Australia Legal Situation - Case Study Example

Your name Instructor’s name Course name Date of submission Australia Legal Case Studies The main issues that are of interest in the dispute between John and Anton are whether there exist contractual obligations between the two parties. The main components of the formation of a contract that are of paramount importance are whether the two fundamental aspects of offer and acceptance have met. Anton’s case against John will be analyzed from the perspective of offer while John’s case against John will be analyzed from the perspective of acceptance. The legal rule that is involved in offer is whether the offeror intended to enter into contractual obligations from the words of the offer. The courts normally analyze the objective intention as understood by the offeror and not the offeree. The case most cited in intention is Carlill v Carbolic Smoke Ball Co in which Carbolic Smoke Ball advertised in the newspapers that it would pay anyone who smoked its smoke ball and contracted the flu. Carlil smoked the smoke ball and contracted the flu and demanded to be compensated to which Carbolic Smoke Ball refused. The court ruled that even if Carbolic Smoke had no intention of forming a contract with the users of its products, the consumers understood the advertisements to be an offer. Anton had therefore made an offer but by John altering conditions of the offer Anton was not bound to specific performance since he had not received any consideration. Anton’s advertisement is an invitation to treat and not an offer and hence he is not bound to contractual obligations prior to entering the contract since no consideration has been given. The courts may also decide that there was no intent to enter into contractual obligations. In Masters v Cameron the two parties had signed a document which had in it all the prerequisites of a valid contract. Masters was supposed to may a deposit on the property prior to the signing of another contract. The court makes its analysis on the enforceability of the given words and what may be the possible effect. The words of modification such as subject to contract may entail that the parties will be bound upon the writing up of a more formal document and will not be bound by the present informal arrangement (Competition and Consumer Regulations of 2010). John’s statement on the other hand is not a mere supply of information but rather a counter offer since it was offering new conditions before entering into a contract. The court ruled that the case was more in line with the third option and as such no contractual obligations existed between the two parties. The court asserted that while the words of exclusion did not necessarily exclude the intention to create a contract, in normal use they will have the upshot of excluding contractual obligations. The case set the precedent for later cases which held that the use of exclusive language is an indication of the intent to postpone contractual associations. In deciding whether there was an offer in the dispute these aspects of intention and the corresponding aspects as laid down in Masters v Cameron. Anton may argue for the perspective of Masters v Cameron which excludes intention to form legal obligations while John may argue from the perspective of Carlil v Smoke Ball Co which rules on the basis of intent as understood by the offeree. An acceptance to the unconditional agreement by the offeree of the terms of a contract as spelled out by the offeror in the offer. Acceptance is subject to certain legal rules which must be met in order for any party to claim a contract’s enforceability. One of the principles applied is the objective intention principle. The objective intention that is applied in the determination of acceptance is the same as that used in the case of Carlill v Carbolic Smoke Ball which looks at objective intention from the perspective of the offerer. Acceptance is subjected to the principle of whether a reasonable offeror would be of the opinion that his offer was accepted by the offeree. Another aspect of acceptance of a contract is the principle that acceptance of a contract must be unqualified and unconditional. Any variation in the terms of the contract as set out in the offer by the offeror makes any acceptance of such an offer by the offeree to be invalid (Trade Practices Act of 1974). The variation or qualification of the terms of an offer is deemed to be a rejection of the offer or a presentation of a counter offer. A good illustration of this principle is the case of Hyde v Wrench in which Wrench made an offer of a thousand pounds for his farm to which Hyde responded by offering 950 pounds. After Wrenches 950 pounds had been rejected by Wrench, Hyde attempted to accept the former offer of 1000 pounds but this was rejected by Wrench. The court held that by offering 950 pounds he had rejected the former offer offered by Wrench and made a counter offer of his own. The principle is however subject to two qualifications; the principle is applied in the instance when the counter offer actually varies the terms of the offer. The offeror