Discuss about the Commercial Law of Australia.
The major issue of the case is unclear terms and conditions of the contract, only the specific time and the amount are described. Along with it, demand in the contract price is another mentionable problem.
A contract has made between Marine Construction limited and Western Australia University, according to which the construction work should be completed by 1st March 2016. Issue aroused when the construction of the building was not completed by 1st March 2016. In this case breach of contract took place by extending the date. The price of the construction was $2,500,000 ($2.5 million) still the labours of the construction site were taking extra time to complete the work. As conflict aroused here, so the Director of the university gave offer that they will give $500,000 extra, so that more labour is hired who can work day and night to complete the work by 1st March 2016. MCU accepted the offer. Here, the MCU is totally liable for the damage of the university because they did not follow the rules of the Contract act. As per Australian contract law, there are five categories: formation, scope of content, avoidance, performance and termination, remedies. In the primitive of contract, a term was binding that, the construction should be made by the mentioned date but misleading took place here because the MCU constructer has mislead the director of the university and made that stage that the university had to increase more money for delivery of the work in time. The contract is breached and unfair terms took place. So in this case, the director of the university can sue MCU for misleading and breaching the contract. The university director can also cancel the agreement or order in this case.
In the context of the second contract it can be observed that in the first contract it was mentioned that it was mentioned that the work will be completed within the period of 1st March 2016. Later issues aroused with the date of completion of the agreement. In order to complete the assigned work within assigned time MCU demanded for the increase in the contract price. Hence on the basis of the past consideration the second agreement was based. The fact that past consideration is legally insufficient is major issue of the second contract. Thus both the parties involved in the contract may not be legally bound to perform the duties. Another major issue of the provided scenario is the fact that the second contract took place under economic duress. In this context, A Little Company Limited v Gregory Raymond Peters [2007] NSWSC 833 (3 August 2007) can be mentioned where Peters had to enter the contract due to economic duress as a result of which the defendant was penalized and had to pay the amount for breaching the agreement . Due to pressure imposed on the university that without the extra payment the work will not be able to be completed within the provided time by MCU the university had to enter the contract reflecting upon the presence of economic duress. As mentioned that the second contract took place under past consideration which may make the contract legally insufficient, and legally unenforceable.
The university should use this acts and give a legal warning to the MCU Company that if the order is not delivered in time then they can sue the company and the Australian courts can cancel the license of the company for breaching the contract and for misleading the customers by not supplying the order delivery in time. As per sec 19(2) c the supplier (MCU constructor) is liable for the economic loss of the Western University.
As the contract is breached, so the university can make remedy by damages and liquidated claim. The university can claim punitive damage from MCU because they are in trouble as the construction of the building was not completed in the specific time and the students were suppose to come in that day. Another clause occurs when the university decided to give extra money to the company, so that order is delivered in time. In this case the university is running financial loss, misleading conduct and for that reason the university can ask Liquidated damage by asking compensation from the company. The last remedy falls under law of equity that is remedy of equity. Through that the breaching party has to follow the order of the court and abide by the injunctions made by Australian court. These are the remedies which the university should use and take legal help, so that they recover the order delivery from MCU as soon as possible.
In reference to the second contract, under Australian Contract Law if it is observed that the imposed pressure was illegitimate, it may result in the breach of the agreement. If it is observed that the unjust enrichment is, occurring the university can rescind the agreement with MCU considering the contract as void. As a result of breach of the agreement the university is limited to ask for damages for the breach of the agreement that is subjected to a liability cap. Moreover with the help of the doctrine of estoppel , MCU can prevent in asserting that there is no contract (as past consideration was present in it) and thus in turn help in receiving legal remedies. The legal remedies for the breach of the agreement would include monetary payment of the damages on the part of the damages and loss of the university on the part of the MCU, completing the obligation of the part of the MCU and preventing it from breaching it. Other than that with the help of subsequent agreement, on the basis of satisfaction and accord agreement the university can terminate the contract as MCU did differ from its actual responsibilities.
Conclusion
The contract is signed by the supplier but they did not deliver the order in time. Misleading act and misrepresentation acts takes place in this case because the supplier misleads the customer and for that reasons the customer (University) can claim the remedies described above or can cancel the order. The supplier is liable in this case for punitive and financial damage of the customer, so in this case he has to follow the rules of the remedy of equity and oblige or accept the orders which will be given by court in favour of the customer in perspective of consumer protection act.
