Commercial Law: The Problem in the Terms and Condition - Case Study Example

Case Law Name of the Student Name of Institution Name of the professor The problem in the case terms and condition essential for contract to be valid and legally binding. Contract law is a product of the common law that has been developed by courts and not parliament. One of the common underlying assumptions of the contract law is that it is a bargain that has been made freely between two or more parties which in most cases is not the fact as can be seen in the case of Mr. Hamid where he did not understand some parts of the contract which was mostly due to language barrier and some of the hidden terms of contract that he could not understand. Therefore, it is evident that the individuals in the contracts were not having equal bargaining power and with hidden terms and language barrier, the contract was unfair to Mr. Hamid, and he can challenge it in court of law and terminated the contract. This is one of the issues that can take them to court in order to establish the legality of this contract as it is unfair. Apart from the problem of unfairness of the terms of the contract, the problem of negligence can also be seen in the case problem. The seller failed to show Hamid the full translation of the terms and condition of the contract, though; he had the time and opportunity to understand it. This have affected the decision that Hamid made hence is enough for them to go to court to in order for the court to determine the legality of the contract. The rule for unfairness in terms of the contract is decided by court. In deciding whether the term is unfair, the court would use three main conditions to test unfairness; this is under section 24 (1) under consumer contract. First, it would cause a significant imbalance in terms of obligations and rights of the parties arising from the contract. Secondly, it would not be necessary to protect the legitimate interest of the party that would be benefited by the contract and lastly, financial implication it causes to the other party. In defending himself, Mr. Hamid would rely on the extent of transparent and a contract as a whole. Short of clearness concerning a term in a normal form customer contract may reason an important inequity in the parties’ rights and obligation. The expression is only considered to be transparent if it expressed in a reasonably plain language that was not in the case of Hamid, since the sales representative uses some terms that he could not understand. Hence, it was unfair. Secondly, the language should be legible, thirdly, presented clear ad lastly readily available to any part affected by the contract. All these conditions were not met in our case; for this reason, Hamid can use them as a defense in the court of law so that he should terminate the contract. A good example is the case of Office of Fair trading vs. Abbey National plc & others. In the regulation 6(2) requires that not only the actual words used by individuals clauses and conditions to be comprehensible to consumers rather, the real consumer should be able to understand how the terms of the contract can affect the obligations and rights that he the seller or suppliers have under the contract in question. It should be noted that the fairness of the particular contract can not be considered in parts but should be assessed as a whole. In many instances, consumers rely on what they have been told by sales representation, agents or employees of a business before and when they are entering into the contract. Any contractual term that sought to claim the business responsibility and liability for representations made prospective consumers by its agent at the point of sale may be unfair. This is the case of Hamid. In negligence, the rule states that, the contract is not legally binding in circumstances where the agent of one party has cause harm out of negligence, and the injured party should be compensated. In the case analysis of Hamid, the term unfair means that the conditions and term used in the contract is treated as if they never existed, however, the contract will continue to bind the two parties as long as the contract can continue operating without the unfair terms (Amirthalingam, 2008). In reference to consumers, the unfair term would cause a significant imbalance between the two parties' rights and obligations that are arising under the contract and this is not reasonable to protect the legitimate interest of either the party, who would be advantaged by the term as this, would cause detriment if it would be applied or relied on. The decision in the case of M & J Polymers Ltd v Imerys Minerals Ltd, the claimant entered into a contract to supply chemicals dispersants to the defendant. According to the agreement, the article 5.3 of the article gives provision that during the contract term, the defendant would order some specific minimum quantities of the products even though he had not prearranged the indicated quantities throughout the pertinent monthly