Voidable Contract between Hamid and the Speed Connect Pty Ltd Company - Case Study Example

Name) (Instructor) (Institution) (Course code) (Date) The case under study concerns two people, Hamid and Kathy. Hamid is an Afghan refugee who was recently released from prison and currently lives in Adelaide here in Australia. The other party involved in this case is Kathy, a saleslady from a newly formed internet company Speed Connect Pty Ltd. These two people gets are engaged in a business contract there are complications involved in this contract leading to a dispute. Issue The Afghan Hamid speaks very little English. The business minded Kathy is aware of this fact. She takes advantage of the situation to speed up the deal as she earns on commission basis there need not to waste more time in achieving her targets. Kathy takes advantage of the situation by using a technical language to explain terms to Hamid leaving him short of full extend of the contract terms. Hamid explains these terms to Hamid which is essentially a 2 year contract which he is going to be bound. Should Hamid breaks the contract before the elapse of the two years, he will incur $1,200 as penalty Hamid speaks very little English and Kathy is aware of this. Kathy explains the terms of the contract which is essentially that Hamid would be bound to a 2 year contract and if he breaks the contract any time before the 2 years he will incur a $1,200 penalty. It is sad to note that Kathy did not use telephone not because it takes twice long but because she wanted to sweeten the deal to Hamid. Due to Hamid’s vulnerable situation of the need to communicate with his family in Afghanistan and the desire to enrol in an on-line English course, he is of the impression to give a month notice to terminate the contract after achieving his dreams. Three months into the contract, Hamid discovers that there were many hidden costs where he was not aware of. He therefore cannot cope with the costs involved as he had not expected when he agreed to be bound by the contract. As a result of the huge financial Hamid is incurring, he contacted the company to terminate the contract. Hamid cannot believe that he has to part away with a whopping $1,500 as a penalty for contract termination which he cannot raise. $1,500 is could be part of hidden costs or part of the terms which Hamid is not aware of. It is important to note that $1,200 penalty is when the contract is broken and not when terminated. Issue Is there misrepresentation of facts in the contract between Hamid and Speed Connect Pty Ltd. as negotiated by Kathy on behalf of the company? Is Kathy taking advantage of Hamid’s poor understanding of English makes the contractual agreement to lack the capacity to stand as an enforceable contract? Are there hidden information, terms and conditions in the contact that Hamid is not aware of? Can the hidden information make the case to be in favour of Hamid or Kathy and the Speed Connect Pty Ltd.? Rule As it has always been, contract between parties must be very clear to all the parties bound and involved (Emanuel, 2012, P. 10). The case between Hamid and Speed Connect Pty Ltd has some misrepresentation in it. The information given to Hamid is misrepresentative in nature as all the information regarding the contract is not relayed very well to Hamid by Kathy as she is after business deal at the expense of following contractual rules? In contract between Hamid and the Speed Connect Pty Ltd through Kathy meet the disclosure of material fact? Was there any important information that was held by Kathy that Hamid needed to know before agreeing the contract? Did Hamid requested to have more clarification and information regarding the contract? Did Hamid have the capacity to access the material information on his own without the company’s assistance? Did Hamid specifically asked for material and non-material facts from Kathy For a contract to valid and enforceable, all the parties involve should have the capacity to be bound by it (Jentz et al., 2010, P. 245). In this case, are all the parties involved in this contract aware of all its terms, conditions and consequences involved? Is there any member party member that does not understand the contract terms in full? If it this there any vitiating factor and what is it? Is the vitiating to contract negotiation or its understanding taken cared of? Analysis Due to unconscionability we find that the agreement of the contract was inherently unfair to Hamid. This is as a result of language barrier whereby he cannot comprehend exactly were the terms of the contract. Since the law is to provide justice (Burrows, 2009, P. 303), Hamid requires the court to help him get justice from the exploitation by the company. The court may allow choose to avoid the contract agreement altogether or may choose the conscionable agreements part of the