The Most Litigated Statutory Provisions in Australian Contract Law - Essay Example

Anand P.S.Brahmanand ID 5283 Order # 134358 26 September 2006 Long Australian (New South Wales) contract law scenario Is Seymour bound to his contracts with Agnes and with Krustylu After thorough analysis of situation, it will be logical to state that Seymour Skinner is bound to his contracts with Agnes and Krustylu Television Studios to partial extent only. In other words, he is not bound to the said contract to full extent. Once the contract is signed under legally permissible principles any person or party relating or signatory of the agreement is bound to obey the contract. Section 52 of the Trade practices act 1974 is one of the most litigated statutory provisions in Australian contract law (FN1). Seymour has already obeyed the contract and worked for the Krustylu Television Studios and hence met the terms of contract partially. However section 52 provides a general prohibition against misleading or deceptive conduct in commercial activities. Whether the violation of contract might also be breach of section 52 is a significant issue. The basis of such argument is the consideration that contractual promises are obligations which contracting parties have undertaken to fulfil, and to enter in to a contractual undertaking and subsequently fail to adhere to it is misleading with in meaning of section 52. There have been several cases (FN2, FN3 and FN4) in which consideration has been given to the scope of section 52. However, if the agreement is signed without consideration of moral principles guided or defined as per Australian contract law there is a sufficient ground for the client to seek for the relaxation. As the Seymour Skinner was forced to sign the agreement or contract which is nothing but violating the legal principles of contract, he is not bound to the contract with Agnes and Krustylu Television Studios to full extent. It has to be assessed whether an unfulfilled contractual promise itself as opposed to a defect in the promise constitutes a breach of section 52. Several cases revealed that an unfulfilled promissory contractual term to be declared as misleading needs to be argued under long Australian contract law (FN5). Analysis can be placed under the following sub heads: (1) A contract is a "promise" or an "agreement" made of a set of promises (FN6). Breach of this contract is recognized by the law and legal remedies can be provided.Once the legality of the contract is maintained, then any party who signed the contract have to obey the contract. The agreement between Seymour and Agnes and Krustylu Television Studios clearly violated the legality, hence it comes under illegality of Australian contract law. Any person involved intentionally under this contract may be punished and the person who was forced to sign will be given sufficient chance to represent his case. Once the judicial body finds sufficient ground in defence of client, it may reconsider or review the contract and may declare the contract as void. (2) This contract comes under violation of principle of performance and breach. Australian courts have not definitively established the non-fulfilment of a contractual promise as conduct itself being misleading with in section 52 (FN7). As long as the "conduct" definition (FN8 and FN9) is satisfied, the person violating or non-fulfilling contractual promise will be charged under misleading conduct. Other wise section 52 of Australian trade Practices act relaxes the condition for client. It will provide enough opportunity for client to represent his case and show sufficient proof of not meeting the definition of "conduct" by the other party under the contract. (3) This contract has not obeyed the principle of undue influence. Seymour has been put under pressure to sign the contract. Even though Seymour Skinner admits that his mother was behind his successful career, it is not proper to expect that Seymour should sign a trade contract in favour of his mother Agnes. As it is the responsibility of any mother to shape the career of her children it is not to be linked with trade contract. It appears that Agnes acted more like a business woman than as a mother which is quite unfortunate and to be condemned. Seymour was otherwise put under undue influence as she emotionally blackmailed him stating that she has no other way. When Agnes was under undue influence because of threat of exposing her photographs by the head of Krustylu Television Studios, she herself applied severe pressure on Seymour to sign the future contract for another two years with out any hike in payment. Hence it is apparent that Seymour has been under tremendous undue influence. It is certain that when a contract is made under undue influence, the definition of conduct is not satisfied. Hence Seymour need not be bound to the original contract signed under long Australian contract law. (4) This contract violated the principle of unconscionability. Violating the contract in the form of intentionally hiding the basic information by making the client unconscious also misrepresents the "conduct" under contract. Seymour was really unconscious about his mother being under threat from Krustylu Television Studios. He was also not aware of tobacco prohibition act because of which he agreed to campaign for a cigarette advertisement. (5) The principle of duress was also affected severely under this contract. The definition of duress is the conduct that has the effect of compelling another person to do what he