The Law and Remedies Applying to Dales Affidavit - Essay Example

INTERNAL MEMO FOR THE BOSS FROM: (INDICATE YOUR NAME) SUBJECT: THE LAW AND REMEDIES APPLYING TO DALE’S AFFIDAVIT DATE: JANUARY 24, 2011 Misleading or Deceptive Conduct The fact scenario appearing in Dale’s (plaintiff) affidavit is governed by the Law of Contract. Looking at the evidence provided by Dale in his affidavit, paragraph two of this evidence when read together with paragraph six shows a clear case of misleading and deceptive conduct by the buyer (Parklife Pty Ltd). In paragraph two of the evidence Eric Sully the director of Parklife Pty indicated to Dale that the ACT Government had given him their support to increase the butterfly population in Canberra back to sustainable levels. This would take place through building of a butterfly park. The information that Dale received on 3 June 2011 via a call from Eric indicating that Parklife Pty Ltd had lost its financial backing and that it had filed for voluntary administration and indeed that the company was in liquidation eliminates the possibility of there being a government support in the first place. It can be reasonably deduced from this evidence that the earlier representation by Eric was driven by the urge to mislead and deceive Dale that Parklife Pty Ltd was financially capable of entering into a sales contract. It is also worthy to note that, there is no evidence linking Dale with further investigation in to the truth of the statement made by Eric. There is therefore a possibility that Dale may be accused of negligence on his part. The necessary Law under these circumstances is the Trade Practices Act (TPA) 1974.1 Eric Sully acting on behalf of Parklife Pty Ltd is in breach of s 52 of this act since he engaged in conduct that was misleading in ‘trade or commerce’. The definition of trade and commerce as described by His Honour the Chief Justice of the Federal Court, Mr Justice Bowen in Re Ku-Ring-Gai Co-operative Building Society (No. 12) Limited [1978] 36 FLR 134,2 is perfectly fulfilled in our case. This is due to the fact that the agreement involved sale of items between the two parties and hence was commercial in nature. Remedies Under Section 82 of the TPA, Dale on behalf of ACT Aviaries Pty Ltd is allowed to sue for damages caused as a result of the breach of section 52 by the defendant, Parklife Pty Ltd. These damages will be assessed by comparing the position in which Dale’s company might have been expected to be if the misleading conduct by Eric had not occurred. If an argument arises from the plaintiff that the loss incurred by Dale’s company could have partly been caused by Dales negligence then the court will determine the existence of such alleged negligence and whether it is in any way connected to the loss suffered by Dale. The court in deciding on this issue will be guided by the ruling that was upheld by the Court of Appeal of Queensland in the case of I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited,3 where the court awarded damages to the appellant only for the loss causally connected with the respondents breach.4 Breach of Contract According to paragraph six of the evidence, Parklife Pty Ltd had not paid the bill for the enclosure yet the period had already exceeded one and a half months since the contract was entered in to .This amounts to material breach of the provisions of the contract since among its provisions, the buyer was required to pay the first installment to the seller of an amount equal to 50% of the price on the material date of the contract. Therefore, going by the total price as at the date the contract was entered into, Parklife Pty Ltd was supposed to pay ACT Aviaries Pty Ltd an amount totaling $3,454.5. This did not materialize hence resulting to a fundamental breach of the time clause by Parklife Pty Ltd. The contract further provides that, a breach of such an essential time clause of the contract gives the seller the right to terminate the contract by notice in writing to the buyer. He may then keep or recover the installment and move on to sue the buyer for breach of contract. It is therefore proper to advise the client to first write a notice to the buyer indicating his intention to terminate the contract on grounds of essential breach since this action has not been captured any where in the evidence. This will enable Dale to be on the safe side in terms of implementation of the provisions of the contract and thus will give him a basis to sue the buyer for breach of the essential condition of time in the contract. Remedies for Breach of Contract This action by Dale is governed by the Sale of Goods Act 1954 (ACT).5 Under Bunge Corp New York v Tradax Export SA Panama HPH 553, the House of Lords further held that the time clause was essential and thus its breach in a contract where it has been expressly provided for amounts to the aggrieved party having a right to terminate the contract since this is a breach of condition. Actually under this circumstances, Dales has a right to maintain an action for price against Parklife Pty Ltd under s 52(1) of the Sale of Good Act 1954(ACT). But since Dale wants a termination of the contract, it then means that he will not maintain an action for price and as such he will receive his Aviary back. A question may arise whether Dale, by legally terminating the contract, is entitled to damages for loss of bargain. In the case of Shevill v Builders Licensing Board HPH 622, the High Court held that, in a situation where the claimant is provided with a contractual right to terminate even if the breach is trivial, the court