however in agreeing to the terms of a counteroffer will be deemed to have entered into a new and valid contract with the offeree on new terms. However the most important aspect of the case between Anton and John involves the agreement between the two parties to postpone the entering of contractual relations which was made by John. By John affirming that he would only enter contractual relations after he had inspected the picture he was affirming that there existed no contract until a later point in time. According to the Misrepresentation Act of 1972, Misrepresentation is defined as the promise given or attributes ascribed to an elemental aspect of a contract that induced an offeree to enter into a contract which then turns out to be false or wrong. For Misrepresentation to be actionable in a court of law it must fulfill two conditions. The statement upon which the offeree relied on to make the contract must be proved to have been factual and not mere expression of opinion. The statement must be fundamental in having led the offeree to enter into the said contract. Statement of Fact For a statement to be deemed misrepresentation it must pass the objective test of not being a mere expression of opinion or a joke. This is illustrated in Smith v House Property Corp in which Mr. Smith who was selling his house which he had let to Mr. Fredrick Fleck. Mr. Smith described Mr. Fleck as a most desirable tenant to Land & House Property Corp. Mr. Fleck ran into bankruptcy a few months after Land and House Property Corp had acquired the house. Land & House Property Corp sued Mr. Smith for misrepresentation of fact since it was proved that Smith knew that Fleck had difficulties in paying his rent. While Smith may argue that he was a just giving an opinion the courts normally analyze the foundation of a statement made and whether they are based on factual and whether they are fundamental to the contract. If the statement is incorrect yet it was fundamental in the formation of the contract then it is a misstatement. An important aspect that is used in distinguishing between the factual nature of a statement is analyzed from the perspective of both the offeree and the offeror. The test used in determining an opinion from a representation is similar to the test used in distinguishing between a promise and a representation. In the instance of a person making a statement when he is in a position to know the facts underlying his statement then he is stating facts in giving his opinion and as such when this is proved to be wrong then he is guilty of misrepresentation (Misrepresentation Act of 1972). The statement by Brian on the watch being a Hamilton Pennsylvania Special 21 jewel pocket watch will have to be analyzed on the basis of whether Brian knew for a fact that this was true or not. Inducement Another elemental aspect of misrepresentation is that after the statement has been proved to have been factual it must have induced the offeree into entering the contract. It does not have to be the main inducement; just the fact that it was one of the inducements to the offeree is enough (Misrepresentation Act of 1972). If the statement played no part in inducing the offeree into entering the contract then there is no action for misrepresentation. Inducement also raises the issue of whether a statement given by the offeror would be relied upon by a reasonable person in entering into a contract. This is illustrated in Nicholas v Thompson in which Thompson made a statement to the Nicholas brothers asserting that he had been offered a huge amount of money for a new film process which he had developed. The Nicholas brothers entered into a contract based on this statement which proved to be wrong. The court ruled that the statement was an inducement and thus the contract was rescinded and Thompson was ordered to pay damages. Thompson appealed arguing that his stamen was not of fact and immaterial. In ruling for the Nicholas brothers, the court asserted that the important element that is considered in analyzing inducement is whether the statement was made in order to make the offeree enter into a contract ands that the statement succeeded in doing so. Andrew entered into a contract on the basis of the statement made by Brian as to the authenticity of the watch and as such the statement was an inducement and therefore actionable. In the instance of fraudulent misrepresentation being proved there are certain legal remedies available for the plaintiff. The case in Brown v Smitt is a good example of how remedy is applied in instances of fraudulent misrepresentation. Equitable indemnification and a claim for damages is very difficult to distinguish. Smitt who intended to buy Brown’s farm had made several improvements on the property before rescinding the contract. The court ruled that Smith could rescind and claim either the return of his money and interest and the costs of improvements on the property. The same principle may be applied in the case of Andrew and Brian with regard to the watch since there can be proved to have been a misstatement of material fact through misrepresentation. Read More