Law Governing Commercial Agency Contracts - Case Study Example

LAW GOVENRNING COMMERCIAL AGENCY CONTRACTS By (Name) Presented to (Tutor’s Name) Course: Institution: Date: The facts in this case is that, Hamid is a refugee in Afghanistan and has just been released from a detention Centre. He understands very little English. Kathy is an agent of an internet company known as Speed Connect Pty ltd. Kathy meets Hamid and they enter in a contract. Kathy explains the terms of the contract aware that Hamid does not understand them fully. A penalty of $1200 is payable on breaking of the contract. Hamid enters into the contract and defaults it in a period of three months. Hamid discovers that he is liable to a penalty of $1500 which he was unaware of. Though there was a telephone translation mechanism for Kathy to use to make sure that Hamid understood the contract, she did not use it. There are several issues in this contract between Hamid and Kathy. It is evident that Kathy was an agent to the Internet Company Speed Connect Pty Ltd. This means that, Kathy had actual authority. Actual authority in accordance to law governing agency, is where by, authority is given to the agent either in writing or verbally. This means that Hamid entered in a contract with the company though it was through Kathy. Hamid acted unconsciously to the contract. Unconscionable conduct in contracts are contracts between dominant and weaker parties, unconscionable conduct is more of undue influence and duress. According to (Editor, 2014), unconscionable conduct if forbidden both by equity and by statute. In this case, the Australian law states a consumer in this case is a person who was unable to understand any documents relating to the supply of services or goods. Hamid who is the plaintiff in this case enters into the contract without full knowledge of the conditions set for the contract. He does not understand English fully and because of this Kathy uses this as a strategy to convince him to enter in to the contract. It is also evident that Kathy uses technical language that Hamid does not understand. She is fully aware that Hamid does not understand the terms of the contract and also avoids the use of the telephone translation to her advantage. The contract between Hamid and Kathy is voidable since Hamid is able to get out of the contract. According to Australian law, it prohibits unconscionable conduct in connection with the supply or either the acquisition and services. Kathy in this issue is liable to unconscionable conduct against Hamid. The remedy in this case is to have the case declared void in whole or in part. The other issue in this case which hamid required advice on is whether there was a misrepresentation done by the defendant or not? In this case, is Kathy liable to it or is it the company which Kathy was working for? Is the case voidable on part of Hamid or is it still valid? Then, are there damages to be recovered by Hamid in this case of he is entitled to rescission. In this case there is the need to establish if, it was inducement, or misrepresentation through negligence on part of the defendant or innocent misrepresentation. Fraudulent misrepresentation is whereby, according to commercial law, a statement is made by the defendant which is untrue and which the defendant believes that it is not true or when he makes the statement he or she does not care if the statement is true or false, meaning it is made carelessly. A negligent misrepresentation is not fraudulent and it is not meant to be fraudulent. It is made without the consent of the defendant, or in other words, carelessly. An innocent misrepresentation is whereby the one who has misrepresented believes in the truth of the matter and he or she is able to prove that (Weitzenboeck, 2012). We understand from the facts of this case that Kathy had put across that, there was a penalty of $1200 in case Hamid defaulted in the execution of the contract. Later on , he came to understand that he was to pay $1500 , which he was unaware of. According to commercial law, in misrepresentation, a person who makes a contract falsely through use of a fact that persuades or in other words induces the other party to the contract is guilty misrepresentation. From the fact the there are three attributes of misrepresentation .these are, if it is a misrepresentation, it should be a statement of fact. The statement should be wrong. Lastly the statement made by the defendant must be made in order to induce the other party to the contract. In the case of Hamid vs the internet speed company, it is evident that the agent to the company who had actual authority misled Hamid who was a refugee and did not fully understand the terms of the contract. According to Kathy, if Hamid defaulted the contract he was to pay a penalty of $1200 while in this case, he was supposed to pay $1500. This shows that Kathy made this mistake intentionally, meaning that it is a false misrepresentation. The company is liable to the actions of its agent since she the agent had actual authority. In this case , Hamid can sue the Kathy because although there was a telephone translator to be used in the case someone did not understand fully the terms of the contract, Kathy acted outside the authority given by the internet speed connect company. The contract also makes it clear that the agent is the one who is liable. Therefore, Kathy is liable to false misrepresentation, therefore the contract is voidable. Another issue is this case is the hidden costs which where are attached to the product. Should the plaintiff terminate the contract on the grounds that the contract had other hidden fees which is not aware of? Is the agent liable for not giving information about other charges which came with the use of the gadget? It is evident that, after three months using the gadget offered to by Kathy, Hamid realizes that there were other hidden costs on the part of the contract. This are costs which Kathy did not put across at the time the contract was made. In contract law, there is the rule of “caveat emptor”. This is a principle in contract law which is used in the sale of real property and in other cases used in sale of goods law. The principle means that, the buyer should be aware. Caveat emptor arise die to the fact , in the contract of sale of goods, it is given that the seller has more knowledge about the good or service of the product while the buyer has little knowledge about the good or service he is to purchase. This is also referred to as information asymmetry. The costs not revealed in this case by the seller are part of the contract and according to the sale of goods law, the buyer should be aware or else the buyer should be cautious. Under this principle however, the buyer who is Hamid in this case is able to recover some damages from the seller in case there were concealed facts about the product which were not put across at the time the contract was made. In this case, it amounts to material representation whereby the seller fails to reveal information about the gadget. This amounts to fraud. In accordance to consumer protection law in Australia which was introduced in January 2011. A person in this case meaning either individuals or corporations, when engaging in trade or commerce is not supposed to engage in any contract which is deemed to mislead of deceive. Misleading or deceiving in this case means that liability in this case is strict and therefore there is no need of proving the intention of the seller (Emerson, 2010). The basic test in this case stands for ordinary person with the inclusion of uneducated or gullible people. It is evident from the contract which was made by Hamid and Kathy that he stands as a gullible person who is not aware of the charges that come by using the gadget. Therefore the consumer protection law protects such people. The remedy to this kind of practice according to consumer protection law in Australia is injunction, or non-punitive orders of damages. The law in this case protects Hamid and therefore he is not liable to the contract. This is a contract binding agreement in the case that the agent has actual authority in the execution of the contract. This means that Hamid is able to sue the Internet Speed Connect Pty Company ltd although the agent acted outside the authority of the third party. This is when Kathy did not use the telephone translation service available to help Hamid understand the conditions in the contract. Hence the company operates in utmost good faith, though it is tainted by its agent who misrepresents the facts in the contract to the buyers. In this case the contract between Hamid and Kathy is not valid and therefore Hamid can get out of the contract. References Editor, 2014. www.accc.gov.au/about-us. [Online] Available at: https://www.accc.gov.au/about-us/using-our-website/disclaimer-copyright [Accessed 5 January 2015]. Emerson, C., 2010. Trade practices amendment (Australian consumer bill). Explanatory Memorandum, Volume 2, p. 41. Weitzenboeck, E., 2012. English Law of Contract, misrepresentation, Norway: Norwegian Research Center for Computers & Law. Read More