1.
Part A
This section of the paper discuss summary of the task 1. Firstly it discusses the proposal developed by the tribe elders for resolving different issues:
It must be noted that above stated proposal is derived on the basis of the theory introduced by hart’s and in this theory hart’s consider three rules[1]:
A rule of Recognition is defined as the base of any legal system and it is the rule which is used to derive other rules of the legal system. This rule includes two different types of rules that are primary rule and secondary rule. Primary rule is the rule which derives the person’s behavior and primary rules are formed on the basis of secondary rules. This rule is also considered by the tribe while framing their proposal for the constitution.
Rules of change is the rule which allowed the changes and modifications in the primary rule, and this rule also manage the changes and removal of the primary rule, and this rule is also recognize by the tribe while framing their constitution.
Last rule is rule of adjudication under which hart stated that both individuals and institutions have power to decide the fact whether any rule made is broken by the person or not. Above stated proposal clearly show the reflection of this rule.
It must be noted that legal system in Australia clearly reflect these three basic rules of hart, but complete legal system is not based on this theory. In other words, legislatures also adopt the theory derived by other experts. Parliament of Australia is considered as best example for this because is the body which frame laws but before framing these laws they take the permission from other authorities[2].
2.
Part B
Issue: Whether Barry has any right to take action against the contract’s validity in lieu of pre-contractual statements made by Angelo for inducing to Barry to enter into the contract?
Rule: Terms of the contract are the most important part of the contract law and this is the area which actually classified the rights and duties of the parties related to the contract. Both pre-contractual statements of the parties and post contractual conduct while considering their rights and obligations under the contract, and breach of any of these terms lead to non-contractual rights and obligations[3]. This can be understood through case law in which different rulings were stated by Lord Denning:
If any party made any representation before entering into the contract and such representation is made for inducing the other party of the contract to enter into contract, then it was considered as relevant proof to decide that such representation was warranty under the contract and false representation were considered as breach of warranty (Oscar Chess Ltd v Williams and Dick Bentley Products Ltd v Harold Smith (Motors) Ltd[4]).
In case parties made any statements which are false in nature to the other party before entering in the contract and that other party rely on these statements for entering in the agreement then party who made false statements breach section 18 under Competition and consumer Act 2010. As stated by Section 18 of the ACL if any person while dealing in trade or commerce must not enter into any such conducts which results in misleading or deceptive conduct[5].
Common law also stated that any false representation made by person before the contract is considered as misrepresentation. A misrepresentation is defined as wrong statements in context of fact made by one party to the contract to the another party for inducing that party to sign the contract, then such representation is considered as term of the contract and bind both the parties.
Actionable Misrepresentation is considered as providing wrong information of the fact by the one party to another party before the contract was made for inducing another party to enter into contract, and another party sign the contract by believing that wrong information. In context of misrepresentation two factors must be satisfied that are:
Materiality- misrepresentation must be material, which means it can induced the another person to enter into contract.
Reliance- as per this rule, another party to whom false statements are made must depend on those statements to sign the contract.
It must be noted that actionable misrepresentation provides various remedies to the innocent party, and these remedies are stated below:
Application: In this case, Barry contacts the Angelo after seeing the advertisement made by Angelo in which he made different claims related to the business. While talking to the Barry, Angelo made some further statements related to the business such as about the profitability, crown, expenses, etc. However, on the basis of these statements, Barry sign the contract but after signing the contract Barry founds that statement made by Angelo were false in nature. In this all the provisions of actionable misrepresentation are applied because if wrong information of the fact is provided by the one party to another party before the contract was made for inducing another party to enter into contract, and another party sign the contract by believing that wrong information then it is considered as actionable misrepresentation. Case law Gordon v Selico Ltd (1986) 278 EG 53 [7]also contain similar facts to this case. In context of misrepresentation two factors must be satisfied that are:
Materiality- misrepresentation must be material, which means it can induced the another person to enter into contract. This factor is satisfied in the present case because Barry purchased the business from Angelo on the basis of statements made by Angelo. Therefore, statements made by Angelo are material in nature.
Reliance- as per this rule, another party to whom false statements are made must depend on those statements to sign the contract. In this case Barry signs the contract by relying on the false information provided by Angelo.
It must be noted that actionable misrepresentation provides various remedies to the innocent party, and as per these remedies parties can make the contract voidable because such contract is not enforceable in nature. Therefore, it is possible for Barry to challenge the contract’s validity on the basis of actionable misrepresentation.
Conclusion: Provisions of Actionable misrepresentation are applied in this case and on the basis of these provisions it can be concluded that if contract between the parties is affected from the actionable misrepresentation than parties to thee contract can make that contract voidable. Therefore, it is possible for Barry to challenge the contract’s validity on the basis of actionable misrepresentation.
3.
Part B
Issue: whether it is possible for Barry to take any action against the Angelo under the breach of contract?
Rule: in case person depends on the actionable misrepresentation while entering into the contract with the another party then such person has right to take action under breach of contract, and both statute law and common law provides different remedies to innocent person for breach of contract such as rescind the contract and file claim for damages and compensation.
First remedy provides the power to the innocent party to set aside the contract, and this power can be used by the party in all the situations of misrepresentation. The main purpose of this remedy is to put back the parties to the contract in their original position, and this means that parties to the contract are put back in the similar situation when contract is not enforced between them. Innocent party has right to cancel the agreement between them and send notification of the same to the representator. It must be noted that innocent party cannot use this remedy in case of repudiation. However, this is an equitable remedy and Court holds the discretion to assign it or not. Following are bars to rescission:
Another party cannot put back in the original position, if party to the contract rescinds the contract by providing information of the same to the former party and returning the goods in question in acceptable condition. In case, parties to the contract rescind the contract under Misrepresentation Act 1972, then also Court possess power to validate the contract.
