Australian Commercial Law | Assignment

Running head: AUSTRALIAN COMMERCIAL LAW
0
Australian Commercial
Law

AUSTRALIAN COMMERCIAL LAW 1
Part A
Question 1 (b)
Herbert Lionel Adolphus Hart has provided a three-part legal system which provides that
a legal system is based on primary and secondary rules. This file will focus on the analysing
the legal system implemented in India and whether it complies with Hart’s three-part legal
system. This report will also analyse whether the Australian legal system complied with
Hart’s three-part legal system and compared it with Indian legal system. The legal system of
United Kingdom has heavily influenced the legal system implemented in India1. The
Constitution in India provides power to governmental authorities and the courts to enforce the
legal system over the country. The sources of law in Indian legal system include the
Constitution, legislation, case law and customary law. The Constitution has given the power
to the government to evaluate the gaps in the legal system and present proposed law in the
Parliament which is called a bill. The parliament of India is the supreme legislative body
which includes Head of State (President of India), House of the People (Lok Sabha) and
Council of the States (Rajya Sabha)2. The ministers who are elected by the votes of public
discuss the bill in both Lok Sabha and Rajya Sabha and either accept it or decline it. They can
also demand changes in the bill before its acceptance.
After acceptance from the Parliament, the bill is signed by the President making it a law
that applies to the country. Similarly, the government has right to evaluate previously stated
law, and they can follow the same procedure to add, delete, change and replace previous
laws3. The Constitution of India defines the scope of adjudication power of courts. The
criminal courts entertain matters such as murder, rape or manslaughter and the civil court
entertain matters such as breach of contract, negligence, family matters and others. The
Supreme Court is the highest court in India, and its judgements are followed by other courts
such as High court, district, magistrate courts and others4. The parties of a case have the right
to appeal against the judgement of a case to a higher court if they are not satisfied by the
1 Prateek Tak, "Legal Aid: A Boon For The Indian Legal System" [2012] SSRN Electronic Journal.
2 Mukund Sarda, "Euthanasia: A Look At The Indian Legal System" [2010] SSRN Electronic Journal.
3 Raj Kumar Bhardwaj and M. Madhusudan, "Online Legal Information System (OLIS) Leveraging Access To
Legal Information Resources In Indian Environment" (2016) 36(1) DESIDOC Journal of Library and
Information Technology.
4 Raj Kumar Bhardwaj, "The Indian Judicial System: Transition From Print To Digital" (2013) 13(03) Legal
Information Management.

AUSTRALIAN COMMERCIAL LAW 2
ruling. Hart’s three-part legal system provides three key principles which include rules of
recognition, rules of change and rules of adjudication.
 Rules of recognition: This principle focuses on avoid uncertainty in law and provides
that the validity of a law should be clear. The Indian legal system complies with this
provision because the procedure of creating laws because the Constitution clearly
defines the procedure of creating laws which avoid ambiguity. Furthermore, the laws
apply to all the citizens without any exception5.
 Rules of change: The Indian legal system complies with this principle as well
because the procedure for adding, changing, deleting and removing of laws is clearly
provided in the Constitution. Moreover, the sources of law are clearly defined as well.
 Rules of adjudication: The Indian legal system complies with this provision as well
because the power of adjudication distributed by the Constitution between different
courts. The judgement of higher courts is required to follow by lower courts and
parties have to right to appeal against a judgement of the court.
The procedures and practices relating to the law are clearly defined in Australian legal
system, and the Constitution defines the scope of the power of authorities. The Constitution
was established in 1901, and after that, it has amended a few times. The Australian legal
system also complies with Hart’s three-part legal system. The Constitution separates the
power into three categories which include the judiciary, executive and legislation6. In
judiciary section, the courts interpret the law and entertain both civil and criminal cases.
Similarly, in Indian legal system, the judiciary powers are clearly distributed, and the courts
entertain both civil and criminal matters. The Constitution distributes the legislative powers
between the government departments, and power is distributed between ministers7.
The government proposed a bill in the law to create new laws, and they also proposed
new laws and changed previous once. The government also issues the bill in the parliament to
create a law and implement at across the nation, and it becomes law after the royal assent
given by the Governor-General. The legislative power in Indian legal system is similar as
well, and the parliament has the authority to implement new laws and amend previous once.
The scope of executive power in Australia is defined by the Constitution as well based on
5 Rajvir Sharma, "Judiciary As Change Agent: Some Insights Into The Changing Role Of Judiciary In India"
(2012) 58(2) Indian Journal of Public Administration.
6 Michael K Meek, Australian Legal System (Lawbook Co., 2008).
7 Enid Mona Campbell and H. P Lee, The Australian Judiciary (Cambridge University Press, 2012).

