Pre-Contractual Negotiations: Binding or Not?

Running head: PRE-CONTRACTUAL NEGOTIATIONS
Pre-Contractual Negotiations
Name of the Student
Name of the University
Author Note

1PRE-CONTRACTUAL NEGOTIATIONS
Q1:
Issue:
The issue in this case is that whether a pre-contractual negotiation is binding or not.
Relevant Law:
It is worthwhile to refer here that, interviews and pre-contractual negotiations are
governed by the provisions of Section 18(1) of Schedule 2 of the ACCA (Cth) as it have been
prohibiting misleading and deceptive conduct in trade and commerce. The case of Barto v GPR
management Services Pte Ltd (1991) 105 ALR 339 can be cited as the best example of pre-
contractual negotiations. In this case, it was observed that, there was alleged misleading conduct
in relation to trade practices. However various representations were allegedly made to the
employee during the course of employment and negotiations in regard to his contract of
employment. In this context, it is important to state that, the Trade Practices Act 1974 (TPA) at
present is known as The Australia Competition and Consumer Act 2010 (ACCA) before 1
January 2011.
It is worth mentioning that, various kinds of business irrespective of their size, different
forms of contracts are associated with it (Dietrich, 2015). In such process, business contracts
dispose various assets and acquire those assets by establishing partnership relations with the
existing corporate entities (Waarden, 2017). Therefore, in this regard, most of the time the
contracting parties relies upon the form of the written contract without considering the
surrounding circumstances which was observed in the case of Noone, Director of Consumer
Affairs Victoria v Operation Smile (Australia) Inc & Ors [2012] VSCA 91. This case was
concerned with an appeal made on the part of the Director of Consumer Affairs Victoria in

2PRE-CONTRACTUAL NEGOTIATIONS
regard to the statements made in relation to treatment of cancer on the website. In this case, it
was held by the Court that the statements made by the defendants were misleading and
deceptive. It is worth noting the importance of pre-contractual negotiations and promises which
may alter the liability on the part of the contracting parties (Kong et al., 2017). However, the
nature of the liability is such that they do not work in correspondence to the terms of the
contract. In the case of Roberts v Hong Kong Bank of Australia Ltd (1993) AILR 213, it was
observed that there was breakdown in communication over the signature of Robert and as a
result of it he had to embark on a marathon 16,000kms from his native place to Hong for the
purpose of accessing his cash. This was due to the reason that, the card he issued in Hong Kong
is no longer considered to be valid as a result of security upgrade.
According to the provisions of Section 18(1) of the Australian Consumer Law (ACL)
misleading or deceptive conduct in trade or commerce has been prohibited. In this regard,
according to this section, when a person engages in any conduct, in either trade or commerce;
however the nature of the conduct is such that it is misleading or deceptive which is likely to
mislead or deceive the parties concerned. Therefore, in this context, mention can be made about
the provisions of Section 52 which states that, a corporation, during the tenure of trade and
commerce should not engage in any conduct which is highly misleading and deceptive in nature
that can mislead or deceive the parties to contract. However, the provisions of Section 52 are
such that, it has no legal sanction. Infringement of Section 52 can give rise to both criminal and
civil sanctions. It is noteworthy to mention here that, from the beginning the provisions of
Section 52 create impact on the principal offender but also on those who aids the breach of the
section. It can be stated that, only the company shall be held liable for misleading or deceptive
conduct engaged by the company itself or by any directors or officer of the company involved in