Contract Law

RUNNING HEAD: CONTRACT LAW
Contract Law

CONTRACT LAW
(A)
Issue
The main problem in the given is whether Joan and Henry are entitled to cancel the contract
with Catapult.
Rule
Once a contract is formed, it has binding effect. Whoever does not perform their part of
contract; the other party has the right to treat the contract as breached and can claim for
damages or for specific performance.1 During agreements, statements produced could amount
to a contractual term or representation.2 If the declaration amounts to an unfulfilled contract
term, the innocent party may file a suit for breach of contract.3 If the declaration is simply an
untrue depiction, the innocent party may take a misrepresentation action. In the case of Dick
Bentley Production v Harold Smith Motors4, it was held by the court that the declaration was
contractual term for the claimant. They found that since the defendant had more knowledge,
as a car dealer, the claimant was fairly allowed to depend on their depiction on the subject of
their expertise.
Whereas Australian Consumer Law (ACL) provides provisions relating to contractual
remedies at contract law or statutory remedies under ACL. As per ACL, an individual must
not engage in such a conduct in trade and commerce which is misleading or deceptive or
which is likely to mislead or deceive the other party.5 Deceptive takes an intention to deceive
and is therefore of little significance as it is hard to prove fraud. But misleading does not
require any intention or state of mind. Indeed, the prohibition of false behaviour imposes a
rigorous responsibility not to mislead others in business and consumer affairs. Whereas a
clause that effectively removes, potential liability for misleading conduct cannot be drafted in
an agreement. Many attempts have been made and nearly universal failure. No contractual
agreement can remove this fact if an individual has been misled in trade and commerce.
1 Philip H. Clarke and Julie Clarke, Contract Law: Commentaries , Cases and Perspectives (Oxford University
Press, 2016) 760
2 John W. Carter, Cases and Materials on Contract Law in Australia ( LexisNexis Butterworths, 2011) 1065
3 Julian & Newlyn Mellick and David Newlyn, LexisNexis Study Guide: Contract Law (LexisNexis
Butterworths, 2015)
4 (1965) 1 WLR 623
5 Australian Consumer Law s 18 (1)
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CONTRACT LAW
In the case of Reckitt Benckiser (Australia) Pty Limited v Proctor & Gamble Australia Pty
Limited6, it was determined by the court that the ACL prevents customers from variety of
company behaviours and procedures that can contribute to misleading or exploitation of
customers. Knowing the law is a basic rule of law principles and the Australian Consumer
Law.
Application
In the given case study, Joan and Henry met with Mark, who was the sales representative of
Catapult. The couple wanted a motorhome with off road capabilities and fuel consumption.
Mark made various representations as to the Catapult Grand All-Terrain. They wanted best
for value money motorhome whereas Mark showed them the most expensive motorhomes
that was not even suitable for off road. Mark’s statement amounted to an unfulfilled contract
term; the couple may file a suit for breach of contract. Declaration was simply an untrue
depiction, the couple may take a misrepresentation action. As applying the case of Dick
Bentley Production v Harold Smith Motors, Marks, statement is a contractual term for the
couple. Mark had more knowledge, as sales representative, the couple was fairly allowed to
rely on his depiction on the subject of his expertise and invested their money into motorhome.
Whereas apart from the common law the couple can seek relief under ACL. The conduct of
Mark was misleading and deceptive as he induced the couple to enter into contract by
disclosing false information relating to the motorhome. Mark violated the provision laid
down in the sec 18 of the ACL. Mark intended to induce the couple so that they purchase the
most expensive motorhome. On the basis of the misleading and deceptive conduct of Mark,
the couple can file a possible suit under the ACL and can cancel the contract. The clause
mentioned in the contract to limit the liability of the Catapult does not exclude their liability
as per the provisions of the ACL. The court shall not consider these clause as the act of Mark
mislead the couple.
Conclusion
From the above it can be concluded that suitability of the motorhome was an essential
condition in the given situation as it was not fulfilled as well as Mark made false depiction as
to the amount and features of the motorhome and the couple relied on such depicted and
invested their money. Such declaration of the Mark was a contractual term for the plaintiff,
6 (2018) FCA 378
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