AUSTRALIAN COMMERCIAL LAW 3
which government officials receive administrative power to enforce laws upon citizens8. A
similar structure is established by the Indian legal system as well. Therefore, it can be
concluded that there are a number of similarities between the Australian and Indian legal
system and both of them follows Hart’s three-part legal system.
8 KATHY MACK and SHARYN ROACH ANLEU, "Entering The Australian Judiciary: Gender And Court
Hierarchy" (2012) 34(3) Law & Policy.

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Part B
Question 2
I: Issue
The key issue is the validity of the contract between Barry and Angelo and whether
Barry can file a claim for damages?
R: Rule
In order to establish a valid contract, it is necessary that the parties to the contract
comply with the essential elements of the contract. There are three key essential elements of a
contract which include an agreement between parties, a valid consideration and an intention
to create legal relationship. It is necessary that the terms of a contract remain the same as
specified in the offer9. The party making the offer is called offeror and to whom the offer is
made is called offeree. An offer requires commitment from the offeror which means if the
offeree accepts the offer then offeror is bound by the terms of its contract. In case a
commitment is not made in the offer than it is not an offer, it can be a supply of information,
a statement of intention, or an invitation to treat or to make an offer. An invitation to treat is
not an offer; it is merely a supply of information in which the party attract others to make an
offer. An advertisement is considered as an invitation to treat, however, as per the case of
Carlill v Carbolic Smoke Ball Co (1892) EWCA Civ 1, a unilateral offer is open for multiple
parties in which they can accept the offer by complied with its terms10. In case of an
invitation to treat, a contract does not exist between parties because the party makes no offer.
In Fisher v Bell (1961) 1 QB 394 case, a shopkeeper display a knife on his window
and a policeman arrested him for selling such knife because it was illegal in the country. The
court held that it was just an invitation to treat hence the shopkeeper cannot be held liable11.
The common law provides that misrepresentation in the advertisement does not hold the party
liable because it is considered as an invitation to treat. However, the Consumer and
Competition Act 2010 of the statutory law held the party liable for misrepresentation as per
section 29. Misrepresentation is referred to a misleading or false statement which is a made
9 Holly Randell-Moon, "The Secular Contract: Sovereignty, Secularism And Law In Australia" (2013)
23(3) Social Semiotics.
10 Marnah Suff, Essential Contract Law (Routledge, 2013).
11 Roderick Munday, "FISHER V BELL REVISITED: MISJUDGING THE LEGISLATIVE CRAFT" (2013)
72(01) The Cambridge Law Journal.

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by a party to attract other in order to sign a legal contract. In Smith v Land and House
Property Corp (1884) 28 Ch D 7 case, the owner of the property sold it to another by stating
that the tenant is “most desirable”. Based on such statement, the party purchased the land, and
after some time the tenant becomes insolvent. The defendant argued that the statement was
merely an opinion and he cannot be held liable for its action. The court held the defendant
liable for misrepresentation by stating that it was not merely an opinion because he was in the
position to know the true facts12.
A: Application
In this case, Angelo posted an advertisement regarding the selling of a business which
generates a monthly profit of $20,000 and has no competitor. The advertisement cannot be
considered as a unilateral offer because it requires the party to contract and give their
acceptance to Angelo in order to create a contract (Carlill v Carbolic Smoke Ball Co).
Therefore, it was an invitation to treat, and Angelo cannot be held liable because an invitation
of treat is just supply of information and it does not bind it parties into a legal relationship
(Fisher v Bell). However, as per Consumer and Competition Act, it is illegal for a party to
post in misleading advertisement and he/she can be held liable for misrepresentation.
Angelo also provided that the monthly expenses of the business are $8,000 whereas
Barry had to pay $8,500 for two months. Angelo was the business owner, and he was in a
position to know the facts about his business, therefore, he can be held liable for
misrepresentation (Smith v Land and House Property Corp). Therefore, Barry can claim for
damages from Angelo based on misrepresentation because he had posted a misleading advert
and he provided wrong information to Barry regarding the business’s monthly expenses.
Barry has the right to rescind the contract based on the misrepresentation made by Angelo in
order to lure him into signing the contract.
C: Conclusion
In conclusion, Angelo is liable for misrepresentation since he posted a misleading
advert to attract potential buyers. As per the provisions of the Consumer and Competition
Act, Barry can hold Angelo liable for damages because he had posted a misleading
advertisement. On the other hand, Angelo was the owner of the business, and he is expected
to know its expenses, therefore, Barry can also hold his liable for giving false information at
12 Greg Marston and Tamara Walsh, "A Case Of Misrepresentation" (2008) 17(1) Griffith Law Review.

