Equity Law - Albert and Bob - Case Study Example

Running Header: EQUITY LAW Equity Law Name Institution Equity Law Problem No. 8 (Artful Errors) This is an incident involving two dealers, Albert and Bob. They are art dealers who make a living from buying and selling artwork. In their course of doing business the two come across a very beautiful artwork among the stock of Albert. The colorfulness and beauty of the painting makes the two have a different perspective of the whole piece of art. Maybe it was because of the lack of adequate information on the real origin of the painting. They all believe that the beautiful painting was a high quality reproduction of a Picasso original by an unknown and unidentified copyist. In this context, Picasso artworks were adorable and everybody’s favorites and attracted a ready market, fetching relatively high incomes for the art dealers as compared to other artworks. Having a showing of his art gallery from local cubist school, Bob badly wanted the painting to include in the show. He approached Albert since he was a friend and expressed his intentions of wanting to acquire the artwork specifically for his show. The two dealers erroneously agreed to strike a deal concerning the painting. With Bob’s persuadings, Albert finally agreed to let go of the painting for just $10,000, an amount he believed was worth the painting after all it was only a copyright of Picasso production. The deal was sealed. However, trouble started when the truth of the origin of the painting was revealed. This was after a Picasso expert nominated by Bob (who wanted the name of the copyist featured in his display) identified the painting to be a real and genuine Picasso article. Being a genuine Picasso article was reason enough to cause trouble between these two dealers. Picasso article meant that it was to fetch way above the $10,000 Bob had offered to Albert who owned the painting but did not know its origin. To make it more complicated, the Picasso expert placed the article at $1,000,000. With this amount of money, Albert did not have to think twice but call of the deal. On the other hand, Bob who was shocked to hear of the amount his ‘new’ article would fetch him was not willing to let go of the already agreed deal. The complexity of this incidence arises from the fact that both of them had no idea of the real identity of the painting. In addition, even though Bob had offered Albert an invoice of a total amount of $10,000 for the painting, actual money had not exchanged hands, giving Albert a reason of wanting to pull out of the deal after learning of the actual price of the painting. The above incidence is an extraordinary case that needs to be carefully handled. With both the concepts of the court of law and that of the equity law one may wonder if Bob can ask the firm whether Albert can validly walk away from the contract on the basis of the mistake. And whether the situation could have been different had both Albert and Bob known about the real origin and the price of the artwork at the time they were negotiating the contract. Sometimes ordinary or common laws may not be applicable. Example is this case here. In such incident, when you force them, justice will not be done to one party in whatever case being handled. As such, where these ordinary laws cannot apply, the judges are force to apply the equity law. These are the set of laws that supplement common laws.1 They come in to correct and prevent the harsh consequences that could have been caused by ordinary laws. In most cases these laws advocate for fairness, which is the backbone of natural justice. Judges are asked to apply these laws in incidences where the strict laws tend to cause more harm other than solve the problem. Gurvitch and Hunt states2: Equity law is often referred to as means of acquiring justice through principles of fairness. A person seeking equitable relief is typically asking a judge to order his opponent to do--or to refrain from doing--something. Thus, equity appears as an element in most legal systems, and in a number of legal codes judges are instructed to apply both the rules of strict law and the principles of equity in reaching their decisions. (p. 67). From Gurvitch & Hunt’s definition of equity law, it is evident that the whole concept is based on the justice of nature (natural justice). It may be tricky to achieve natural justice with laws adhered to in the court of law. With the concept of equity laws, judges are advantaged to overlook the harsh and strict rules and instead apply other legal principles that supplement terms of the strict rules with the natural law3. In some way, equity law has really helped to solve the complexity nature of some cases in the efforts of doing justice. Both the two dealers agreed to get into a contract on the bases of a common error, lack of adequate information about the artwork in question. This is fact enough to give each of them a basis of argument4. Bob who is delighted with the revelations about the painting may challenge Albert to stick to the contract since they had already negotiated and even exchanged invoices. This shows that the deal had already been sealed and no matter what it could not be reversed. On the other hand, Albert can hit back by arguing that by the time of negotiating the contract he had no idea of the real origin and price of the painting that he had in stock. To boost his argument is the fact that even Bob confessed before the contract to have no idea whether the article was a genuine Picasso or not. The two dealers all believed that the piece of art before them way a copyright of Picasso and that is why Bob opted for the assistance of a Picasso expert to try and identify the copyist. It sounds convincing and a concept easy to be understood. However, the law has a rather weird way of interpreting such