Australian Commercial Law (LAWS20058) Individual Assignment Analysis

This assignment analyzes a commercial law case study involving a business sale. Part A compares the legal systems of Australia and India, focusing on the application of HLA Hart's three-part legal system, including rules of recognition, change, and adjudication, and the influence of the English legal system. Part B examines the legal issues arising from the sale of a business between Barry and Angelo. It addresses whether Angelo's statements in an advertisement and during discussions constitute misrepresentation under common and statutory law, focusing on the elements of contract formation, invitation to treat, misrepresentation, and the application of the Australian Consumer Law (ACL). The analysis also explores potential remedies for Barry, including rescission and damages, and the likelihood of success based on the facts. The assignment further investigates potential breach of contract claims, considering whether Barry can claim breach of contract due to discrepancies in the business turnover, lack of competitors, and the absence of a loader in the contract, applying relevant legal principles and precedents to determine the outcome.

AUSTRALIAN COMMERCIAL LAW- LAWS20058
TERM 1, 2018 – ASSESSMENT 1 – INDIVIDUAL ASSIGNMENT
30-Apr-18
(Student Details: )

AUSTRALIAN COMMERCIAL LAW- LAWS20058
Contents
Part A...............................................................................................................................................3
Question 1(b)...............................................................................................................................3
Part B...............................................................................................................................................5
Question 2....................................................................................................................................5
Issue.........................................................................................................................................5
Rule..........................................................................................................................................6
Application..............................................................................................................................7
Conclusion...............................................................................................................................8
Question 3....................................................................................................................................8
Issue.........................................................................................................................................8
Rule..........................................................................................................................................8
Application..............................................................................................................................9
Conclusion.............................................................................................................................11
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Part A
Question 1(b)
Legal system of any nation reflects the process or procedure which is followed in interpretation
and enforcement of law. Through the legal system, the responsibilities and rights are elaborated.
Majorly, the legal systems across the globe include common law and statutory law, with some
systems including religious laws as well1. The pre-legal systems were deemed to have certain
defects. These were cured by HLA Hart, when he brought his three part legal system, which
covered the rules of recognition, rules of change and rules of adjudication2.
The legal system of India is fairly developed legal system, which has both primary rules of
obligation and the three part Hart system also applies. As per Hart, the rules of recognition are
the foundation of any legal system, as these rules are accepted by officials and private persons
and are authorities in identification of primary rule obligation. In the legal system of India, the
rules of recognition are presented through the Indian Constitution. The Indian Constitution
permits the parallel legal systems to exist as personal laws, where the validity is derived from
religious institutions. The Indian Constitution also permits the pre-constitutional laws to
continue, including personal laws. In line with the rules of recognition, a hierarchy is set up
where Constitution is at the top3.
There is an integrated judicial structure in India under the Indian legal system, where the rules of
adjudication are upheld, and at the top of this structure, sits the Supreme Court of India. They
1 US Legal, Legal System Law and Legal Definition (2018) <https://definitions.uslegal.com/l/legal-system/>
2 Luís Duarte d'Almeida, James Edwards and Andrea Dolcetti, Reading HLA Hart's 'The Concept of Law' (A&C
Black, 2014)
3 Sheela Rai, Hart's Concept of Law and the Indian Constitution (2002) 2 SCC (Jour) 1
<http://www.supremecourtcases.com/index2.php?option=com_content&itemid=5&do_pdf=1&id=783>
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have been given the authority of interpretation of Constitution as well, along with the High
Courts of the State, which come below Supreme Court of India in the hierarchy chart. There is an
applicability of precedents under this system. Further, the judgments are given based on general
principles, objectives and structure of Indian Constitution4. The rules of change also are adopted
under this system, as the established law can be amended or changed, and is done so, based on
the changed needs. The statutes are even repealed and replaced, to remove the inconsistencies in
law or for changing with the changed times, where the old legislations have been proven to be
redundant5.
The Indian legal system is based on English legal system, and this is also the case for Australia.
