Business Law Problem Solving - Assignment Example

End of examAttach this Cover Sheet to the Answer to the Final Examination. Family Name: …………………………………………. First Name: ……………………………………………. Student Number: ……………………………………… Date Handed in: ..…………......... “I certify that I am aware of the University’s policy on plagiarism and that this Answer to Final Examination meets those requirements and has not been previously submitted for assessment in any other course of study and it is my own work.” Signed: ………………………….…………….. For Marker to complete: Question 1 Parties: Mrs Golf v. Mr. Iron Issue: There are two breaches of contracts and misrepresentation for the scenario provided. First, Mr. Iron entered in a contract with Mrs Golf with a promise to clean 2000 golf balls in 10 minutes using his product, which subsequently did not yield the expected results. Second, Mrs. Golf entered into another contract with Mr. Iron for him to install additional equipment which he claims would clean the ball thoroughly, but did not. If it can be proven that Mr. Iron breached the contract through misrepresentation, Mrs. Golf can legally claim for remedies for misrepresentation or deception as well as tort liability for negligence on the part of Mr. Iron resulting to economic loss on her part. Law: The claim for damages due to negligence in tort and in contract, although they have different objectives, is generally the same. Breach of contract occurs when there is a contract made and the contract, in part or in full, was not fulfilled as the terms demand. Although the constitution of the breach of contract depends on the terms of the contract, a contract is breached when a party fails to perform the terms of the contract, fails a timely performance of the contract, or does not at all perform the contract. The plaintiff has the right to claim all economic losses that sprang from the breach of contract1 as each party to the contract are held liable to any form of loss incurred by the other in the performance or non-performance of the contract2. Tort occurs when there is a duty of care and there is a non-performance to the duty of care resulting to physical or economic damages to one party, even if the parties involved has no legal and foreseeable relationship. Both tort and breach of contract claim on damages to place the plaintiffs in the condition they would have been had the breach3 or the tort4 did not occur. Misrepresentation is an untrue statement(s) made by one party to another of a fact that exists, which can be a part or not a part of the contract, which induces the other party to enter it5. Misleading or deceptive acts are prohibited in Section 52 of the Trade Practices Act of 19746. There are four essential elements that must be established in order for s.52 to hold7. These elements are (a) the party whose conduct was impugned is subject to provision, (b) the conduct must happen in trade or commerce, (c) the offending party must be engaged in a conduct8, and (d) the impugned conduct must be misleading and deceptive. Misrepresentations are negligent if they are carelessly made and if they breach they contract in the process9. The available remedies for misleading or deceptive conduct and misrepresentation are rescission and damages in tort for negligence. In Riddiford v. Warren10, it was established that sales contract could not be rescinded for misrepresentation because the equitable remedy for rescission does not apply to the contracts for the sales of goods. In addition to that, innocent misrepresentation does not necessarily constitute a ‘cause of action’ unless the representation is included in the term of contract between the parties involved11. The difference of misrepresentation resulting to tort from the misrepresentation resulting to breach of contract lies in the context by which the misrepresentation is made. The misrepresentation is tortuous if it puts the party in a situation he would not have been if the misrepresentation was not made and it is a breach of contract if the misrepresentation had been true12. It is important to define and determine the context with which the misrepresentation has been made in order to determine the scope and the extent of the remedial award for the plaintiff. Application of the Facts to the Law: There are two contracts for this case. The first contract was made when Mrs. Golf agreed to purchase Mr. Iron’s equipment influenced by the latter’s commercial advertisement that his equipment can clean 2000 golf balls in ten minutes. The second contract was made when Mrs. Golf agreed to purchase additional item that would meet the intended results of the original contract. The statements provided by Mr Iron, orally and in writing, are misleading given that it did not deliver the desired results. Mr. Iron breached the contract twice: the first time was when his equipment did not function as advertised and the second time was when his equipment did not function as promised after installing another part of the equipment that is supposed to address the initial malfunction. Mr Iron’s promises and his subsequent breach of contract resulted in major economic loss on the part of Mrs Golf. Mrs Gold is entitled to receive remedies for the damage of the breach of contract and the tort liability. The misrepresentations that were made by Mr. Iron put Mrs Golf in a situation where she could not immediately operate her golf business due to dirty golf balls and both misrepresentations are not truthful. On top of that, there is a significant degree of variation from the advertised truth to what are obtained in both cases. Mrs Golf can claim for damages13 or rescission of contract14. Conclusion: Mrs Gold can demand for remedy for all damages15 that were incurred including the economic loss of her business brought about by Mr. Iron’s misrepresentation of his products by citing misrepresentation resulting to tort and misrepresentation resulting to breach of contract. She can also opt to rescind the contract, which would place lesser burden on Mr. Iron, provided that Mr. Iron would return all the money paid for by Mrs Gold16. Question 2 The right of a party in contract to rescind must be exercised within a reasonable time17 of discovering the falsity of the statement or the misrepresentation, which means that the time to substantially restore the parties involved to the original condition is still possible18. In other words, Mrs Boss could no longer sue Mr Bung. Question 3 Parties: Ms Ant v. Bring it on Bank of NSW Issue: Ms Ant was not informed of the subsequent increase of the bank’s interest rate from 10% in the first year of the loan to 18% during the second year. Law: In order to discourage both parties in the contract to exploit the weakness of each other for its own economic advantage, the equitable doctrines of unconscionable dealing and undue influences were created. This is to ensure that remedies can be enforced to