Is Raymond Contractually Bound to Pay for Two Days Hire - Assignment Example

Business Law Student's Name Institution Business Law a) Is Raymond contractually bound to pay for two (2) days hire? Explain you answer by reference to the applicable law (5 Marks) Issue The issue in question is whether Raymond ought to pay for two days hire yet he had stipulated when making the offer that he wanted to hire the car for one day and he had returned the car within twenty four hours. Charlie on the other hand insisted that Tuesday and Wednesday are two different days yet the form that Raymond signed was silent on the issue. Law When Raymond entered a conversation with Chen and asked whether he could rent a car for one day he made an offer to rent a car for one day. The legal significance of an offer is that it gives the offeree the power to create a contract through a unilateral action (Carter, 2012). By taking Raymond’s details and entering them on an Avista motor vehicle rental form, Chen accepted Raymond’s offer to rent the car. An acceptance involves communicating unqualified assent of the express and implied terms of the offer to the offeror1 (Lambiris, 2011). In Eliason v Henshaw2, it was held that acceptance must conform to the offer with regard to time, place, and mode. The charge of $140.00 per day amounted to consideration. Application of Law to Facts The contents of a contract are known as terms and breach of terms entitles innocent parties to bring actions and to obtain remedies. Before an innocent party can bring an action for breach, the court must determine what the parties to the contract agreed to do (Pendleton & Vickery, 2008). When establishing the validity of a contractual term, the court primarily considers the intention of the parties. In the case of written contracts, external evidence cannot be used to contradict or vary the terms of the contract (Carter, 2012). Terms are classified as conditions or warranties. If the innocent party would not have entered a contract due to a certain term or were it not for a certain term, then the term is a condition as was held in Associated Newspapers v Bancks3. Terms can be express or implied. The rental form signed by Raymond did not contain an express definition regarding the duration of a day. The two day charge cannot be justified as the duration of a day is a universally implied term by trade usage or custom. The universal duration of a day is twenty-four hours (James, 2010). Raymond is only contractually bound to pay for twenty-four hours. If Charlie intended Tuesday and Wednesday to be two different days, he should have expressly stated so in the rental form. b) Is there any way Raymond can argue that he is not responsible for the damage sustained to the hire vehicle? If so, explain his argument and any counter arguments that may be raised by Avista. (10 marks) Issue The issue is whether Raymond can be held responsible for the damage caused to the hire vehicle which sustained damage on the left hand side. This is in light of the fact that Chen had informed him that the charge of $140,000 per day included the motor vehicle insurance. The issue is also in light of the fact that term 20 of the 32 terms and conditions specifically stipulated that the rental price does not include motor vehicle insurance and the hirer was to remain liable for any and all damage sustained by the motor vehicle Law A pre-contractual statement is known as a representation. If a representation is not true, the injured party is not entitled to seek remedy for breach of contract; he or she can only seek remedy for misrepresentation (Carter, 2012). Chen said that the price of $140.00 per day included insurance before Raymond could sign the contract thus it was a pre-contractual statement which amounted to a misrepresentation in consideration of the fact that term 20 indicated otherwise. Term 20 is an exemption clause. It is an exclusion clause because it exempts Avista Car Rentals from any and all liability. Application of Law to Facts As an employee working at the front counter of Avista Car Rentals, Chen owes a duty of care to Avista customers. By issuing a false pre-contractual statement that the daily charge included motor vehicle insurance, Chen made a negligent misrepresentation since he breached the standard of care and injured Raymond who might have taken other precautions if he had realized that motor vehicle insurance was not included. In Bisset v Wilkinson4, it was held that for a misrepresentation to provide a remedy, it must be a misrepresentation of a fact that is in existence (Davenport & Parker, 2012) The misrepresentation must have induced the representee to enter into a contract by relying on it (Carter, 2012). Raymond had to prove that he relied on Chen’s negligent misrepresentation to enter into the contract and sue for damages under the tort of negligence. The court can exercise discretion and rescind the contract. Raymond can also rely on section 18 of the ACL5 which prohibits people engaging in commerce or trade from engaging in deceptive or misleading conduct. Moving under the section is more recommendable since there is no need to prove negligence, puffs are actionable, and remedies are extensive since damages can be recovered even for an innocent misrepresentation. Avista can counter-argue that by signing the rental form contract before reading all the terms and conditions, Raymond acted carelessly and therefore he is duly liable for the damage sustained by the car. In