need not otherwise do (FN10). It is a recognized defence to any act, such as a crime. Krustylu Television Studios violated this by threatening Agnes. Of course, she also violated the same principle while making Seymour signing the contract. Hence Seymour need not bind to the contract as the principle of duress is affected under Australian contract law. Identify any grounds on which he could seek to get out of his obligations: There are strong chances for Seymour to get out of his obligations as the agreement has violated the principles of duress, unconscionability, performance and breach, undue influence and illegality. Let us see one by one as follows: The contract can be declared as void with sufficient proof of misleading or deceiving nature of contract. Under section 52 of the trade practices act of Australian contract law " A corporation shall not in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". It comes under " unfair practices" and it was ruled in case of Justice Fox of Federal Court in Brown V The Jam Factory Pvt Ltd. Under this context, unfulfillment of promissory contract may not be treated as offence or punishable. (a) the court may declare the contract as void (FN11) (b) It may vary a contract or arrangement in such a manner as it thinks fit (FN12). (c) It may refuse to enforce any or all of the provisions of a contract (FN13). Hence Seymour can file a representation stating the grounds in which he was put under unconscionability, undue influence, breach of performance, illegality and duress so that he has very high chances of coming out of obligations. Assessment of his likelihood of success if the matters were to proceed to court: Seymour would have great chances of success if the matters were to proceed to court. It can be assessed as under following heads. (1) Once it is represented in the court, all the genuine grounds in which he was subjected to illegal measures during signing of the contract can be placed before judiciary. As the court will analyse the total situation and there is a strong likelihood of success for Seymour to come with out any legal punishment or with a minor punishment. (2) The court will see the extent to which the contract has been violated at the time of formation with respect to basic legal principles under long Australian contract law. As Seymour was subjected to undue influence at two occasions. His mother Agnes made him to sign by applying emotional blackmailing during initial contract with Krustylu Television Studios and Agnes. The severity of intentional pressure can be understood as Seymour's social life, diet and contacts were controlled as mentioned under the contract. 40 % of his earnings and transfer of his assets to Agnes in the name of income tax minimization also supports this theory of undue influence. Once the court gets convinced with this, the contract may be declared as void and Seymour will not be made guilty. Moreover, he was put under undue influence second time when renewal of initial contract was made. It also comes under violating the principle of unconscionability as Seymour was not conscious about the blackmailing of Agnes in the name of exposing her photographs by the head of Krustylu Television Studios. Australian contract law states that a supplier shall not in trade or commerce in connection with the supply or possible supply of goods or services to a consumer engage in conduct that is in all the circumstances unconscionable. The principle of unconscionable conduct was discussed in sections 51 AB and 51 AC (FN14 and FN15) The section 51 AC of trade practices act (Unconscionable conduct in business transactions) states that a corporation must not trade or commerce in connection with (a) the supply or possible supply of goods or services to a person ; or (b) the acquisition or possible acquisition of goods or services from a person engage in conduct that is in all the circumstances, unconscionable. (3) As Seymour was not interested to sign the renewal of contract with out any pay hike, Krustyulu Television Studios made undue influence and violated the principle of duress hence it is highly objectionable as far as the contract rules are concerned. Seymour was not knowing about this malpractice and he was rather forced to sign due to his mother's pressure. The court can be updated with all the genuine proofs and Seymour will not be declared as punishable. Moreover, there is every possibility that he may be given compensation from Krustylu Television Studios for easting his time, energy and mental peace. The contract made among Seymour, Agnes and Krustylu Television Studios also reveals that it is completely misleading under which Agnes and the head of Krustylu Television Studios may be punished under long Australian contract law. Under section 52 of trade practices act (Misleading or deceptive conduct) it was stated that a corporation shall not, in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Krustylu television Studio got involved in misleading the contract in two ways. It has made the photographs of Agnes as weapon to sign the contract at old rates which is highly misleading and objectionable. It should not involve in any act that affects the basic interests of any citizen as per the Australian contract law and hence there is a strong chance that the total contract may be declared as void by the apex court. Seymour was forced to sign to advertise for a cigarette company. In fact, he was not aware that this act is against the "Tobacco advertising prohibition act 1992" (FN16) which