Australian Commercial Law: Contract, Misrepresentation, and Breach

This assignment solution provides a detailed analysis of Australian Commercial Law, addressing key legal issues related to contract formation, misrepresentation, and breach of contract. The assignment explores the legal framework, including relevant legislation such as the Australian Consumer Law and the Sale of Goods Act, along with common law principles. It examines a scenario involving a dispute between tribe members and a new constitution proposal, analyzing the application of Professor Hart's three-part legal system. The document also delves into a case involving a vegetable shop sale, focusing on issues of misrepresentation, specifically fraudulent misrepresentation, and the rights of the buyer. Additionally, it considers potential breach of contract claims, outlining relevant remedies available under Australian law. The analysis includes the application of legal principles to factual scenarios, supported by case law and legal arguments, and demonstrates a comprehensive understanding of commercial law concepts. This assignment is a valuable resource for students studying Australian Commercial Law, offering insights into the legal principles and their practical application.

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

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Answer 1 (a)
In relation to the problems identified with respect to the process of resolving dispute between the
Tribe members a new constitution for the Tribe has been proposed. The primary rule which the
new constitution brings into the tribe is to ensure that the process of legal decision making is
enhanced. It was identified in the scenario that a decision which was made by the elders was
inconsistent in relation to the previous decisions. The new constitution proposes that all decisions
have to be consistent to the extent that the facts of the cases are similar to each other. It was
identified that the elders were being biased towards their own family members. The new
constitution introduces rules that everyone should be treated equally without any form of
discrimination and biasness. Secondary rules which are going to address the primary rules have
been provided through the new constitution. There have been provisions for an executive body
which would enforce the rules made by the elders so that the tribe members are not able to ignore
the rules. The constitution has provisions for changing the rules from time to time based on the
needs of the society. The new Constitution provides for a set of judges who would decide that
whether a tribe member is telling the truth based on evidence.
The new constitution or proposal which has been made in relation to the tribe members is very
much in compliance to the 3 part legal system which has been proposed by professor Hart1. This
is because the proposal has provisions in relation to the rule of recognition. The proposal
provides that where there is any defect in the primary rules they can be remedied by secondary
rules in place. The proposal also has provisions for the rules of change as it provides that the
proposal can be amended from time to time by taking into consideration the needs of the society
and such amendments should be in compliance with the constitution2. The rules of change
1 Coyle, Sean. From positivism to idealism: a study of the moral dimensions of legality. Routledge, 2017.
2 Mar, MaksymilianDel. Legal Theory and the Legal Academy. Vol. 3. Routledge, 2017.

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provisions has been incorporated in the constitution as it provides administrative powers to the
executive who would enforce the decision of the decision makers in the society and also make
their own decisions required at the time of exercising their powers. In the same way as pointed
out by Hart there is a close connection between the rules of change and the rules of recognition
in the constitution.
The provision in relation to the rules of adjudication is also incorporated in the constitution
which has been proposed to the Tribe members. This is because the judges who would make the
decision have been provided with the powers to ensure that no one takes rules in their own hands
and also base their decisions on evidence and proof. The Australian legal system also in the same
way as discussed in the proposed constitution for the tribes incorporates within itself the three
part legal system proposed by Hart3. The provision of consistent decision making is present in
Australia through the doctrine of precedent. Common law is present in order to rectify any
defects which are identified in relation to statutory laws. The laws have to be made in
compliance with section 51 of the Constitution or else they would be declared as invalid.
Everyone in Australia is considered equal before the law.
Answer 2
Legal issue
What are the rights of Barry in relation to the discussion between him and Angelo before getting
into the contract.
Rule
3 Tonry, Michael. "Fairness, Equality, Proportionality, and Parsimony: Towards a Comprehensive Jurisprudence of
Just Punishment." (2017).

