Whether Sasha Would Succeed in a Claim to the Effect That Vladimir Should Be Bound by the Advert - Assignment Example

SSIGNMЕNT FОR BUSINЕSS LАW Assessment Submitted By: NAME: INSTITUTION: COURSE: INSTRUCTOR: DATE: © 2015 QUESTION 1 (i) Whether Sasha would succeed in a claim to the effect that Vladimir should be bound by the advertisement on the Notice Board? Issue “There is an issue as to whether Sasha was given an offer based on an advertisement on the notice board” “Does a false advertisement constitute a legally binding offer”? Rule An advertisement becomes legally binding if the advertisement “makes a statement or claim” and the statement or claim must be provable. The Federal Trade Commission (FTC) of US will not allow an advertisement for sale of an item or offer a certain service, when, in reality, the item is non-existent in stock or the advertiser has no “intention of stocking it” or when the advertiser is not willing to provide the service. If the advertiser makes a statement in an advertisement that can be proved to be untrue or unfulfilled, then the advertiser has broken both the state and federal law in which case the advertiser may be culpable. In general, an advertisement is not considered to be a legally binding offer but only an “invitation to do business”. The advertiser cannot therefore be said to make ‘an official offer’since an advertisement is not usually directed towards specific people or parties, and also does not include the material elements that are essential in an offer. This notwithstanding, an advertisement may have some elements that are legally binding, especially when considered against ‘consumer protection laws’ (CPL) found in almost all the states in Australia. In contract law, an offer is considered as “an open expression to do business on a specific set of terms with the intention that if the offer is accepted, the persona making the offer will be bound by the contract”. Most often, however, the party placing an advertisement does not usually express any willingness to the effect that it will be bound by the advertisement. Application In the Carlill v. Carbolic Smoke Bail Company case (Carlill v Carbolic Smoke Bail Co [1893]1 QB 256), the court held that the advertisement was legally binding. Similarly, the McWilliam’s Wines Pty Ltd v McDonalds System of Australia Pty Ltd case [1980] 11.11, is reported to have misled consumers due to false advertisement. In such cases, the advertisement will be the main inducer to the customer because of an offer of a certain thing. “Money-back guarantees” advertisements are also considered to be legally binding in certain circumstances (Carlill v Carbolic Smoke Bail Co [1893]1 QB 256). Since an offer must be communicated with offeree in writing, orally or by conduct (Harvey v Facey [1893] AC 552), it therefore becomes very difficult to make a party legally bound to the terms in an advertisement, although it is possible to sue the party in civil court for “false or misleading advertisement claims”. In fact, many states in Australia have “laws that make it illegal for a party to advertise a product or service as having certain qualities or benefits that the product in fact does not possess”, so that the wronged party can seek relevant remedy. For instance, if a party encounters a ‘less-than-faithful’ advertisement, it can pursue a “claim for false advertising”, among other remedies (Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd [1954] 76 WN (NSW) 72. Conclusion Based on the foregoing evidence, and considering the fact that Vladimir decided to charge Sasha for electricity contrary to what was advertised, – “Shop available for lease. Good rates, electricity included” – in effect making a false claim, “the court is likely to find Sasha in a position to succeed in pursuing a “claim for false advertising”. 575 Words (ii) Advising Sasha who desperately wants the lease of the shop. Issue “The issue is whether a contract occurred when Sasha decided to accept Vladimir’s verbal offer at the meeting” “Does an acceptance exist between Sasha and Vladimir?” Rule In contract law, offer and acceptance ought to be established for a contract to be valid. For two entities to enter into a valid contract, one entity ought to make an explicit statement in definite terms. In addition, both parties must be willing to be legally bound by agreed terms (Cescastle Pty Ltd v Renak Holdings Ltd [1991] 19.2). For the case study under consideration, when Sasha met Vladimir on June 1st, Vladimir made an offer to Sasha, with the “terms of the lease of $1,000 per week for a 12 months lease and the tenant pay all outgoings including electricity” clearly stated out. According to Graw, Stephen et al (2014), an offer is a legally binding promise which contains clear expression of the terms. This promise will bind the offeror (the person who makes the offer) once those terms are accepted by the offeree (the person who receives the offer). A number of rules must apply to an offer. One, an offer must have clear, absolute and understandable terms (Carlill v Carbolic Smoke Ball Co [1893]1 QB 256). Two, an offer must be communicated with offeree in writing, orally or by conduct (Harvey v Facey [1893] AC 552). Three, an offer can be made to one person at small or the whole world at large (Carlill v Carbolic Smoke Ball Co [1893]1 QB 256). In view of the foregoing, Vladimir indicated that he was committed to the offer on the basis of