The major issue of the provided scenario is faulty audit on the part of TJC. Secondly, $65 million fraud was done by the Chief financial officer in the company is also another mentionable issue. Legal Consideration
The civil liability case is Perre v Apand (1999) HCA 36 needs to be discussed here. In this case contract was made between the plaintiff (Perre) and defendant (Apand). A contract was made that the plaintiff will sell potatoes in WA but the defendant supplied bad potatoes which are infectious as the potatoes grown in an infected land. So the plaintiff was not allowed to sell the potatoes as per WA regulation. Here, he was the victim of pure economic loss. So in this case he has sued the defendant under civil liability act of section 34 for getting financial compensation from as per rules of Australian civil law and commercial law.
The Sydney based firm TJC gave an offer that they will make a contract with some potential clients for 4 year and in the first month they will not take any fees from any of the client and do audit to their business. This was an invitation of treat and this offer was accepted by a company known as Sunflower Bank Ltd. Because of carelessness or negligence and lack of skills, TJC did wrong audit. This resulted in tort of negligence. In this context, A, DC v Prince Alfred College INC [2015] SASCFC 16 can be mentioned. In the provided scenario it can be noticed that it was the duty of Prince Alfred College to take care of the plaintiff, which was breached by it. As a result of which was held liable under Civil liability Act. The Chief Financial Officer of the company, Miss Ann and her assistant Mr. Claudio did fraud of $65 million, for which the company was running loss but TJC did not do any proper audit to find out and when the audits were submitted to Australian Stock Exchange, the result came that all the audits are false. As a result of this tort of conversion can be seen to have been committed. It is mentionable here that, as a result the tort of negligence, tort of conversion can be seen to have been committed. The reason being due to the wrong audit performed by TJC, Chief Financial Officer got the scope to commit the fraud. Hence it would not be wrong to comment that tort of negligence affected tort of conversion. This case falls under Australian Tort Law. The TJC has done civil wrong and is liable to tort because wrong audit is a crime. If the innocent party file case under Tort law, then TJC has to give a large amount of financial compensation to Sunflower Company following the order of the court.
The TJC has breached the duty of care under Civil Liability act 2002. TJC Company has established negligence by not doing their duty properly with proper audit. The TJC (defendant) unsettled the plaintiff’s (Sunflower bank Ltd) duty of care under Division 2 of Civil Liability act. They had breached the duty of care and allegedly cause damage to the company under Division 3 of civil liability act and for that reason they had to face financial loss. The innocent party or plaintiff can claim under section 5B to the court and as per section 50 of civil liability act, it is mentioned that how to follow the rules of duty of care under Standard of care. The Sunflower Bank Ltd is the victim of financial loss, so they can claim under section 34 of civil liability act. It is necessary for Sunflower that the punishment should be awarded to TJC because they had done offence by breaching the duty of care and doing wrong edit which harmed Sunflower Bank Limited.
For example, a civil liability case can be described here, that is Perre v Apand (1999) HCA 36. In this case contract was made between the plaintiff (Perre) and defendant (Apand). A contract was made that the plaintiff will sell potatoes in WA but the defendant supplied bad potatoes which are infectious as the potatoes grown in an infected land. So the plaintiff was not allowed to sell the potatoes as per WA regulation. Here, he was the victim of pure economic loss. So in this case he has sued the defendant under civil liability act of section 34 for getting financial compensation from as per rules of Australian civil law and commercial law.
As TJC has breached the duty of care and did careless act by performing civil wrong, so the Sunflower Bank Ltd can claim under section 36 of civil liability act under which the Australian court can ask for compensation and to get rescued from the court and keep good relation with the potential clients and the shareholders, the TJC should pay compensation to fulfil the economic loss of Sunflower bank Limited and follow the civil law rules and use remedy of tort by correcting their own fault. They should try to win the trust of the clients and other shareholders by following the rules of the contract law and performing proper duties and proper audits without negligence. Even they should take professional skilled person’s help to audit the business of various companies without doing any mistakes. They should also apologise officially from the Sunflower Bank Limited and request them not to cancel the contract with them with assurance that they will provide quality work in future. This can help Tom, Jane & Co. to save their potential clients for future. It is also mentionable here that in case of tort of conversion as seen to have been committed in the provided case the plaintiff can recover the property’s complete value from TJC at the date of conversion along with the exemplary damages when the committed breach is revelled.
Conclusion
In this case problem aroused because the negligence is done by the defendant and the plaintiff suffered economic loss. The defendant falls under tort of negligence and civil liability. The plaintiff can sue the defendant to the court under section 36 of civil liability act or can ask compensation for financial loss and the defendant has to rescue themselves by giving compensation to the plaintiff and for further better relationship with other clients, the defendant has to follow the rules of the civil law of Australia and Australian contract law, so that they are able to save the relation with the clients.
