties1. There is no valid contract unless there are agreements between two or more persons. Offer and acceptance between two or more parties make a legal contract. Consideration is that each party in the contract has agreed to do some thing on behalf of the other. Normally speaking, it is the price one pays or agrees to pay to the other for the bargain. As its third element, the contract would be valid only if both the parties have intended to enter in to the contract while they entered2. When it comes to the case of Anthony and Cloak room, it can be found that there has been a valid contract between both the parties. Cloak room has agreed that they will keep his Laptop valued $3000 until he demands. There were offer and acceptance between them too. Cloak room offered their service of keeping things in safe custody and Anthony accepted it for a certain consideration. Both the parties were in true intention to enter in to this legal contract as well. The contract between Anthony and Cloak room was therefore merely legally valid and genuine. According to the contract, Anthony must get back his laptop on his request. But, he didn’t get it back due to that he missed the document and that has been used by some one else to collect his laptop. During the contract being made, cloak room has put a condition that he must bring the document back to claim his belongings and he signed on the contract. His signature was legally an acceptance of the contract as well as the condition. The main question to be analyzed is whether Anthony or Cloak room is legally bound? Can he legally claim a refund of his loss? Condition and fulfillment of the contract Condition precedent and Condition subsequent are the very common two conditions associated with a contract. A condition precedent is a precondition that stops a contract to come in to being until some specifically mentioned event has happened. The condition precedent may be either a) condition precedent to the formation or existence of a contract and b) a condition which is precedent to the obligation of a party to perform part of the contract3. In the case of condition precedent to the formation of the contract, parties do not have enforceable rights until the condition is fulfilled. In this case, the acceptance is conditional and therefore the contract will not come in to existence. For instance, in the case law of Pym v Campbell (1856)4, sale of three-eight shares in an invention has been negotiated, but the memorandum of association stated a condition that the contract will be binding on if the invention has been first approved. It is an example for condition precedent for the formation of the contract. In the second case, the obligation of the party to perform part of the contract depends on fulfilling the condition precedent and therefore there is a binding contract creating enforceable rights too5. A condition subsequent is legal term in relation to a contract. The condition subsequent must be complied with or it must be fulfilled after the contract is made. The other party can terminate the contract for non-fulfillment of the condition. For example, an insurance policy normally contains a notice of loss to the insured if he fails to notify the insurer about the risk occurred within a specific time period. Legally, condition subsequent refers to the term in a contract which is in existence, but has yet to be performed or has been partly performed and needs to be fully performed, according to the occurrence of a specific event will either terminate the agreement6. The condition subsequent will be the occurrence of an event or its non-occurrence. As Gillies noted, both condition precedent and condition subsequent are almost same thing, and the difference between them can be termed as semantic. They both seem like opposite side of the same coin7. When analyzing the case between Anthony and Cloak room, it is clear that there has been a condition along with the contract. Anthony signed on the document which was containing the condition “The casino (Cloak room) takes no responsibility for any loss incurred by the person(s) depositing goods into this cloak room whether by any act or omission of the casino, its employees or agents”. Though he didn’t read it, he signed and this signature was merely the acceptance of the condition. This condition is not condition precedence but condition subsequent. More specifically, the clock room is legally bound to give back his belonging only if Anthony returns the document, but he failed to fulfill and therefore contract comes to a breach by him due to his non-fulfillment of the condition. Failure of condition subsequent may function as a signal to the party or parties concerned in the contract that the contract is to come to an end8. In short, the primary evidences show that Clock room is not legally liable for the loss. Anthony made breach to the condition subsequent in association to the contract between him and Clock room and thus it breaches the contract as well. As Anthony could not fulfill the condition, his will be legally advised that Clock room is not legally liable for the loss. But still, there has been a mistake from the part of Anthony and his legal advisor can help him inclining on the matter of his mistake during the time of contract as it invalidates the contract and is therefore not legally bound. It can be argued that Anthony assumes that there are no such strict rules from Casino (Clock room) and he was mistaken while he signed the document. His mistake during the time they entered in to the contract makes it void and more over it is legally the matter of good faith from his offeror (Clock room) to notify him about the importance of the writing in the document as well. Mistake of Anthony and duty of Clock room to act in legal good faith Mistake is a very important part of contract law as it has long been generating a good number of legal issues. The doctrine of mistake says that if one or both parties are mistaken while they entered in to the contract, the contract becomes void. It is basically the mistake with fact and not with the law itself. There can be two types of mistakes, one is subjective as the mistake may not be apparent from the conduct of the party or both of them. With regard to this mistake and regarding whether it brings a valid contract or not, there have been a number of different arguments and legal conclusions9 The second type of mistake is that one or both the parties are unaware of that they do not appear to be an agreement. In this contract, it is very clear that there is no valid contract. When it comes to the case of Anthony and Clock room, it can be argued that Anthony has been unaware of the strict rule that clock room is not liable for missing of the document. Unless he is fully aware of the terms in this condition, it can be argued that the contract was not in effect. Secondly, clock room didn’t function in duty of good faith. Good faith is honesty or fidelity and loyalty to something. It is a relational concept as well10. Australian Law of Contract recognizes that there must be an implied obligation of good faith and fair dealing in contract performance. The same applies in entering in to the contract as well. It is the duty of both the parties to see whether the other is fully aware of the matters or terms or conditions11. When analyzing the case between Anthony and Clock room, it also can be argued that Clock room didn’t act in good faith. While he signed, though clock room presumes that he might have noticed the writing in the document, it is still his duty of good faith to remind him or request him to read the contents and be aware of the terms. Conclusion A contract becomes valid if there are valid offer, acceptance, consideration and intention of both parties to enter in to the contract. The contract between Anthony and Casino is thus valid, as it contains necessary elements. More over, there has been a condition subsequent which requires the fulfillment. Anthony failed to fulfill the condition and therefore he is liable, and not Casino. Though this is the primary views of laws, it can be argued that Anthony was mistaken in contract and clock room didn’t act in god faith. Anthony didn’t realize the strictness of the terms and he didn’t read it. So he is mistaken and the contract with mistake of one or both parties is void. Secondly, clock room has been supposed to notify him to read the writing, but they didn’t act in good faith and therefore the contract is void. Bibliography Duncan, W.D, Joint ventures law in Australia, Revised second edition (2005), Federation Press, Groves, M and Lee, H P, Australian administrative law: fundamentals, principles, and doctrines Cambridge University Press, 2007 Latimer, P, Australian Business Law 2009 - 28th edition, CCH Australia Limited Gillies, P, Business Law, Twelfth Revised edition, Federation Press, 2004 Read More