Discuss about the Introductory and Contract Law.
The case Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 (20 July 2016) was held in the Australian High Court. The jurisdiction of the High Court of of Australia extends the Supreme Court in the Australian Court hierarchy and final Court of appeal in Australia. It has both Appellate and original jurisdiction. It has the authority to do judicial review on law, which are passed by the Australian Parliament and the State Parliament. It also has the jurisdiction to interpret the Constitution of Australia (Nauze, 1972).
This case is a civil case and the onus of proof lies on the respondent, the tenet.
In procedures brought by the respondents (“the tenants”), the Victorian Civil and Administrative Tribunal (the VCAT) observed that the complainant (“Crow) created an impression to the respondent over the span of agreement for the leases, in a way that the inhabitants would be concerned for the time of renewal. The VCAT assessed that the declaration offered, raised to a collateral contract, which gratified Crown to offer a negotiating of leases for a long time on several terms to be chosen by Crown. The VCAT additionally discovered that if the conclusion were incorrect, it would have likewise acknowledged the renter accommodation that Crown was estopped from averting the presence of collateral contract. It requested that Crown should pay the main respondent $467,505.00 and the following respondent $1,143,167.00 for compensation when there is a breach of contract (Vass, 2016).
With respect to the situation, the VCAT that the Crown had created an impression to the tenants at the renewal time of the negotiation that they will take care of the tenants during the renewal time. The VCAT held that the announcement by the Crown offered ascend to collateral contract. Furthermore, the Crown needs to pay $467505 to the primary respondent and $1,143,167 to the second in type of damages for breach of the agreement. The Crown was at risk for estoppel from denying the collateral contract. On appeal before the Supreme Court of Victoria said that the VCAT was in mistake and estoppels did not emerge. Rather, the Court of Appeal said that there was a promissory Estoppel. The Court of Appeal announced that there was no collateral contract yet there was an issue in dispatching the issue of estoppel (Rohatgi, 2016).
The legal issue on part of the Crown was that the Collateral contract and promissory estoppels claimed by the respondent for which the Crown is liable for damages are not valid. The representation he made was not valid and the mere stating of something does not make the contract valid (Grossi, 2016).
Tenants got procedures to the VCAT in which they affirmed that a progression of representations had been made by delegates of Crown to Mr Zampelis, such that the tenants would be given an additional term of five years taking after lapse of the 2005 leases. These demonstrations were said to add together to a guarantee that the Crown would practice its authority under cl 2.3(a) of the 2005 rents and propose a renewal for an additional five year term. The tenants asserted to have been instigated by the representations to execute the leases and to do the renovations. Two, alternate legal results were said to take after from the guarantee: a collateral contract, by which Crown was obliged to offer the tenants encourage five year leases, appeared, or an estoppel emerged which kept Crown from denying that commitment. Significantly, the terms of the further rents were said to be the same with respect to the 2005 leases (Handley, 2016).
A collateral contract is usually a sole term agreement, made in favor of the party for whose advantage the agreement works consenting to go into a principal contract, which sets out further terms identifying with a similar kind from the principle contract (Hospital Products Ltd v United States Surgical Corporation).
The Court had held that there is a collateral agreement only when there is representation, which is contractually binding. It would only be a collateral agreement if there were a contractual promise. The intention only arises when the parties have acted or shown conduct towards it. The Court of Appeal agreed that the statements were “vague”. The intention as to collateral contract is a question of law ( Heilbut, Symons & Co v Buckleton).
A promissory estoppels is one where the promisor has promised to do something for the promisee and the promisee has acted according to that promise, even if there was no consideration, it is enforceable by law (Feinman, 1984).
The court held that there was no promissory estoppels because the representation made must be cleat and not unambiguous and vague. The person to whom the representation be made must not be vague and the representation must not be open to different construction. The mere saying of that looked after at renewal time does not mean that he meant that there would be an extension on the lease term (Low v Bouverie).
Under the decision taken by the Court of Law in this case we see that in case of collateral contract the party does not need to give notice while under a lease negotiation the Crown has an obligation to give notice under the law to make it binding. For lease to happen there must be a consideration and the terms must be expressed or implied or in perpetuity. The essentials of a valid contract formation are: offer, acceptance, mutuality of obligation, consideration and a written agreement.
