Essential Contract Law and Consumer Protection Law - Case Study Example

Common Law Assignment The common law assumes that contracts are formed, only between persons who are fully capable of entering into contracts. This is the common perception and long established practice. However, there are certain exemptions to this notion.1 All contracts for payment of money lent or for goods supplied or to be supplied, except for necessaries in case of minors, are absolutely void. Under the principles of common law, contracts made by minors are legally not binding on them and voidable. However, contracts made for the benefit of minors, are generally binding. Moreover, contracts that are prejudicial to minors are also voidable under common law. At common law, irrespective of the nature of the contract, both void and voidable contracts cannot be enforced against minors2. A minor can enter into a contract of apprenticeship or service, in order to defray expenses essential for survival. This was upheld by the Australian High Court in Hamilton v Lethbridge, wherein it ruled that such contracts were binding, and issued injunction orders against the minor. In this case, the defendant, a minor, had entered into a contract for performing articles for clerkship under the plaintiff. It was further held that a minor can reject a contract of employment, only after the minor attains the age of majority3. It is also inapplicable to New South Wales, due to the enactment of the Minors (Property and Contracts) Act 1970. Through the length and breadth of Australia, the legal age for majority has been fixed at 18 years. This Act specifies that a civil contract, is binding on a minor, if it involves the acquisition of property of a permanent nature. This was established in NW Ry Co v M’ Michael4. In Doyle v White City Stadium Ltd5, it was held that contracts for necessaries could be treated as contracts for the benefit of minors. Therefore, contracts of apprenticeship6, education7, service8, and similar areas9 are valid and binding. Contracts involving cash payments for the goods and services received by minors, are legally binding upon the minors under certain conditions. In the context of minor contracts necessaries include goods and services that are required for the life of minors. This classification encompasses goods and services that are essential for maintaining the minor’s position in life. It is up to the claimant to prove that these goods and services were necessary for the survival of the minor10. In Scarborough v Sturzakar, the defendant had purchased a bicycle from the plaintiff. The court decided that the defendant was liable to pay the price of the bicycle to the plaintiff, as it was essential for the defendant’s Station in life. The defendant used the bicycle to ride to his place of employment, which was twelve miles from his residence11. However, the claimant has to establish that the goods or services provided were essential for the minor. After careful consideration the court will award suitable compensation to the claimants, at reasonable prices for the goods or services received12. Moreover, in Bojczuk v Gregorcewicz, it was held that the loan contract entered into by the minor defendant could not be deemed to be a contract for necessaries13. In Steinberg v Scala, the court ruled that a minor could void a contract on grounds of minority, but could not recover any moneys paid under the contract, unless there was a total failure of consideration14. In Nash v Imam the court ruled that the purchased garments were not necessary for his actual needs, because the number of waistcoats, in his possession were adequate15. In this case the court held that extravagant clothing does not constitute a necessity. Hence, the music system purchased by Kamil is not a necessary for his lifestyle16. Consequently, Kamil has entered a void contract, which he can repudiate and claim the amounts paid by him to the Car Equipment Leasing. Beneficial contracts of services provide minors with the capacity to obtain employment, and knowledge and skills that are essential in their future. If the minor had obtained any such benefit, then the courts deem such contracts as valid17. In New South Wales, persons are considered to be capable of entering into contracts once they attain the legal age of majority. The Minors (Property & Contracts) Act 1970 deals with contracts made by minors. Under this Act, contracts entered into for the benefit of minors, and regarding which the minors have full knowledge, are legally binding upon them. Minors cannot circumvent contractual obligations, if these conditions are fulfilled18. Under Section 33 of the Act, a minor desirous of repudiating a contract has to furnish a written notice to the other party to the contract. Under Section 31 of the Act, a contract by a minor can be repudiated if was not in the interests of the minor, of if the minor had failed to understand or lacked knowledge about what had been transpired, in this context. Such repudiation has to be performed before attaining the age of 19 years. The 19th year is crucial for repudiating a contract entered into during minority, and it is not possible to repudiate the contract after completing 19 years19. The ticket issued by the car parking company to Kamil, had an exclusion clause on its reverse. This company relied on this clause to evade liability for Kamil’s car’s sound equipment, stolen in their car park. In Thornton v Shoe Lane Parking, the court held that the contract was formed when the plaintiff entered the parking place, which was prior to the issue of the ticket. Therefore, the exclusion clause had not been included in the construction of the contract, hence the defendant was held to be liable20. According to this decision, Kamil can claim damages from the car parking company for breach of contract, and the losses suffered by him. The Sale of goods legislation governs consumer sales contracts in New South Wales and Victoria. In these jurisdictions, contracts for sale or lease, and contracts for services are regulated by Part IV of the Goods Act 195821. In Wilson v Rickett Cockerell & Co Ltd., it was held that the plaintiff could recover damages from the defendant company for loss of property and personal injury caused by the goods sold22. In Sydney City Council v. West the plaintiff had been given a ticket after parking his car in a commercial parking site. He did not read the clauses written on this ticket, and on his return, found that his car had been stolen. There had been an exclusion clause on this ticket. The court did not permit evasion of liability by means of this exclusion clause; because the exclusion clause had not been incorporated into the construction of the contract23. The car parking company is liable for damages, under the common law. Section 68(2) of the Trade Practices Act 1974 (Cth), states that in unfair or unreasonable contracts, exclusion clauses are ineffective. Consequently, the court will award damages for breach of contract to Kamil, as the car parking company had been negligent in not protecting the contents of his car from theft. The company cannot rely on exclusion clause. Kamil sold Sam a laptop for 500 dollars; subsequently, he asked Sam to pay him an additional 500 dollars. He cannot demand the extra amount, because the contract was completed, as soon as the consideration had been passed. Moreover, the contract is valid, as Kamil was a major at the time of the agreement. Therefore, he cannot claim extra amount or rescind the contract. Bibliography Bojczuk v. Gregorcewicz [1961] SASR 128 Can the minor enter into this financial agreement? Available at http://www.osullivandavies.com.au/docfiles/09Feb07.pdf Clements v London & N.W. Ry., [1894] 2 Q.B. 482 (CA.) D. Barker, 2007, Law Made Simple, Elsevier, ISBN 0750684941, P. 124 De Francesco v Barnum [1890] 45 CH D430 Doyle v White City Stadium Ltd., [1935] 1 K.B. 110 (CA. 1934) Flower v London & N.W. Ry., [1894] 2 Q.B. 65 (CA.) Geoff Monahan, 2001, Essential Contract Law, Routledge Cavendish, ISBN 1876905018, 9781876905019, P. 64 Goods Act 1958 Hamilton v Lethbridge (1912), 14 CLR 236 (Aust. HC) John Goldring, 1998, Consumer protection law, Federation Press, ISBN 1862872813, 9781862872813, P. 52. Meakin v Morris, 12 A.B.D. 352 (1884) Minors (Property and Contracts) Act 1970 Nash v Inman (1908), 2 KB 1, (CA) Roberts v Gray, [19131 1 K.B. 520, Mackinlay v Bathurst,36 T.L.R. 31 (C.A., 1919) Scarborough v Sturzaker [1905] 1 Tas. LR 117 Steinberg v Scala (Leeds) Ltd (1923), 2 Ch D 452 Sydney City Council v West (1965), 114 CLR 481 Thornton v. Shoe Lane Parking (1971), 1 All ER 686 Trade Practices Act 1974 (Cth) Trade Practices Act 1992 Wilson v Rickett Cockerell & Co Ltd [1954] 1 QB 598 Read More