Whether Ronald Can Succeed in Making Auto Angels Refund His Money - Assignment Example

Business Law: Name: Student’ Number: Course: Tutor’s Name: Introduction To answer this question there is need to use four step analysis so as to identify all the facts and make the best conclusion. Legal Issue The legal issue in this case will be to establish whether Ronald can succeed in making Auto Angels to refund his money. There is also another issue to determine whether clause 13 of the contract can protect Auto angels from any liability. There is also the issue to determine whether the promise to install a stereo was a term of the contract. Legal principles To solve the legal issues there is need to refer to law of contract. According to the law of contract breach of the contract terms can lead to termination of the contract. It is important for parties to understand the terms of the contract before they sign it1. The reason behind this is that there are different types of terms which include express and implied terms. There terms which occur to be mere representations which one party may make the other party to enter into the contract. Express terms are elements that have been included in an agreement by declaration2. They can be presented either orally or through writing. In other circumstances there are exclusion clauses that help one of the parties in an agreement to avoid liability. The exclusion clauses should be brought to the attention of all parties. This will help them in understanding their obligations in the right manner3. Implied terms are the elements which should be necessarily discussed by the parties but they considered to be terms of the contract4. The common requires the parties to do what is necessary so as to allow the contract to be performed. This ensures that the parties had an intention to be legally binding. Implied terms are important because they are necessary to ensure that there is efficacy to the contract. The implied terms are very clear for the parties to understand and they should not contradict express terms5. Application of Law In solving the legal issues in this case there is need to apply precedents which have been set in other similar cases. In Derry V Peek (18989)14 APP Cas 3376, Derry issued prospectus of company he was a director claiming that the company was authorized to use steam-driven trams. Such was authority was applied for but it was yet to be approved. Derry believed the approval by the Board of Trade was a mere formality. Peek relied on the information that was provided in the prospects and went ahead to purchase shares from the company. The Board of Trade rejected the company’s application to use steam-driven trams. This led to the collapse of the company. Peek sued Derry for damages because he was the one who offered the prospectus and was a director in the company. The issue in this case was to establish whether there was a fraudulent misrepresentation. The court held that the directors were not fraudulent because there was no false representation that was presented in the prospectus knowingly, without belief or carelessly. The directors believed that they will be approved to use steam-driven trams and therefore, this was not being fraudulent. Therefore, Peek failed in his claim for damages because the court did not find any evidence that the claim was fraudulent. In the case of Oscar Chess Ltd v Williams [1957] All ER 3257, Williams’s mother owned a second hand Morris Minor motor car which was sold to the plaintiff in 1955 after her mother requested William to sell it. The plaintiff was a second hand car dealer. William mother believed to be 1948 model. After sometime the second hand dealer discovered the real age of the car, it was a 1939 model. This made the dealer to sue William for breach of contract. He claimed that the age of the car was a term of the contract. The issue was whether the age of the car was a term of the contract. The court held that it was not a term of the contract because it was mere representation. The reason behind this decision was that the dealer was a specialist in second hand vehicles and could have obtained the true age of the car before purchasing it. The court said that William was not a specialist and therefore, it could have been hard to be aware of the real of the car. Therefore, there was no breaching of the contract. In the case Causer v Brownie [1952] VLR 81, Brownie worked as a drycleaner Causer took his wife’s dress to him for dry cleaning. Causer was given a docket which had the words ‘No responsibility is accepted for loss or damage to articles whatsoever’ printed on it. During cleaning the dress was stained and Causer claimed damages. Brownie refused to pay any damages because he was being protected by the clause on the docket. The issue on this case was to determine whether Brownie could use the statement