Question 1(b)
The chosen foreign country for this task is India. The Indian legal system tends to address the Hart’s 3 part legal system requirements in the following manner.
This is imperative in order to ensure that there is a recognizable source of law so as to avoid any uncertainty. In case of Indian legal system, there are clear recognizable sources of law that have been highlighted below.
Owing to the existence of defined source of law, this condition is fulfilled.
There is a procedure for changing the rules which is primarily through the legislative route where new laws are enacted which tend to replace the old laws. Also, amendments to the old laws can be introduced and passed by the Parliament. Further, the procedure for passing these laws and amendments has been clearly highlighted. Additionally, the constitution can also get amended and the procedure for the same is outlined in the Indian constitution. The case laws also tend to change with times as the higher courts tend to alter their decisions on given issues. Hence, this condition is fulfilled by Indian legal system.
In India, the Supreme Court is the highest court of law which tends to act as adjudicator of the constitutional provisions and also sorts out dispute between the state and the centre. Besides, the judiciary also has the power to put down any law formed by the Parliament which tends to violate the basic principles of the constitution. Also, there is a hierarchy of courts to decide on various legal matters and adjudicate in case of disputes arising in various domestic and commercial relations. Besides, there are also tribunals which tend to deal with administrative matters and tend to possess powers of adjudication. Therefore, there does exist a defined machinery of adjudication mechanisms in India to deal with various disputes. Therefore, this condition is also satisfied.
Based on the above discussion, it is apparent that the Indian legal system does comply with Hart’s 3 part legal system. This is true also for Australia since it has a defined source of law comprising of constitution, common law, case law along with statute law. A difference from India is that customary law seems to be absent through the tradition and custom are indirectly represented through statute. Besides, the rules for change of law have been well defined and adhered to, thereby avoiding any unauthorised change. This is usually done through the Parliament and also through latest developments in case law. Additionally, with regards to adjudication, there exists the Federal and State courts along with tribunals which tend to sought out any disputes that tend to arise from a host of issues. Thereby, it may be appropriate to derive the conclusion that the description of the legal system by Hart also fits true for Australia.
Question 2
Based on the facts provided, the key is to outline the relevant legal advice to Barry concerning the validity of contract entered into with Angelo.
Relevant Law
Misrepresentation is a key concept which is applicable in contract law. It points to a circumstance where the seller has misrepresented material factual information with the intention of luring buyer into contract execution. For misrepresentation to be proved, the conditions highlighted below have to be fulfilled.
For misrepresentation to arise, it is essential that a particular factual statement should have be stated wrongly to the buyer. The falsification of any opinion especially regarding futuristic estimates would not be covered within the ambit of misrepresentation. However, if the seller is silent, it is not covered under the ambit of misrepresentation. This is as per the verdict of the Smith v Hughes case where the defendant knew that the purpose for which the plaintiff was buying the oats would not be served by the new batch of oats but still remained quite since the plaintiff never asked the defendant. The court ruled favour of the defendant citing that the no false statement had been made by the defendant and it is the fault of the plaintiff who never asked about the batch of oats.
The intention behind this requirement is that there should misrepresentation of material facts which must tempt the buyer into enacting the contract. However, in this regards an essential aspect is that is that in the presence of evidence highlighting that representation is false, the innocent party should take consideration of the same and not act in a negligent manner. A leading case in this regards would be Redgrave v Hurd. In accordance with the applicable facts, a solicitor was seeking a partner in his firm and hence falsified the details about business revenue so that he could obtain a partner for the firm. Additionally, the books highlighting the correct monthly receipts were also forwarded to the interested partner who decided not to examine these and decided to enter the contract. However, post the enactment of contract, the new partner became aware of the actual business receipts and hence desired to opt out. But the court ruled in favour of the solicitor since books were presented but the new partner decided against vetting the same and was thus instructed to fulfil the contractual obligation.
As per s.18(1) of CCL, it is imperative that the conduct must not be deceptive for a person engaged in trade or commerce. The necessary conditions for applicability of this section are outlined below.
