Contract between Winnie and ERH - Assignment Example

Contract Problems Name Institution Contract Problems Introduction This study will discuss the legal rights of a bride Winnie by referring to the case law and the Australian Consumer Law. This analysis will evaluate whether bride Winnie has legal rights to sue for damages at her wedding. It will look at the extent to which Winnie has the possibility to win in case she sues the wedding planner and the hotel. It will examine whether the wedding planner breached her duties as indicated in the contract between her and Winnie. The analysis will include the formation of the contract, validity of the contract and remedies and damages available to Winnie. The Formation of the Contract Case: Bolton vs. Mahedeva (1972), Substantial performance Issues and Rules The issues to discuss in this part involve the formation of the contract. The first issue to be considered in the case is whether poor performance of a task included in a contract should be considered bleach of contract: Bolton vs. Mahedeva1. Consumers sometimes get defective and low quality products and poor services. For this reason, the Australian Consumer Law is aimed at preventing the businessmen from taking advantage of the consumers2. Greedy business people take part in malpractices such as adulteration, boarding, exaggeration of quality and other illegal practices. All these practices are considered illegal by law. In addition, another issue to be considered is whether the delivery of poor quality of product or service by an individual under contract carries damages costs. The general law suggests that there are some losses incurred as a result of poor quality delivery and this may lead to some costs incurred. In addition, the issue of terms and conditions need to be considered in the case. For clarity, most contracts establish some terms and conditions. However, the terms and conditions of a contract may be unclear3. Contract laws have established the rule to incorporate clear terms of contracts in order to avoid evidential problems. Parties are also required to deliver their obligations according to the contract requirements. Applications and Conclusion From Bolton vs. Mahedeva (1972) case, the verdict of the court relied on the fact that the appellant performed all the tasks included in the contract and thus, the defendant had to pay the remaining instalment agreed upon according to the contract4. However, due to the unsatisfied work, the appellant was required to pay the cost of the defects5.The court based the decision on the fact that poor delivery of product or service is a form of bleach of contract. Consumers are protected by the Sale of Good Act. From the case, we can conclude that satisfaction of consumer is very important. The contract given to Winnie was on ERH’s standard terms and conditions. One condition set out was that in case of any damages incurred during the wedding, ERH will not be liable. Winnie was aware of the conditions and terms of the contract before signing. Obviously, not knowing the terms of the contract may lead to clarity and certainty problems. The conditions set out by ERH meant that Winnie would not be inclined to sue them in an event of damage. However, according to Australian Consumer law, sellers should not offer deceptive information to the consumers6. The wedding planner did not offer all the information to Winnie. The wedding planner is required to offer all the information whether good or bad to the customer. It was wrong for her not to tell Winnie that the band consisted of his sons. She also did not clearly state that a tropical storm could destroy the wedding. This information should have been included in the contract. In addition, Winnie did not receive the quality of service they agreed upon and this is by law considered breach of contract; see Bolton vs. Mahedeva (1972) case. Winnie and Emerald Reef Hotel entered into an adhesion contract. This contract is drafted by one party as the other party with less bargaining power is expected to adhere to it. Some adhesion contracts tend to exploit one party of the contract while others work for the benefit of both the parties. In the case study, the contract could be seen to exploit Winnie. For instance, Emerald Reef Hotel is frequently faced with huge storm. This should be the major information provided in the contract in order to ensure that there are no mistakes or misrepresentations of contract. Due to the frequency in the occurrence of the storm, the contract between Winnie and ERH can be regarded as unfair. The consumers are protected by the Australian Consumer law from unfair contract terms. The Competition and Consumer Act under the Australian Consumer Law is responsible for the implementation of the unfair contract terms laws that protects the consumer from unfair contracts7. The ACCC protects the consumers from the contracts that seek to limit the consumer rights, terms that make consumer responsible for situations outside their control, terms that confuse the consumers about the arrangements in the contracts and terms that offer restrictions to consumers in relation to contract termination8. The contract between Winnie and ERH can be considered unacceptable by ACCC due to the fact that it makes Winnie liable of frequent stroms that is outside her control. The Sale of Good Act has terms that apply all sellers with the aim of protecting the consumers9. According to the act, the suppliers need to offer goods and services of high quality and that satisfy the needs of the consumers. Validity of the contract terms Case: Balfour vs. Balfour (1919). Validity of Contract Issue and Rules In the case, one issue to be considered is whether a decision to carry out some obligations without physical contract results to contract invalidity. General law highlights that when an individual is obligated to carry out certain duties, it is legally binding if there is evidence of a contract. Lack of contract means that obligations lack legal binding and this makes it invalid. If two parties have not signed any agreement, there is no legal consequence to it. Another issue is whether an agreement between two people with acceptance of the parties constitutes a valid contract. Contract