on the docket to avoid any liability for loss or damage of his customers’ properties. The court decision was that the statement could not become a term of the contract because the docket did not appear to be a contractual document. Brownie did not explain anything about the docket being a contractual document and therefore, Causer thought that it was kind of identification while collecting the dress. The statement was not brought to the attention of Causer by Brownie. Therefore, Brownie could not rely on the statement to avoid liability because it did not form terms of the contract. In another case Alati v Kruger (1955)94 CLR 2169, Alati owned a fruit selling business which he sold to Kruger. During negotiations Alati told Kruger that his average weekly income was about £ 100. This information induced Kruger into buying the business. This information was not true because he did not earn £ 100 per week. Later Kruger found that for the last nine weeks that Alati was on business his income did not reach the stated one. Kruger informed Alati his intentions of avoiding the contract because the information provided was not collect and this was fraud. Therefore, Kruger began proceedings to recover the amount he had paid for the business. He continued to operate the business until it failed. The issue before the court was to determine whether Kruger was entitled to avoid the contract while the business had already collapsed. The court held that Kruger was entitled to avoid the contract and should also recover the purchasing price he incurred. The reason behind this is that Alati gave false information which induced Kruger into buying the business. It would unfair to deprive Kruger of the remedy because the failure of the business was not of his making. Alati did not help in any way to help avoid collapse of the business. Conclusion According to the case Derry V Peek (18989)14 APP Cas 33710, false representations that the parties believe could not make the parties liable for damage. In this case Barry made Ronald believe that if he purchased the car a new stereo will be installed. This is shown when he agreed to sign the contract even before the stereo was installed. Barry went ahead to give Ronald a date when he should come back and have a stereo installed on his car. Barry also told Ronald that the car was owned by an old lady and that she had taken good care of the car. This was fraudulent misrepresentation which is not allowed by the law. Barry used this to convince Ronald to buy the car. Therefore, Ronald will be successful in avoid the contract and recovering the purchasing price he had paid for the car. According to the case Derry V Peek (18989)14 APP Cas 33711, Auto Angels will have to prove that Barry was not fraudulent in giving the information to Ronald. It only in cases where the parties believed in the false representation could help Auto Angels from being liable of any damages. According to the Alati v Kruger (1955)94 CLR 216 and Oscar Chess Ltd v Williams [1957] All ER 32512, Auto Angels will be liable to returning the whole purchasing price of the car to Ronald because it was not what he wanted. He was induced into buying the car because of the information which was provided by Barry who was an employ of the company. The information was fraudulent because Barry wanted to have the contract go through by all means that is why he provided false information. According to the case Causer v Brownie [1952] VLR 113, exclusion clauses cannot be used as a way of avoiding liability. In this case the contract stated that one is bound by the terms and conditions of the company. The terms and conditions of the company were not presented to Ronald and therefore, he was aware of the term that was excluding the company from any liability. This exclusion clause would have been explained to Ronald before he had signed the contract. Therefore, Auto Angel will be liable for damages claimed by Ronald. Reference List Books Abbott, K, Pendlebury, N and Wardman, K. 2007. Business Law. Sydney: Cengage Learning. Adamson, J.E. 2010. 21ST Century Business: Business Law. London: Cengage Learning. Clarke, P. 2006. Law of Contract. Sydney: Turnaround Publishers. Emerson J.D. (2009). Business Law. London: Barron Publishers. Gibson, A. and Fraser, D. (2013). Business Law. Sydney: Pearson. Gillies, P. (2004). Business Law. Sydney: Federation Press. Goldman, A.J. and Sigismod, W. (2010). Business Law: Principles and Practice. Sydney: Cengage. Lambiris, M. (2012). First Principles of Business Law.Sydney CCH. Latimer, P. (2012). Australian Business Law 31st edition. Sydney: CCH. Miller, C. and Cross, J. (2004). Business Law: Text and Cases 11th edition. Sydney: Cengage. Cases Alati v Kruger (1955)94 CLR 216 Causer v Brownie [1952] VLR 1 Derry V Peek (18989)14 APP Cas 337 Oscar Chess Ltd v Williams [1957] All ER 325 Read More