Comparison Of Legal Systems And Contract Law Analysis

Question 1(a) and 1(b): Comparison of UK and Australian Legal Systems

Question 1(b)

The UK legal system has been selected for this task. The various aspects of the system are discussed below in relation to Hart’s 3 part legal system.

• Rule of recognition

There needs to be recognizable sources from which law is derived so that no arbitrary authority can become as the underlying source of law. In case of UK, in the absence of a written constitution, there are three main sources of law which are highlighted below.

• Statute Law – This would refer to the laws that are formed by the Parliament through the passing of the various legislations.
• Common Law – This essentially refers to various principles that have been highlighted in the historical cases and form basis of modern day judgements
• EU Law – The UK legal system in the recent times has been influenced by the EU (European Union) legal regulations owing to UK being recently a part of the EU which led to the need to implement EU laws.

Thus, based on the above discussion, it is apparent that defined authorities tend to act as law sources in UK thus complying with rule of recognition.

A comparable system is also in place in Australia in relation to the rules of recognition. There is a high degree of overlap between the sources of law in the two countries, however a major difference is with regards to the constitution acting as a critical law source in Australia which is not the case in UK considering that it does not have a written constitution. As a result, the dependence on conventions and legislation is more in the UK context. Nevertheless, they both comply with the Hart’s description of legal system.

• Rule of Change

There are defined procedures for the change in laws including the repealing of old laws. In this regards, a noticeable aspect is the participation of people in this process through the petitions which can lead to deliberations on change of law. Additionally, the supreme authority of change in the UK legal system is the Parliament. Since, a written constitution does not exist, hence theoretically Parliament has unlimited power to change various laws without any elaborate process unlike that required in countries with written constitution.

The above case is comparable with Australia to some extent since the Parliament in Australia also acts at the main body responsible for changing laws along with repealing of old laws. However, this capacity of being about change is subjected to the restriction posed by the written constitution. In particular, the mechanism to bring about amendment in the Constitution is comparatively more difficult.

• Rule of Adjudication

If there are laws, then in order to adjudicate on the arising disputes, there needs to be a defined system comprising of judiciary. This is the case in UK since an elaborate system of courts does exist. However, before the changes made in 2005, judicial power were also concentrated in the executive and legislative which was a concern since it reflected poorly on the independence of judiciary. But, after the Supreme Court has been set up, the adjudication powers have largely been concentrated in the judiciary which is largely independent.

The system in Australia is also comparable with one major difference being that separation of powers is more pronounced in Australia and hence the adjudication functions are mostly concentrated in the judiciary only.

Part B

Issue

The central issue is to determine whether the contract signed by Barry and Angelo is voidable or not. Legal advice needs to be extended to Barry after considering the various aspects of the given case according to statute and common law.

Question 2: Analysis of Misrepresentation in Contract Law

Law  

In pre-contractual phase, the parties are negotiating the various aspects in relation to the contract. The seller party is the one who provides several information/representation to the buyer related to the product which is being sold. In this regards, the execution of the contract on behalf of the buyer would be based on the factual information provided on the part of seller. Misrepresentation is the act of providing false information given by the seller to the buyer in order to attract the buyer to enter into contract. In this scenario, the intention of the seller for making false information would be taken into consideration. For misrepresentation, there are two main conditions which need complying with. .

The misrepresentation of the information must be for factual statement. This is because any false statement in context of estimation for future would not be treated as misrepresentation. Also, when the concerned buyer does not ask for any specific information about the product or service before executing the contract and also the seller has kept silent, then the silence on the part of seller would not be categorised as misrepresentation. The judgement announced in Smith v Hughes case is the testimony of this verdict. In that case the buyer of oats did not ask for the quality of the new batch of oats from the seller. Also, the seller did not ask the buyer that the quality of the new batch is different from the previous batch of oats. Therefore, the silence on the part of seller would not be categorised under misrepresentation of factual information. The court in this case announced the judgement in favour of seller and cited that no false statement had been made on the part of seller and hence there is no presence of misrepresentation. Further, it was fault of buyer to not ask for the quality of the new batch. Hence, the buyer cannot sue seller or ask for damages and the enacted contract was enforceable on the parties.

It is also imperative that misrepresentation must be for significant information that is tempting for the buyer to enter into contract. Further, it is essential fact that if the seller has clearly indicated or provided the financial reports regarding the revenue, efficiency, other imperative parameters for business, then it is pivotal on the part of buyer to check the reports and just do not rely on the statements made by seller. If the buyer negligently does not bother to check the reports/booklets, and enters into contract with seller, then the court would enforce the contractual liability on both the parties irrespective of the fact that seller has misrepresentation the factual information to buyer. The verdict of Redgrave v Hurd case is the leading case in this regards.

