Discuss about the Contract Law for Flexibility Honesty and Fairness.
Contract law plays a significant role in the commercial activities of any Jurisdictions. The law has created rules of practice that ensure that promotes market fairness and efficiency among the traders in Australia. It is not in doubt that the law of contract has changed and evolved immensely over the recent decade with the legislature and the judiciary making major contributions to its growth. This research paper is thus poised to keenly investigate some specific facets of contract law in Australia, including their growth and application in the real commercial world. Further, the role that these laws have played to ensure honesty fairness and justices will also be discussed. It is imperative to note that there has been a fundamental and absolute sway from the traditional approach to several doctrines in contract to ensure that parties in agreements are not left on the loosing side of the scales of justice. The law of contract has since been made more flexible. It can be argued that it has grown to be more fertile in the recent past with the room for its reform equally burgeoning.
The first doctrine that shall be observed is one that the courts have shown the willingness of not giving it the strict application that was bequeathed by common law. This element of contract law is referred to as the intention to create a legal relationship in business agreements. The traditional approach that had been hitherto embraced by the courts is the application of the rebuttable presumptions test. For social agreement the presumption was that the parties did not intend to create a legal relationship between them (Merritt V Merritt 1970). For commercial agreements the presumption was that the parties in the agreement had the intention the terms in the agreement will be legally binding .What is of interest is that to promote fairness and flexibility of the judicial decisions in Australia appear to be extinguishing the traditional doctrine of rebuttable presumption test to ensure that they address each matter that comes before it with an objective eye taking all factors into consideration. Among the recent case that seems to extinguish the traditional doctrine of rebuttable presumption to determine the intention of the parties is Gray v Gray (2004) where the courts have shown notable reluctance in applying the presumptions test. The case concerned a loan agreement between a mother and a child and the judges said that each case should be treated as different and special to determine the intention of the parties. The courts have also recently stated in Ashton v Pratt (2014) that the courts should objectively examine the circumstances of each case because a miscarriage of justice is likely to occur if the courts solely apply the rebuttable test.
It can be observed from the above contentions that the courts are keen to ensure that the parties in commercial agreements and application of contract law are treated fairly and thus it seems indispensible that some old doctrines have to be given less or no attention at all.
The doctrine of Privity in contract law is a formidable rule that dictates that it is only parties to a contract who can enforce a contract. In fact, in Trident General Insurance Co. Ltd v. McNiece Bros. Pty. Ltd. (1988) the rule has been that contracts cannot be made for the benefit of third parties. Some states in Australia have since eroded this doctrine and given life to the rule that a contract can also be made fro the benefit of a third party (Property Law Act 1974 (NT) section 56). It should be borne in mind that this position is however not uniform in all states. The idea inherent in this shift in legal position is that there commercial traders who end up losing a lot money during trade because of rigid doctrines that have been inherited from common law rules.
Indeed the requirement of honesty and good faith in commercial agreements has been necessary in commercial contracts to ensure that parties in the contract are treated fairly. What seems to be an overridden doctrine which was also brought by the common law is Caveat emptor. This doctrine asserts that let the buyer be ware and the seller is not obliged to disclose any information. It has been argued that the doctrine had given ample opportunity for the sellers to practice dishonesty because the task of enquiring all the status of a particular commodity is an onerous one for the buyer. This implied that if the purchaser of a commodity found that the good is not in a good condition they could not seek for compensation because they did not check the quality of the product during the purchase. It is worth noting that this gave room for the seller to give misleading and deceptive information knowing that the buyer will not bring him or her to question. A more modern approached has been employed in Australia which follows the principle that the let the seller be ware (caveat venditor). In this sense there have been provisions that have been developed lately in the Australia consumer law that mainly protect the consumers and require the sellers to give product safety guarantees on their products before they engage in any commercial dealings.
Pursuant to section 20 Australia consumer law (2010) misleading and deceptive conduct in commercial trade and contracts is prohibited. The courts have embraced this approached given life by the legislature and have interpreted that parties engaging in a contract should be honest and ensure that all material fact are disclosed before parties sign a commercial agreement ( Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd 1988). It is apparent from the aforementioned assertions that the where a party to a commercial agreement is silent and fails to disclose material important facts required in the transaction, this will be regarded as dishonest and unfair.
The general law in contract is that an agreement that has been duly signed by the parties to the contract is binding on them even when one did not read the terms of the agreement (L’Estrange v F Graucob Ltd 1934). This rule appears harsh and a remedy has been provided by the vitiating factors such as duress and undue influence. But the common law had not taken care of extreme cases where a consumer is seriously harassed by the seller, a condition that the Australian jurisdiction has said that is more detrimental than mere duress and undue influence. The legislature Australia came up with the provisions of unconscionable conduct in the Australia consumer law section 21(1) to ensure that they protect contracting parties from the harsh conduct that seeks to take advantage of another party who may be green on the subject matter that the parties are contracting. This provision of the Australia consumer law appear to be promoting fairness and honesty in the commerce and trade because if the strict application of the general law that the contract is binding once has been signed is applied, it will be unfair to the innocent party who was induced to enter the contract and the harsh application of the law will amount to a mockery of justice. To promote fairness the courts have further held that the innocent party in the trade or commerce must show that the other party had a high bargaining power which he took advantage of (Kakavas v Crown Melbourne Ltd 2013). The forgoing assertions also have the effect of ensuring that the parties in a contract or any commercial dealing have the freewill to enter into any commercial dealing and that unnecessary pressure and inducement should not be applied to force a party to enter into an agreement.
