Australian Commercial Law

This document provides a comprehensive analysis of various issues in Australian Commercial Law. It discusses legal relationships, remedies for prior statements, enforcement of restraint of trade clause, and more. The document also includes relevant rules and applications for each issue. It is a valuable resource for students studying commercial law in Australia.

Running head: AUSTRALIAN COMMERCIAL LAW
AUSTRALIAN COMMERCIAL LAW
Name of the Student
Name of the University
Author Note

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Part A
Issue 1
Whether there has been an intention for the purpose of creating legal relationship existing
between Sally and Ethan in the agreement instituted between them.
Rule
There needs to be an objective of creating legally enforceable agreement for the purpose of
institution of valid contract. As per the principles established in the case of Balfour v Balfour
[1919] 2 KB 571, social agreements are generally construed to have been instituted with no
intention of holding each other under legal relationship. However, as per the principle
established in the case of Merritt v Merritt [1970] EWCA Civ 6, commercial agreements are
generally considered to have been backed by the creating legal relationships. Again, as for the
principal established in the case of Ermogenous v Greek Orthodox Community of SA Inc [2002]
HCA 8, it has been held by the court that consideration needs to be given to the circumstances of
the case and the objective test needs to be applied instead of the subjective test that have used to
be applied previously.
Application
The facts of the case presents the situation that Sally and Ethan has been cousins and has entered
into a contract to sale the convenience store belonging to Sally to Ethan. The store has been sold
for consideration of 155000 dollars and has been paid with the Goodwill of $25,000. This
requires an intention to be conceived from situation for the purpose of creating a valid contract
existing between Sally and Ethan. This has further been supported by the involvement of the

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lawyers that they have been intending to create a valid contract as can be supported with the case
of Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8.
Conclusion
Hence, there has been an intention for the purpose of creating legal relationship existing between
Sally and Ethan in the agreement instituted between them.
Issue 2
Whether there are any remedies that can be extended to Ethan for the prior statements made by
Sally before the institution of the contract.
Rule
The statements that any individual involved in the institution of a contract makes prior to the
formation of the same can depict two forms namely a condition for a representation. For the
purpose of arriving at a decision the court will examine the presence of any misrepresentation
distortion of facts and whether such miss representation has been made with respect to a
condition of the contract. The court needs to investigate that there has not been any false
statement made by the parties involved. First representations prevents the parties to form an
informed judgement as can be illustrated with the case of Bisset v Wilkinson [1927] AC 177.
The court also needs to consider the fact that the false representation that has been made has not
been intended to be executed by the party making the statement the party to whom it has been
made has decided to rely upon the same as can be treated with the case of Horsfall v Thomas
[1862] 1 H&C 90. The party who has been subjected to misrepresentation without any fault on
his part main claim damages against the party who has made search misrepresentation. This can
be supported with the case of Redgrave v Hurd (1881) 20 Ch D 1.

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Application
In the present case there has been a misrepresentation made by Sally while selling his business to
Ethan. In this case Sally has represented her business to have profits and prosperity by presenting
her profits for three years which again has not been accurate. The figure she has presented to him
has been fabricated for the purpose of depicting enhanced figure which is not true. Being
unaware of any business activities and having no experience in the business ventures Ethan had
no means of discovering the statements to be false. The financial difficulties faced by the
business has not been known to Ethan. And because of his inexperience in the field of business
he has no means to be aware of the same. Hence, Ethan has no other means to have discovered
the fact other than on relying upon the representations made by Sally. This can be illustrated with
the case of Bisset v Wilkinson [1927] AC 177. Moreover, this misrepresentation has made
Ethan to suffer losses which entitles him to claim damages from Sally for the misrepresentation
she had made. This can be supported with the case of Redgrave v Hurd (1881) 20 Ch D 1.
Conclusion
There are remedies that can be extended to Ethan for the prior statements made by Sally before
the institution of the contract as the same were misrepresentations.
Issue 3
Whether the restraint of trade clause incorporated in the contract between Sally and Ethan can be
enforced or treated as valid in case of any contravention of the same by Sally.
Rule

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The covenants incorporated in a contract that restricts the trade is influenced by the common law
principle namely restrictive covenant. As per the provisions enumerated in the proceeding of
Austerberry v Oldham Corporation (1885) 29 Ch D 750, restrictive covenant depicts a clause
contained in the contract for sale of a business to make the individual selling the business to
refrain from indulging into the similar business within a mentioned limit of time or geographical
boundary. However for the purpose of enforcing such a clause the content of the clause is
required to be reasonable as well as rational. The main objective of enforcing such a clause is the
conservation of the Goodwill of the business. The assessment of the reason ability of the same is
required duration and the limit that has been set in the Clause.
Application
In the present situation, the store has been purchased by Ethan from Sally along with the
Goodwill of the business. This contract for the sale of the business in question has been
incorporated with restrictive clause restricting Sally from setting up similar business within a
limit of hundred kilometres from the business she has sold for a period of 10 years. This can be
conceived as a reasonable restriction of covenant being imposed. As the business has been
purchased along with the Goodwill of the same the imposition of such restrictive covenant will
not be treated as unreasonable. Hence, the restraint of trade clause incorporated in the contract
between Sally and Ethan can be enforced or treated as valid in case of any contravention of the
same by Sally. And Ethan can sue Sally for damages.
Conclusion
The restraint of trade clause incorporated in the contract between Sally and Ethan can be
enforced or treated as valid in case of any contravention of the same by Sally.