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The primary discussion which needs to be conducted in order to resolve the issue identified
above is that of free consent required to formal contract and specifically of misrepresentation. In
the case of Smith v Land & House Property Corp. (1884) 28 Ch D 74 it had been ruled by the
court that misrepresentation is a form of a false statement which one party makes to another
party which are not the part of contractual terms and induces the other party to form a contract.
In addition the Court ruled in the case of Bisset v Wilkinson [1927] AC 1775 that for the purpose
of taking action against the misrepresentation the statement must be false in relation to the facts
and not be a mere opinion, law or future intention.
When a person is making a false statement which is in relation to a future happening it would
generally not be considered as a misrepresentation and will not be a cause of action for
misrepresentation unless such terms forms a part of the contract as ruled by the court in the case
of Esso Petroleum v Mardon [1976] QB 8016.
Further it had been stated by the court in Solle v Butcher [1950] 1 KB 671 7 that and action
cannot be taken against the statement which has been made in relation to the existence of a law.
It has also been stated by the court in the case of With v O'Flanagan [1936] Ch 5758 that where a
statement which was actually true when it had been made and due to change in situation have
become false it is the duty of the person to disclose the truth or else it would be considered as a
misrepresentation.
4 Smith v Land & House Property Corp. (1884) 28 Ch D 7
5 Bisset v Wilkinson [1927] AC 177
6 Esso Petroleum v Mardon [1976] QB 801.
7 Solle v Butcher [1950] 1 KB 671
8 With v O'Flanagan [1936] Ch 575

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In the case of Museprime Properties v Adhill Properties [1990] 36 EG 1149 it had been ruled by
the court that the misrepresentation has to be material in nature which means that it has to have
the capacity of inducing a reasonable person to get into a contract. However a strict objective test
is not applied to analyse this situation as stated in the case of Attwood v Small (1838) 6 CI & F
23210
A claim for misrepresentation can only be brought by a party when they have actually relied on
the statement to get into a contract. If the party did not have any knowledge about the
misrepresentation it is considered that there was no reliance as per the case of Horsfall v Thomas
[1862] 1 H&C 9011.
At law there are three kinds of misrepresentation which has been identified and are generally
classified into fraudulent, innocent and negligent misrepresentation.It had also been stated by the
court in the case of in Redgrave v Hurd (1881) 20 Ch D 1 that a claim of misrepresentation
would not arise where the representee had not relied on the misrepresentation and had made his
own investigation and judgement12. However this rule is not applicable in case of fraudulent
misrepresentation as adjudged Pearson v Dublin Corp [1907] AC 35113
Where a party has involved in intentionally providing a false statement of fact to induce another
party to get into a contract it is known as fraudulent misrepresentation as discussed by the case of
Derry v Peek (1889) 14 App Cas 33714. In general the courts allow recession as well as
consequential damages to parties who have been subjected to fraudulent misrepresentation.
9 Museprime Properties v Adhill Properties [1990] 36 EG 114
10 Attwood v Small (1838) 6 CI & F 232.
11 Horsfall v Thomas [1862] 1 H&C 90.
12 Redgrave v Hurd (1881) 20 Ch D 1
13 Pearson v Dublin Corp [1907] AC 351
14 Derry v Peek (1889) 14 App Cas 337

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Application
It has been assumed that elements of a valid contract such as offer, acceptance and consideration
have been satisfied between Barry and Angelo in relation to the formation of the contract for the
vegetable shop. The advertisement before the contract was made stated that there was no
competitor of the business which was to be sold to Barry. Further it has been stated by the
advertisement that the turnover of the business each month is $20,000. However after getting
into the contract it was identified by Barry that both such representation which had been made by
the advertisement were false as the business had a competitive in the same shopping village and
the turnover was only $13,000 for each month. In relation to the test of materiality it can be
stated that the statement made through the advertisement is a material statement of fact which
can induce any person to get into the contract. Therefore to the application of the test provided in
the case of Museprime Properties v Adhill Properties it can be stated that Barry had reasonably
being induced by the statement to get into the contract.Further it can be stated that Barry had
relied on the Representation made through the advertisement to get into the contract with Angelo
for the purchase of the shop. Therefore it can be stated that the second test of misrepresentation
has provided by the case of Horsfall has also been satisfied. It is also reasonable to state that
Angelo must have had knowledge about the existence of a competitor and the turnover of the
business in reality and even after knowing so he made a false statement of fact. This conduct on
the part of Angelo would constitute a fraudulent misrepresentation under the provision stated in
the case of Derry v Peek. In the light of the situation Barry would be provided the right to get out
of the contract with Angelo and the contract would be voidable at the option of Barry. Barry
would also be able to make a claim for damages as it is a part of a remedy for fraudulent
misrepresentation.

