Commercial Law Text - Cases - and Materials

Question: Discuss about the Commercial Law for Text, Cases, and Materials. Answer: Introduction: The main issue in this case is whether a contract between was formed between Vanessa and Nikhils Car Sales Pty Ltd (Car Sales). A contract is a promise made by one party to carry out certain things in exchange of a consideration. It can be either a written contract or verbal contract. There are six elements of a valid contract, and these include offer, acceptance, consideration, intent, consent and capacity. In a contract, an offer is made and an acceptance has to be gained. A mere counter offer is not taken as an acceptance, as was established in the case of Hyde v. Wrench (1840) 3 Beav 334. A contract also needs to have a consideration, which has some economic value. This consideration can be anything which is decided by the parties as long as it has certain economic value. This was held in the case of Chappell Co Ltd v Nestle Co Ltd [1960] AC 87. The parties to the contract should have the intent to enter into a contract. In other words, the parties should have the intention to create a legal relation, as was held in the case of Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256. In absence of an intention, the contract cannot be legally binding. The consent to enter into the contract must be free from cohesion, duress and undue influence. Lastly, the contracting parties should have the legal capacity to enter a contract. This means the contracting parties have to be of sound minds and legal age. In the present case, the offer was made by Car Sales. A counter offer was made by Vanessa, which was accepted by Car Sales. A consideration of $9500 was fixed for an exchange of the car. This consideration was paid by Vanessa and the car was attained by her. Both Vanessa and Car Sales had the intent and capacity to enter into a contract. From the above analysis, it can be clearly established that a contract was made between Vanessa and Car Sales. The issue is this case is the availability and applicability of remedies to Vanessa on the basis of her rights under the common law. When a party lies about a certain fact, so as to induce the other party to enter into a contract, it is the case of misrepresentation. Such an aggrieved party, who relied on the false statement and suffered a loss as a result of it, can claim for damages as per the common law. This was held in the case of Bisset v Wilkinson [1927] AC 177 where the defendant lied about the material fact of the case and the plaintiff was awarded damages. Further, such misrepresentation must have induced the party to enter into the contract as was held in the case of Museprime Properties v Adhill Properties [1990] 36 EG 114. The false statement has to be regarding the fact of the contract. A mere opinion of a person cannot be held as a false statement. In the same way, claims made in the advertisements cannot be held as representation of facts. But where the advertisement contains factual statements, the case of misrepresentation can be established if the said factual statement is a false one. Further, misrepresentation means an innocent mistake where the maker of such statement believes that he is making a true statement. There is no intention to deceive a buyer. A fraudulent statement is made if the maker of such statement is aware that the statement is false. In such a case, the contract can be rescinded by the aggrieved party. Also, the aggrieved party can sue for monetary damages as a compensation for the loss incurred. In common law, there is a rule of Parol Evidence Rule (PER). This rule was established in the case of Goss v Lord Nugent (1833). When a written contract is formed on the basis of a discussion, it is assumed that all the terms of the agreement have been entered into the written contract. This is the rule of PER. PER prevents a party from using the previous agreement as an evidence to challenge the written contract. Another case in this regard is De Lassalle v Guildford [1901]. In this case, the previous communication between Vanessa and Car Sales contained a clause of warranty. But when the contract was drawn in written form, the warranty was not mentioned in it. Also, Vanessa had read the contract and signed it. So, she cannot claim warranty on the basis of parol evidence rule. Further, the salesman of Car Sales had opined that the car was one of the best. This was an opinion and not a statement of fact. So, the salesman cannot be held liable for misstatement as per the common law. The statement made by Nikhil was fraudulent. Even though there was only one previous owner, but such owner was a company and the car was a fleet car. Fleet vehicles are often used by many people and are also given on rent. Nikhil knew about this material fact of the contract and did not disclose it. So, a fraudulent misstatement of fact is present in this case. Hence, Vanessa can claim remedies on the basis of fraudulent misstatement. As per the common law, Vanessa is eligible to get the contract revoked and get damages in form of monetary compensation. The issue is this case is the availability and applicability of remedies to Vanessa on the basis