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Contract Law

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Rules & Regulations of Contract Law

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In accordance to the first scenario Rosso, who is residing abroad, enter into a contract with Sparkles for cleaning the house in the city and in pursuance to the same makes available the key of concerned place on 15th January 2016. However, after some time when Rosso returns, to his shock, he finds the entire house in mess. He discovers that the entire place was filed with dust and his belongings were broken into pieces. Apart from others, one of the most valuable possessions of Rosso, an antique desk, was also found broken. It has been ascertained that the desk alone shall require repairs worth $10,000. In accordance to the facts it has been ascertained that there was a clear breach of contract from the end of service providers. Moreover, another issue which is raised in the situation is that Sparkles Ltd. Operated to provide cleaning services only that are elderly and surviving on the basis of pensions. Hence, whether the action of company can be considered as ultra vires to the object mentioned in the memorandum or Rosso shall be entitled to claim damages..

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In accordance to law, it is stated that the advertisement published by Sparkles was misleading and deceptive in nature. In order to establish the nature of misleading it is imperative for the parties to establish that one of the parties was induced to enter into the contractual relation on the basis of false impressions. It is an established law that the parties can terminate the contract if any of the elements of contract are not fulfilled or the parties breach the terms of the contract. In addition, to these factors there exist various vitiating factors which amount to be a valid ground for avoiding a contract in a lawful manner. Misleading and deceptive practices are one such vitiating factor which allows the aggrieved party to repudiate the contract. Moreover, Australian Consumer Law clearly states prohibitions in respect to the misleading or deceptive actions of business enterprises. Moreover, the court in Miller & Associates Insurance Broking v BMW Australia Finance stated that silence shall be considered as misleading only in the event there arise a duty of disclosure on the concerned party. This doctrine imposes a strict liability offence on one of the parties who has in fact acted in a wrongful manner. Moreover, it has also been held by the court in Perre v. Apand Pty. Ltd (1998) that the intention of conduct shall not matter as long as there exists scope to protect the interests of the claimant. Hence, if the claimant has relied on the misleading or deceptive statement/conduct of a corporate and entered into any form of relation, then a strict liability shall be imposed on the wrongdoer. The primary rationale which supports the application of this rule is that any entity making a representation is in a higher position to know the authenticity of information being represented. In pursuance to the same, law places complete onus on the person making the representation. It has been opined by court in many cases that though this rule is in contradiction to the traditional principle of caveat emptor, it is considered to be more fair and just in nature. Further, in the case of HTW Valuers (Central Qld) Pty Ltd. Astonland Pty Ltd. (2004) it was also established by the court that the claim under cses of misleading and deceptive conduct shall be allowed only in the instances the claimant has in fact received quantifiable loss which is economic in nature. In addition, the case of Butcher v. Lachlan Elder Realty Pty Ltd. (2004) also states that entities shall ensure that advertising claims as well as information shall not be in any form misleading or deceptive in nature. It shall be considered as a clear violation of Section 52 contained in the Trade Practices Act 1974.

Light and Bulb and for this reason he has been offered such a deal. In pursuance to the same, Dennis enters into a contractual relation with Sparkles, which contained the standard terms of the entity. Dennis made the payments for March and April bills as and when received by him. However, the bill for month of May received by Dennis was in the name Glitters. When enquired he was informed that only the of entity has been changed. Hence, Dennis makes the requisite payments. Further, in the next month the same incident is repeated and this time the bill was in the name of Twinkles. Completely distressed from repetition of the situation, Dennis decided to terminate the contract with Sparkles and approach Light and Bulb for availing their services again. However, on July 15, 2016, after being informed about termination, the representatives of Twinkles communicate that Dennis has acted in breach of the terms and hence is liable for payment of $685 in the form of termination fees. In furtherance to the same, Dennis receives a letter from the company with a demand of $900.