As a result of this, there is a similarity in how the three part legal system given by HLA Hart
applies in India and in Australia. As is the case in India, in Australia also, the Constitution is the
key to governing the legal system of the nation. The Constitution of Australia is deemed as the
supreme law which was established back in 1901. It presents the doctrine of separation, where
the functions are divided into executive, judiciary and legislative, which is also true in case of
Indian Constitution. There is a commonality of precedents being adopted. However, unlike India,
the High Court of Australia sits at the top of hierarchy in Australia and the other courts come
below it. The three part system also applies in Australia in context of rules of change where the
laws are amended/ repealed/ changed from time to time, based on changed circumstances6.
Other similar points under the two nations adopting the three part Hart system include the
differentiation between the primary and secondary law in terms of statutory and common law,
4 Ibid
5 P.M. Bakshi and Subhash C. Kashyap, The Constitution of India (Universal Law Publishing, 2012)
6 Nicholas Aroney, The Constitution of a Federal Commonwealth: The Making and Meaning of the Australian
Constitution (Cambridge University Press, 2009)
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classification of laws in different forms like civil and criminal law7. There have been cases where
the cases of Australia have been used in India and the vice versa is also true, owing to such
similarities8. More or less, the manner in which the three part legal system applies in India, is
applied in Australia as well, where only the nuances like name of courts is changed, but the
common theme of having a hierarchy structure, following precedents and given judgments based
on established rules, is followed.
Part B
In Australia, there are a number of laws which apply on similar situations, and at times where
one law denies relief to the party, the other law provides the same. This report is an analysis of
the incidents which transpired with Barry and covers the remedies which can be claimed by
Barry from Angelo. This would include remedies under both statutory and common law for the
first question and common law remedies for the second question.
Question 2
Issue
Whether the statements made by Angelo given in the advertisement and during the discussion
phase would make the claim of misrepresentation, under common and statutory law, by Barry
successful?
7 Matthew Groves, Law and Government in Australia (Annandale, NSW: The Federation Press)
8 Michael Kirby, Constitutional Perspectives: Essays In Honour Of H M Seervai Constitutional Law: Indian And
Australian Analogues (2018) <http://www.hcourt.gov.au/assets/publications/speeches/former-justices/kirbyj/
kirbyj_seervai.htm>
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Rule
The formation of any contract requires the essential elements of the contract to be present, and
this means all the elements, as even the lack of single element would render the contract legally
unenforceable9. The very first element is an offer being made by first party to second party.
There is a difference between invitation to treat and offer. The invitation to treat denotes the
negotiations phase of contract, which is not legally binding; whereas an offer is the key term of
the contract on which it is based10. Generally, the advertisements which are put up in the
newspaper are taken to be invitation to treat. This is due to the landmark precedent set out
through Partridge v Crittenden11. This is however, not the case, where the advert covers a
unilateral offer, open to acceptance by mere performance. This is due to the landmark precedent
set out through Carlill v Carbolic Smoke Ball Co12. For making this differentiation, the wordings
of advert has to be analysed.
There are certain factors which can render the formed contract as void or voidable, which are
known as vitiating factors, and one of these factors is misrepresentation. Misrepresentation
denotes false statement of fact or law being made by D to P for inducing P into the contract.
Where misrepresentation is found by the court, the contract becomes voidable at the choice of
P13. If the contract is not rescinded, damages can be claimed for the loss sustained due to
presence of misrepresentation. Bisset v Wilkinson dictates that the false statement made, has to be
one of fact or law, and cannot be of an opinion or advice given. Though, D can still be made
liable in such cases where A made the statement of advice and was in a position to know the
9 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
10 Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
11 (1968) 2 All ER 421
12 [1893] 1 QB 256
13 Catherine Elliott and Frances Quinn, Contract Law (Pearson Education Limited, 9th ed, 2013)
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truth behind it as per the precedent set out under Smith v Land & House Property Corp14. Where
a claim is made regarding misrepresentation, the parties can raise a defence of P checking the
validity of statement made by D, resulting in absence of reliance on the statement made by D15.