period. The defendant had purported to have terminated the contract through a notice that was treated by the plaintiff as an illegal refutation of the agreement, through which the denial accepted by the plaintiff. In its ruling, the judge held that the pay clause was commercially justifiable and did not constitute a penalty by itself. The arbitrator referred to the language Lord in the oil case (Amirthalingam 2008)In the case of Hamid, he can terminate the contract without paying the remaining penalty for terminating the contract since the clauses were hidden and were justifiable to be unfair trading. The law of ACL asserts that the consumer agreement is unacceptable and annulled if it is unfair, it further clarifies that unfair contract is one, which is not in standard form and is not negotiable (Morgan 2006). If this case is viewed in terms of general utility of liquidated damages to Hamid, taking the liquidated clause, the jurisdiction to put aside the damages clauses on the basis that it is a penalty, is so huge (Morgan 2006). The clarification of this point is well captured by Judge Chadwick in Euro London Appointment v. Claessens International Ltd in its decision, the judge states "the consequences is an exemption to the universal code of English law that an agreement and should be enforced in accordance with its terms”. This shows that the fundamental principle identified in the case of Philip Bernstein Ltd v Lydiate Textile Ltd in 1962 and the similar sentiments were echoed in Sterling Industrial Facilities v Lydiate Textiles Ltd (Kinsky 2006). In ordinary circumstances, the court would apply the law that contract should be enforced in pacta sunt sevanda, only if they can brought within that incomplete group of cases in which, for the purpose of public policy, the court could refuse to give such effect to the parties agreement on limited and well- known class is the penalty. One important factor, which Hamid have to take into consideration, is that he must prove beyond reasonable doubt that he does not owe any liability to the company. This is well captured in the case of Rebophone Facility Ltd v Blank 1966 (Kinsky 2006). The effect of termination of the contract means that both parties are relieved from their duty and obligations in the future. However, any rights that either party already had before the termination of the contract. In this case, Hamid will not be reliable for any future payment since the contract was not valid (Leng 2007). Conditions, under which contract may be terminated, include, discharge by frustration. The frustration in question can arise under the following conditions; 1. Unexpected events that cannot be controlled by the parties and can significantly hamper the performance of either party of their obligation. 2. Neither of the parties caused the unforeseen events 3. Neither of the parties contemplated the happening of this happening 4. When the contract is not legally binding Hamid can also argue its case against negligence by the sales agent since he failed deliberately to explain for Hamid all the clauses in plain language which could be easily understood, and failed to give the translator. In negligence, an individual is only accountable for damage that is foreseeable as a consequence of their events; that is a breakdown to work out sensible care and skills (Howarth 2006). For this reason, in this case, the sales agent caused harm to Hamid financially and Hamid should launch complaint about negligence and further facilitates the termination of the contract. In conclusion, Hamid should take the case to the court and courts will be able to establish the legality of the contract whether it is unjust and to order the suitable release if a breaking of the unjust agreement terms laws has occurred, or the term is deemed to have occurred. The Hamid should go to the courtyard as the only institution that can decide whether the term in its standard form consumer contract is unfair is court. In addition, to do well in a neglect deed the claimant must set up on the balance of chances. That is; the defendant owed the duty of care, and the defendant breached the duty of care to them. The claimant must suffer compensation as a consequence of a breach of duty of care. If Hamid terminates the contract before two years, he will experience monetary loss as a result of fines. This is a strong point through which Hamid can argue its case. Reference Amirthalingam K. 2008. Refining the duty of care in Singapore,LQR 42 Hoffmann L. Causation 121 LQR 592 Howarth D 2006. Many Duties of Care – or a Duty of Care? Notes from the Underground 26 OXJLST 449 Kinsky C. 2006 SAAMCO 10 years on: causation and scope of duty in professional negligence cases (2006) 22(2) PN 86 Leng T. 2007. The search for a single formulation for the duty of care: back to Anns (2007) 23(4) PN 218 Morgan J 2006. The rise and fall of the general duty of care 22(4) PN 206 Neil Cuthbert & Alan Berg, “After Caparo:can banks rely on audited financial statements?” 1990 Apr IFLR 17. Read More