Western Australian Sports Federation and Health Way Sponsorship Advisory Service - Assignment Example

Case Studies Sponsorship Contract between Western Australian Sports Federation and Health Way Sponsorship Advisory Service Question 1 Selected Term, No 9: “Each party shall indemnify the other against any claims arising from any breach of the agreement by either part” Selected Words: “Indemnify”, “Claims” and “Breach” Indemnify Indemnify is a legal jargon that refers to the act of protecting someone by promising to pay for the cost of potential loss , injuries or damages that are likely to occur in future either through money or any other types of payment. According to the Merriam-Webster online dictionary, to indemnify involves issuing compensation for the loss that a certain party has suffered due to certain actions. In contract law, the word “indemnify” is commonly used to refer to the act of compensating someone for a particular loss that they have suffered1 In essence, indemnity is a legally binding promise that one party in a contract undertakes to accept risk in case a loss or damage occurs to the other party. For example, in a typical insurance contract, the insurer often agrees to indemnify or compensate the policyholder for certain specified liabilities or losses that could occur (AGS 2011). A good example of law courses where the issue of indemnity was raised include; Co-operative Bulk Handling Ltd versus Australian Manufacturing Workers Union2 and Unioil International Pty Ltd versus Deloitte Touche Tohmatsu(1997)3. In Co-operative Bulk Handling Ltd v Australian Manufacturing Workers Union (1997), the court rejected an application for indemnity costs. Conversely, in Unioil International Pty Ltd versus Deloitte Touche Tohmatsu (1997) the court upheld that indemnity costs should be issued to the plaintiff 4. Claim Claim is a commonly used legal jargon that refers to a request or demand for something one considers it is owed to them. In contract law, the word “claim” is often used to refer to a remedy that arises from any violation of terms set out in a contract. It is an award conferred to the party that has suffered damage or loss following a breach of a contract 5. The court case Clarke versus Dunraven [1897]6 provides a good example of how the word claim comes into play. In this case, the plaintiff filed for a claim on grounds that, due to negligence the defendant had violated their contract agreement. As a result, the court upheld the plaintiff’s claim. Breach Breach can be described as the act of violating or failing to adhere to the stipulations of an agreement. It can also be considered as an infringement or contravention of a law or an agreement. In laws pertaining to contracts, a breach is a condition that arises when a contracting party fails to adhere to or meet the conditions set out in a contract7. The court case involving Associated Newspapers Ltd versus Bancks (1951)8 provides a good example on how a breach can occur. In this case, the court held that the Associated Newspaper breached the conditions set in their contract with Bancks by failing to publish his cartoon in the front page of the comic section as they had agreed in the contract. Question 2 Selected Term, No 9: “Each party shall indemnify the other against any claims arising from any breach of the agreement by either party” The parties agreeing to this contract have the duty of paying for any damages or losses that will occur due to their failure to meet the agreements set out in this contract. When one party fails to meet the conditions established in the contract, they should award or meet the demands of the other party that has suffered the damages. Following any violation of the terms set out in this contract , the party responsible shall compensate the other party for the damages or losses that they have incurred. Question 3 In the sponsorship contract between Western Australian Sports Federation and Health Way Sponsorship Advisory Service, there are six key provisions in the contract that can be considered as terms. They include provision 6, 7, 8, 9, 10 and 11. These provisions can be considered as terms mainly because they satisfy the criteria set out in Byrne versus Australian Airlines Limited (1995)9. In this court case it was held that, in order for a provision in a contract to be considered as a term it must foremost be necessary to provide business efficacy to the contracting parties. Secondly, the provision must be equitable and reasonable. Thirdly, in order for a provision to be considered as a term it must be clear and non-contradictory to other terms in the contract. Provisions 6, 7, 8, 9, 10 and 11 of the sponsorship contract evidently satisfy these criteria hence they can be considered as contract terms. These contract terms can further be classified as either conditions or warranties. The section below discusses whether these terms are conditions or warranties. Condition and Warranties Term 6: “In the event of a dispute arising that the parties themselves cannot resolve, the parties agree to refer the matter to an independent arbitrator appointed by mutual agreement”. A critical look at term 6, it is evident that this term is a warranty. In reference to Associated Newspapers Ltd versus Bancks (1951)10, this term does not qualify to be considered as a condition. In order for a term to be considered a condition it must be central to the existence of the contract such that the contracting parties would not enter into the contract if the term was different in any way. However, term 6 of the sponsorship contract is not central to the existence of this contract thus it can be considered as a warranty. This term qualifies to be warranty because it is subsidiary to the core purpose of the contract.11 Term 7: “If the parties cannot agree on an arbitrator, or both parties do not agree with the decision of the arbitrator appointed, the agreement may be terminated” As set out in Poussard versus Spiers & Bond [1876]12, term 7 in the sponsorship contract can be considered as a condition. In this case it was established that in order for a contract term to be considered as a condition, it must be sufficiently serious so as to affect the functioning of the contracting parties. This term plays a critical role in the existence of the contract. It sets a condition that following a dispute, if the contracting parties cannot agree on an arbitrator then the contract may be terminated. This term is also a pre-condition to performance since it sets an order that must be fulfilled, in the event that the contracting parties are not able to fulfill this obligation, their business relationship or engagement may be affected. Therefore, this term can be considered a condition.13 Term 8: “Where one party is unable to carry out its obligations under this agreement due to circumstances beyond its control or which it could not have prevented, those obligations are suspended whilst those circumstances continue, provided the other party is notified and the first party uses its best endeavours to overcome the circumstances preventing its obligations from being carried out”. Based on the court decision in Associated Newspapers Ltd versus Bancks (1951)14, term 8 in the sponsorship contract qualifies to be a condition. In this court case, the preceding Judge upheld that publishing Bancks ‘cartoon in the front page of the comic section was a condition since he would not have consented to this contract unless this condition was met. Similarly, term 8 in the sponsorship contract is a condition mainly because it is central to the existence of the contract. There is likelihood that, if this term was not stipulated in the contract it would affect the decision of the contracting parties. This term is a key provision that touches on the obligations of the contracting parties and can if not met can result to the termination of the contract. For instance, if Western Australian Sports Federation fails to inform the Health Way Sponsorship Advisory Service that it is not able to meet its obligation due to certain circumstances. The Health Way Sponsorship Advisory Service may consider this as a breach and subsequently seek to terminate the contract15. Term 9: “Each party shall indemnify the other against any claims arising from any breach of the agreement by either party” This term can also be considered to be a condition. A critical look at Poussard versus Spiers & Bond [1876]16, it is evident that in order for a contract term to be classified as a condition, it must be sufficiently serious such that it significantly affects the core purpose that the contract was intended for. In this court case the plaintiff’s failure to attend the opening night of the opera significantly affected the core purpose of the contract since the defendant had to find a substitute. Thus the court upheld the defendant’s decision to repudiate the contract. On this basis, term 9 can be regarded as a condition mainly because it is critical to the performance and can impact on the way the contracting parties perform their obligations during the contract duration. Generally, this term requires the party responsible for a breach to compensate the other against any claims. By taking this into consideration, the performance of contracting parties during the contract duration is bound to be affected by this term. Since this term significantly affects how the contracting parties carryout their business it qualifies to be considered a condition.17 Term 10: “The terms and conditions of this agreement shall not be disclosed to any third parties without the prior written consent of both parties” In reference to the criteria set out in Bettini versus Gye[1876]18, this term can be classified as a warranty. In this case, it was established that the plaintiff’s obligation to attend rehearsals was not a sufficiently critical term to warrant the termination of his contract. Rather, this obligation as stipulated in the contract was a subsidiary to the core purpose of the contract. Based on the decision of the Judge in this court case, it is plausible to argue that, term 10 in the sponsorship contract is a warranty mainly because its breach would not affect the core purpose of the contract. It is generally a supplementary term thus it cannot warrant the termination of the contract 19. Term 11: “The rights of either party under this agreement shall not be transferable or assignable either in whole or in part” As set out in Poussard versus Spiers & Bond [1876]20, it is plausible to argue that term 11 in the sponsorship contract is a condition. It was established in this court case that in order for a term to be considered as a condition it must be sufficiently serious such that it significantly affects the main purpose that the contract was intended for. Term 11 is central to this contract and is sufficiently serious such that its breach could affect the purpose of the contract and the performance of the contracting parties. Therefore, this term is a condition21. References Adorati, F., 2006, The Manager’s Guide to Understanding Commonly used Contract Terms: Boilerplate Clauses, Global Professional Publishing, London. Aherns Lawyers, 2013, Indemnity Costs, viewed January 25 2014 Australian Government Solicitor (AGS), 2011, Indemnities in Commonwealth Contracting, viewed January 25 2014< http://www.ags.gov.au/publications/legal-briefing/br93.pdf> Gibson, A. & Fraser, D., 2011, Business Law, 7th Ed, Pearson, Melbourne. Merriam-Webster, “Indemnify”, viewed January 25 2014 Law cases Associated Newspapers Ltd versus Bancks (1951) 83 CLR 322 Bettini versus Gye[1876] 1 QBD 183 Byrne versus Australian Airlines Limited (1995) HCA 24 Co-operative Bulk Handling Ltd v Australian Manufacturing Workers Union (WA Branch) (1997) Lib No 970190 Clarke versus Dunraven [1897] AC 59 Poussard versus Spiers & Bond [1876] 1 QBD 410 Unioil International Pty Ltd v Deloitte Touche Tohmatsu [No 2] (1997) 18 WAR 190 Read More