Commercial Law - Ellen - Case Study Example

Name: Tutor: Title: Commercial Law Course: Date: Commercial Law Introduction Persons engaged in commerce or trades are governed by commercial law in as far as their rights, relations and conduct is concerned. Ellen has entered into the contract of lease whereby the local council will determine her final decision in the contract making.As a consequence the law identifies three forms of contract in as far as letting and hiring are concerned. These are; the letting and hiringof an immovable or movable thing; the letting and hiring ofwork to be done; and the letting and hiring of services. Ellen’s case falls on the letting and hiring of an immovable and the letting and hiring of services. This is because first, she had to seek the services of the local council, then the hiring of an immovable which in this case is the building. This is because the contracts satisfy the definition given by Kahn et al whereby a contract of lease is made when there is an agreement by the lessor to offer for the impermanent use and enjoyment of a thing, wholly or in part, and the lessee binds her or himself to pay a certain amount of money as return for the particularuse and enjoyment to the lessee (Khan et al 2000). Matters arising from the case An essential for a contract of lease is that of use and enjoyment of the thing that has been let. This use and enjoyment of the thing consist of the right to collect and use up its fruits (iusfruendi) and right to use the property (iusutendi). This is because right to use the property and the subsequent right to collect and use up its fruits are the rights that an owner of a property has in regard to it. The subsequent fruits given birth in as far as Ellen’s case is concerned were supposed to be a calm place free of any noise nearby. Unfortunately, this is not the case since she does not enjoy the ultimate fruits as was promised by the council officer and is required of a lessor to grant to the lessee as his or her right. But as a result of the noise, Ellen developed a nervous disorder that threated her career. Following the approach employed by Solomon J in the case of Clarke v Nourse Mines Ltd 1901 TS 512 at 520-521, the lessor in this case the City Council will be liable for the disorder that she developed. Further, Solomon J observed that the lessor must ensure that the tenant enjoys undisturbed use of the property and the surroundings. Of great importance to note is that Ellen actually signed the lease after being assured that everything was going to be fine. It is the assurance that she got from the council officer after informing him of the requirements for her studio. Solomon J further adds that in case the lessor is not able to provide for what he or she had guaranteed, which is actually supposed to be provided for, then the lessor will have breached the contract and as a result liable for damages(Khan et al 2000). Critical to note is that it is the duty of the lessor to ensure undisturbed use and enjoyment of the property let. Under the law, in a situation where a third party who does have a legal right to a property creates a nuisance, it is the right of the lessee to actually ask the lessor to protect the use and enjoyment of the property. It is in order to claim that the city council was aware of the builder and everything about him when Ellen went for their assistance since he came only two weeks after Ellen had settled. Normally, if a titleexisted at the commencement of the lease or came up during the course of the lease as a result of the actof the lessor, then the lessor is bound to pay whatever damages that may arise from the denial of the lessee’s enjoyment rights. The city council was aware of all these hence should be held responsible (Crosling G.M. and Murphy H.M 2006). The Australian Consumer Law is supposed to safeguard the consumer in addition to ensuring fair business dealings in Australia. Under the Australian Consumer Law; misleading statements and predictions about a business or its quality is a crime. Similarly, the misleading statement and prediction given to Ellen by the council officer do satisfy the definition provided for by Australian Consumer Law. The ACL is anationwide, state and territory law as from 1st January 2011. It consists of unfair contract terms legislation introduced on the 1st July 2010. It is under this law that misleading or deceptive conduct is highlighted. Among them is silence, whereby a business is perceived to have breached the law by failing to reveal important facts to a customer. On a similar note, silence will be presumed to have misled or deceived ifessential details that a person ought to know are not brought to their knowledge. The question that arises from this case is whether the information on the noise that Ellen sought was vital to her. It is without doubt that it was very vital to her business since the lack of that information led to her development of stress and nervous disorder (Australian Consumer Law 2011). Another subject that is considered as misleading or deceptive conduct is false opinions and predictions. Predictions, promises and opinions are normally deemed to have misled or deceived if the person making the statement either had no realistic basis for making it or did not care if the statement was true or not. When Ellen goes to the council offices for help, the council officer goes before he can respond to her question and on returning, he has a very quick look at the computer before he replied. He just says, “relax everything will be fine” which turned out not to be the case. On what basis did he make these statements? Simply no grounds at all since the city council must have been aware of the renovation as because it kicked off only two weeks after. In addition to this, the officer did not care if his statement was true or not. From what was decided in the case of ACCC v G.O.Pty Ltd [2007] FCA 1246, then the council should be held liable for whatever damages Ellen incurs as a result of its misleading