As per  s. 18(1) of CCL, it is essential that the advertisement must not be misleading (Deceptive) for a person who is engaged in trading or commerce business.  The incurred transaction must be for commercial act not for personal nature. Also, it is noteworthy that it is not necessary for deception to actually happen but the possibility of deception is good enough. The buyer must have suffered financial loss due to the deceptive act. However, it is also critical that for this section to be applicable, there is no requirement for intent to deceive to be present as per the judgement of Perre v Apand Pty Ltd.

Question 3: Possibility of an Action for Breach of Contract

It is apparent from the given situation that Angelo has misrepresented the basic factual information (turnover, expenses and competitions) through advertisement. Further, Angelo wants Barry to buy his business and therefore, he has not provided any reports/booklets to Barry because he was aware about the fact that if Barry would check the reports, then he would not enter into contract of buying his business. Hence, the statements made by Angelo are the available factors for which the Barry can rely on. Therefore, the contract would be termed as voidable. It can be said that s. 18(1) would also be validated here because the advertisement made by Angelo is deceptive and the transaction is of commercial type. Also, Barry suffers the financial losses because of the deception conduct of Angelo which is evident from the false information of advertisement. Hence, Barry can recover the damages from Angelo

Based on the above, it can be said that contract would be voidable because of the fraudulent misrepresentation made by Angelo. Also, as per s. 18 (1), Barry has legal position to recover the damages from Angelo.

Question 3

Issue

The central issue in this question is to determine whether the representation made in this case would be considered as term of the contract or not. Further, the advice needs to be offered to plaintiff Barry about his legal position for the case in regards to potential breach of contract.

There are numerous representations made by the seller during the pre-contractual period which is also known as negotiation period. However, among all the representations, there are some representations which are crucial for the buyer to enter into contract. These imperative statements would be termed as term of the contract. However, the terms are those representations which are essential to enact a contract and if later on these terms are breached, then the enacted contract would also be breached. Further, there is set of representations that are just mere representation and hence, would not be classified as term of the contract. The contract terms would be classified into two main categories.

• Express term:  Terms which are specifically mentioned or stated by the representor would be classified as express term.
• Implied term: The terms which form the key basis for entering into contractual relationship between the parties but are not stated directly and assumed to be present are called as implicit term.

There are certain factors that can be used to determine if a given representation would be considered term or not. In this regards, parole evidence rule would be taken into use. According to this rule, the representation which the parties have mentioned in the written contract would be terms of contract. Whereby, there is set of representation which the party has stated but not highlighted in the written contract, then it would not be categorised as contractual term because if they were essential, then it would have been highlighted in written contract. Another pivotal parameter relates to the expertise of the parties to check the validity of representations which would also be taken into consideration. According to the decision given in Oscar Chess Ltd v Williams case, the position and skill of the representor party would be a key element to decide that the representation would be a term of contract or not. In the above case, the representor party was seller of cars and had specified to the buyer that the respective car was 1948 model. However, the car was not 1948 model and was 9 years old model and the actual model was 1939.  It is apparent that seller was having position to check whether the car is 1948 model or 1939 model. Also, car model was significant aspect for the buyer to enact a contract to purchase the car and therefore, the court had announced that the car model is a term of contract.  

When the given representation is having a high significance factor for buyer, then the probability of representation to be a contractual term would increase. Also, according to Bannerman v White case, the buyer had a significant aspect regarding the hops being treated with sulphur. Also, the seller had requisite skills to decide whether the hobs are treated with sulphur or not. Moreover, the buyer would not purchase the hobs if he would have known that hobs are without sulphur treatment. Therefore, the significant representation would be contractual term.

It is evident from the given situation that the certain representations stated for business on behalf of Angelo (Seller) to Barry (Buyer) would be classified as term of contract. Barry was working and wanted to increase his income and therefore, in this regards, he wanted to purchase business of Angelo because Angelo had put an attractive advertisement related to the financial scenario of the business. It can also be seen that Barry did not have any experience in relation to the business but Angelo had experience and knowledge regarding the real financial position of the business. Moreover, Angelo did not extend any annual receipts/ booklets to Barry in regards to show him the actual facts and figures. However, he purposely did not provide it to Barry because Angelo was aware that Barry was willingly to buy the business just because of the attractive financial position. Hence if Angelo would have issued him the reports, then Barry would have not enacted a contract. Hence, the representation by Angelo regarding the financial performance of business would be implicit terms of the contract. There are set of express terms (related to worth of loader and van) which are highlighted in written contract. However, it can be concluded that implicit terms are breached because the actual figures are different from what Angelo has represented and similarly, the express terms are also violated in relation to the worth of loader and unstated lease payment for van.

Conclusion

It can be said that the given contract has both implicit and express terms. Further, both express and implicit terms have been breached by Angelo and therefore, the contract would be breached and Barry can claim for the damages from Angelo.