of her rights under the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Schedule 2). As per Section 18 of this Schedule, a person is prohibited from conducting trade in way which is misleading or deceptive or which would likely be misleading or deceptive. These provisions are applicable to the publication of an advertisement as per section 19(2). Section 20 of this Schedule prohibits a person from indulging in unconscionable conduct within the meaning of the unwritten law. Section 21 of this Schedule contains that a person should not be engaged in unconscionable conduct relating to the supply of goods and services. Section 29 of this Schedule contains the provisions regarding false or misleading representations regarding the goods or services. This section prohibits a person from making false or misleading representation related to promotion of goods and services. A person is not allowed to make a misleading representation regarding the quality, standard or style of the goods or services. In case a false or misleading representation is made, Section 151 states the penalties in such cases to the amount of $1,100,000 for a body corporate and $220,000 for an individual. Further, as per section 224, when the Court is satisfied that a person has contravened with sections of unconscionable conduct and unfair practices, the Court, at its discretion can order the person to pay pecuniary penalty to the Commonwealth, State or Territory, as the case may be. These penalties are same as stated in Section 151. Section 227 holds that this penalty may be paid to the aggrieved party if the Court finds it appropriate. Further, the aggrieved party is also liable to compensatory damages as well as is eligible to gain an injunction against the breaching party to stop the misleading conduct and the unfair practices. In the case of Google Inc v ACCC High Court of Australia [2013] HCA 1, Google was considered to be engaged in misleading and deceptive conduct as per section 52 of the Trade Practices Act which is now section 18 of the Australian Consumer Law. In the present case, Vikram was engaged in misleading and deceptive conduct by failing to disclose the material fact regarding the previous ownership of the car. This misled Vanessa into buying the car. Further, Vikram had also lied about the low kilometers part in the advertisement along with the promise of a 12 month warranty to induce the buyers to purchase the car. Vikram was also engaged in unfair trade practice. The car for sale shows the odometer at 75,000 but at the time of sale, the car had covered 175,000 kilometers. Under the Australian Consumer Law, a misrepresentation of fact is considered as deceptive. And here, the statement of the salesman would also be considered as deceiving. Further, the product that Vikran was selling was in bad condition and this again, is covered in unfair trade practices. Hence, as per the Australian Consumer Law, Vanessa has the right to sue Car Sales for contravention of various provisions of this act. And as a result, she is liable to monetary compensation as well as equitable remedies in form of injunction against Car Sales. References Australian Contract Law. (2010) Chappell Co Ltd v Nestle Co Ltd [1960] AC 87. [Online] Australian Contract Law. Available from: https://www.australiancontractlaw.com/cases/chappell.html [Accessed on: 16/09/16] Australian Contract Law. (2010) Google Inc v ACCC High Court of Australia [2013] HCA 1. [Online] Australian Contract Law. Available from https://www.australiancontractlaw.com/cases/google.html [Accessed on: 16/09/16] Australian Government. (2016) Federal Register of Legislation: Competition and Consumer Act 2010. [Online] Australian Government. Available from: https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3#_Toc368657533 [Accessed on: 16/09/16] Carter, J.W., Peden, E., and Tolhurts, G. (2007) Contract Law in Australia. NSW: LexiNexis Butterworths. Corones, S.G. (2011) The Australian Consumer Law. NSW: Thomson Reuters (Professional) Australia. Dosen, A., et al. (2013) Investigating Legal Studies for Queensland. Melbourne: Cambridge university Press, p 40. Gibson, A., and Fraser, D. (2014). Business Law 2014. NSW: Pearson Australia. LawTeacher. (2016). Contract Law Misrepresentation Cases. [Online] LawTeacher. Available from: https://www.lawteacher.net/cases/contract-law/misrepresentation-cases.php [Accessed on: 16/09/16] LawTeacher. (2016). Explaining The Parol Evidence Rule And Its Exceptions To The Rule. [Online] LawTeacher. Available from: https://www.lawteacher.net/free-law-essays/contract-law/explaining-the-parol-evidence-rule-and-its-exceptions-to-the-rule-contract-law-essay.php [Accessed on: 16/09/16] Macdonald, E., and Atkins, R. (2014) Koffman Macdonald's Law of Contract. 8th ed. Oxford: Oxford University Press, p 290. McKendrick, E. (2014). Contract Law: Text, Cases, and Materials. 6th ed. Oxford: Oxford University Press, pp 80-81. Morandin, N., and Smith, J. (2011). Australian Competition and Consumer Legislation 2011. Sydney: CCH Australia Limited. Swarb. (2015) De Lasalle V Guildford; CA 1901. [Online] Swarb. Available from: https://swarb.co.uk/de-lasalle-v-guildford-ca-1901/ [Accessed on: 16/09/16]