There are three parties, the agent Mr. Will (a Malaysian importer), Fresh Farms and Diary to Go. Mr. Will has implied authority in this case. Principles of Agency law is drawn in this case. A written agreement has been made between the three parties. Certain interpretation is done here with valid enforceable contract. The agency law is related to the relation who helped to for a contract in this case. The legal consideration of the void agreement is described in the case. Here, it needs to be mentioned Fresh farm is an agent and rest parties are the principal. A three year written agency agreement is made and express authority is described here.
The problem aroused in this case when the Fresh farms appointed the agent and expressed authority is not described clearly. The contract took place with Diary to go who was the overseas importer. In Agency law under Australian legislation the agent enjoys two types of authority, that is, Implied authority and Actual authority. When contract takes place in written or oral form between the agent and principal, Actual authority takes place. Here, the agent has to take all the responsibilities and authorities in mutual agreement with implied terms. In case of implied authority, the oral or written agreement does not take place here. Common practice is done by the agent here. The authority is enjoyed by the agent in this case but problem arises when roles of business are established with new company and that results in various conflicts.
In this context Abigroup Contractors Pty v Peninsula Balmain Pty Limited (2001) can be referred . A contract was formulated between Peninsula and Abigroup, which was a building contract. Under the contract it was agreed upon by Abigroup to perform constructional activities in relation to the discussion of Peninsula regarding Balmain factory buildings in the units of residential. Peninsula appointed a third party in order to supervise and manage the Project. However a conflict occurred between Abigroup and Peninsula regarding the disclosure on the part of Peninsula that Superintendent was its agent. Moreover, Superintendent (i.e. the agent hired by the principal- Peninsula) by performing the tasks associated with construction and designing of the project violated his authority which was the main reason of dispute. The Supreme Court gave the judgement that the conduct of Peninsula was deceptive and misleading, wherein Abigroup was awarded with sum of six figure in compensation. In the context of the above mentioned case, the non-disclosure on the part of Peninsula regarding appointing Superintendent as an agent and its performance tasks associated with construction and designing of the project resulted in the violation of the authorities and responsibilities, where the principal becomes liable. The estopped concept is also related in this case and in this agreement, the object cannot be included in the agreement made with the agent and in this type of agreement confusion takes place.
Same type of case has occurred in the case of Farm fresh. Fresh farm made contract with Diary to go and Mr. Will. If common practice is related in this case, then, the contract will be enforceable by law. In the perspective of that act because of will’s lack of authority, the contract was terminated.
The implied authority or practice is related to this case. Express authority agreements did not occurred in this case. The contract made between Fresh farm, Diary to go and Mr. Will. As 5% commission cannot be entitles, so the term of contract can be proved void and null. When it is found that the contracts are void and null, the Mr. Will cannot be stopped because partial consent took place in this contract. The good faith has to be maintained by the third party in this case. On the third party detrimental change has occurred with apparent authority. There is a six months gap in the contract formation between Fresh Farms and Mr. Will. Here estopped application should be used. The fresh farm cannot work more than the time period mentioned and if they do that then Fresh farms will be found guilty in dealing with the agent. So the Fresh farm has to stop the agreement. The act of Mr. Will was not a common practice and the actions made by him were under the court’s consideration. The three parties are legally liable in fulfilling the contract’s content. As the 3rd party is harmed, so the court can prove the contract null. Due to negligence of the principal, problem aroused. All the factors stand against Fresh Farms.
There are some questions asked in the assignment, whose answers are given below:
1. The contract took place between Diary to go and Fresh farm is valid. But it is necessary that Fresh Farm has to prove that, the act of Mr. Will falls under implied authority and expressed authority.
2. It is not possible for Mr. Will that he will get 5% from the contract if he acts outside implied authority expressed by him, rather than that if such obligation is not binding in the case then he is eligible to get 5% from the contract.
Hence in terms of the above discussion, ratifications can be made to contract. It includes terms of the contract that should be clarity of the terms of the contract on part the involved. Other than that, as the terms of the contract was breached as a result of breach of authority under discharge by breach- breach of a term, the contract can be terminated or damages can be demanded by the plaintiff. In such cases rescission of the contract, specific performance of mentioned task in the contract and award of damages are effective remedies. Other than that, in case of Agency Law, a mentionable remedy breach of authority is on the part of the person on behalf of whom a particular act was performed have the authority to ratify it and make the performed act as a valid one.
Conclusion
The case deals with Agency law where three parties are described. There is one agent and two principals. Different types of legislation of authority are described in that case with examples and classification. The conclusion is drawn that, proper rules and terms of the agreement is needed to be followed and time life should not be crossed and regulations should not be breached otherwise the contract between the parties can be terminated which will create economic loss.