contract to be enforced (Schwenzer, Hachem and Kee, 2012, P. 80). Misrepresentation The agreement between Hamid and the Speed Connect Pty Ltd through its sale agent Kathy, some form of misrepresentation is observed. Negligence misrepresentation is observed. There is a special relationship between the parties involved in this contract. This is due to the fact that Hamid does not understand English very well put him in a compromising situation when negotiation the terms of the contract. This is contract is business in nature and Hamid is bound to incur a lot of money if it is allowed to stand Statements made by Kathy to Hamid about the contract were meant to induce him into the contract as her target is to make as many sales as possible due to her commission based earning. We find that Kathy is aware that Hamid is does not understand English taking advantage of the situation by exploiting him and going ahead to explain the terms using a technical language without the help of telephone conversation. She was also very well aware that Hamid will act on the information that she will provide to him. She therefore There also some sort of fraudulent misrepresentation in this contract. This is observed through giving of false statements. Kathy knowingly fails to disclose some crucial information regarding the terms of the contract. Some of the information that Kathy fails to disclose include the $1,500 penalty involved if Hamid wishes to terminate the contract before the elapse of the two year period where Hamid is bound with the contract. Fraud is also observed in the fact that there was hidden cost which Hamid is now suffering from. Hamid is now suffering from these hidden costs. Nondisclosure This is a kind of misrepresentation. This is a special case between the two parties involved. In this case the court will determine that it was the responsibility of Speed Connect Pty Ltd. to disclose the clearly the hidden costs to Hamid and other clients who are affected the same. This is a special case whereby the Speed Connect Pty Ltd. through Kathy should clearly explain all the terms clearly to Hamid in a simple and understandable language since his understanding of English language and consequently the contract terms very low. It is very clear that Hamid had no opportunity to access both material and non-material information on his own since his English is very poor. He therefore needs assistance from Kathy to provide all information to Hamid since she is aware that he does not understand English. Kathy went ahead to take advantage of this and conceal he information from her client Lack of capacity This contract agreement between the parties involved lack contractual capacity. Lack of this is observed where one party of the contract has no clue of what he or she does not fully comprehend exactly the terms he is going to be bound and the implications he/she is going to encounter as a result (Fitzpatrick, 2015). Hamid is entering into a contract unaware of the consequences. Language barrier is one of the factors that bring in the aspect of lack of capacity to enter into this commercial agreement. We find out that Kathy is taking advantage of the situation by explaining using technical terms which Hamid does not understand. She also goes ahead to not to use telephone translation to make it better for Hamid to understand. The issue vitiating the contract is not addressed in fact Kathy went ahead and takes advantage of it to rule over the decision capacity of Hamid to make a sound decision Conclusion With the above facts, this is a voidable contract between Hamid and the Speed Connect Pty Ltd. Company. Hamid has the option to be bound by it till the elapse of two years or walk away from it. The court can rule that there was lack of capacity in Hamid entry into this contract as he poor in English. Hamid is not liable to pay the company $1,500 as contract termination penalty as that was not communicated at all to Hamid when took the contract considering his English level. Hamid is liable compensation of damages and cost involved in the hidden cost by using Speed Connect Pty Ltd. services even though he did not requested for the information regarding the same during contract negotiation References Burrows, A. (2009). The law of restitution. 3rd ed. Oxford: Oxford University Press, p.303. Emanuel, S. (2012). Contracts. New York: Wolters Kluwer Law & Business, p.10. Fitzpatrick, D. (2015). Unenforceable Contracts: What to Watch Out For | Nolo.com. [online] Nolo.com. Available at: http://www.nolo.com/legal-encyclopedia/unenforceable-contracts-tips-33079.html [Accessed 28 Jan. 2015]. Jentz, G., Miller, R., Cross, F. and Jentz, G. (2010). Business law. Mason, Ohio: South-Western Cengage Learning, p.245. Schwenzer, I., Hachem, P. and Kee, C. (2012). Global sales and contract law. Oxford: Oxford University Press, p.80. Read More