what he said at the meeting. In the circumstances, his was a valid offer and not just an invitation to receive offers. In fact at the meeting, Vladimir said “This is my offer. Go away and think about it. You had better get back to me soon by email as there is a lot of interest in the premises and I am actively looking for people as well”. The foregoing statement is a clear indication that Vladimir had made an offer to Sasha, who would either accept or reject it. Vladimir had expressed the willingness to contract on definite terms, made with the intent that it shall become binding as soon as Sasha accepted it. Acceptance on the one hand is the offeree’s response or willingness to be bound by the terms of the offer. Just like an offer, acceptance is guided by a number of rules that include: One, acceptance is made in response to the offer and should therefore be identical to the terms of the offer (Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd [1954] 76 WN (NSW) 72). Two, acceptance ought to be communicated back to the offeror in writing, conduct or word of mouth (Felthous v Bindley (1862) 142 ER 1037). Three, acceptance must present the offeree’s intention to create a legal relation with the offeror (Masters v Cameron (1954) 91 CLR 353). A rejection of an offer on the other hand occurs when the offeree’s response is not identical to the terms of the offer (Hyde v Wrench [1840] 3 Beav. 334). The law states in very clear terms that the offeree can only form a new offer by first ‘revoking’ the old offer made by the offeror. Application The Commercial Tenancy (Retail Shops) Agreements Act 1985 regulates leases by applying a clause that requires a tenant to take care of the leased premises through ‘refurbishing or refitting’ the property, otherwise the lease will be void (Masters v Cameron [1954] 91 CLR 353). Secondly, the clause requires a tenant to contribute towards the cost of any of the landlord’s finishes, fixtures, fittings, equipment or services if only the tenant is notified of these costs in the Disclosure Statement given to the tenant (Graw, Stephen et al, Understanding Business Law 7th edition Hardcover, 2014). Conclusion “The court is likely to rule in Sasha’s favor since she responded within reasonable time on Vladimir’s offer. Sasha can therefore sue compensation. 668 Words (iii) Advising Roberto as to his legal position. Issue “The issue is whether early termination of a lease constitutes a default” “Does Roberto posses any tenant rights in leasing commercial premises?” Rule In tenancy law, the Commercial Tenancy (Retail Shops) Agreements Act 1985 entitles, for certain leases, a tenant entering into a new lease for retail premises the right to a minimum tenancy period of up to five years (Central London Property Trust v High Trees House Ltd [1947] 4.45). If a tenant has been given a lease including options of less than five years, the tenant may give notice to the landlord that they wish to exercise their statutory option (Graw, Stephen et al, Understanding Business Law 7th edition Hardcover, 2014). Notification must be given to the landlord within a certain time before the expiry of the current term and be on the prescribed form, commonly referred to ‘Regulation 6 Form 3’ (Central London Property Trust v High Trees House Ltd [1947] 4.45). This is a legal termination of a lease before full term. The reasons culminating into the termination of a lease prematurely are many and varied. But whatever the case, the tenant has the right to exercise his or her options (Central London Property Trust v High Trees House Ltd [1947] 4.45). Similarly, a tenant has certain rights that must apply. These rights spell out in clear terms what the tenant can do while in occupancy of the premises, and they should be contained in the lease agreement signed by the tenant and the landlord. Otherwise, the rights could be refused. Such rights according to the case (Brambles Holdings Ltd v Bathurst City Council [2001] 4.22) include: the right to “put up signage, erect additional shelving or partitioning use any common areas, and access to certain facilities such as toilets and the parking lot. Application When Roberto signed a specific term tenancy agreement, he was committing himself to stay in the premises for the full term. Thus when the events change and he wants to move out before the expiry of the specified term, some costs are likely to be involved. Breaking tenancy lease during the fixed term can be expensive. In fact, the law advices that if you break a tenancy lease, it is possible that you pay rent until a another tenant takes over, or until the fixed term period expires, whichever occurs first and/or a part of advertising expenses and the agent’s re-letting costs (Cescastle Pty Ltd v Renak Holdings Ltd [1991] 19.2). If a tenant needs to terminate the lease agreement early, he or she should give a notice as soon as possible. Legal position for Roberto is to give 14 days’ written notice to terminate his tenancy lease early, otherwise he will be liable. Conclusion When a tenant terminates a lease before the expiry date without a legally accepted reason, the owner may sue the tenant for rent losses. Roberto is advised to give notice of his intensions. The alternative available is for the owner to look for another tenant in order to mitigate loses. 506 Words QUESTIONS 2 TO 11 2. True 3. True 4. False 5. True 6. True 7. False 8. False 9. True 10. False 11. True Read More