L’Estrange V Graucob6, it was held that a person who signs a document that has an exemption clause is automatically deemed to have read the document even under circumstances when he or she has not read the document. Raymond is therefore fully bound by the exemption clause whether or not he read it as it his duty as a consumer to exercise discretion and caution when entering into an agreement. When Avista makes this argument, Raymond can counter that exemption clauses are invalid if there was: misrepresentation; fraud; the document was signed after completion of the contract; and if the document was not contractual in nature (Gillies, 2009). Chen misled Raymond by claiming that motor vehicle insurance was part of the daily price. Chen’s misrepresentation induced Raymond to fail to read all the terms and conditions of the contract. Raymond can rely on the precedent set in Curtis v Chemical Cleaning & Dying co7 whereby the plaintiff took her dress to the defendant for dry cleaning. The plaintiff was asked to sign a document which she did not read after the assistant told her that the document did not contain exclusion clauses. The defendants returned the dress to plaintiff but it contained stains prompting the plaintiff to sue. The court held that the defendant could not rely on the exclusion clause to escape liability since the plaintiff had been misled by the assistant (Carter, 2012). Raymond was misled by Chen therefore the exemption clause was not incorporated by his signature. He is therefore not liable to pay for the damage sustained by the car. Avista can further claim since the exemption clause is part of the contract, the court should interpret it in its ordinary and natural meaning as was held in Darlington Futures Ltd v Delco Australian Pty Ltd8. Raymond should then counter argue that the exemption clause was an unfair term since it exempted Avista Car Rentals from any and all liability. In Thomas National Transport Ltd v May & Baker Ltd9, it was ruled that parties cannot contract out their obligations and a clause that relieves a part from any and all liability cannot be valid. Under this approach, Raymond cannot be held to be fully liable for the damage sustained by the car. c) Will Avista be able to rely on the document Charlie had him sign? Explain your answer. (5 marks) Issue The issue in question is whether the document Charlie compelled Avista to sign is enforceable. This is in consideration of the fact that Raymond initially refused to sign as he was not willing to be held liable for the damage sustained by the car. Raymond only signed the document reluctantly after Charlie told him that if he refused to sign the large vehicle he had booked for the afternoon would not be availed to him. Law For a contract to be valid and binding there must be unconditional and genuine consent from both parties (Carter, 2012). Consent is negated by unconscionable conduct, undue influence, duress, misrepresentation, and mistake (Pendleton & Victory, 2008). Where a person is compelled to enter into a contract against his or her will; the action of the person who compels him or her amounts is referred to as duress. Legally, duress refers to the illicit pressure exerted by a person to coerce an unwilling person to enter into a contract. Application of Law to Facts The pressure exerted must have the potential to cause a reasonable person to do something he or she would not if the circumstances were ordinary. If Charles failed to avail the larger vehicle to Raymond, Raymond would have failed to attend a meeting that he could not afford to miss and he would not be in a position to find alternative transportation at that time. Charles exerted economic duress on Raymond since Raymond entered the unconscionable agreement because of exertion of commercial pressure. Avista cannot rely on the document since Raymond can have it rescinded and declared voidable. In addition, Raymond can sue for damages under the tort of intimidation. Conclusion Raymond is not contractually bound to pay for two-day hire since the contractual terms and conditions were silent on the definition of a day. The universal definition of a day by trade usage or custom is twenty-four hours and therefore Raymond was only bound to pay for twenty-four hours. Raymond can argue that he is not responsible for the damage sustained by the hire vehicle by relying on the defence of negligent misrepresentation since Chen misled him; and by citing the fact that the exemption clause contained in term 20 of the form is unfair and unconscionable since it exempts Avista from any and all liability. Avista cannot rely on the document that Charlie compelled Raymond as the document is null and void because Charlie exerted duress on Raymond therefore there was no genuine consent. The odds in this case are in favour of Raymond. Avista is not in a position to successfully defend its claims in a court of law. References Carter, J. (2012). Contract Law in Australia. Chatswood, A: Lexis-Nexis Orders/service. Davenport, S., & Parker, D. (2012). Business and law in Australia. Pyrmont, N.S.W: Thomson Reuters (Professional) Australia Gillies, P. (2009). Business law. Sydney: Federation Press. James, N. (2010). The Principles of Business law. Milton, Qld: John Wiley & Sons. Lambiris, M. (2011). First principles of business law. Sydney: CCH Australia. Pendleton, W., & Vickery, R. (2008). Australian business law: Principles and applications. Frenchs Forest, N.S.W: Pearson Education. Read More