cases5. It is often said that in judicature, ignorance has no defense. What transpired between the two was merely based on a mistake of lack of information on the artwork. In this case, this ignorance favors Bob who appears to carry the day. Another thing that adds weight to Bob’s argument is the fact that the two had already struck a deal and invoices given out. From this perspective of common law, Bob is able to hold Albert onto the contract despite the shocking revelation of the painting. Now comparing $10,000 and $1,000,000 and the aspect of business, it rather obvious that the situation could not have been the same had Albert known of these figures and that the painting was a genuine Picasso before the contract. He would not have been unknowingly been lured into the contract. Problem No. 9 (Arthur’s House) This is another case involving two friends, Bryanna and Arthur. The case is one of its kind as it looks simples jet very complicated. The case revolves around a certain residential house in Coconut Grove that is thought to belong to Arthur. Bryanna desperately needs a house next to her mum so that she could take care of her since she is seriously sick. Now the house in question happens to be adjacent to Bryanna’s home. As such, she takes up the opportunity to approach Arthur when they are having a chat in some certain hotel to express her intentions of wanting to buy the house. Arthur seems to easily understand Bryanna’s situation and is ready to help by letting go of the residential house. However, just like the first case, this contract is agreed on basis of a common error between them. Arthur thinks that the house is his while Bryanna is convinced to believe so. However, the actual situation is not that way. The two start discussing on the price and later settle at $650,000. Being a business transaction just like any other, Bryanna insists on an official arrangement immediately6. The two embarked on some documentation to formalize their contract. They all agreed and signed papers reading, “Bryanna has paid Arthur $65,000 as a 10% deposit on 18 Palm Street Coconut Grove for a sale at the total price of $650,000 to be settled within six week of today’s date.” Bryanna proceeded to award Arthur with a $65,000 cheque. It was here that the true value and information about the house was revealed. Arthur was shocked to learn that even though he received rent and all other dues from the house, the asset did not exactly belong to him. He also learned that the house cost way above what he thought. Selling it for $65,000 meant that he would suffer a loss as the real cost was at least $2,000,000. But what could he do. He had already singed the documents legalizing the contract and even received a deposit of $65,000. On the other hand, Bryanna desperately needed the house and obviously could not let him pull out of the contract. The only option Arthur was left with is to ask the legal firm if it could be able to successfully defend the proceedings of the case filed against him by Bryanna for breach of contract. But how possible was this? The dilemma of this case arose when Arthur presented the cheque to the directors of the trustee company in charge of the house thus the need to apply both equity and common. The use of the law of equity may differ from one case to the other. However, the whole concept revolves around supplementing the harsh remedies of the court of law in those extraordinary cases like this one here7. Michael states that the aims of equity law include holding defendants in contempt in order to make them comply with judgments. He writes that with the law (equity law) one party can own property while another party has the right to use the property. He also adds that the law also enables one to guarantee a debt or loan using his or her legal land8. These are not the only cases that call for application of the equity laws. According to Dworkin, there are several others with the same complexity that need the approach of the natural law. On his take on equitable remedies he states9; Equity courts created several new remedies for plaintiffs. Among other remedies, equitable plaintiffs can obtain injunctive relief, which forces the defendant to behave or not behave in a certain manner; equitable restitution, which forces an owner of property to hold the property for the benefit of another party; and specific performance, which forces parties to a contract to follow the contract to the letter. However, to obtain these remedies, plaintiffs must first prove that the legal remedy would not redress the wrong. (p. 78). From the definition of equitable remedies above it is evident that there are several incidences where the law of equity can apply. Most state nations’ judicature has unified equity law and the court of law. Arthur believed to be the owner of the asset as it was an inheritance from his late father. However, the house’s ownership was under Maynard Family Holdings Pty Ltd. The company was the trustee of a trust that had been established by Arthur’s father for the benefit of his two sons, Arthur and Michael. Arthur was only a beneficiary of the trust together with his brother. He was not truly the owner of the house. Arthur misunderstood the family lawyer who had told him that full ownership will be granted to him when the trust came to an end on the fifth anniversary of his father’s death, approximately 2 years away, when the assets will be distributed among him and his brother Michael. This meant that not until the fifth anniversary both Michael and Arthur were custodians of the asset and under no circumstances could the house worth $2,000,000 be sold fro $650,000. That meant that his brother, who was not involved in the contract, would go short fall to your brother of $675,000 as explained by director John Harradine. All these are solid arguments that could