Knowledge of Australian Law Required - Case Study Example

I Contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. For a contract to validly exist the following essential requisites must be present, these are: (1) agreement consisting of an offer and acceptance; (2) consideration; (3) intention to create legal relations; (4) compliance with any legal formalities; and (5) legal parties must have legal capacity to contract. In every contract it is important to have the consent of both the contracting parties. Consent must be demonstrated by the meeting of the offer and acceptance upon the thing which are to constitute the contract. In its derivative sense, consent merely means the agreement of wills. Generally, for a contract to be binding it is not enough that it is accepted, the acceptance must be notified. But there are instances where notification is waived. (Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256). There are contracts which are perfected by consent and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all of the consequences. In an agreement there must be a meeting of the minds between the parties. An offer is a communication to do or not to do. There is no particular form required to make an offer. In this case a representative of De Luxe Pty Ltd made an offer for Mrs. Stradling to buy vacuum cleaner. However, it cannot be said that there was a meeting of the minds since Mrs. Stradling who was intellectually disabled was threatened and intimidated by the representative of De Luxe Pty Ltd to accept and sign the contract. In Gibbons v Wright it was held that there is no fixed standard of sanity – what is required is that a party must be of sound mind and capable of understanding the general nature of what he is doing. (Gibbons v Wright [1954] 91 CLR 423) It is essential that consent must be intelligent, that it must be free, and that it must be spontaneous and real. A contract may be rendered voidable or unenforceable where the consent is given through violence, intimidation, undue influence, or fraud. In order that intimidation may be sufficient to render a contract voidable it requires that one of the contracting parties who in this case is Mrs. Stradling should be compelled by a reasonable and well-grounded fear of an imminent and grave evil upon her person or property. This presupposes that the threat or intimidation must be actual, serious and possible of realization and that the one making the intimidation can and will still carry out his threat. Most importantly where one of the parties is unable to read and write the burden is upon the person enforcing the contract to show proof that the stipulations of the contract have been fully explained, such is an exact opposite in the case at bar. Furthermore, fraud is present since through insidious words or machinations of the representative of DeLuxe Pty Ltd Mrs. Stradling are induced to enter into a contract, which without them she would have not agreed to. The representative of DeLuxe Pty Ltd also exercises undue influence over Mrs. Stradling because of her mental weakness and condition depriving her of a reasonable freedom of choice. Section 51AC of the Trade Practices Act 1974 provides that “a person must not in trade or commerce in connection with the supply or possible supply of goods to a person or corporation engage in conduct that is, in all circumstances unconscionable.” (Trade Practices Act 1974 s 51AC (2b)) Provided further in section 51AC (3) of the said Act, “without in any way limiting the matters to which the court may have regard for the purpose of determining whether a corporation or a person (supplier) has contravened subsection (1) or (2) in connection with the supply or possible supply of goods or services to a person or corporation (business consumer), the court may have regard to whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the business consumer or person acting on behalf of the business consumer by the supplier or person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services.” (Trade Practices Act 1974 s 51AC (3)) Under the foregoing facts and related laws, Mrs. Stradling can get out from any obligation as a result of the contract entered with DeLuxe Pty Ltd. II Yes, Basil can recover for the damage of his car. One of the common torts or delicts is fault or negligence. Negligence must be direct, substantive, and independent. There is fault where a voluntary act or omission causes damage to the right of another giving rise to an obligation on the part of the actor to repair such damage. There is negligence where one fails to observe that degree of care, precaution, and vigilance that the circumstances justly demand whereby that other person suffers injury. Generally, where one by act or omission causes damage to another there being fault or negligence shall be liable to pay for the damage done. In order to incur liability there must be an act or omission, presence of fault or negligence as a result of lack of due care, there must be damage to another, and a causal connection between the fault or negligence and the damage. When a person by his act or omission causes damage or prejudice to another, a juridical relation is created by virtue of which the injured person acquires a right to be indemnified and the person causing the damage is charged with the corresponding duty of repairing the damage. All damages for the natural and probable consequences of the act or omission complained of are recoverable. The issuance of ticket wherein a condition stating that parking in the said premises is at the owner’s risk evades liability only if such condition would have prevented the damage. The general principles under section 5B (1) of the Civil Liability Act 2002 provides that, “a person is not negligent in failing to take precautions against a risk of harm unless (a) the risk was foreseeable, and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person’s position would have taken those precautions. Provided further in sub-section 2 the court is to consider the following in determining whether a reasonable person would have taken precautions against a risk of harm (amongst other