Electronic Contracts And Contract Law Principles

Principles of Valid Contract

Discuss about the Electronic Contracts and Contract Law Principles.

A contract is a legally binding agreement with set defined promises which the law will enforce. Some of the essential elements of a valid contract comprises agreement, consideration, form, intention, genuineness of the consent, legality etc.  Some of the guiding principles associated to consideration of contract includes the clauses like consideration must move from the promiser and the consideration must be sufficient but need not be adequate. Mistake in equity or misrepresentation in a contracts triggers remediation procedure (Fairhall, 2012).

The business case refers to a situation where a contract between the seller (Sydney cbd café) and the buyers (Bill and Jill) has signed, which essentially comprises three main statements. The first statement is about weekly taking of the outlet on sale. Second statement is related to the estimated cost of running the business while the third statement is promise on the part of seller not to indulge in the same business for next few years.

After running the business for several months after signing the contract, the new buyers are in the position to validate each of the three statements as mentioned in the contract from business law perspective. The first statement on the weekly takings is turned out to be a misrepresentation given the fact that the weekly takings are far less than the stated amount in the contract. As per the business law, misrepresentation is false statement made by a party in a contract including a half-truth. Per law, a remediation action should follow the terms of the contract. In this case, before tagging the first statement as misrepresentation, we must judge whether the sudden fall in weekly takings has got any connotation with the third statement mentioned in the contract. The recommended approach in this case is to first judge the type of misrepresentation, i.e. whether it is fraudulent misrepresentation, negligent misrepresentation or innocent misrepresentation. One of three types of contracts void at common law includes the contracts in restraint of trades, which imposes restriction on future liberty of a party to carry out business. With anti-competitive agreement in place under one of the statements in the contract, first statement on grossly lower volume of sales could be termed as fraudulent misrepresentation in the contract given the fact that the seller have not get into the same business as promised in third statement. In this case, necessary remediation action needs to be taken in line with the terms of the contract. In case no specific remediation action has been prescribed in the terms of the contract then a lawsuit can be filed to seek remediation action seeking rescission to aim at restoring the parties to their pre contractual position (Iknow, 2014).

Business Law Principles

On the other hand, if the third statement, which is a promise from the seller not to run a café in Sydney cbd is an anti-competitive agreement. If it is found that the seller has violated this agreement, which might have resulted a deep dent in the weekly takings. This is a breach of contract and can either be referred to Competition Commission or to Court for legal remediation.

Hughes, who runs a pizza business, is a sole proprietor for his business. Initially the business owner has taken the service of UberEats, a logistics company, to deliver the products to the customer. The business owner continues to use the name of this logistics company even when he has discontinued their service in order to cut down the operational expense. As per business law, this can be treated as misrepresentation and as tortious liability under the law of tort.

Disclosure of true owner’s name is mandatory for formation of business for the sole trader. In the present case the owners of the business, Huge and his son have not registered any documents to comply with the mandatory disclosure law. Also, the rule on disclosure doesn’t apply for goodwill in this case as the logistics company, with which the current own had business relationship, is no longer part of this business. Hence, restriction on the choice of business name is also relevant in this context. Secondly, the business advertisement (disclosure) order provides necessary guidelines and mandates on the content, format or size. In the current case, the advertisement published by Huge and his son carries the contents, which has misled the consumers in terms of quality and freshness of the products and its ingredients. Hence, the misrepresentation of information in advertisement is very much relevant to this case (Koffman & Macdonald, 2006).

In order to take further cost cutting measure, the owner of the business has started compromising with the quality standard of the products. Although the advertisement demands fresh ingredients and a number of cases have been reported where the consumer have received sub- standard product from this pizza outlet. As per the business law, consumer transaction is associated to three main principles; viz. an individual who purchases goods and service; a supplier who is serving the business purpose and the goods or service associated to the transaction should be intended to be used for private use and/ or private consumption. This case spread across all the three principles associated to consumer transactions. The customers, who have ordered pizza, are the consumers, Huge and his son are the supplier who owns the business and the sub-standard pizzas are the goods which have been transacted. Sales of Goods Act is readily applicable for this type of transaction. Secondly, consumer protection from unfair trading regulations (CPRs) is also applicable under the purview of this transaction (MacMillan & Stone, 2012).

