Giving Bob Advice Based on Common Law - Article Example

Giving Bоb аdviсе based on соmmоn law An Article Submitted By: NAME: INSTITUTION: COURSE: INSTRUCTOR: DATE: © 2015 INTRODUCTION The present article advises Bob Wheelie had purchased a bicycle store from Mr. Spoke on the basis of the historical figures presented by the seller in the form of historical accounts. It later turned out that Mr. Spoke had given Bob Wheelie inflated accounts representation in order to induce him (Bob Wheelie) to purchase the store and allow him (Mr. Spoke) to retire and travel overseas. On realizing this, Bob Wheelie becomes very upset and is seeking legal advice on what to do. To address this problem, the article is divided into two parts. The first part is a draft essay which seeking to find all the facts, all the legal issues, the applicable law, the relevant law and then applying the law before coming to a conclusion. The second part of the article is the legal essay written in the third person, advising Bob Wheelie on the basis of common law. THE DRAFT ESSAY Finding the Facts Has been in love with pushbikes Saw an ad that caught his eye The owner of a bicycle store was retiring and needed to sell his store Bob made enquiries with Mr. Spoke regarding the sale Bob purchased the bicycle store Very excited about his new venture Came across some old register tapes, cash receipts and tax documents Discovered that the figures Mr. Spoke gave Bob were false Bob is very upset Finding the Legal Issues Was there an offer of sale on the basis of an advertisement placed by the seller? What liability is there attaching false inducement by the seller? Was there any reasonable excuse for Bob Wheelie to rush his purchase of the bicycle store? Was the agreement and hence the contract between Bob and Mr. Spoke legally binding If Bob has a case against Mr. Spoke Finding the Applicable Law Common Law Australian Consumer Law 2010 (Competition and Consumer Act 2010 (Cth), Schedule 2) Contract Law – Statute of Frauds 1677 (Imp) Applying the Relevant Law Common Law Under common law, a ‘condition’ is so important that without at least one condition, parties cannot enter into a contract. Consequently, a false condition or a breach of a condition is serious enough to enable the wronged party to treat the contract as “void, voidable or at least rescinded”. Coming to a conclusion Application of the Common Law on the basis of a ‘false condition’ renders a contract “void, voidable or at least rescinded”. Consequently, Bob Wheelie has two options for remedy – to stick with the contract or get out of it. Since he is very upset, it is therefore only logical for him to withdraw from the contract and retrieve his money from Mr. Spoke. THE LEGAL ESSAY Advising Bob Wheelie on his legal options Whether or not there was a contract between Bob and Mr. Spoke The first thing to do is to establish whether or not there was a contract between Bob Wheelie and Mr. Spoke. Ordinarily, two parties can enter into a contract if one of the parties makes a statement(s) to encourage the other party to enter into that contract. If such a statement forms part of the contract, and not a mere pre-contract talk, then such a statement becomes ‘a term of the contract’, so that the parties to that contract will be bound only by the terms of the contract, and not by any peripheral pre-contract statements that one party may have made to the other. As a matter of fact, courts look at “evidence of intention by one or the other of the parties that the statement should be part of the contract”. Furthermore, if the party making the statement has a special skill or knowledge compared to the other party, then the statement is more apt to be a ‘term of the contract’. According to The Law Handbook of Australian Law,1 a statement made by one party to the other decidedly becomes a term of a contract if the agreement is put into writing and the parties involved sign it, then the parties will be bound by the terms of the contract, unless ‘mistakes’ concerning “the nature of the document” occur or false statements are made. It is a fact that Bob had an intention of working for himself and doing just what he loved, riding bikes. It is also true that, on the basis of this intention, Bob visited Mr. Spoke’s bicycle store on the encouragement of an ad he saw claiming that “the owner of a bicycle store was retiring and needed to sell his store”. After making enquiries with Mr. Spoke regarding the sale, Bob purchased the bicycle store on the basis of the historical figures presented by Mr. Spoke in the form of historical accounts. Unbeknown to Bob, these accounts were not an accurate representation but were inflated by 55% in order to induce him to purchase the store and enable Mr. Spoke to retire and travel overseas. Based on the principles outlined above, it is evident that the statement made to Bob by Mr. Spoke during his representation of the store, is, as a matter of fact, core to the formation of a contract between these two parties. Furthermore, it was to the knowledge of Bob Wheelie that Mr. Spoke had a special skill or knowledge about running a business that finally convinced him to decide to purchase the bicycle store. But unfortunately for Bob, there is no indication that the two parties entered into a contract. This is because there is no mention of the two parties signing any document, contrary to