overcome the unwanted effects of unfair transactions in any contracts19. In most cases, the conduct of the stronger party is subject to the court’s decision even though the consent given by the weaker party receives equally strong interest20. The doctrine of unconscionable dealing allows remedy to be applied21 if a stronger party enters into an imprudent transaction with a weaker party which often means that the stronger party exploits the weaker party’s disadvantage to the stronger party’s economic gain. The doctrine of presumptive undue influence dictates that there must be some sort of relationship between the parties involved and the existence of trust and confidence must be established in order for this doctrine to take hold2223. If the relationship between the parties is not among the relationships defined by the doctrine of presumptive undue influence, the plaintiff can still claim under the doctrine of proven undue influence24. Section 51 AA of the Trade Practices Act of 1977 demands that corporations should not engage in any unconscionable conducts. Consumers can hold on s52 for defence if (a) the prohibited conduct is directed at conduct engaged in by corporations, (b) the conduct must occur in trade and commerce, and (c) the conducts must have the necessary elements to mislead or misrepresent. Remedies for misrepresentation include injunction to stop the misleading conduct and rescission of contract25 since evidence for fraud is not a necessary requirement for equity26. Application of the Facts to the Law: Ms. Ant suffered a special disadvantage vis-avis Bring it On Bank of NSW. The bank’s conduct is improvident as it did not provide or inform Ms Ant of the specific provision of the contract, granting Ms. Ant’s inexperience in dealing with banks. Had the bank specifically mentioned this clause in the contract or discussed it with Ms Ant27, an unconscionable dealing would not have been cited. Ms Ant’s relationship with her bank, and the undue influence the bank has on her financial transaction with them allows Ms Ant to use the principle of proven undue influences to rescind the contract. Ms. Ant can also cite s52 for her defence and can demand for the rescission of the contract, given that the contract is within a reasonable time frame. Conclusion: Because the elements of unconscionable dealings and proven undue influences are present, Ms Ant can claim for the rescission of her contract with Bring it On Bank of NSW. Question 4 Parties: Don v. Dave Issue: Dave did not pay Don the amount he has promised to pay to him but instead give him another amount less than the promised amount. Law: Promises made by parties to a contract apart from the original terms of the contract typically introduce expectations that when not met, results in legal issues. Promissory estoppel is the doctrine that allows the enforcement of the promise if the promise was made with an intention to affect the legal relationship between and among parties28. Promissory estoppel is established when three elements were satisfied which are (a) there has to be a contractual relations between parties29, (b) a very explicit promise is made that a party will not exercise their contractual rights in the strictest sense, and (c) the party promised upon relied on this promise30. With the non-completion and non-compliance of the contract aggravating one party, the aggrieved party can seek to enforce their rights31. The doctrine of promissory estoppel can also be extended to include situations where the promise constitutes a new course of action. Application of Fact to the Law: This case is quite complicated given that there is more than one contract made during the course of Don and Dave’s transaction. First, Don’s demand to increase his price to $220,000 constitutes another contract since it is not what was originally agreed upon by both parties. Dave can hold on to Don’s promise to build the yacht for $100,000 since Fono’s involvement in the contract is not foreseeable and Don’s relationship with Fono does not have anything to do with the contract signed between Don and Dave. Second, Dave’s promise to pay Don the extra $120,000 is a condition subsequent to the performance of a contract which means that Dave is legally bound to pay Don this amount. If Don does not accept Dave’s offer of $50,000, Don can sue Dave for breach of contract if he would not accept the $50,000 and file legal actions against Dave. However, if Don does accept Dave’s $50,000, he will be subject to a promise not to pursue for any more financial gain. If he pursues a case against Dave for the remaining money Dave owed him given that he accepts his $50, 000, Dave can use the doctrine of promissory estoppel on him in defence. Conclusion: Don should instead pursue a legal action against Dave for breach of contract and not accept Dave’s $50, 000 since if he will win the case, which he will most likely will, he can get the full amount of $120, 000. Question 5 Parties: Mr Chops v Joe Cuts Issue: Joe Cuts hired John Ham-fisted to act as his agent during his absence with a strict instruction to transact business no more than $2000. John Ham-Fisted spent more than what he is instructed. Joe Cuts refused to pay Mr. Chops more than $2,000. Law: The concept of an agency exists when a person, which is the agent, has the power to bring another person, which is the principal, to a contractual obligation with a third party.32 Becoming an agent is not a job but rather a relationship that exist between the agent and the principal. The creation of agencies is an exception to the doctrine of privity only when the principal does not want to be disclosed, making the third party think that he is making a contract with the agent33. In other words, the third party is aware that the agent is working for the principal and any agreements forged between them are binding to the principal owing from the principle of implied authority34. The actual authority of the agent is bound to the agreement made between the agent and the principal35 while it is also possible that all the actual authority of the agent is implied36. Implied actual authority means that the agent has the power to perform the things within the scope of his office37 and if the third party is aware of this implied authority, he could not argue that he relied on the appearance of the agent for wider authority. Application of Facts to the Law: There is no mention that Mr. Chops is aware that John Ham-fisted is acting as an agent of Joe Cuts. Joe Cuts did not specifically mention to John Ham-fisted that he should inform Mr Chops that he is Joe Cuts’ agent. Mr. Chops is led to believe that he is working with the principal and not an agent. John’s authority is limited to the agreement he has made with Joe and Joe’s liability is likewise limited to this agreement. Conclusion: Mr Chops should ask Joe for the $2000 and have John pay the remaining balance. Read More