enable the legal firm defend Arthur in the case of breach of contract filed against him by Bryanna after the contract was called of by Maynard Family Holdings Pty Ltd10. Problem No. 10 (Thoriotetracupride) This is another equity case involving two companies that are in mutual agreement to carry out business together. The companies are Deep Rock Ltd (“Deep Rock”) and Australian Science and Technology Organization (“ASTO”). Deep Rock was involved in sinking and equipping exploratory geo-thermal wells up to 30,000 meters deep for electricity reticulation. This was with the financial help from the Australian government on the agreement that it will report all its findings of its researches and explorations to ASTO. In the course of its exploration activities, Deep Rock discovered a vital mineral compound that later was found to have the capacity to generate abundant energy that could be used to supplement all energy from fossil fuels and named Thoriotetracupride. After several experiments done to the compound led by Andrea Symondson, a geological analyst working for Deep Rock, it was discovered that indeed the mineral compound had the capability to split water atoms into hydrogen and oxygen ions, meaning that it could save the country the large sums of money spent on petroleum energy. Andrea was convinced that this was a life changing discovery and so compiled all information about the mineral compound and forwarded it to the Deep Rock board and one to ASTO. She anxiously looked forward to the launching of her team’s vital discovery which never came to be. The dilemma of this case arose when it was learnt that despite importance of the mineral, its launch meant the death of petroleum business in the country. It was more complex as it could also mean a great downfall for Sunda Motors Ltd and Hemisphere Petroleum which were Deep Rock’s biggest shareholders. It meant no more business for these two as they dealt in petroleum products and commodities that use petroleum products. Andrea is upset with the fact that the mineral can not be launched due to these reasons and she together with Richard of ASTO decides to seek legal ways to pass the information to the scientific community without suffering legal sanctions. With the laws of equity Andrea and Richard can achieve this without having to face legal sanctions. Peterovic and Kittl states, “Equitable restitution may force an owner of property to hold the property for the benefit of another party; and specific performance, which forces parties to a contract to follow the contract to the letter.” (p.89)11. Now it should be noted that launching of the mineral is for the interest of the whole public and is capable of changing so many lives. This gives Andrea and Richard basis of argument12. Here equity laws will clearly stipulate that the whole state can not be compromised for the interests of the two companies, Sunda Motors Ltd and Hemisphere Petroleum13. Problem No. 11 (Dealer In Love) Problem No. 11 presents a case of two people, George and Janet. George is disabled due to the injuries he sustained from a motorcycle accident. Despite being heavily compensated for the accident, he is depressed by this condition as he is reduced to a wheelchair, he cannot go out or even hang out with friends. With the boredom, he is lured into substance use and addictions (alcohol and cannabis). It is in the line in this substance use that George meets Janet, who happens to be a dealer in the drugs. She offers to be delivering the drugs at his door step making it easier for George. With numerous visits to his home, George gets used to Janet who turns to be the most important person in his life as far as his condition is concern. Janet on her side seems to enjoy being next George. With time, their friendship grows stronger until George starting developing feelings for her. He finds the guts to face her and tell her. At the same Janet desperately needed a house for her and her daughter from her past relationship. She takes advantage of the fact that George like her to convince him to loan her $50,000. After acquiring the house Janet cuts links with George and in fact refuses to pay back the loan saying it was a gift. From the perspective of natural law it is evident that George has been done injustice14. The question is if he could manage to get legal redress against Janet. Now with his depressed condition anybody would sympathize with him. However, the case of getting legal redress against Janet may be really tricky. They a secretive friendship and nobody in the neighborhood knew of it. Another challenge is the nature in which George gave out the loan. There was no any kind of documentation to formalize the transaction15. This gives Janet all reasons not to pay the loan. George may demand that Janet accounts for the house. Janet can do so stating that she used the ‘gift’ of $50,000 she got from George. Now with the condition of George and the numerous times they spent together, it is easier for anybody to believe that indeed it was a gift. In addition Janet may challenge George that he was changing the deal because she refused to get in love with him, after all nobody was there. All these show how hard it is for George to get some legal redress against Janet16. Problem No. 12 (Family Favourite) Problem No.12 is on inheritance. The case involves a will left by a father, Tyrone, to his widow and his four married daughters. Upon his death and reading of the will the daughters seem not happy with what the will says. The will gives Alexander the go ahead of purchase Tyrone’s interests of $200,000 in the accountancy partnership upon Tyrone’s death. $200,000 worth of Tyrone’s interests turned out to be the sum that made up the residue of Tyrone’s estate. The idea is not welcomed the four daughters as that meant that each of them was to get a total of $50,000 