Assistance to James in Contractual Violation, Negligent Misrepresentation and Legal Issues under ACL

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Foundation of Company and Commercial Law
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Answer 1
Issue
The issue is what assistance/financial should be given to James in order to compensate the
violated of the contractual terms?
Rule
A contract imposes its terms on the parties based on which they are bind by them. They
have the legal obligation to comply with the same. The terms which are included in a
contract are categorised into two types: express and implied. The expressed terms are
included by the parties in the contract whereas implied terms are included by the statute or
the court. Moreover, the express and implied terms are categorised into condition and
warranty. The conditions are terms which are significant based on which the entire contract
is formed, and non-fulfilment of them resulted in terminating the entire contract.
Warranties are those terms which are not as important as conditions, and the contract is
not rescinded in case they are violated by the parties.
The Parol Evidence Rule (PER) is significant in contract law which provides that after forming
a contract, the oral evidence of the terms which contradict with the existing written terms
will not prevail in the contract. However, the court provided in Curtis v Chemical Cleaning
case that this rule is not applicable in case any party misrepresent the terms of the contract.
The court provided in Costa Vraca Ltd v Berrigan Weed & Pest Control Pty Ltd & Anor case
that while forming a service contract, the parties of a contract have to ensure that they
maintain a standard which a reasonable person would in the particular situation. After
violation of contractual terms, the aggrieved parties can demand remedies from the
contract which include rescission, repudiation, damages, specific performance, and
injunction.
Application
A valid contract was formed between James and Lloyd Right Pty Ltd (Lloyd) in which an
expressed term is included by the parties. The term specifies that it is the obligation of Lloyd
to collect a permit from local council regarding putting the chair in the sidewalk. Lloyd can

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rely on the doctrine of PER to eliminate the term of minimum seat capacity which took
between the parties. However, Lloyd specified to James that 120 seats would be put in the
restaurant while purchasing them. As discussed in Curtis v Chemical Cleaning case, Lloyd
cannot rely on PER based on the misrepresentation made by him. The expressed term is
violated by Lloyd due to failure of taking the permission from the local council. Based on this
breach, the financial compensation should be paid by Lloyd for the loss suffered by James of
40 customers. The amount of loss as per $30 per customer should be paid, and the amount
of contract should not be paid by James that is $15,000.
Conclusion
Based on the above observations, James has the right to terminate the contract based on
violation of the term and misrepresentation. Lloyd should provide financial assistance to
James for the loss suffered by him.