In accordance with the relevant facts, it is apparent that key factual information such as monthly turnover, expense and competitor detail has been falsified by Angelo. Additionally, it is apparent that the misrepresented facts were pivotal to luring Barry into the deal considering that the valuation of the company is closely linked with annual profits. Besides, Barry was doing a job and thus, he would not have bought a business which leads to lesser profits than his salary. Besides, Angelo did not provide any books for the business which could have enabled Barry to realise the truth of the representations made by Angelo. Thus, he had no choice but to rely on the expertise of Angelo and entered into contract based on the financial information extended. Hence, it would be appropriate to conclude that misrepresentation has been done by Angelo and therefore the contract is voidable if Barry desires so.
Further, the initial advertisement regarding the business was clearly deceptive. It is also part of a commercial transaction. Further, the advertisement owing to the incorrect facts is potentially misleading even if Angelo would have stated the correct facts later. Also, Barry has suffered financial losses owing to overpaying for the business. Hence, s. 18(1) would be applicable and damages can be claimed by Barry.
The above discussion leads to the conclusion that contract would be voidable on account of presence of fraudulent representation. Further, Barry can claim damages from Angelo based on both common law as well as s (18) of ACL.
Question 3
Issue
In wake of the given facts, it needs to be highlighted if there has been any breach of contract based on the implicit and express terms related to the contract enacted between Angelo and Barry.
A contract is based on the various terms which need to be adhered to. These may be express or implicit. It is a common observation that the pre-contractual phase involves negotiations where the sellers typically tend to make representation about the product or service that they are willing to sell. However, all these representations would not be considered as contractual terms. Considering that terms are legally enforceable while mere representations are not, it is imperative to draw a line between the two with regard to a given contract.
For determining whether a given representation is a term or not, there are various key parameters that ought to be considered. In accordance with the parole evidence rule, typically those representations that end up in the written contract are taken as terms while the representations that are confined to oral negotiations are usually not since if they important, they should have been represented in the written contract. Another crucial factor to be considered is the expertise of the party making the representation. The higher the expertise of representor, the higher is the likelihood of it being a term rather than representation as apparent from the verdict of Oscar Chess Ltd v Williams case. As per the case details, the seller had represented that the car was a 1948 model but it alter turned out be a 1939 model which was worth much less. The court opined that the item description was a term owing to the expertise of the representor coupled with the significance of the same.
Another key parameter to consider is the significance that the representee attaches to the given representation. A higher importance attached would imply that there are greater chances of the representation being a contract term. This is apparent from the decision in the Bannerman v White case whereby the buyer had clearly stated that hops with sulphur treatment were required for making beer. The seller assured that hops were sulphur treatment while actually they were not. Considering the importance given to the sulphur treatment by the buyer, it was considered as a contract term and hence there was a breach in the contract owing to seller provided non-sulphur treated hops.
Based on the above discussion, it is apparent that in the given case there are key representations which can be considered as terms. These would include the details on financial performance of the company since Barry relied on expertise of Angelo for these and also these are significant for the decision making with regards to acquiring the business and deciding on the appropriate price. It is likely that if the true financial details would have been revealed, Barry would not have acquired the business from Angelo. Besides, the importance of the financial details also arises from the fact that it was these details about the business that caught Barry’s attention and lured him into enacting the contract. Besides, considering the scenario whether Barry had no other source to verify the details, it is apparent that these representations are implicit terms for this contract.
Also, besides the above implicit terms that have been violated, there are additional express terms which are included in the written contract and tend to highlight the value of van and loader. However, these seem to be incorrect that van is on lease and also the lease payments are due. Besides, the condition of the loader is such that the repair required to bring it in working order equals the replacement cost. Thereby, it is apparent that there has been a breach of the express terms also related to the contract. In wake of the violation of both the express and implicit contractual terms for the contract enacted between Barry and Angelo, it would be fair to conclude that the contract has been breached.
Conclusion
The discussion above highlights that the given contract has both express as well as implicit terms. The implicit terms relate to the business’s financial performance and a breach regarding the same has been done. Also, the express terms also have been violated. Considering this, Barry can demand compensation for the financial damages that he has suffered on account of enacting a contract with Angelo.
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