under the will. According to them, they believed that their father’s shares were way above $200,000. As such they consulted legal procedures to try and stop Alexander from buying the shares. This was going to be a rather difficult task for the four lovely daughters. It is evident that cases of inheritance and the will are always very technical17. In this particular incidence, Mr. Tyrone enjoyed a very good professional relationship with Alexander, his nephew. This made him love him so much since none of his children had qualified to be an accountant. Letting Alexander buy $200,000 worth of his shares in the company is something Tyrone wanted as an appreciation for their friendship. This can be confirmed by Alexander’s father who is also a signatory of the company. Another challenging factor about this case is the fact that Tyrone never used to discuss his professional matters with anybody in his family18. Also, he was of sound mind at the time of writing his will as confirmed by the doctor. All these things Alexander was able to prove to the court. He also proved that he did not manipulate the writing as he was no present at the time it was being written. At the time that he made his will Tyrone had full testamentary capacity and was not subject to any discernable pressure or influence from Alexander or Thomas. These and many other several factors that Alexander was able to prove before the court gave an upper hand in the case, making him carry the day19. Problem No. 13 (What a Crock) This is a problem of two old friends, Josip and Andrea who meet after a very long time and try to rebuild their friendship. Andrea comes visiting and is amused by the crocodile farm business that his old friend engages in and that makes him up to $250,000 a year. Being on a long business, Andrea requests to stick around as he really liked the farm. During the stay, Andrea overhears Josip mention that he wanted to sell the farm so as to go spend time with his family. Andrea decides to take up the opportunity as he did not mind owning the farm. He suggests to his friend requesting to buy the farm from him. Josip accepts to take up the $2,500,000 Andrea is ready to part with in six installments. The two reach an agreement and the payment has to be done within six months. Andrea presents with a $500,000 cheque as deposit for the payment. In addition, he adds him another $8,000 cheque after the first month. All this is done with the witness of the animal industry officials. The deal also demanded that Josip stays on the firm for 2 years as an adviser. Things do not go on well with the two friends and Josip retreats from the contract and wants to pull out of the whole deal. He argues that there was no any legal writing binding them to the contract. However, it may not seem easy as he thought. The fact that deposit for the contract was paid with witness of two officials is evident enough to prove that indeed there was a contract20. On the same note, Josip agreed to leave the management of the farm under Andrea. As such, it is evident that all sale receipts since the payment of the deposit bared Andrea’s name clearly indicating the existence of a contract. He also moved to stay in the servant’s quarters as stipulated by the contract. As such, there are several equitable rights that might be mobilized to force Josip to sell the farm as agreed and to make Josip remain as adviser for the remaining part of the two years21. Problem No. 14 (The Nest Egg) This is another complicated case involving erroneous buying of property. Marcel and Elvira Ferranti, a late middle aged couple, are convinced to buy a house at an inflated price. The two are aging and wanted something to supplement their income in old age as their age will soon not allow them to work. As such, they decide to invest their present saving. They hook up with one Mr. Henry Appleyard of the Coastal Realty agency who is in charge of the houses owned by Marina Veneziana Pty Ltd. Mr. Appleyard knowingly convinces the couple to purchase a Town House No. 231 for $350,000 when its actual value is discovered later on to be $150,000. Mr. Appleyard quickly takes them to a lawyer and the couple gets to sign the contract of acquiring the house by first paying a deposit of $50,000 followed by $300,000 in 30 days. The following day after the two had paid the deposit, they come to dearly learn of the truth about the transaction. It is revealed that all those transactions were sale scams by which Gold Coast properties were sold at grossly inflated prices to unknowing people from interstate. Immediately the couples call the agency complaining of the fraud and that they wish to pull out of the contract. Mr. Appleyard refuses to let them pull out by threatening to sue them for breach of contract. However, the couple has very solid grounds to argue out their case. The whole transaction was an intention sales scam of which they did not know22. The house was $150,000. Queensland Consumer Affairs said that this valuation was known to both Mr. Appleyard and the lawyer Samuel Harrison because it had been arranged with their co-operation and on condition that they received a copy. This clearly shows that this was an intentional scam, giving Marcel and Elvira Ferranti all reasons and right to pull out of the contract23. References Ahmad, Albert, Lawyers: Islamic Law (Oxford University Press, 1988). Albrow, Muen, Bureaucracy (Key Concepts in Political Science) (Palgrave Macmillan Press, 1970) Auby, J, Administrative Law of the European Union, its Member States and the United States (Penguin Books, 2002) Bayles, D, Hart's Legal Philosophy (Pearson Prentice, 1992) Beale, H, and Tallon, D, Contract Law (Hart Publishing 2002) Bent F, Mette, K and Søren, L, Underestimating Costs in Public Works Projects:Error or Lie? 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