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Conclusion
The statements made by Angelo before the contract was formed are false statement of facts and
are therefore considered as fraudulent misrepresentation
Answer 3
Issue
Is a breach of contract claim possible for Barry?
Rule
The rules regarding the sale of goods in Australia are governed by the Australian Competition
and Consumer Act 2010 or the sale of good Act 1954. The consumer laws are only applicable on
purchase has which are done for household or domestic purpose and have a price of less than
$40,000. The SOGA is applicable on the purchase of all goods within Australia which does not
fall within the scope of the consumer laws.
It has been stated out by the provisions of section 19 of the SOGA 1954 that an implied
obligation is imposed on the sellers to provide reasonable quality goods to the buyer even where
there had been no agreement which provides for the quality of the goods.
In addition to the provisions of the legislation at common law also implied terms are added to
contract in order to ensure that the contracts are able to operate properly. Where the parties get
into a contract they discuss certain terms to be a part of the contract however a few terms which
have not been discussed by them may also be a part of the contract in order to ensure that the
contract performs appropriately.There are various ways in which an implied term can be

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incorporated into a contract. In the case of The Moorcock (1889) 14 PD 6415 it had been
provided by the court that an implied term can be added to the contract for the purpose of
providing the contract with business efficiency. This situation takes place when the incorporation
of the term is so important that without the term it is impossible for the contract to be carried out
by the parties. A few other ways in which a contract can have employed terms is through the
operation of law or by Customs in industry.
When the contractual rights of a party have been violated common law along with legislations
provide various remedies which can be availed by the parties at law. A few remedies which are
available to a party in case of a breach of contract include specific performance, injunction,
recession and damages. In the Landmark case of Addis v Gramophone [1909] AC 48816 the court
had provided a ruling that where the party has suffered any form of injury due to the breach of
contract they are to be provided compensation so that they can get back to the situation where
they were in where the contract has not been formed at all with the wrong doing party.
Application
A written contract has been formed between Angelo and Barry who had been duly signed
without the use of any lawyer as Barry did not want to incur additional cost. The terms of a
contract included a van along with the loader to be provided to Barry up on the purchase of the
shop. However after the purchase of the shop Barry got to know that the Van has been leased and
in order to continue using it he has to pay and additional $500 to the party from whom the Van
has been leased. Further it had been provided by Angelo to Barry that the expenses which are
incurred in relation to managing the business are only $8,000 per month. However through the
15 The Moorcock (1889) 14 PD 64
16 Addis v Gramophone [1909] AC 488

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use of the Van the expenses of the business have increased to $8,500 per month. Therefore in
relation to the additional expenses borne buy Angelo for the purpose of using the Van a claim for
damages can be made by him. When goods are purchased it is an implied term of the contract
that the goods will be at least of a reasonable quality and fit for the purpose for which they have
been purchased. If such obvious terms and not present in a sale of good contract the contract
would not be able to function properly. Therefore through the application of The Moorcock case
is can be stated that the fitness and quality of the goods is an implied term of a contract which is
obvious and necessary for the continuation of the contract. The implied term is further supported
by the provisions of section 19 of the SOGA 1954. This signifies that it was an implied term of
the contract that the loader which has been provided to Barry under the contract would be of a
reasonable quality and fit to be used. However the loader has been found to be damaged and in
order to repair it expenses equal to its original value have to be incurred. In the given situation
Barry through the application of the case of Addis v Gramophone can also make a claim for the
expenses would should be incurred for fixing the loader from Angelo.
Conclusion
Barry can make a claim against Angelo and claim damages in relation to the broken loader and
the lease expenses of the Van.
Part C
Script

