Question:
Discuss About The Condition Is An Imperative Clause Contract?
At the pre-contractual stage, both the parties are involved in the negotiation of the contractual terms and duties. Also, one party has extended various representation related to the contract and the other party relies on these representation and decide whether to enter into the contractual relation. Those representations which are mentioned into the contract are termed as terms and breach of these kinds of terms would result violation of contract. In this case, the innocent party can sue the defended and recover marketing damages[1]
Further, the breach of term would be based on the fact that whether the term is a warranty or condition of the contract. Condition is an imperative clause of the contract. As per the judgment given in Poussard v Spiers[2] case, the plaintiff can revoke the contract only when the condition has been breached by defended. However, it is essential to note that in case of warranty this is not feasible. It means the party can sue the other party on the account of breach of warranty but cannot revoke the contract under Bettini v Gye[3] case.
According to the exclusion clause, the liability of the defended would be minimized on the account of breach of any term only in the following aspects.
When the defendant has notified the plaintiff in relation to the exclusion term. Further, it is noteworthy that exclusion clause that one party has made after the enactment of the contract would not be considered as valid clause as evident from Thornton v Shoe Lane Parking[4]and Olley v Marlborough Court[5]
It is imperative that the respective exclusion clause must not be used against the plaintiff especially when the defendant has made false claim or misrepresentation.
It is the essential that defendant communicates to the other party regarding the inserted exclusion clause. However, if the party has informed related to the exclusion clauses to other party and the party does not read the clauses due to negligence, then also the exclusion clauses would be valid. Therefore, it limits the liability of defended party.
It is apparent from the case facts that Airbus Corporation Ltd and Qantas Airlines have enacted a contract regarding the purchase of an airplane. The contract contains 545 terms and some of the terms are highlighted below:
Further, after the enacted of the contract, Airbus Corporation Ltd has sent number of documents along with the contractual form to Qantas Airlines. One of the documents also contains limitation of liability regarding the breach of contract. However, due to confusion, wrong software has been installed in the entertainment system and hence, it shows only 34 channels. It is apparent that term of contract (the system should has 36 channels) is a warranty considering the underlying importance. Hence, Qantas can sue Airbus Corporation Ltd for breach of warranty. Qantas has the legal rights to claim for the damages but cannot cancel the contract. In regards to the defendant liability, it is apparent that exclusion clause would not be applicable here because Airbus Corporation Ltd has provided the exclusion clause after the enactment of the contract. economics, the clause would not be enforceable as per the judgment of Olley v Marlborough Court [1949] 1KB 532. Therefore, Qantas has the legal rights to recover the damages from Airbus Ltd.
Agency law would be applicable when one party known as principal has issued the set of authority to another party known as agent to make legal contracts with the third party on the part of principal. The main aspects of agency law are as furnished below:
It is noteworthy that if the agent does not have any of the above highlighted authority, then the third party cannot force the principal to satisfy the contractual liabilities[10].
It is essential that agent would perform the work as per the instruction given by principal by considering the fiduciary duty.
When any of the above listed fiduciary duties would be breached by the agent, then principal can sue the agent and recover the damages. Further, the principal would not be liable to complete the contract obligation when the third party is aware about the fact that agent does not has authorization. Also, when third party has entered into contract in good faith and is ignorant about that the agent lacking authority to make contract, then also the principal is accountable[14].
Gemma is salesperson who is working in Frank’s appliance shop. Her main work is to sell the appliances to customers. Tom who was looking for a dishwasher has agreed to pay $350 for a second hand dishwasher. He has informed Gemma that he will pay $350 for dishwasher but first he has to find a suitable space of the dishwasher. Meanwhile, Gemma has called her niece and has sold the dishwasher for $300. Tom has informed Frank that he was ready to pay $350 for the dishwasher. Hence, it can be said that Gemma is working as an agent for Frank and to perform work for Frank’s interest is her fiduciary duty. However, she has done a work for her private interest by selling the dishwasher to her niece at cheaper rate. Therefore, Frank can recover the damages of $50 from Gemma on the account of breach of fiduciary duty.
Bob is working as salesperson for Frank’s shop. Frank has given him authority to sell large amounts of washing machines to laundries. Also, Bob has negotiated with Angela multiple times regarding the sale. However, due to misconduct of Bob i.e. late coming and drinking habits¸ Frank has fired Bob from the job. However, he does not inform Angela that Bob would not be able to sell washing machine because he has no more an employee. Further, Bob has asked Angela to sell 10 washing machines for $10,000. Angela is ready to purchase and also made the payment of $10,000. It can be said that Bob has acted fraudulently and hence, Frank can sue Bob and would be in the position to recover the amount of $10,000. Also, as Frank does not inform Angela, hence Frank is liable to complete the contract obligation and he has to provide 10 washing machines to Angela at the agreed price. Otherwise, Angela can sue Frank and claim for the damages.
Conclusion
Frank can sue and recover the damages from agents Gemma and Bob. Further, Bob has made a contract with Angela that is binding on Frank and hence, Frank has to complete the contractual obligation.
References
Bryan Robert, Vermeesch, Lindgren Kevin Edmund, Business Law of Australia (Butterworths, 12th ed. 2011)
Davenport Shayne, Business and Law in management (Thomson Reuters, 4th ed, 2012)
Gibson Andy, Fraser Douglas, Business Law (Pearson Publications., 8th e, 2014)
Harvey Callie, Foundations of Australian law (Tilde University Press, 3rd ed, 2009)
Bentley v Craven (1853) 52 ER 29
Bettini v Gye (1876) 1 QBD 183
Christie v Harcourt [1973] 2 NZLR 139
Freeman & Lockyer v Buckhurst Park Properties [1964] 1 All ER 630
Northern Railway Co. v Swaffield (1874) LR 9 Ex 132
Olley v Marlborough Court [1949] 1KB 532
Poussard v Spiers (1876) 1 QBD 410
Robb v Green [1895] 2 QB 315
Thornton v Shoe Lane Parking [1971] 1 All ER 686
Watteau v Fenwick [1893] 1 QB 346
[1] Andy Gibson, Douglas Fraser, Business Law (Pearson Publications., 8th e, 2014)
[2] Poussard v Spiers (1876) 1 QBD 410
[3] Bettini v Gye (1876) 1 QBD 183
[4] Thornton v Shoe Lane Parking [1971] 1 All ER 686
[5] Olley v Marlborough Court [1949] 1KB 532
[6] Shayne Davenport, Business and Law in Australia (Thomson Reuters, 4th ed, 2012)
[7] Watteau v Fenwick [1893] 1 QB 346
[8] Northern Railway Co. v Swaffield (1874) LR 9 Accounting
[9] Freeman & Lockyer v Buckhurst Park Properties [1964] 1 All ER 630
[10] Callie Harvey, Foundations of Australian law (Tilde University Press, 3rd ed, 2009)
[11] Bentley v Craven (1853) 52 ER 29
[12] Christie v Harcourt [1973] 2 NZLR 139
[13] Robb v Green [1895] 2 QB 315
[14] Robert Bryan Vermeesch, Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 12th ed. 2011)
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