relevant things) : (a) the probability that the harm would occur if care were not taken; (b) the likely seriousness of the harm; (c) the burden of taking precautions to avoid the risk of harm; (d) the social utility of the activity that creates the risk of harm. It is essential before an award of damages that the plaintiff must satisfactorily prove the existence of the factual basis of the damages and its causal connection to defendant’s acts. Damages for which a defendant may be held liable are those which are the natural and probable consequences of the act or omission complained of. As provided in section 5E of the Civil Liability Act 2002 in determining liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities. Any fact relevant to the issue of causation. The negligence of the respondent must be the proximate cause of the injury of the plaintiff. If the plaintiff’s own negligence is the cause of the injury, no damage will be recovered. The negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it appears that the defendant, by exercising reasonable care and prudence, might have availed injurious consequences to the plaintiff notwithstanding the plaintiff’s negligence. In other words, even though a person’s own acts may have placed him in a position of peril, and an injury results the injured person is entitled to recovery. In the case at bar, the defendant had the last clear chance to avoid the accident by the exercise of ordinary care but failed to exercise such last clear chance, and the accident occurred as a proximate result of such failure. It is both a societal norm and a necessity that one should exercise a reasonable degree of caution for his own protection. Section 5F of the Civil Liability Act 2002 clearly provides for the meaning of obvious risk to remove any doubt, “is a risk that, in circumstances, would have been obvious to a reasonable person in the position of that person. It includes risks that are patent or a matter of common knowledge. A risk of something occurring even though it has a low probability of occurring can be an obvious risk. It can also be an obvious risk even if the risk or a condition or circumstance that gives rise to the risk is not prominent, conspicuous or physically observable.” Hence, in this particular case despite the warning in the ticket there was no obvious risk as to result damage in Basil’s car. It was clear that the proximate cause of damage was due to the failure of the car park employee to exercise due diligence. III The business of a company is managed by a director. A person at least 18 years old may be appointed as director of a company. A person may also be appointed as director of a company provided that the appointment is granted by ASIC under section 206F or leave granted by Court under 206G if such person is disqualified from managing corporations under Part 2D.6. (s 201B Corporations Act 2001). Under section 198A of the Corporations Act 2001, “directors may exercise all the powers of the company except any powers this Act or the company’s constitution (if any) requires the company to exercise in general meeting”. The directors of company may confer on a managing director any of the powers that the directors can exercise; in like manner said directors may revoke or vary conferral of powers as provided as in section 198C of the Corporation Act. Generally, a person who is a managing director of a corporation has all the powers of a general agent as well as all the incidental powers necessary to carry out the object of the corporation in the transaction of its business. As a managing director one must exercise powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise. (s 180 Corporations Act 2001). Such powers must be exercised in good faith and for a proper purpose; any contravention is a civil penalty which could result to disqualification of a director. (s 181 Corporations Act 2001) The Corporations Act clearly provides that “a director or any officer of the corporation must not improperly use their position to gain advantage for themselves to the detriment of the corporation.” (s 182 Corporations Act 2001). The Act further provides that an offence is committed when a director or officer of a corporation is reckless or intentionally dishonest, and fails to discharge the powers and duties incumbent upon an officer or director in good faith in the best interests of the corporation and for a proper purpose. An offence is also committed when a director or corporation officer dishonestly use his position recklessly and to gain advantage directly or indirectly for himself or someone else to the detriment of the corporation. (s 184 Corporations Act 2001). In the same manner a director or officer of a corporation committed an offence if he uses information obtained by virtue of his position dishonestly. A corporation is a juridical entity with legal personality separate and distinct from those acting for and its behalf and, in general from the people comprising it. As a rule, obligations incurred by the corporation acting through its directors or officers are the corporation’s sole liabilities. Any directors or officers of a corporation who purport to act for and in behalf of the corporation, keep within the lawful scope of their authority in so acting, and act in good faith, do not become liable, whether civilly or otherwise, for the consequences of their acts, which are considered acts of the corporation itself. However, such is not the case at bar. Ellie who was the managing director of ET Industries Pty Ltd knew full well that she was dismissed from the company on December 22 and yet fraudulently purchased a dozen of Moet champagne on December 23 chargeable against the company. Having been dismissed from ET Industries Pty Ltd, Ellie can no longer make any transaction or business dealings in behalf of the corporation. The unauthorized use or charging of purchases does not bind the corporation or any of its directors or officers and is not liable to pay Fine Wines Liquor Store. The corporation, its directors or officers is not liable for the misconduct or dishonesty of his co-directors or other officers of the corporation, because