Necessary Elements for Establishing Breach of Law of Contract - Coursework Example

Business Law Name: Students ID: Unit Code: Instructor: Introduction This essay will argue the necessary elements for establishing breach of law of contract to establish whether there was a valid and enforceable contract between Anna and Julian, Bliss Island Resort. The essay will also focus on whether the resort was in breach of the contract. This area of business law is backed by several cases. These cases recognise and explain the factors requisite to support an argument for remedy. The law of contract imposes an obligation on every person to honor their legally enforceable promise, failure to which the party is held liable. Thus, a contract can be called an agreement or promise which is legally binding or enforceable by law. As defined by Sir William Anson in the words, “A legally binding agreement between two or more parties by which rights are acquired by one or more to acts or forbearances on the past f the other or others.” Situations where legal issues arise under contract law are: Intention to Create a Legal Formation These should be an intention among the parties to create a legal formation through an agreement attached by legal consequences and create legal obligations. In this case, Bliss Island Resort invites Anna and Julian, the plaintiff, to spend their leisure time at the resort by enjoying the food, especially cakes, and skiing activities. Bliss Island Resort is a business entity and had set rules within the premises to be obeyed, therefore, there was the intent to create legal relation that was binding since there were definite terms. Hence, Anna and Julian can sue Bliss Island Resort in court since there was a contract and that did create a legal relationship. In the case of Ermogenous v Greek Orthodox Community of SA Inc a religious minister employed by the Greek Orthodox Community, (an incorporated association) brought an action against the Community for breach of the employment contract when the Community refused to pay him his leave entitlements. The Community argued that the agreement was a social arrangement and it was not intended to be legally binding. The court held that all of the circumstances of the case suggested that the parties did intend to be legally binding despite that the agreement was with a minister of religion. Consideration Consideration has been defined as the price paid by one party for the promise of the other. An agreement is legally enforceable only when each of the parties to it gives or obtained is the price for the promise and is called consideration. In case law definition Currie vs. Misa (1875) defines consideration as “Some right interest profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Thus, Anna and Julian were bound to pay the resort bill in consideration from the resort to provide accommodation in return. This can be evidenced in the case of England vs. Davidson (1840), where a reward was offered by the defendant to anyone who gave information leading to conviction of some criminal. The plaintiff, a police constable, gave such information. When the plaintiff claimed the reward, the defendant pleaded (inter alia) that the plaintiff had merely done his duty. It was held that the plaintiff was not bound to render the service he did to the defendant, and by doing so he had furnished consideration for the reward to which he was entitled. Acceptance The acceptance is an ascent to the terms of an offer. It must match up with the terms of an offer and it is for this reason that a cross offer, counter offer or conditional ascent is not an acceptance in the legal sense. Acceptance is not valid up until it is communicated to and received by the offeror. The act of acceptance can be illustrated in the case of Bliss Island Resort and Anna and Julian when Julian phoned the resort and said that they would be spending their holiday there. The concept of acceptance is illustrated in the case of Entores ltd. Miles Far East Corporation (1955). The plaintiff in London made an offer by Telex to the defendants through their agent in Holland. Acceptance of the offer was communicated and received by the plaintiff on their Telex machine in London. The court had to determine whether the contract was made in London or Holland. The court held that since communication by Telex was almost instantaneous, the contract was concluded in London where the acceptance was received by the offeror. The Offer An offer is defined as an expression of willingness to enter into a contract on definite terms, as soon as these terms are accepted. It is made by a person known as the offeror and addressed to the offeree. An offer is valid only if the terms are definite, but not when they are ambiguous. For example, an offer must be differentiated from an invitation to treat. An invitation to treat is merely an invitation to make an offer and no contract can result from it alone. The best example is afforded by display of goods in a shop or supermarket. According to decided cases, this amounts to an invitation to treat, not