law highlights that there are a number of factors that a contract need to satisfy in order to be considered valid. Acceptance of the parties alone may not make a contract valid. For instance, a valid contract should have an offer. An offer expresses the readiness and unconditional acceptance of the agreements stated in the contract10. Also, there is no contract without an acceptance by the party to whom the offer is addressed. In order to be valid, there is need for communication of acceptance. A contract is accepted if the offeror is alerted. It may take the form of telephone, face-to-face communication or email. Specific provisions should be included in order to notify the offeror about all the information relevant to the agreement. A valid contract has lawful consideration. A consideration can be termed as the payment offered by the party contracting the other. Consideration comes in form of liquid money, goods, service and cheques. Payment should be measurable in economic terms in order for a contract to be valid. Moreover, an individual under the age of 18 is not allowed to enter into a contract. Any contract involving underage lacks legal binding and is voidable. Parties involved should also be competent enough to enter into a contract. Persons disqualified by law and people with unsound mind are regarded incompetent to enter into a contract. A contract should have genuine consent of the parties involved. A party should not be forced to sign a contract if he or she is not willing. There should be no physical danger involved in forming a contract. For a contract to be valid, it should be legal. Several contracts can be regarded as illegal due to a number of reasons. For instance, a contract involving a crime, corruption and defraud is considered illegal. The contract in the case study was legal since it involved legal undertakings. Applications and Conclusion The court regarded the contract between Mr Balfour and Mrs Balfour as invalid since it did not satisfy the requirements of a valid contract. Although there was acceptance of parties, the contract had no legal binding since there was no physical contract signed by the two parties: Balfour vs. Balfour.There are a number of factors that are required for a contract to be valid. In order for a contract to be regarded as valid, there should be intention to create a legal relationship11. When one party has signed a contract, he or she will have the ability to sue the other party if they have not fulfilled their requirements and vice versa. In case of lack of such intention, then the contract is invalid. Winnie signed the contract in order to receive wedding services from ERH. With regard to availability of intention, the contract between the two parties was valid. In addition, the contract between Winnie and the wedding planner can be considered valid. The contract had acceptance by parties. Winnie was notified about the contract through face-to-face communication and it was concluded via the telephone. This made the contract valid due to Winnie’s expression of readiness and acceptance. In addition, Winnie paid for the wedding arrangement in two instalments. Total payment made by Winnie was 20,000 which represented the full settlement. This enabled the validity of contract. 12. Winnie was above 18 years and by law, she was a good candidate to enter into a contract. Vitiating factors of the contract Case: Henjo Investments vs. Collins Marrickville; [1988] Misleading conduct/misrepresentation Rules and Issues One issue regarding the case involves the factors that make a contract defective. The case highlights whether misinterpretation makes a contract defective. Contract law argues that parties entering into a contract must agree to all the terms stated in the contract. It must be clear that all the parties have freely agreed without any defects that may affect the contract and make it defective13. Another issue to be considered in the case is whether silence in the part of a company may be considered as misleading conduct and may make a contract defective. According to Australian Consumer law, companies are required to share all the information about a product or a service in order to ensure that buyers make rational purchasing decisions. Silence is condemned by law as a seller is required to reveal all information to the buyer before entering into a contract. Failure to do so is considered misinterpretation which can lead to contract being invalid. Also, the Trade Practices Act 1974 forbids any business person or company from giving misleading and deceptive information to the consumers with the desire to influence their choices. Application and Conclusion It was discovered that the seller entered into a contract without communicating to the buyer about the fact that the restaurant was fairing badly and did not offer the true value of the business. This case represents representation by silence. The real complain of the buyer relied on the fact that the buyer was not informed of the true value and seating limitations of the restaurant he wanted to purchase. In honour of the buyer, the judge determined the contract to be void. The buyer was also paid a damage fee of $69,562.9014. Therefore, by law, misinterpretation is wrong and there may be some damages to be paid in an event of misinterpreted information. The event planner of ERH gave a statement that induced Winnie to enter into the contract. Such an event may require ERH to pay damage fee. The contract between Winnie and Emerald Reef Hotel was misrepresented. Misrepresentation can be defined as a false statement that is one party make in order to induce the other party to sign the contract. Misrepresentation acts as an inducement as it influences the position of a party with regards to the contracts15. A statement of fact becomes a misrepresentation if it is not true. With misrepresentation, there is no genuineness of consent when one party tries to influence the other party to enter into the contract. Misrepresentation can have an effect on the contract as it can make it voidable or not void16. The party that has been misled or induced can request the court to withdraw the contract and cancel all the agreements. The event planner for Emerald Reef Hotel