a director is not an insurer of the fidelity of agents of the corporation. However, liability may be had if it is shown that there was a neglect of duty in supervising the business with attention or to use proper care in the appointment of agents. Such is not the case at hand as evidenced by the dismissal of Ellie as managing director of ET Industries Pty Ltd. Thus, Ellie the guilty director should be the one liable for her act. IV Buying a property such as a motel entails a large amount of investment and money, it just makes sense to look around and consider financial options as well as the rights and responsibilities of buying and owning a property as big as a motel. It is very important to have a pre-purchase inspection report of the property before buying for buyer to get informed on the condition of the property, to be able to negotiate at a lower price, or to get professional advice regarding the purchase and to determine the feasibility of the business in the area. Section 46 of the Property, Stock and Business Agents Act 2002 provides for the responsibility of real estate agents to give financial and investment advice stating that, “the regulations may make provision for or with respect to requiring a real estate agent who provides financial or investment advice to a person in connection with the sale or purchase of land to provide to the person specified information or warnings, failure to comply with this requirement is guilty of an offence”. In a contract of sale one party (the seller or vendor) obligates himself to transfer the ownership of and to deliver a determinate thing, while the other party (the buyer or vendee) obligates himself to pay for said thing for a price certain in money or its equivalent. It is essential to have a valid sale that there must consent or meeting of the minds between the parties, and a determinate subject matter which is the object of sale, the motel in this case. There can be no meeting of the minds if the parties differ as to the object. The price is the cause or consideration. In buying a property an initial deposit will be required from the buyer as payment for an expression of interest to prove that the buyer is serious, this does not mean that the property will be at the buyer’s disposal or it will be taken off the market. When the offer is accepted the contract must be signed to complete the process but before signing the contract a buyer must refer the matter to his solicitor or licensed conveyancer. A contract has not been made and is not legally binding before the exchange of contract and payment of the initial deposit. In some jurisdiction there is a cooling off period after the buyer pays the initial deposit where the buyer has the option to get out from the contract of sale provided that the withdrawal of interest is in writing. The cooling off period may be waived by the buyer after the property has been fully inspected by the conveyancer or solicitor. A settlement period usually takes place about six weeks after the exchange of contracts and it is during this period that the balance of the purchase price and other adjustments are settled. Section 51AC (1) of the Trade Practices Act 1974 clearly provides that “a corporation must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person or the acquisition or possible acquisition of goods or services from a person engage in conduct that is, in all the circumstances, unconscionable.” Provided further in sub-section (2) of the said Act, “a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a corporation or the acquisition or possible acquisition of goods or services from a corporation, engage in conduct that is, in all the circumstances, is unconscionable.” It is specifically provided in section 52 of the Property, Stock and Business Agents Act 2002, “that a person who, while exercising or performing any function as a licensee or registered person. By any statement, representation or promise that is false, misleading or deceptive whether to the knowledge of the person or not, or by any concealment of a material fact whether intended or not, induces any other person to enter into any contract or arrangement is guilty of an offence against this Act.” Under the same section it states that, “a statement, representation or promise is taken to be false, misleading or deceptive if it is of such nature that it would reasonably tend to lead to a belief in the existence of a state of affairs that does in fact exist, whether or not the statement, representation or promise indicates that the state of affairs does exist”. In the case at bar, Evatt did not make any false representation or misrepresentation to encourage Norris in buying the property. The former did not promote the business by making false facts or exaggerating facts as to the quality, standard, value, sponsorship, and performance characteristics of the motel. Norris on the other hand, had chosen for himself the area which he thought offers him the business potential and lifestyle that he wanted. He had the rights and sufficient time to conduct inspection of the property prior to signing the contract and look for himself the business feasibility. Furthermore, Norris seeks the advice of his accountant and proceeded with the business. Evatt as the agent could not be faulted if the business did not turn out well. Thus, Norris’ action to sue Evatt for the latter’s statement of the motel is not tenable. Bibliography: Section 5B (1) Civil Liability Act 2002 Section 5B (2) Civil Liability Act 2002 Section 5E Civil Liability Act 2002 Section 5F Civil Liability Act 2002 Section 180 Corporations Act 2001 Section 181 Corporations Act 2001 Section 182 Corporations Act 2001 Section 184 Corporations Act 2001 Section 198A Corporations Act 2001 Section 198C Corporations Act 2001 Section 201B Corporations Act 2001 Section 46 Property, Stock and Business Agents Act 2002 Section 52 Property, Stock and Business Agents Act 2002 Section 51AC (1) Trade Practices Act 1974 Section 51AC (2) Trade Practices Act 1974 Section 51AC (3) Trade Practices Act 1974 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Gibbons v Wright [1954] 91 CLR 423 Read More