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Part B
Issue
Whether any action has been underlying to be taken by Sally against Good Health Help Pty Ltd
under the ACL.
Rule
As per the provisions contained in s 60, the Competition and Consumer Act 2010 (Cth), sch 2
pertaining to Australian Consumer Law, all the services that has been extended against a
consideration is required to be supported by the guarantee of reasonable skill and care. The
supplier of services are required to utilise dear skills as well as undertaker adequate care while
extending services to the consumers. The usage of technical know how and skill pertaining to the
service provider is required to be utilised for the purpose of evading any form of loss or damages
caused to the consumer.
As per the provisions contained in s 267, the Competition and Consumer Act 2010 (Cth), sch 2
pertaining to Australian Consumer Law, in case there has been a failure on the part of the service
provider to utilise their skill and technical know how for the purpose of evading any loss or
damage being caused to the consumer which has inflicted any injury to be caused to the
consumer in question is required to be conceived as being incurring a liability for the service
provider at fault.
Application
In the present scenario subsequent to the leaving of the hospital, Sally has been visiting the
medical shop namely Good Health Help Pty Ltd. The company has suggested her that she have

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been caused a separate form of injury in the back that can be relieved by the treatment given by
them. However such a suggestion that has been extended by the company has been concluded up
in information which has been incorrectly made as a result of an x-ray wrongly carried out.
There has been a deterioration in the condition of Sally pertaining to her back injury after she has
been operated as per the advice by the company. This can be treated as a breach of the duties
pertaining to the company with respect to the Australian Consumer Law. This is because as per
the provisions contained in s 60, the Competition and Consumer Act 2010 (Cth), sch 2 pertaining
to Australian Consumer Law, all the services that has been extended against a consideration is
required to be supported by the guarantee of reasonable skill and care. The supplier of services
are required to utilise dear skills as well as undertaker adequate care while extending services to
the consumers. The usage of technical know how and skill pertaining to the service provider is
required to be utilised for the purpose of evading any form of loss or damages caused to the
consumer.
This would be required to be remedied by damages being provided to Sally by the company for
the breach of their duty as a service provider towards the consumer. This is because as per the
provisions contained in s 267, the Competition and Consumer Act 2010 (Cth), sch 2 pertaining to
Australian Consumer Law, in case there has been a failure on the part of the service provider to
utilise their skill and technical know how for the purpose of evading any loss or damage being
caused to the consumer which has inflicted any injury to be caused to the consumer in question is
required to be conceived as being incurring a liability for the service provider at fault.
Conclusion
Sally has the option of bringing a proceeding for damages against the company.

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Part C
Issue
Whether Sally has the entitlement of bringing a legal proceeding under the law of negligence
against David.
Rule
As per the principles inculcated within the judgement of Donoghue v Stevenson [1932] AC 562,
negligence is said to have been caused when an individual has been imposed with a
responsibility of being careful for refraining from causing and injury to another related person
and that individual has contravened responsibility causing injury to the related person. However,
for the purpose of contending a negligent act to have been present, the insured person is required
to establish certain requisites that are required to be existing for the purpose of claim in an act to
be negligent.
Firstly, there needs to be a responsibility imposed upon the alleged person to ensure being
careful while discharging his duties as can be conceive from the judgement delivered in the
proceeding of Caparo Industries Plc v Dickman [1990] 2 AC 605. Secondly, the alleged person
has been found to have contravened such responsibility of being careful for being liable to have
committed negligence as per the provisions inculcated within the proceeding of Bolton v. Stone
[1951] AC 850. Thirdly, the contravention of the duty pertaining to the alleged should have a
direct relation with the insured person as per the principles enumerated in the case of Home
Office v Dorset Yacht Co Ltd [1970] UKHL 2. Fourthly, the negligent act has been the main
cause of the injury caused to the aggrieved as per the principles of the case of March v Stramare
(E & MH) Pty Ltd [1991] HCA 12. Fifthly, the relation between the injury caused and the

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negligent act needs to have a proximity as per the principles enumerated in the case of
Constantine v Imperial Hotels Ltd [1944] KB 693.
Application
The injury caused to Sally has been caused during the time she has been visiting the store
belonging to David. The main cause of her sudden fall can be depicted as slippery polish off the
floor of the store belonging to David. This required debit to have been careful about the store he
has been owning. He should have warned the visitors of the store to exhibit care while walking
on the floor as the same has been slippery and is probable to cause of fall down. The injury
caused to Sally can be said to have approximate relationship with the failure of David to disclose
the slippery texture of his floor while Sally has been inspecting the store. This needs to be
construed as breach of duty of being careful. This is because being the owner of the store David
has been imposed with the duty to ensure being careful with respect to the slippery floor the store
has been possessing. This can be treated as on negligence on the part of David. This is because
As per the principles inculcated within the judgement of Donoghue v Stevenson [1932] AC 562,
negligence is said to have been caused when an individual has been imposed with a
responsibility of being careful for refraining from causing and injury to another related person
and that individual has contravened responsibility causing injury to the related person. However,
for the purpose of contending a negligent act to have been present, the insured person is required
to establish certain requisites that are required to be existing for the purpose of claim in an act to
be negligent.
Conclusion

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Sally has the entitlement of bringing a legal proceeding under the law of negligence against
David.

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References
Austerberry v Oldham Corporation (1885) 29 Ch D 750
Balfour v Balfour [1919] 2 KB 571
Bisset v Wilkinson [1927] AC 177
Bolton v. Stone [1951] AC 850
Caparo Industries Plc v Dickman [1990] 2 AC 605
Constantine v Imperial Hotels Ltd [1944] KB 693
Donoghue v Stevenson [1932] AC 562
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8
Home Office v Dorset Yacht Co Ltd [1970] UKHL 2
Horsfall v Thomas [1862] 1 H&C 90
March v Stramare (E & MH) Pty Ltd [1991] HCA 12
Merritt v Merritt [1970] EWCA Civ 6
Redgrave v Hurd (1881) 20 Ch D 1
The Competition and Consumer Act 2010 (Cth)