On the face of it, it may be apparent that pre-contractual good faith and honesty is not necessary in commercial dealing. In fact, traditionally English law did not have the desiderata of honesty and good faith between the parties before a contract was made (Walford v. Myles, 1992) Lately there has been a willingness and readiness that has been manifested by the judiciary to legislature to insist on the parties of an agreement or trade to uphold good faith and honesty before they enter into contract (Philips Electronique Grand Publique SA v. British Sky Broadcasting Ltd. 1995). This is not only the position of the united kingdom but Australia Consumer law has also a adopted a requirement of good faith and honesty in its provisions. Parties in a commercial dealing or trade are not supposed to engage in misleading and deceptive conduct before the contract has been formed. (Australia Consumer Law section 18). Misleading advertisements have been held to be contrary to the provisions of honesty and good faith that is required of manufacturers and service providers. The courts have also had a high interest in ensuring that pre-contractual good faith is upheld as has ben demonstrated in Google Inc. v ACCC (2013) where the internet website Google was running advertisements on its website that were deceptive and misleading and did not reflect the true nature of the product. The court held that such a conduct was prohibited by law and found liability on the service provider in that case. It has been argued that a misleading and deceptive conduct can be in the form of assertions that lead an individual into an error or they could be false statements of fact that an ordinary person could reasonably not know the truth in them (Australian Competition and Consumer Commission v TPGInternet Pty Ltd 2013). This position has now become an overarching and formidable rule created by the judiciary and the legislature. This new rule on misleading and deceptive conduct seems to be replacing the tradition common law rule of misrepresentation of facts. Essentially the rule seeks to promote fairness and honesty in the contracts in commercial dealings and that the sellers should ensure that they are truthful in all their engagements in commercial trade.
The general in contract law is that a contract will be invalidated where either of the party that signs the contract is a minor and has not attained the age of majority. It is assumed that such persons do not have the understanding of the implications of what they are singing to. The common law position is that contract with minors will only be of necessity items such as food and clothing (Nash v Inman 1908). What is particular significance to note is the fact that there has been some willingness among some states in Australia to accept contracts that are entered into by minors as valid. The test that seems to be applied here is that one of reasonableness and ability to have the sufficient reasoning required to understand the terms in the agreed contract. This has been seen to promote justice and fairness because some minors may be intelligent and industrious enough to enter into a commercial dealing. Additionally it has also been recognized hat it should be in the interest of justice that a person who is mentally incapacitated to enter into contract to be allowed to make an agreement during their lucid moments. This may not be the universal position in Australia but there is a judicial willingness to adopt the rule into a permanent law in some states.
From a biblical perspective in the book of Isaiah, the bible proclaims that those who will survive the punishment by fire must practice fairness and honesty while they avoid gaining any benefit through fraudulent activities and avoid doing what is morally wrong (Isaiah 33:14-17) Accordingly the bile in Proverbs 11:1 argues that the practice of dishonesty and impartiality are a disgrace to the lord. As such it is perfectly demandable and desirable that in commercial dealings and trade parties should ensure that they do not benefit from what is genuinely and legally does not flow from their efforts and as has been demonstrated by the recent contract law rules developed in Australia, the major aim is to breath life into the teachings of the Holy Book.
The idea of electronic contract has not been there in the past because there was in development of technology case may be in the recent times. According to Martin and Jaques (2001) electronic contracts have been facing the major challenge of ensuring that they comply with the capacity provisions that are required of the traditional contracts that are made by pen and paper. It begs the critical question whether it would be just and fair to treat the electronically made contracts with the same rules that apply in the traditional contracts. It is not in dispute that there is already in existence rules regarding invitations to treat, offer and acceptance in electronic contracts. However according to Carter and Harland (2002) electronic agreements and commercial dealing defy the rule of privity of contract because a purchaser in a contract agreed in a website commerce dealing ,may fail to trace the other party in the contract to endure that they enforce the contract against them. As such it seems preposterous and unfair that one party will have to suffer a great deal of injustice because of the impracticability of the enforcement of the contract. There is also great need to promote justice and fairness in commercial dealing that are made and agreed over the mobile phones through short message service (SMS). This need was demonstrated by the courts in Communication and Media Authority v Mobiligated Ltd a company Incorporated in Hong Kong and Others (2009) where the court had the vie that injustice would most likely occasion a party in such a commercial dealing where there is little judicial ink hat has been split over the matter.
Conclusion
It can be conceded that the approach that has been taken by the courts and the legislations in repealing the old common law doctrines that the doctrines of equity did not sufficiently provide for has had a positive impact towards the development of fairness and justice to the parties in commercial dealings. Suffice to say innocent parties that did not hitherto have remedies against dishonest parties in trade have a reason to celebrate the new position that the judiciary and the lawmakers are taking. Parties in commercial trading should also be guided by the teachings in the bible and make peace with the fact that their ill intended actions will also be jugged by the Most High in heaven.
References
Australian Competition and Consumer Commission v TPGInternet Pty Ltd 2013 HCA 54
Australia consumer law (2010)
Ashton v Pratt [2012] NSWSC 3
Carter, J. W. and Harland, D. J. (1993). Cases and Material on Contract Law in Australia
Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong – [2009] FCA 539
Gray v Gray [2004] NSWCA 408
Google Inc. v ACCC (2013) 294 ALR 404
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546
Kakavas v Crown Melbourne Ltd & Ors [2013] HCA 25
L’Estrange v F Graucob Ltd [1934] 2 KB 394
Martin, N. and Jaques, M. S. (2001). The Effective Formation of Contracts by Electronic Means. New South Wales Society for Computers and the Law Journal. Available: https://www.nswscl.org.au/journal/46
Merritt v Merritt [1970] 1 WLR 1211
Nash v. Inman [1908] 2 KB 1
Philips Electronique -v- British Sky Broadcasting Ltd [1995] EMLR 472
Property Law Act 1974 (NT)
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd. (1988) 80 ALR 574
Walford v Miles. [1992] 2 AC 128
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