the provisions of the terms of contract formation as informed by numerous precedent cases of Lakeway Co. v. Bravo 576 S.W.2d 926 [Tex. 1979]; Angela Raguz v Rebecca Sullivan &Ors (2000) 50NSWLR 236; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; and Azzi v Volvo Car Australia Pty Ltd [2007] NSWSC 3192; among others. Bob’s rights and obtainable remedies under Common Law Under common law, a ‘condition’ is so important that without at least one condition, parties cannot enter into a contract. Consequently, a false condition or a breach of a condition is serious enough to enable the wronged party to treat the contract as “void, voidable or at least rescinded”. On the basis of the foregoing scenario, Bob Wheelie has two options for remedy – to stick with the contract or get out of it. When Bob Wheelie indicates being very upset with his decision to purchase Mr. Spoke’s bicycle store, it implies that the only option left for him is to withdraw from the contract and retrieve his money from Mr. Spoke. Under rescission, Bob has the right to withdraw from the ‘non-existent’ contract altogether as outlined in “The Statute Law” whose procedure is set out in “The Statute of Frauds 1677 (Imp)”3. It has been established in many rescission cases that the ‘rescinding party’ “must do so within a reasonable time and cannot do so after doing anything to affirm the contract”4. Since such withdrawal must be done quickly, the short duration of time that Bob took to realize a ‘faulty’ condition in the contract is reasonable enough to enable him succeed in rescinding. Although it seems that there is no existent contract between Bob and Mr. Spoke, Bob Wheelie can still apply for rescission order based on the fact that a “false representation” was made by Mr. Spoke in exaggerating ‘net worthy’ of his bicycle store. This provision is informed by the landmark case of Dillon v Baltic Shipping Co “Mikhail Lermontov” [1993] 176 CLR 344 p555 under which contract remedy was possible resulting from disappointment and duress, which are the consequences suffered by Bob Wheelie. Bob’s rights and obtainable remedies under Australian Consumer Law Since Bob Wheelie is a consumer involved in “consumer transactions for goods and services that are of financial nature, he will therefore operate within the Australian Consumer Law (ACL), whose major provisions applies in Consumer Protection Legislation (CPL) as noted by5. This section of the law is administered by the “Australian Competition and Consumer Commission (ACCC)”. Additionally, the ACL contains the requisite consumer guarantees such as “the customers’ rights” in the cases where sellers or suppliers breach the consumers’ guarantees. For this reason, yes, Bob has rights under ACL particularly under the CPL. Similarly, Bob has the right of remedy by rescission executable under ACL as noted by6. This remedy is provided for by a court order “cancelling the contract” and the court can also “make an order to restore the wronged party – i.e. Bob to his original position, meaning the money he paid for the bicycle store should be refunded”. Since Bob was not given any warranty, his main basis for rescission will only be “breach of a condition of the contract through misstatement”. However, the most “commonly used remedy for breach of contract is payment of money, called damages”, which is computed to compensate the grieved party for any loss incurred because of the breach7. In Norton v Hervey Motors Ltd [1968] AC 465 of New Zealand, “the consumer was unhappy with defects in the paintwork on a vehicle she had purchased and she wished to have the vehicle replaced”. Although the court maintained that “a reasonable consumer” would go ahead to purchase the vehicle, this is not the case with Bob whose business venture is irredeemable. CONCLUSION Based on the foregoing evidence, it can be established that Mr. Spoke misled Bob Wheelie into buying his ‘poorly performing’ bicycle store by misinforming him using exaggerated figures of accounts. In view of this therefore, Bob could lodge claims in pursuant of compensation for damages against Mr. Spoke on the basis of negligent misstatement8. By definition, a negligent misstatement is ‘a false statement of facts that is made carelessly albeit in honesty’9. This is exactly the position held by Mr. Spoke, a fact that makes the court likely to rule in Bob’s favour because the contract would be rendered void, voidable, or even rescinded10. BIBLIOGRAPHY Articles and Books Ashworth A and J.C.N. Horder, Principles of Criminal Law (7th edn, Oxford University Press 2013) Chalmers Damian., Davies Gareth and Monti Giorgio, European Union Law (2nd ed., UK: Cambridge University Press 2011 pp. 534) Hepple B, Equality, the New Legal Framework. (Hart Publishing 2011) Painter, R. and A Holmes, Cases and Materials in Employment Law (9th ed., Oxford University Press 2012) Sargeant, M and D Lewis, Employment Law (7th ed. Longman 2014) Schneps Leila and Coralie Colmez, Math on trial. How numbers get used and abused in the courtroom, (Basic Books, 2013). Cases Angela Raguz v Rebecca Sullivan &Ors (2000) 50NSWLR 236 Azzi v Volvo Car Australia Pty Ltd [2007] NSWSC 319 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Dillon v Baltic Shipping Co “Mikhail Lermontov” [1993] 176 CLR 344 p555 Lakeway Co. v. Bravo 576 S.W.2d 926 [Tex. 1979] Norton v Hervey Motors Ltd [1968] AC 168 Read More