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 Hello Mr Barry I am ------- and I am here to provide you advice in relation to the
agreement which you had with Angelo.
 It has been assumed that elements of a valid contract such as offer, acceptance and
consideration have been satisfied between you and Angelo in relation to the formation of
the contract for the purchase of the vegetable shop.
 I got to know that the advertisement before the agreement was made between you and
Angelo stated that there was no competitor of the business which was to be sold to you.
 Further I got to know that it has been stated by the advertisement that the turnover of the
business each month is $20,000.
 However after getting into the contract it was identified by you that both such
representation which had been made by the advertisement were false as the business had
a competitive in the same shopping village and the turnover was only $13,000 for each
month.
 I would like to inform you that Angelo has conducted misrepresentation in relation to the
agreement with you.
 This is because the statement made through the advertisement is a material statement of
fact which can induce any person to get into the contract like you have been.
 The court will assume that you have reasonably being induced by the statement to get
into the contract with Angelo.
 Further it will be found by the court that you had relied on the Representation made
through the advertisement to get into the contract with Angelo for the purchase of the
shop.

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 It is also reasonable to state that Angelo must have had knowledge about the existence of
a competitor and the turnover of the business in reality and even after knowing so he
made a false statement of fact.
 This conduct on the part of Angelo would constitute a fraudulent misrepresentation
 In the light of the situation you would be provided the right to get out of the contract with
Angelo and the contract would be voidable at your option.
 You would also be able to make a claim for damages as it is a part of a remedy for
fraudulent misrepresentation.
 Further if you do not wish to get out of the contract with Angelo you can sue him because
of his conduct as he has not provided you what was promised
 A written contract has been formed between Angelo and you who had been duly signed
 Through the agreement Angelo promised you a van along with the loader on the
purchase of the shop
 However after the purchase of the shop you got to know that the Van has been leased
and in order to continue using it he has to pay an additional $500 to the party from whom
the Van has been leased.
 Further Angelo had stated you that the expenses which are incurred in relation to
managing the business are only $8,000 per month.
 However through the use of the Van the expenses of the business have increased to
$8,500 per month.
 Therefore in relation to the additional expenses borne by you for the purpose of using the
Van a claim for damages can be made in the court.

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 I would also like you to know that when goods are purchased it is an implied term of the
contract that the goods will be at least of a reasonable quality and fit for the purpose for
which they have been purchased.
 Where the parties get into a contract they discuss certain terms to be a part of the contract
however a few terms which have not been discussed by them may also be a part of the
contract in order to ensure that the contract performs appropriately
 If such obvious terms are not present in a sale of good contract the contract would not be
able to function properly. Therefore the courts will find in your favour that the fitness and
quality of the goods is an implied term of a contract which is obvious and necessary for
the continuation of the contract.
 I would like you to know that it was an implied term of the contract that the loader which
has been provided to you under the contract would be of a reasonable quality and fit to be
used.
 However the loader has been found to be damaged and in order to repair it expenses
equal to its original value have to be incurred.
 In the given situation you can also make a claim for the expenses which should be
incurred for fixing the loader from Angelo.

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Bibliography
Addis v Gramophone [1909] AC 488
Attwood v Small (1838) 6 CI & F 232.
Bisset v Wilkinson [1927] AC 177
Coyle, Sean. From positivism to idealism: a study of the moral dimensions of legality.
Routledge, 2017.
Derry v Peek (1889) 14 App Cas 337
Esso Petroleum v Mardon [1976] QB 801.
Horsfall v Thomas [1862] 1 H&C 90.
Mar, MaksymilianDel. Legal Theory and the Legal Academy. Vol. 3. Routledge, 2017.
Museprime Properties v Adhill Properties [1990] 36 EG 114
Pearson v Dublin Corp [1907] AC 351
Redgrave v Hurd (1881) 20 Ch D 1
Smith v Land & House Property Corp. (1884) 28 Ch D 7
Solle v Butcher [1950] 1 KB 671
The Moorcock (1889) 14 PD 64
Tonry, Michael. "Fairness, Equality, Proportionality, and Parsimony: Towards a Comprehensive
Jurisprudence of Just Punishment." (2017).

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With v O'Flanagan [1936] Ch 575