Second remedy which can be accessed by the innocent party under breach of contract is claim for damages or compensation. In this claim for damages and compensation are considered as the alternative remedy to the cancellation of contract, and in this innocent party possess the power to file suit for damages against the party who is involved in actionable misrepresentation. Parties also possess their right under tort of deceit, because this act provides remedy in context of actionable misrepresentation[10]. In case Byrne v Heller[11], Court recognizes this remedy for the fraudulent misrepresentation. Court further stated that main purpose of this remedy is to put back the person in original position.
Various components are determined by the Court for deciding the question of actionable misrepresentation and reliance of the innocent party on that misrepresentation. However, some exceptions are also there under which person who made false representation is not liable to pay any damages, and these exceptions are stated below:
Application: in the present case, Angelo indulged in actionable misrepresentation and this is already proved in above question, and actionable misrepresentation is considered as the breach of contract. As stated above in case person depends on the actionable misrepresentation while entering into the contract with the another party then such person has right to take action under breach of contract, and both statute law and common law provides different remedies to innocent person for breach of contract such as rescind the contract and file claim for damages and compensation. In the present case, Barry can claim for these remedies, and explanation regarding both the remedies is stated below:
Rescission- under this Barry has power to cancel the contract because Angelo make false statements to the Barry and on the basis of these statements Barry sign the contract. As per this remedy, innocent party can set aside the contract, and this power can be used by the party in all the situations of misrepresentation. The main purpose of this remedy is to put back the parties to the contract in their original position. Therefore, Barry has power to cancel the contract.
Damage- under this remedy Barry proceeds the contract but Barry can claim for damages and compensation. In this claim damages and compensation are considered as the alternative remedy to the cancellation of contract, and in this innocent party possess the power to file suit for damages against the party who is involved in actionable misrepresentation.
Conclusion
Barry can opt for rescission and claim for damages.
ACL, Terms, < com/law/scope-terms.html”>https://www.australiancontractlaw.com/law/scope-terms.html>, accessed on 2nd May 2018.
Lexis-Nexis, Actionable misrepresentation and negligent misstatement—overview, < https://www.lexisnexis.com/uk/lexispsl/disputeresolution/document/393747/567M-26H1-F18B-71BK-00000-00/Actionable-misrepresentation%E2%80%94overview>, Accessed on 2nd may 2018.
C Turner, MISREPRESENTATION, AGENCY, AND CONTRACTS FOR THE SALE OF GOODS IN SOUTH AUSTR,ALIA-MORE EFFECTIVE REMEDIES OR INCREASING CONFUSION?, < https://classic.austlii.edu.au/au/journals/AdelLawRw/1975/8.pdf>, accessed on 2nd may 2018.
Legal Service Commission, Misrepresentation, < https://www.lawhandbook.sa.gov.au/ch10s02s10.php>, accessed on 2nd May 2018.
OCW, Paper 1: An Analysis of Hart’s Theory of Primary and Secondary Rules, < https://ocw.mit.edu/courses/linguistics-and-philosophy/24-235j-philosophy-of-law-spring-2012/assignments/MIT24_235JS12_Hartrules.pdf>, Accessed on 1st May 2018.
Lumb, R, fundamental law and the processes of Constitutional change in Australia, < https://classic.austlii.edu.au/au/journals/FedLawRw/1978/12.pdf>, Accessed on 1st May 2018.
Case laws
Oscar Chess Ltd v Williams and Dick Bentley Products Ltd v Harold Smith (Motors) Ltd
Gordon v Selico Ltd (1986) 278 EG 53
Long v Lloyd [1958] 1 WLR 753.
Peyman v Lanjani [1985] Ch 457.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.
Statute
Australian Consumer law.
Misrepresentation Act 1967.
[1] OCW, Paper 1: An Analysis of Hart’s Theory of Primary and Secondary Rules, < https://ocw.mit.edu/courses/linguistics-and-philosophy/24-235j-philosophy-of-law-spring-2012/assignments/MIT24_235JS12_Hartrules.pdf>, Accessed on 1st May 2018.
[2] Lumb, R, fundamental law and the processes of Constitutional change in Australia, < https://classic.austlii.edu.au/au/journals/FedLawRw/1978/12.pdf>, Accessed on 1st May 2018.
[3] ACL, Terms, < https://www.australiancontractlaw.com/law/scope-terms.html>, accessed on 2nd May 2018.
[4] Oscar Chess Ltd v Williams and Dick Bentley Products Ltd v Harold Smith (Motors) Ltd.
[5] Australian Consumer law- Section 18
[6] Lexis-Nexis, Actionable misrepresentation and negligent misstatement—overview, < https://www.lexisnexis.com/uk/lexispsl/disputeresolution/document/393747/567M-26H1-F18B-71BK-00000-00/Actionable-misrepresentation%E2%80%94overview>, Accessed on 2nd may 2018.
[7] Gordon v Selico Ltd (1986) 278 EG 53
[8] Long v Lloyd [1958] 1 WLR 753
[9] Peyman v Lanjani [1985] Ch 457.
[10] C Turner, MISREPRESENTATION, AGENCY, AND CONTRACTS FOR THE SALE OF GOODS IN SOUTH AUSTR,ALIA-MORE EFFECTIVE REMEDIES OR INCREASING CONFUSION?, < https://classic.austlii.edu.au/au/journals/AdelLawRw/1975/8.pdf>, accessed on 2nd may 2018.
[11] Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
[12] Legal Service Commission, Misrepresentation, < https://www.lawhandbook.sa.gov.au/ch10s02s10.php>, accessed on 2nd May 2018.
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