an offer, it is the customer or prospective buyer who makes an offer to the shopkeeper or attendant or cashier, by picking up goods and expressing the desire to buy them. In the case of Anna and Julian and the resort, the brochure displayed what to expect at the resort and was basically an invitation to treat and not an offer. However, when Julian called the resort and spoke to Sandra an offer was made expressly. It was Sandra who made the offer to Anna and Julian who accepted the offer. Therefore, Anna and Julian can sue the resort in a breach of contract for remedy. Capacity to Contract Every person is recognised by law to be capable of entering into contracts, but certain categories of person’s due to age, states or mental instability have certain incapacities in this connection. Lack of contractual capacity in one or both parties may melt down the contract as void, voidable or unenforceable. Any person who claims exemption from liability on the ground of incapacity to contract must prove such fact, and in the absence of this proof he will be liable on the contract. The special rules affecting each class of persons are as follows: infants or minors, insane or drunken person, corporations and married women. In this case, both parties were adults and therefore the contract was void and enforceable. Genuine Consent For a contract to be valid and enforceable, there must be free consent as indicated in the Competition and Consumer Act 2010 (Cth) Section 18. The lack of real consent may be caused by: Mistake, Misrepresentation, Duress, Undue influence, or Unconscionable conduct. In the case of Anna and Julian there was free consent. This is because they are the ones who desired to go to enjoy their 20th anniversary at Bliss Island Resort. Misrepresentation The idea here is that the parties have not really agreed, as there has been no “meeting of minds or wills”, as although this would appear to be the case, one of them has been driven to the agreement by a statement as to some existing fact or past event that is not true which served to induce them to enter into the contract. Australian Consumer Law s18 states that “A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” The misrepresentation can be fraudulent when it is intended to deceit, representations made knowingly, recklessly as to its truth. This is evident in the case of Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988). There also can be negligent misrepresentation that is committed when one person fails to exercise reasonable care resulting in harm to another. In the case of Hedley Byrne & Co Pty Ltd v Heller & Partners Ltd [1964] negligent misrepresentation could be applied to spoken or written word of an adviser and in the case of Mutual Life & Citizens Assurance Co Ltd v Evatt (1968), it was stated that the duty of care extended not only to professional advisers but to persons who give advice in serious circumstances As in the case of Shaddock & Associates Pty Ltd v Parramatta City Council (1981), to establish negligent misrepresentation one must prove: Existence of ‘special relationship’ exercising a duty of care Subject matter must be of serious or business nature The giver must realize the recipient intends to act upon the advice or information Reasonable to rely on the information Must suffer damage, usually monetary In the case of Anna and Julian both fraudulent and negligent misrepresentation is manifest. First by giving false information, and second by Bliss Island Resort failing to honour a duty of care on Anna and Julian. Conclusion This essay has established, with reference to relevant case law, the factors necessary to argue a case for breach of contract, and has applied them to the legal facts as provided in the scenario. It can be seen that Bliss Island failed to honour their part of the contract as indicated in the brochure and through the call. The resort also displayed fraudulent and negligent misrepresentation by giving false information and failing to honour their duty of care respectively. Anna and Julian would rely on that information to make a decision and they also suffered a loss, including monetary loss. In light of this argument, Anna and Julian could pursue damages against Bliss Island Resort, since they have already come out of the place they cannot cancel the service. References Articles and Books Ciro, Tony and Vivien Goldwasser, Cases, Material & Commentary on Law and Business (Oxford University Press, 2004) Gamble, Roger, Jean Du Plessis and Luke Neal, Principles of Business Law (Thomson Lawbook Co, 2008) Gibson, Andy and Douglas Fraser, Business Law (Pearson, 2012) Lambiris, Michael, First Principles of Business Law Source Materials (CCH Australia, 2008) Cases Competition and Consumer Act 2010 Ermogenous v Greek Orthodox Community of SA Inc Currie vs. Misa (1875) England vs. Davidson (1840) Entores ltd. Miles Far East Corporation (1955) Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83. Hedley Byrne & Co Pty Ltd v Heller & Partners Ltd [1964] AC 465. Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225. Read More