AUSTRALIAN COMMERCIAL LAW 6
the time of the contract. Based on misrepresentation, Barry can rescind the contract between
him and Angelo.
Question 3
I: Issue
In case Barry did not want to rescind the contract, the key issue is whether he has the
right to claim for breach of contract against Angelo?
R: Rule
A contract is based on specific terms which are required to comply by each party to
the contract. In case any party breach or did not comply with the terms of the contract, it
resulted in breach of such contract. The aggrieved party in a breach of a contract has the right
to file a suit against another party to demand damages13. The aggrieved party has a number of
options in case of a breach of a contract such as repudiation, damages, specific performance,
rescission and injunction. The aggrieved party has the remedy against losses which are
caused due to breach of the contract. In Pilkington v Wood (1953) Ch 770 case, a party
purchased a house which he later found out have a defective title. Later he obtains
employment elsewhere which required him to relocate, and he finds it difficult to sell the
house due to its defective title.
The court held that the aggrieved party could claim for damages from another party
which he has faced due to the defective title of the house14. However, he cannot claim for
damages caused due to his requirement to move because it is not associated with their
contract. The aggrieved party can claim for rescission as a remedy for the breach of the
contract which allowed them to go back to the post-construction position. The aggrieved
party can also terminate the contract by using repudiation remedy15. The party can also ask
for specific performance for the breaching party which assist them in avoiding the loss
occurred due to the breach. The aggrieved party can also claim for remedy of injunction in
which the court orders the breaching party to stop doing a specific action to avoid the loss of
the aggrieved party.
13 Stefan Grundmann, "Regulating Breach Of Contract – The Right To Reject Performance By The Party In
Breach" (2007) 3(2) European Review of Contract Law.
14 Sankalp Jain, "Importance & Significance Of Damages As A Remedy For Breach Of Contract" [2014] SSRN
Electronic Journal.
15 J. W Carter, Breach Of Contract (LexisNexis Butterworths, 2011).

AUSTRALIAN COMMERCIAL LAW 7
A: Application
In this case, Barry entered into a contract with Angelo for purchasing his van and
loader. While entering into a contract, Angelo did not tell Barry he is not the real owner of
the van, and it is leased. Angelo also claimed that the monthly expenses of the business are
$8,000 whereas Barry had to pay $8,500 which included the lease payments of the van. Barry
can claim for damages from Angelo based on breach of contract on the basis that he gave him
false information which accounts for misrepresentation. Barry can claim lump sum amount
for the van of $15,000 from Angelo, and he can also ask for additional expenses which he
had to pay as lease because they rise due to breach of contract by Angelo (Pilkington v
Wood). Barry also purchased the loader from Angelo which was a part of their selling
agreement. However, there is no information or statement made by Angelo regarding the
working condition of the loader in the contract. Due to ambiguity in the contract, Barry will
face difficulty in claim for breach of contract regarding the loader.
C: Conclusion
In conclusion, Barry can file a suit against Angelo for breach of the contract because
he sold his van to Barry without telling him that it was on the lease. Barry can demand lump
sum amount of the van and additional charges which he had to pay the lease payment of the
van. On the other hand, Barry will face difficulty in claiming money for the loader because of
lack of availability of information about it in the contract.