will in such circumstances not award damages for loss of bargain unless the contract very clearly says so. In the sale of Goods contract between ACT Aviaries Pty Ltd and Parklife Pty Ltd, clause 5.1 expressly gives the seller the right to recover and keep the installments. The right to recover the installment is a fulfillment of the ruling that was held by the High Court. It thus implies that on the basis of this case law Dale has the right to not only terminate the contract but also to recover the lost installments. Essentials of a contract Paragraph nine of the affidavit indicates a contract that was entered in to without fulfilling the necessary essentials of a contract. Various case laws indicate how the judges determine whether the essentials of a contract have been incorporated at the time the contract is being made. One of these essentials is ‘agreement’. The existence of an agreement is usually analysed through the rules of offer and acceptance as it was the case in R v Clarke (1927) 40 CLR 227; [1928] ALR 97; (1927) 1 ALJ 287.6 It should however be noted that the rules of offer and acceptance are merely “an aid to analysis”,7 and may sometimes prove inconclusive or artificial. The second element necessary for contract formation is ‘consideration’. Consideration can be anything from money to a promise to undertake or promise not to undertake a particular act. ‘Intention’ is the third essential. The parties involved must manifest the intention to create legal relations. In such circumstances, parties to commercial arrangements are presumed to intend legal consequences. The fourth essential element is ‘terms’. This refers to the provisions in a contract. The fifth essential element is ‘illegality’. The illegality of contract arises if the contract is prohibited by statute or if it infringes a rule of public policy. The sixth essential element is ‘capacity’. This refers to the ability of a party to enter into legally binding contracts. Both Dale and Eric acting as the representatives of their respective companies had the legal capacity to enter into a binding contract and thus this essential had been fulfilled. The sixth essential element of a contract is ‘formalities’. In most jurisdictions in Australia Contracts do not need to be represented in writing but exceptions apply. Oral contracts are as enforceable as written contracts. The evidence in paragraph nine of the affidavit indicates breach of this essential since the contract entered in to was oral instead of written as had been prescribed by terms of the contract. The provisions of the sale contract provided that the parties to the contract must sign each copy of the sale. This meant that there was an express provision that for the contract to be binding, it had to be written in nature for the signing to take place. Since there was no written agreement between the two parties governing the sale of the 50 bird cages, it is thus apparent that the demand to be given back the unsold bird cages or even the money realised from the cages already sold is unenforceable in law. Conclusion It is clear from the evidence given that there exists a case of breach of contract. Firstly, the evidence in paragraph two of the affidavit when read together with paragraph six indicates the existence of misleading or deceptive conduct by the defendant. The plaintiff has the right to get redress under section 82 of the Trade Practices Act (1974) Cth. Paragraph six of the evidence further indicates the existence of a fundamental breach of an essential clause in the contract. This case will be treated in light of the ruling in Shevil v The Builders Licensing Board (1982) 149 CLR 620. Paragraph nine of the evidence shows a situation where the essentials of a contract were not fully adhered to. The contract regarding sale of bird cages was not in written form as required and thus it would not be enforceable in law. This implies that the claim of a refund relating to bird cages is null and void. As to whether Dale can claim the $1000 from the primary school, he is legally allowed to claim the value of the railings as per the contract. By claiming $1000 instead of $800, it amounts to unjust enrichment which the courts will not allow. Remember the main aim of damages is to restore the complainant to the position he would have bean had the breach not occurred. In deed Dale has a legal right to dismantle and retrieve the Aviary. This is because termination of the contract means that every party is restored back to the position they were in before the contract occurred. Any transaction between Dale and Eric regarding cages is unenforceable in law. This is because the contract entered into regarding the sale of this particular goods did not satisfy the essentials required i.e. the contract was not in writing. This therefore means that Dale has no legal right to claim the remaining cages proceeds from the sale of sold bird cages or even to claim damages for breach of contract to be taken out of the funds in Piggy Bank. REFERENCES Court of Appeal of Queensland in the case of I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited[2002] HCA 41 (2 October 2002) Greig Donald W and Davis J.L. (1987) The Law of Contract, Sydney: Law Book Co. McCabe, Paula (2002) “I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited: The High Court confirms its Views on Damages Under Sections 82 and 87 of the Trade Practices Act 1974, “Bond Law Review: Vol. 14: Iss. 2, Article 11. Re Ku-Ring-Gai Co-operative Building Society (No. 12) Limited [1978] 36 FLR 134 Shevil v The Builders Licensing Board (1982) 149 CLR 620. Read More