This assignment was a great learning experience for me. In the process of completion of the assignment there are numbers of new concepts, laws and remedial process with which I got accustomed. As in learning experience, there are few portions that are easy to understand, here as some of the portions are complex for the learners to comprehend, which was same for me as well. Some of the portions of the assignment I found simple while there are portions which I found difficult to understand. Hence in totality it was an enriching experience with number of complexities and hurdles that contribute to the existing knowledge base. Here I would like to mention the fact that I found dealing with case scenario 3 the most difficult part of the assignment. The reason being the fact, it required me to deal with Agency Law which I found complex. Also, the fact under Australian legislation in Agency law, Implied and Actual authority are the two types of authorities enjoyed by an agent made it complicated for me to understand, comprehend and implement as per the given scenario.
Other than that, the provided cases were easy to understand and made me aware of number of new concepts. While dealing with case study 1, I had to deal with the concept of breach of contract. I also became aware of the fact that under Contract act when the aggrieved party faces loss the responsible party is liable for the damage. This assignment made me aware of the five categories under Australian contract law which are avoidance, scope of content, formation, avoidance, remedies and performance and termination. It order to provide remedy to the aggrieved party, this assignment also taught me that sec 19(2) c of Consumer Protection Act can be referred.While dealing with case 2, the concept of Australian Tort Law became clear to me. The fact that TJC expression was flawed created issue for the given scenario. While dealing with the provided scenario, I was also become informed of the fact that, such cases fall under Civil Liability Act 2002. It further taught me that, in order provide remedy to the plaintiff, section 36 of civil liability act can be referred.
While dealing with the third case taught me about Agency law. It educated me about the fact that, under Australian legislation in the Agency Law, two types of authorities are enjoyed by the agent which is Implied and Actual authority. The concept of implied and actual authority further became clear to me in the process of completion of this case.
However, in totality for me it was a great learning and enriching experience. My group mates have the similar about the difficulty level of the assignment. Some of them also faced issue with the allotted time to complete the assignment.
The prescribed books for the completion of the assignment like Australian Commercial Law were of great help for me as it helped me in having an idea and clearing the concept, theories associated with commercial law.
In order to collect information regarding the mentioned cases, I referred to Austlii. This assignment required providing information and reference to number of cases in that aspect Austlii turned out to be of great help along with providing me with the recent and updates information associated with the referred cases. While undergoing online research I came across with Austlii. Cases like Abigroup Contractors Pty v Peninsula Balmain Pty Limited (2001), A Little Company Limited v Gregory Raymond Peters [2007] NSWSC 833 (3 August 2007) were obtained from it, that helped me in the completion of the assignment.
A Little Company Limited V Gregory Raymond Peters [2007] NSWSC 833 (3 August 2007) (2007) austlii.edu.au <https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2007/833.html?stem=0&synonyms=0&query=economic%20duress>
A Maintenance Agency For Australia (Australian Government Pub. Service, 3rd ed, 2004)
Australian Corporations Legislation (LexisNexis Butterworths, 2010)
Bali, Charles J, Australian Commercial Law In Perspective (Leagle Publications, 2007)
Bryan, Michael and Vicki Vann, Equity And Trusts In Australia (Cambridge University Press, 2012)
Carter, J. W, Contract Law In Australia (LexisNexis Butterworths, 2013)
Castle, Michelle, Costs Ramifications of The Civil Liability Act (NSW Young Lawyers, 2002)
Cullen, Ian, Civil Liability Act 2002 (NSW Young Lawyers, 2002)
Dal Pont, G. E, Law Of Agency (Butterworths, 2001)
Damages | ALRC (2015) Alrc.gov.au <https://www.alrc.gov.au/publications/12-remedies-and-costs/damages>
Fletcher, K. L and K. L Fletcher, The Law Of Partnership In Australia (Lawbook Co, 2007)
Greig, D. W, Neil Gunningham and Gordon J Borrie, Commercial Law (Butterworths, 3rd ed, 2008)
Law Of Contract (Australian Government Pub. Service, 3rd ed, 2002)
Review Of Australia’s Consumer Policy Framework (Productivity Commission, 2008)
Stewart, Pamela and Anita Stuhmcke, Australian Principles Of Tort Law (The Federation Press, 2012)
Supreme Court Of New South Wales – Court Of Appeal (2002) austlii.edu.au <https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCA/2002/211.html?stem=0&synonyms=0&query=title(Abigroup%20Contractors%20Pty%20Limited%20and%20Peninsula%20Balmain%20)>
Supreme Court Of South Australia – Full Court (2015) austlii.edu.au <https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/sa/SASCFC/2015/161.html?stem=0&synonyms=0&query=tort%20of%20negligence%20cases003E
Turner, Clive and John Trone, Australian Commercial Law 30E (2015) Coop.com.au https://www.coop.com.au/australian-commercial-law-30e/9780455233765
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