It is important to state that Cleaning Industry of the nation is under an obligation to abide by all practices mentioned in the Code of Practice within the industry. The code of practice provides for a set of behaviour which shall be considered reasonable and proper in nature. In accordance to one of the clauses every contractor is required to notify the client before transferring their services to another supplier. Another common law factor which has the capacity to vitiate the contract in its totality is the factor of undue influence. In pursuance to the same, the defendant party generally makes an improper use of their position in order to acquire contractual benefits or induce the other person in to a contractual relationship, so that the consent of such a person cannot be considered to have received voluntarily. In the event it is established that there was presence of the vitiating factors in the form of duress or undue influence, the aggrieved shall be entitled to rescind the contract. In the case of Commercial Bank of Australia v. Amadio (1983) it was opined that rescinding the contract is distinct from terminating it as the former makes the contract void ab initio and does not make available any form of contractual remedy. On the other hand termination is merely ending the contractual relation at the very point and does not make it void ab intio, thereby enabling the parties to make use of contractual remedies. One of the renowned Australian case in the name of Johnson v. Buttress (1936) it was opined by the court that undue influence can be either in an actual form or presumed undue influence where it can be deemed that the concerned party occupied such a relationship which had the capacity to influence the decision of aggrieved party. In addition, in pursuance to the contract formulated between the parties, i.e. Dennis and Sparkles (now represented by Twinkes), every service receiver had the right to terminate the contract after giving a written or oral notice to the contractor. This is an express term which has been mutually agreed by the both the parties and clearly mentioned in all the standard contracts of Sparkle Ltd.

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In pursuance to the same it can be stated that Biff by acknowledging the association of Dennis with Light and Bright, and making the offer of low price if he agrees to sign a contract for 3 years. In such a situation Biff influenced the decision of Dennis as he erroneously considered him associated with Light and Bright. It is important to consider that in the event Dennis was know to the fact that Biff belonged to some other company he might not have consented for the agreement, as he was a loyal client of Light and Bright. In light of the same it can be stated that Dennis was empowered by contract law to rescind the contract. Moreover, the standard terms in contract also empowered Dennis to terminate the contract by giving a oral or written notice. This condition has also been fulfilled by Dennis and thus, the action of Dennis cannot be considered as breach of the contract. Hence, in pursuance to the same Dennis was under no obligation to make payments in the form of termination fees.

In accordance to the third scenario Ted, owner of Australian Phones Pty. Ltd, is under a negotiation of a contract with solicitor Belinda. Soon after Ted is hospitalized and undergoes a heart surgery. Belinda visits the hospital and asks Ted to sign the contract, on failure of which she shall not represent Australian Phones Ltd. Belinda leaves the contract on the bed side and while walking out meets wife of Ted, Jan. Ted at that moment asks Jan to go through the contract. However, Jan has no university degree and her understanding of the contract cannot be considered as reliable. Ted who has just undergone the surgery, signs the contract relying on the opinion of Jan. After passage of 2 months, when Australian Phones win the case Ted refuses to transfer the shares to Belinda, as mentioned in the contract.

In order to analyze these facts it is important to understand the vitiating factor of unconscionability.Law presumes existence of this factor where it is so oppressive or unreasonable for a party to make a decision, that minimum standards of dealing in a fair manner are also not met. In such cases one of the parties occupy a special disadvantageous position, while the other benefits from the opportunity so created by such a position. A similar position can be witnessed in the present scenario as Ted is in a disadvantageous position which has given Belinda an opportunity to include terms which are more favourable for her. Hence, in connection to this situation it can be stated that requiring Ted to make a decision in such a condition was so oppressive and unfair in nature, that the entire contract shall be vitiated. Moreover, the advice of Jan can also not be trusted as she had not gained education to understand the repercussions of different terms which are included in the contract. Hence, the fact that Ted signed the contract relying on the advice of Jan shall not hold any relevance. Therefore, in such a situation Ted shall not be required to transfer the share in the name of Belinda, even if all the other terms were lawful. The rationale behind the same is that the manner in which consent of Ted was acquired cannot be considered as valid in nature, rather can be said to have influenced by the said vitiating factor.

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