A Misrepresentation or a Breach of a Duly Executed Binding Contract - Case Study Example

Business and Corporate Law   Legal Question 596 words   I. Facts and Issues of the Case The case at hand is between two parties, namely, the Blundell sisters, herein referred to as the “promisee” and Amy, a well-known Australian country music promoter, herein referred to as “promisor”. The two parties executed a valid contract between themselves, particularly a formal Consulting Agreement for three years with validity starting 2 January 2011 to 31 December 2013. The salient provisions of the contract are as follows: (a) for Amy to arrange three (3) TV show appearances and five (5) radio interviews for the Blundell sisters, (b) to book the two sisters to Totti’s, Brisbane’s most exclusive salon, (c) to secure them a national record deal by 2012 and (d) to hold a Nashville tour by 2013. The aforementioned details should be fulfilled during the first 6 weeks of the contract, as stipulated in it. It is noteworthy that prior to the execution of the contract, Amy advised the Blundell sisters that she had entered into a lot of contracts in the music industry and that she has the capacity to “really make them known in Queensland, Australia and the world”. However, the contract is already on its seventh (7th) week but none of the provisions in the contract has been accomplished. Worse, Amy has a falling out with the head of Australia’s biggest country record label rendering it unlikely for the sisters to secure an album as scheduled in their contract. It is therefore the Blundell sisters’ problem what to do with the contract they have with Amy knowing that she failed to fulfill its provision and is seemingly impossible to ever accomplish all the other salient portions of it. The termination of the contract is the most likely solution to this problem. In view of the aforementioned facts, the main legal issues for the Blundell sisters would be first, to move for the voiding of the contract with Amy based on misrepresentation or to move for the contract’s termination due to breach of contract. II. The Law Applicable to the Issue at Hand Given the fact that the issue at hand revolves around a contract, the law concerned would be the Australian Contract Law. Under this law, a contract is defined as an agreement between two (2) or more individuals which is intended to become binding and enforceable by law. Under a contract, the parties involve would be consist of a promisor, who makes a promise, and a promisee, who is the recipient of the promise.1 Case at hand is a type of formal contract. The main elements in any binding contract would the intention to go into a binding legal relation by the parties involved, the agreement or the offer and its acceptance, the contract’s consideration, which is a promise or an act by a party in exchange for the other party’s act or promise, and finally, a genuine consent by the parties involved. When these elements are proven to exist, it can therefore be declared that the contract is binding. There are many ways to void a contract, e.g., mistakes, duress, unconscionability, undue influence, etc. This paper will however focus only on the pertinent legal actions possible for the aggrieved party to terminate and void the contract from the promisor. The Contract Law provides for the voiding of a contract by reason of misrepresentation. A misrepresentation is made if there are statements made before the execution of the contract that led to its formation. The representation made by one party is done to induce the other party to agree to enter into contract, thus making it a false representation. Misrepresentations can become cause for action leading to breach of contract or misleading conduct among others. There are three categories of misrepresentation two of the applicable ones are the fraudulent and the negligent misrepresentation. The former refers to the maker of the statement who purposefully or recklessly made an untrue statement that resulted into the execution of the contract. The latter is based on the statement-maker’s careless wrong representation. If proven, the contract can be voided. Another provision of the Australian Contract Law that is relevant to this case is the discharging or termination of contract. This law provides six (6) ways by which to terminate a contract, i.e., by performance, via the terms of contract, through the agreement, via the operation of law, due to frustration and because of breach of contract. This paper will focus only on the last one, discharge by breach. A discharge or termination of a contract can be done when one of the parties is unable to deliver or perform his duties as stipulated in the contract. Given such situation, the aggrieved or the innocent party can terminate the existing contract and even file for damages or such other remedies the courts may find necessary. In terms of remedies, liquidated claims and damages are the most basic for cases of breach. These damages for breach are taken to be performance’s “substitute. It is created to make plaintiff be in a position where he should have been should the stipulations of the contract been accomplished correctly. Losses claimed should however be too remote and the innocent party should also be reasonable with his damage claims. III. Application of the Law to the Issue In applying the Australian Contract Law to the issue and establish that there is indeed a binding contract between the Blundell sisters and Amy, it is necessary for the former to show the elements mentioned above, namely, a complete and certain agreement, the intention to create legal relations2 and the consideration. There is a clear business context for the fulfillment of certain actions between the two parties, therefore, an intention to be bound legally is presumed.3 In the facts presented, nothing indicated a rebuttal for said presumption,4 and an analysis of the information clearly shows that the parties are intending on executing a binding contract.5 In fact, the information supplied simply says that a binding contract has been executed by the two parties thereby implying that all the above requirements are met. Consideration is defined as the “price” by which Amy’s “promise” is purchased by the.6 In this case, the price to be paid by the sisters is implied to be a sum of money for the services they expect Amy to deliver for them. It is assumed given the statement establishing the existence of an executed binding contract. Therefore, the consideration is executor whereby the Blundell sister’s promise to compensate Amy is the consideration for Amy’s promise to do the abovementioned services to the sisters. Therefore, the necessary elements are proved. These elements are thereby proved. Due to the inability of Amy to deliver what was promised in the contract, the sisters are now in the position to either void or terminate the contract and even sue for damages or other remedies. Limited with the given facts, it is apparent that there is a possibility of misrepresentation on the part of Amy when she declared that she can make the Blundell sisters known in Queensland and the world. It is a misrepresentation if she said this before she had an altercation with the head of the biggest country record label in Australia. Such information should not be hidden from the sisters since it is quite detrimental to their goal in taking Amy as their promoter. However, if the falling out with said head happened after the execution of the contract, then Amy did not misrepresent herself in her declaration. However, the sisters may still move for the termination or discharge of the contract due to breach. As defined, it is the failure of one party to deliver as promised given a certain period of time. In the case of this contract, it is quite clear that Amy failed to fulfill the stipulations in the contract wherein she is supposed to deliver some services for the Blundells. As such, the sisters are given the right to terminate the contract with Amy. In this case, it can be said that the breach is sufficiently serious since all the provisions indicated therein are not met. These provisions are detrimental to the sisters and are in fact the very reason why the contract exists. Failure to deliver said provisions would mean failure to the Blundell sisters to achieve their career goals. As provided by law, the sisters may sue Amy for damages or remedies. They can either sue her for the cost of actual damage she made, which may be decided by the courts or find remedies that would force Amy to find a way to still make good on her promises in the contract. IV. Conclusion In a nutshell, the case at hand involves basically a misrepresentation or a breach of a duly executed binding contract. The promisee (Blundells) is the innocent party and the promisor (Amy) failed to deliver her part of the bargain making it possible for the former to either void or terminate the contract between them and even file for damages or remedies. References Atkin LJ in Rose & Frank Co v JR Crompton & Bros Ltd [1923] 2 KB 261 at 293. Australian Contract Law Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) AC 847 at 885; endorsed as ‘quid pro quo’ in Australian Woollen Mill Pty Ltd v The Commonwealth (1953) 92 CLR 424 at 456-457. Edwards v Skyways (1964) 1 WLR 349. Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at CLR 105-106. Rose and Frank Co v J R Crompton and Brothers Ltd (1925) AC 445. Read More