Gigi v Mr Zen, Nathan v Rizwan, Janek v Erwin Pty Ltd, Nadia v PPH - Case Study Example

I Gigi v. Mr Zen In this dispute, the concept of equitable (promissory) estoppel means that Gigi can expect to recover damages from Mr Zen should she seek remedy through the courts. In order for estoppel to apply, a binding contract is not required. Instead, a situation must arise such that it would be unconscionable for one party (in this case, Mr Zen) to abandon his promise to the other party without offering appropriate compensation. As established by Waltons Stores (Interstate) Ltd v Maher1, several elements are necessary to make the abandonment of a promise unconscionable: The promise must be one that caused the promisee to believe that a legal relationship would arise between the parties, and act accordingly; the promise must be such that the promisor would reasonably expect that the promisee would take such action in reliance on this promise; the promisor must know that the promisee will be harmed by acting on the basis of this promise if the promise is not kept; and yet, the promisor fails to keep the promise or take measures to mitigate the harm done by breaking the promise. Mr Zen made a firm, specific promise in writing, and Gigi responsed that she and Zen were “in business”. After this exchange, it would certainly be unreasonable for Mr Zen to believe that Gigi would not proceed with developing the property in question, at considerable expense. The fact that Zen specifically instructed his lawyers to “go slow” shows that Zen was aware that he had made (and was breaking) a commitment, and as an experienced owner of a chain of stores, he certainly knew that Gigi would be harmed by his failure to inform her of his change of intention. Gigi will be granted estoppel and appropriate compensation. II Nathan v. Rizwan It is generally unwise to rely on verbal agreements, particularly as a way of altering a written contract. In addition to the other legal problems involved, Nathan must convince a court that the conversation between him and Rizwan occurred as he remembers it – and Rizwan is likely to remember the conversation rather differently. Assuming that Nathan and Rizwan agree about what was said, what, if anything, did that conversation mean? Did it legally obligate Rizwan to deliver software compliant with U.S. military standards? There are two ways in which such an obligation could have arisen: either the conversation created an amendment to the written contract; or else Rizwan’s assertion that he was familiar with U.S. military standards and his implication (or at least his failure to deny) that he would comply with them constituted a representation upon which Nathan relied in signing the contract. The first approach is not promising. The written contract is neither incomplete nor ambiguous, so no verbal amendments are necessary to view it as complete and binding. Further, the conversation was not sufficiently specific to override the terms of the written contract. Finally, the original contract is complete in itself, so one would expect that any additional obligation on Rizwan’s part would have been offset by an additional consideration – e.g. a higher price to be paid for the software delivered. The second approach is more likely to work. If Nathan can show that Rizwan’s assertion that he would provide software that was U.S.-standard-compliant induced him to sign the contract, Rizwan may be held responsible for adhering to this requirement; according to Australian Steel & Mining Corporation Pty Ltd & Ors v. Corben2, a false inducement can constitute grounds for awarding damages. While this approach might persuade a judge, it would probably be best for Nathan to seek some sort of compromise with Rizwan rather than embark on litigation that might well fail. III Janek v. Erwin Pty Ltd. The fact that Janek did not read the “terms and conditions of entry” posted at Erwin’s website does not mean that these terms and conditions do not apply; as long as it was clearly indicated (in this case, on the receipts he received) that Janek’s use of Erwin’s transfer station yard was subject to these terms and conditions, Janek is bound by the terms of this contract even if he does not know what these terms are. It is difficult to see any convincing justification for Janek’s claim that Erwin “impliedly agreed to safe-guard” his truck. Erwin’s business is not advertised as a secure-storage facility, after all – so a user of Erwin’s facility would have no a priori reason to assume that secure vehicle storage was part of the service Erwin offers. Further, the $100 entry fee is paid on a per-visit basis, without regard to whether the user of the facility will be leaving a truck there overnight or merely depositing a load of scrap metal and immediately departing; this implies that the entry fee is payment for use of the facility to drop off scrap to be recycled, and to the extent that Erwin allows drivers to leave their trucks at his facility overnight, this is a favour rather than an integral part of the service paid for by the entry fee. The gate-keeper’s assertion that Erwin had a good security system in place when in fact the security system was faulty may indeed constitute negligence, but it did not create contractual terms (especially given the terms and conditions on the Erwin website, which explicitly disclaim liability) or induce Janek to enter into a contract with Erwin (since he paid nothing extra to leave his truck in Erwin’s yard overnight). Therefore, Erwin can be expected to win if Janek sues for breach of contract. IV Nadia v. Pickering Property Holdings (PPH) PPH has made two significant misrepresentations regarding the apartment Nadia purchased: that it had ‘good’ tenants, and that its tenants had access to the complex’s swimming pool. Nadia relied on these representations in deciding to purchase the apartment, despite the fact that the contract provided by PPH includes a clause stating that the purchaser is not relying upon any such representations. Both misrepresentations were innocent, at least on PPH’s part: the agency conveyed the information that it had been given by third parties. Contract law does not favor Nadia in this situation, since the contract she signed included an explicit disclaimer of liability for representations made by PPH employees and since Nadia did in fact receive title to the apartment. However, according to the precedent established by the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd3, Nadia does have a good case for a damages claim under tort law. Since she was working directly with PPH and contracting with them, under the Hedley Byrne standard PPH owed Nadia a ‘duty of care’ in selling her a property; and their complete failure to verify important claims about the apartment they were selling was negligent even if it was not fraudulent. Nadia accordingly can expect to be awarded damages in a suit against PPH, but will still be bound by her contract and will still own the apartment. V Lyn v. Nipper Press & DTC v. Lyn It is not clear from the description of circumstances whether Lyn has actually entered into a contract with Nipper Press. Assuming that she has done so, she does not have a very strong case under contract law, since Nipper Press did not in any way misrepresent its services or its pricing. There are certain situations in which a mistake can be grounds for avoiding a contract. For example, had Lyn mistakenly offered Nipper $20,000 for a printing job that Nipper knew should actually cost $10,000 based on the terms set forth in their catalogue, a judge would likely rule that Nipper was wrong to accept the mistaken offer without comment, and that the contract was thus non-binding. On the other hand, the precedent established in Smith v Hughes4 is that a seller is not obligated to point out every mistake that a customer makes. If Nipper is charging the correct price for the printing it does for Lyn, it is Lyn’s responsibility to ascertain the price of the printing job before providing a quote to her client. Restraint of trade clauses in employment contracts are enforceable to some degree; but as shown in Stacks/Taree v Marshall5, they will be enforced by the courts only to the extent that they protect the legitimate interests (e.g. proprietary knowledge and relationships) of employers. DTC can legitimately prevent Lyn from poaching its clients for a reasonable period of time; but three years is clearly excessive, and the prohibition on Lyn’s competing against DTC for new customers will not be upheld in court. Read More