Misrepresentation of Logistics Company

A number of other law enforcement directives given in consumer credit act, food safety act etc. is also applicable in connection of this scenario.  Food Standard Agency (FSA) has become operations since long in accordance with food standards acts. To comply with the food safety and extending advice in relation to other consumer interests are the primary responsibility of FSA. As per the business law, to comply with FSA guideline is the responsibility of each business. The case in hand indicates that the owners of the business didn’t comply with the FSA guidelines. Hence, the case in hand also falls under the purview of food safety act (Poullet, 2004).

The logistics service provider UberEats can file a lawsuit against Homeslice Pizza on accounts of using Uber’s goodwill in the advertisement where the logistics service provider has no current business interest with the pizza firm. Although there is no formal binding contract exists between these two entities, however, as per the business law, even the third party has the authority to seek legal remediation against the misrepresentation in the form of using their brand name by another business entity. Although consumer protection regulations provide some defences against the innocent publication of advertisement and a provision of bypass does exist in business law, but the current case doesn’t comply under the purview of this protection (Utz, 2015).

A sole owner, who doesn’t comply with the law is exposed to criminal offence on accounts of misrepresentation of the company’s name and on account of non- disclosure of the necessary documents for conducting the business. As per the business law, the Court can execute the power to impose an order of dissolution of the business.

Enforcement of regulatory statues and provision for consumer advice are the main roles of the local government to ensure consumer protection. Non-compliance with the quality standard is considered as the direct impact on consumer protection. The court has the authority to direct the local government to enforce necessary legal action in line with the direction given in consumer credit act and food safety act. Local government is also empowered to conduct sample testing to determine the quality standard of the pizzas that have been served to the consumers. Apart from the enforcement, a number of local authorities have been set up for the purpose of providing necessary advice on complaints. As an alternative, the impacts consumers can also seek legal advice to these local authorities. Administrative control under the enterprise act offers necessary protection for the consumers in the form of super-complaint, enforcement in line with fair trading act.  Necessary legal action also be sought in terms of violation of licensing of traders under the consumer credit act. The business owner, Huge and his son may have their license withdrawn in case they had obtained any license for selling the pizza (McComish & Smith, 2008). 

General guidelines under business law are available for general safety standard and safe product. Per law, the business owner or a producer is required to furnish necessary information to the consumers so that the consumers can assess any risk associated to the products and can take necessary precaution to mitigate the risk. However, in the present case, Huge and his son have continued to claim the freshness and high quality standard of the products without furnishing necessary information or evidence of their products as no documents have been furnished to the regulatory authority. Hence, from the business law perspective, this is a violation on the basic regulation on the trading and licensing and is subjected to legal violation. The court is empowered to take necessary legal action for each of the trade violations.

Reference:

Fairhall, H., 2012. Australian Government Review of Australian Contract Law. [Online] Available at: https://www.lawsociety.com.au/cs/groups/public/documents/internetyounglawyers/644777.pdf [Accessed 30 August 2016].

Iknow, 2014. Legislation. [Online] Available at: https://www.iknow.cch.com.au/topic/tlp622/overview/long-service-leave [Accessed 10 September 2016].

Koffman, L. & Macdonald, E., 2006. The law of contract; books.google.co.in/books?id=3WycAQAAQBAJ&pg=PA40&dq. 7th ed. London: Oxford.

MacMillan, C. & Stone, R., 2012. Elements of the law of contract; https://www.londoninternational.ac.uk/sites/default/files/programme_resources/laws/ug_subject_guides/elements_law_contract-subjectguide4chapters.pdf. The real W.W.W, pp.1-52.

McComish, S. & Smith, G., 2008. AUSTRALIAN CONSTRUCTION LAW. [Online] Available at: https://www.allens.com.au/pubs/pdf/const/AustralianConstructionLaw2008YearinReview.pdf [Accessed 31 August 2016].

Poullet, Y., 2004. Electronic Contracts and Contract Law Principles. [Online] Available at: https://www.crid.be/pdf/public/5650.pdf [Accessed 29 August 2016].

Utz, C., 2015. Australian Contract Law – Association of Corporate Counsel. [Online] Available at: https://www.acc.com/legalresources/quickcounsel/australian-contract-law.cfm [Accessed 29 August 2016].