An adversarial system is an outdated way of handling disputes. An adversarial system is a system where the parties to the dispute put their case in front of an unbiased person, a judge or jury through their own advocates in the attempt to examine the truth of a case. In Adversarial system when dealing with criminal cases, the prosecutor or judge cannot ask the accused person questions because he is not directly representing his case (Allison, 2013). He can only answer cases when he chooses to do so. In case of Civil cases the defendant have to compulsorily give statements but he cannot be cross-examined on the statement nor is the statement taken on oath. The judges must be fair and give their judgment based on the case based on fundamental justice and due process. The name “adversarial system” may be ambiguous because, it implies that it is only applicable within a particular type of structure where, there are contrasting prosecution and defense. The case is not the same, and both the current adversarial and inquisitorial systems have the authority of state estranged between a prosecutor and the judge. They can provide the defendant with legal aid. Certainly, The European Convention on Human Rights and Fundamental Freedoms in Article 6 need those traits in the legal structures of the signatory states.
The most relevant way of solving disputes is the traditional way of presenting it in front of the judge and the jury. The judge and the jury give the decision in an unbiased way. This is the trial or litigating way of solving disputes. Apart from the traditional ways of solving dispute there are other ways also of solving disputes. Negotiation, Mediation and Arbitration are few ways of solving the methods. These ways are known as the ADR-Alternate Dispute Resolution (Greenacre et al., 2016). The cases that come to the Court often get solved in the Court only few amongst them goes to trial. Some of the cases are often considered to be suggested by ADR before the parties goes to the Court (Chng & Chua, 2016). Let us now look into the various methods of solving disputes-
Negotiation- The most basic means of solving disputes is by the way of negotiation. It is a continuous communication between the parties to the dispute with the aim of finding a solution. The parties negotiate directly or may get it done by an Attorney. The procedure followed is nothing specified. The negotiation between the parties is enforceable under law. The essentials of negotiation are:
Mediation- the process by which settlement between the parties is made by an unbiased person, known as the mediator. It is a voluntary process, which promote reconciliation between the disputing parties that in turn helps the parties to the dispute reach on a mutual agreement. It is the next best suitable method for solving disputes after the process of negotiation. Mediator explains the rule of the proceedings to the parties and their attorneys. They can even meet the parties separately and he makes the parties understand each other’s viewpoint (Roebuck, 2013).
Arbitration- Arbitration is an argued topic to a reasonable individual for choice. Arbitration is ordinarily an out-of-court policy for settling a question. The arbitrators control the process, will pay attention to both sides and reach a conclusion. Alike a trial, just a single party will win. However, the appeal rights are restricted unlike a trial. In a more formal situation, the mediator directs a hearing in which the parties initiate through archives, displays and declaration. The parties may approve a few cases to build up their own manner; or an administrating organization may give ways (Moore, 2014). There can be probably one referee or a three mediator’s board. An intervention hearing is generally held in place of work or a meeting room. The result can be tied if all get-togethers have consented from before to be bound by the choice. Overall, the privilege to claim the judge’s choice is extremely constrained. A mediator’s honor can be diminished to decision in a court and consequently be enforceable. In non-arbitration, a choice might get to be definitely last if all sides approval to recognize it or it might serve to help you judge the case and be a opening stage for the settlement talks (Carbonneau & Butler, 2013).
The method to use a process for dispute settlement depends upon the parties to the dispute. The nature of the case helps the person to decide which method to use. It is said that Court room settlements are the best way to settle disputes the conflicting parties decides on the settlement procedure. ADR helps settlements of dispute in a fast way and some of the ways of settling disputes outside Court room (Fellas, 2014).
Issue: Does Charlie owe Bob the extra $5 000?
Rule: In Hospital Products Ltd v United States Surgical Corporation, Gibbs CJ detained that when a demonstration was made at the time of negotiation might be a collateral agreement if at the time of making the representation the parties had an intention to abide by it. The agreement becomes contractually binding. The parties who made the representation must have the intention of a contractual promise, which might be distinct from a mere representation. The issue as to the fact whether there is a intention or not depends upon the words and conduct of the parties to the principal contract.
In Heilbut, Symons & Co v Buckleton, Lord Atkinson held that the existence and non-existence of the intention of the party depends upon the decision given by the jury. The jury decides the truth of the fact. The intention of the party was fraudulent misrepresentation which does not make the contract binding.
In Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd , French CJ Kiefel and Bell JJ, held that the announcement by the Crown offered ascend to collateral contract. Furthermore, the Crown needs to pay $467505 to the primary respondent and $1,143,167 to the second in type of damages for breach of the agreement. The Crown was at risk for estoppel from denying the collateral contract. The Court of Appeal of Supreme Court of Victoria said that the VCAT was in mistake and estoppels did not emerge. Rather, the Court of Appeal said that there was a promissory Estoppel. The Court of Appeal announced that there was no collateral contract yet there was an issue in dispatching the issue of estoppels. Tenants got procedures to the VCAT in which they affirmed that a progression of representations had been made by delegates of Crown to Mr Zampelis, such that the tenants would be given a further term of five years taking after the lapse of the 2005 leases. These representations were said to add up to a guarantee that Crown would practice its power under cl 2.3(a) of the 2005 rents and offer a renewal for a further five-year term. The tenants asserted that they are instigated by the representations to execute the leases and to do the renovations. Two, alternate legal results were said to take after from the guarantee: a collateral contract, by which Crown was obliged to offer the tenants encourage five year leases, appeared, or an estoppel emerged which kept Crown from denying that commitment. Significantly, the terms of the further rents are said to be the same with respect to the 2005 leases (Hull, & White, 2014).