or deceptive conduct which was false. The impact or effects of their statement to Ellen was so grievous that she was not only able to continue with her business but also developed a nervous disorder (Crosling G.M. and Murphy H.M 2006) Under the Australian Consumer Law, it is a breach of the law for one to make false or misleading representation about condition on the goods or services. The main question in this case as far as the condition on the services will be whether what the council officer said on the condition of the environment where Ellen started her business was true. The answer is a definite no. It was not true and therefore amounted to false or misleading representation. This is what was found in the case of TPC v PacificDunlop Limited (1994) ATPR 41-307 wherebya manufacturer traded socks labeled as ‘pure cotton’ but were not of pure cotton as alleged hence his information amounted to false representation. This was also what was held in the case of TPC v Cue Design Pty Ltd (1996) A Crim R 500; ATPR 41-475 whereby a retailer had located a label on some attire that indicateda sale price and another higher saleprice that had been crossed-out. But the truth of the matter was that the attires had not at any single time been sold for thehigher price. It is equally important to note that for an officer in that position, city council that deals with so many people, it is critical to exercise due care and diligence when offering services at all times. The officer was negligent in the statement/advice that was during the course of his work. In his position, he owes the duty of care to the public. In order to establish further liability on the part of the city council, it is critical to determine whether that duty of care was breached. From the facts presented, the officer hurriedly examined his computer before assuring Ellen that everything was going to be alright. Then it turned out that everything was not as he assured. The fact that he “has a very quick look at the computer” is an indication that the officer was negligent in his duty. It is through this negligence that he breached the duty of care owned to Ellen by him and by the council. Having established that the duty of care owed to Ellen by the council had been breached by officer and as an officer of the council, the council should be held liable for the damages suffered by Ellen. This normally falls under vicarious liability. All the factors have been satisfied to proof negligence, breach of duty of care and to whom it is owed (Australian Consumer Law 2011). Grounds for liability by the council The grounds argued as to why the city council should be liable for the damages incurred by Ellen can therefore be summarized as; Breach of duty owed to Ellen by the council Making of false or misleading representation about the condition of the environment Ellen was looking for Misleading or deceptive conduct whereby the council officer made false opinions and predictions Breach of the right to the use and enjoyment of a calm environment by Ellen that was supposed to be free of noise Negligence on the part of the council by the council officer when giving his advice to Ellen. Having established that there are grounds to actually incrimate the council for the loss of her business and the subsequent nervous disorder, then an examination on what Ellen is entitled to will wind up this case. Damages Ellen is entitled to claim damages from the council for the loss of her business. This loss is actually foreseeable because she had explained to the council officer that her business required a calm environment free from noise and the subsequent loss of her business was as a result of the breach of the contract. According to the reasonable foreseeability rule of the general law of contract, the council must thereforeplace her as far as it is possible, by a monetary payment, in the position she would have been in had performance been appropriately ensured. This will amount to all the loss Ellen had incurred in monetary terms from the noise from the building under renovation. Further, the council ought to pay for the hospital bill that will accumulate when Ellen is seeking treatment for her nervous disorder (K Lehmann 2006). This is a case where there is interference by a party with better title. In addition it is critical to point out that the breach by the council is as a result of actual disturbance due to interference by a party with better title. The person next door doing the renovation was the owner and therefore the usual remedies for breach of contract will be obtainable. Ellen will claim damages since no obligations imposed upon her had been satisfied. There was no notice to her by the council that there could have been such renovation which caught her as a surprise (K Lehmann 2006). Specific performance Ellen may pray for specific performance on the part of the council which may result to the council stopping the renovation immediately so as to afford Ellen with the noise free environment that she so much required. This will have ensured that the terms that were in place when receiving the advice have been met by all the parties (Lehmann 2006). Bibliography Books Commercial Law Association of Australia Legislative Review Task Force Submission to Corporations and Markets Advisory Committee Insider Trading Proposal Paper November 2002, www.consumerlaw.gov.au Lehmann K.Basic Principles of Business Law LexisNexis, 2006 Khan et al The Law of Commerce, 2000 Crosling G.M. and Murphy H.M How to Study Business Law- Reading, Writing and Exams, 3rded, 2000 Govindjee et al Commercial Law I, Fresh Perspectives 2006 A JKerr’s The Law of Sale and Lease,3rd ed, 2004 Nagel K.J Commercial Law, 3rded, 2006 VisserGibson Australian Mercantile and Company Law, 8thed, 2000: Australia Scott J.The Law of Commerce in Common Law, 2009 Cases ACCC v G.O.Pty Ltd [2007] FCA 1246 Clarke v Nourse Mines Ltd 1901 TS 512 TPC v PacificDunlop Limited (1994) ATPR 41-307 TPC v Cue Design Pty Ltd (1996) A Crim R 500; ATPR 41-475 Read More