said to the to-be-bride, “If you have your wedding at ERH, it will be the happiest day of your life!” this statement can be considered a means of inducing Winnie to enter agree to hold the wedding at ERH. The statement may be false in an event of a tropical storm that often occurs in the area. In addition, on the wedding day, the Emerald Reef Hotel offered poor quality food and drinks to the guests. For instance, the guests were offered Asian Finger Feast of low quality that was sourced from supermarket freezer. In addition, the tropic punch was not as described in their menu. The hotel presented their menu in such as a way that misled Winnie due to its attractive and delicious looking nature. What was presented in the menu was different from what was offered physically. Another factor that could make the contract between Winnie and Emerald Hotel is mistake. The contract between Winnie and ERH was faced with mistake. Mistake of a contract does not influence the agreement between the parties. However, in some circumstances, mistakes of facts influence the validity of a contract and may render it void17. The contract between Winnie and the Emerald Reef Hotel can be considered shallow. It can be argued that Winnie did not know the true position of the contract on the matter of liability for damages and if this was known, she would have not signed the contract. Remedies and Damages Available to Winnie Case: Re Vincenzo Latella and Diego Latella v LJ Hooker Limited [1985], Misleading conduct/change of mind Issue and Rules One of the issues is to determine whether the damages in the case were as a result of breach of contract due to false advertisement: Re Vincenzo Latella and Diego Latella v LJ Hooker Limited18. According to Australian Consumer, companies are required to avoid using false advertisement when marketing their products. Another issue to determine in the case is whether the responded used false advertisement in marketing its property. In addition, another issue to consider in the case is whether failure to buy a property after signing contract is considered bleach of contract. Contract parties have duties under general law to keep the obligations indicated in the contract. Failure to do so is regarded as bleach of contract. Contract law states that instances of breach of contract faced with damages require payment of remedies. There are many remedies given to a party affected by a breach of contract such as rescission, award of damages and financial pay among others. Applications and Conclusion The court noted that although the respondent had used false advertisement to market the property on sale, the decision to purchase the property had nothing to do with the advertisement. The court implied that if an individual enters into a contract, then he or she should be willing to satisfy all the obligations presented in the contract. The judge decided that Dr. Harris needed to pay the damages since his decision of not wanting to purchase the property had nothing to do with the advertisement. From the case, we learn that any damages incurred due to factors such as breach of contract, unsatisfactory work, or partial completion may result to damages that may be calculated in form of money. Winnie incurred some damage since her wedding was destroyed by storm and the food was unsatisfactory. Emerald Reef Hotel may be ordered by the court to pay some damage fee. The main remedy for Winnie will be an award of damages. There are two types of damages that can be awarded when claims of breach of contract is approved including compensatory damages and punitive damages. The compensatory damages cover the loss incurred due to breach of contract or damages of services and products. The amount of capital awarded to a party is meant to cover the losses and damages caused19. Punitive damage is awarded with an attempt to punish the wrong doer of the breach of contract. In addition to the compensatory damages or actual damages, a party may be offered punitive damages. Nevertheless, in the case of Winnie, only the compensatory damages may be awarded. Summary and Conclusion The contract between Winnie and ERH may be considered shallow due in part to the inadequate information about frequent storm occurrence. In addition, the contract was unfair to Winnie due to the fact that she was liable for some occurrences out of her control. The validity of the contract relies its legality, offer, intention and acceptance. The vitiating factors affecting the contract include mistake and misinterpretation. The event planner for Emerald Reef Hotel said to Winnie, “If you have your wedding at ERH, it will be the happiest day of your life!” this statement can be considered a means of inducing Winnie to enter agree to hold the wedding at ERH. As a result of damages incurred by Winnie the compensatory damages may be awarded to cover for the losses. References Balfour vs. Balfour (1919). 1 WLR 624; [1959] 2 All ER 379. Beale T, Hugh W. et al.. Cases, Materials and Text on Contract Law. Hart Publishing, Oxford University Press, (2002). Bolton vs. Mahedeva (1972). 83 CLR 322; [1951] HCA 24. Bruce, A. Consumer protection law in Australia. Chatswood, N.S.W: LexisNexis Butterworths (2010). Carter, J. Contract and the Australian consumer law: a guide. Chatswood, NSW: LexisNexis Butterworths, (2011). Corones, S. The Australian consumer law. Rozelle, N.S.W: Thomson Reuters (Professional) Australia, (2011). Cseres, K. Competition law and consumer protection. The Hague Frederick, MD: Kluwer Law International Sold and distributed in North, Central and South America by Aspen Publishers, (2005) Gerry, M.. Unilateral Obligations and International Private Law. Journal of Legal Studies, 4(2): (2002), 317-333. Henjo Investments v Collins Marrickville; [1988] FCA 40; (1988) 39 FCR 546; (1988) 79 ALR 83 Hogg, M. Perspectives on Contract Law from a Mixed Legal System. Journal of International Law, 29(2):2009, 11-132 MacQueen, Hector L and Thomson,. Joe Contract Law in Scotland, Butterworths, Edinburgh, 2000. Morandin, N. & Smith, J. Australian Competition and Consumer Legislation 2011. Sydney: CCH Australia, 2011. Re Vincenzo Latella and Diego Latella v LJ Hooker Limited [1985] FCA 86; 5 FCR 146 (20 March 1985) Read More