prohibits the promotion of smoking or of any tobacco product on television, including product placement with in a television show. He signed due to misleading nature of Krustylu Television Studios. However, his mistake is that he should make him self aware before signing the contract as the courts will not consider the ignorance to law as an excuse. Other issues: One of the important information needed here is whether the contract made between Seymour and Krustylu Television Studios is implied and well written or not Lot of ambiguity is present between written /implied and unwritten contracts (FN17). Agnes also deceived Seymour by controlling his social life and personal contacts. It is against the basic rights to be enjoyed by any citizen under Australian contract law. He was not in a position to interact with his close friend Edna frequently because of interference from Agnes. This also can be challenged in a court of law. Seymour may be charged with non-fulfilment of promissory contract and he can provide a proof that the contract has been breached by defect and misleading and the apex court can refer to its previous judgements (FN18). One more possible threat to Seymour is that the Krustylu Television Studios may file a case against him under "Restraints of trade act". However, if the Supreme Court of Australia believes that there is sufficient genuine ground is present which affects the basic rights or principles, it may relax the provisions as mentioned under restraints of trade act 1976 no.67. It states that a restraint of trade is valid to the extent to which it is not against public policy. It should not affect any right (right to danger) accrued before the date the order takes effect. Seymour also developed hacking cough due to repeated smoking for television advertisement under compulsion, which is against the section 59 of trade practices act 1974 of Australian contract law (FN19). Under this condition, Seymour's case will be considered liberally and he will come out of the obligations certainly. Conclusion : The long Australian law has provided several provisions for the safety of genuine parties who are subjected to undue influence, illegality, unconscionability, duress and breach of performance. Hence by successful representation in Supreme Court of Australia the innocent persons like Seymour will certainly get the justice in their favour and will come out of the obligations definitely. References: FN1: Common wealth consolidated acts. Trade practices act1974.http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/. FN2: The ruling of high court of Australia. Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information CentreLtd. (1978) 140 CLR 216 http://www.austlii.edu.au/au/cases/cth/high_ct/169clr594.html. FN3: The ruling of high court of Australia. Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd. (1978) 142 CLR 113http://www.austlii.edu.au/au/cases/cth/high_ct/169clr594.html FN4: The ruling of high court of Australia. Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 149 CLR 191). http://www.austlii.edu.au/au/cases/cth/high_ct/169clr594.htmlFN5: The ruling of high court of Australia.Concrete constructions (n.s.w.) pty ltd v. nelson (1990) 169 CLR 594 F.C. 90/018 http://www.austlii.edu.au/au/cases/cth/high_ct/169clr594.htmlFN6: http://en.wikipedia.org/wiki/Contract FN7: Skapinker, D & Carter, JW, "Breach of Contract and Misleading or Deceptive Conduct in Australia" (1997) 113 LQR 294.http://www.murdoch.edu.au/elaw/issues/v7n3/seah73_text.html#t19 FN8: Austrasin Pty Ltd v Stratlock Ltd (1986) ATPR 40-695, 47,626. TRADE PRACTICES ACT 1974 - SECT 4 http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s4.html FN9: Bonutto, S, "New Horizons for Section 52 Can Breach of a Contractual Promise amount to Misleading and Deceptive Conduct" (1993) Queensland Law Society Journal 123, 124-126. FN10 : http://www.answers.com/topic/duress. FN11 : section 87 2 (a) TRADE PRACTICES ACT 1974 - SECT 87 Commonwealth Consolidated Acts http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s87.html FN12: section 87 2 (b) TRADE PRACTICES ACT 1974 - SECT 87 Commonwealth Consolidated Acts http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s87.html FN13: section 87 2 (ba) TRADE PRACTICES ACT 1974 - SECT 87 Commonwealth Consolidated Acts http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s87.html FN14: Trade practices act 1974 - sect 51ab Commonwealth ConsolidatedActs http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s51ab.html FN15: Trade practices act 1974 - sect 51aC Commonwealth Consolidated Acts http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s51ab.html FN16: Tobacco advertising prohibition act 1992 Part 3 : Prohibition of tobacco advertisements. Commonwealth Consolidated Acts.http://www.austlii.edu.au/au/legis/cth/consol_act/tapa1992314/ FN17: Debbie Harrison. 2004. Is a Long-term Business Relationship an Implied Contract Two Views of Relationship Disengagement. Journal of Management Studies. Vol. 41 Issue 1 Page 107 january 2004. FN18: Weeliem Seah 2000. Unfulfilled Promissory Contractual Terms And Section 52 Of The Australian Trade Practices Act Brown v The Jam Factory Pty Ltd (1981) 53 FLR 340. Murdoch University Electronic Journal of Law volume 7 no.3. http://www.murdoch.edu.au/elaw/issues/v7n3/seah73_text.html#t19 FN19: TRADE PRACTICES ACT 1974 - SECT 59 Misleading representations about certain business activities Commonwealth ConsolidatedActs http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/s59.html Read More