Application: When we apply the rules, laid by the Court I the above-mentioned cases in the case study of Bob and Charlie we see that Charlie is liable to pay Bob for contract. Charlie does owe Bob $5000. When we apply the case of Hospital Products Ltd v United States Surgical Corporation we see that at the time of making the negotiation Charlie had an intention to pay Bob $5000 for the completion of his work. There was a formation of a collateral contract that Charlie. There was a formation of a contractual promise and not a mere representation, which makes the contract binding (Calomiris et al., 2016). Again in the case of Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd , it was seen that whether there is a intention or nor depends upon the jury. If a party to a contract promises to do something on performance by the other party and the other party acts according to that then the promiser is supposed to pay to the promisee. Charlie said that he would pay Bob if he completes the work within the said time. Bob acted according to what Charlie said so Charlie becomes liable to pay Bob. Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd it was said that there was a formation of a promissory estoppel.
Under law, there is formation of a fiduciary relationship, where one person (fiduciary) acts for another (the principal) and when acted upon that he gets liable to principal interest (Breen v William). Fiduciary obligation is entity of equity and cured by equitable remedies. The breach of such fiduciary duty or obligation managed in the theme Breach of Fiduciary Duty. When there is a fiduciary relationship, a motive of trust and confidence created between the parties.
Conclusion: Charlie owes Bob $5000 for the completion of construction work. Charlie is liable to pay Bob under the concept of collateral contract and promissory estoppel. There is formation of a fiduciary relationship, where one person (fiduciary) acts for another (the principal) and when acted upon that he gets liable to principal interest (Breen v William). If a party to a contract promises to do something on performance by the other party and the other party acts according to that then the promiser is supposed to pay to the promisee.
References:
Allison, J. (2013). ADR Research: Arbitration, Mediation, Negotiation, and More.
Calomiris, C. W., Larrain, M., Liberti, J. M., & Sturgess, J. D. (2016). How collateral laws shape lending and sectoral activity (No. w21911). National Bureau of Economic Research.
Carbonneau, T. E., & Butler, W. E. (2013). International Litigation and Arbitration.
Chng, P. S. W., & Chua, B. L. (2016). Mediation in the Classroom: An Open Systems Approach to Develop Critical Thinking and Learning Skills. New Waves, 19(1), 55.
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd & Anor [2016] HCA 26 (20 July 2016)
Feinman, J. M. (1984). Promissory Estoppel and Judicial Method. Harvard Law Review, 678-718.
Fellas, J. (2014). The Idea of Arbitration (Clarendon Law Series) by Jan Paulsson. Arbitration International, 30(3), 589-604.
Greenacre, R. R. G., Hendrick, I., Kaufman, M. R., Robert, P., Knight, M. L., Lewin, B. D., … & Kanzer, M. (2016). Breaking the Mold ADR.
Grossi, S. (2016). Book Review-Robert H. Klonoff, Introduction to the Study of US Law. Cases and Materials (West Academic Publishing).
Handley, K. R. (2016). The Law of Proprietary Estoppel. By Ben McFarlane [Oxford: Oxford University Press, 2014. xxxiii+ 688 pp. Hardback £ 165.00. ISBN 978-0-199-69958-2.]. The Cambridge Law Journal, 75(02), 432-434.
Heilbut symons & co v buckleton 1913 ac 30 hl
Hospital products ltd v united states surgical corporation (1984)
Hull, J. C., & White, A. (2014). Collateral and credit issues in derivatives pricing. Journal of Credit Risk, 10(3).
La Nauze, J. A. (1972). The making of the Australian constitution. Melbourne University.
Moore, C. W. (2014). The mediation process: Practical strategies for resolving conflict. John Wiley & Sons.
Roebuck, D. (2013). Mediation and Arbitration in the Middle Ages: England 1154-1558. Holo Books, The Arbitration Press.
Rohatgi, N. K. (2016). 35_Law of Contract (2000).
Vass, B. (2016). High Court revisits promissory statements, collateral contracts and estoppel. Proctor, The, 36(9), 17.
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