The provisions of misrepresentation are not only set out under common law, but are covered
under the Competition and Consumer Act, 201016 as well. Australian Consumer Law17, i.e. ACL,
provides section 29 where the false and misleading representations, in context of goods and
services, are deemed as an offence, and penalty provisions become applicable upon these being
present18. Australian Competition and Consumer Commission v TPG Internet Pty Ltd19 is one of
such cases where the defendant was made liable by the court for putting in hidden costs in the as
against the advertised price, as this was deemed as misleading the consumers regarding the price
of product being offered.
Application
The discussed law needs to be carefully applied to the case study, to conclude the chances of
claims of Barry being successful against Angelo. There was a newspaper advert here making
certain claims. This required certain steps to be fulfilled, for giving acceptance, thereby denying
chances of unilateral offer being made, further resulting in non-applicability of Carlill v Carbolic
Smoke Ball Co. Here, Partridge v Crittenden would apply making advert as invitation of treat;
resulting in the claims made under it, not being upheld as an offer by the court of law.
14 (1884) 28 Ch D 7
15 Attwood v Small [1838] UKHL J60
16 Competition and Consumer Act, 2010 (Cth)
17 Competition and Consumer Act 2010, sch 2
18 Australian Consumer Law, s29
19 [2013] FCAFC 37
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The claims regarding misrepresentation needs to be applied. Angelo had told Barry that the
business expenses were $8,000. Angelo can claim that this was just a statement of opinion based
on Bisset v Wilkinson, resulting in his liability extinguishing for higher business expenses. But,
Barry can rely on Smith v Land & House Property Corp to show that Angelo was in a position to
know the true position. Where Angelo claims that Barry had not relied on his statement made,
regarding business being successful, it would not be successful as that is not an issue of
contention based on it being a statement made in invitation to treat. As common law does not
provide remedy for this claim, Barry can rely on provisions of ACL and claim damages from
Angelo for false or misleading representation under the advert and would be successful based on
Australian Competition and Consumer Commission v TPG Internet Pty Ltd.
Conclusion
Hence, Barry would be successful in getting the contract rescinded based on misrepresentations
of Angelo under common and statutory law.
Question 3
Issue
Whether Barry would be successful in getting the claims of breach of contract where he is not
able to get the contract rescinded?
Rule
Breach of contract, as the term suggests, is the promise made under the contract not being upheld
by D. It becomes obligatory for contracting parties to fulfil all the terms of contract. Where this
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is not done, P can claim remedies from D, in terms of damages and/or equitable remedies20. The
theme here is to put P in place where he/she would have been if D had performed the contract
properly21. Only such damages can be claimed by parties which are a direct and natural result of
the breach of contract by D22.
Where awarding of damages, in terms of monetary compensation payable by D to P is not
enough, equitable remedies are awarded. This includes getting the contract rescinded, allowing P
to go back to his/her pre-contractual place. As was mentioned earlier, this remedy is available in
cases of misrepresentation being present. P can also claim remedy of repudiation, specific
performance and injunction23. Repudiation relates to the court allowing P to not perform the
contractual obligations and is often awarded in case of anticipatory breach of contract. Specific
performs allows the court to ask D to specifically carry out the terms of contract and is awarded
majorly in cases of properly related contracts. Lastly, injunction allows the court to stop D from
doing something, which is possibly going to put P in an unfavourable position. Where the court
deems these as necessary, these remedies are awarded, but only when damages prove to be not
good enough award to remedy P24.
Application
The discussed law needs to be carefully applied to the case study, to conclude the chances of
claims of Barry being successful against Angelo. Regarding the first issue of this case study, the
actual turnover came to be way less than the claimed upon turnover in the given advert.
However, this would be deemed as a negotiation phase term, which was not included in the
20 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
21 Addis v Gramophone [1909] AC 488
22 Hadley v Baxendale (1854) 9 Ex Ch 341
23 Ewan McKendrick, Contract Law (Pearson Education Limited, 11th ed, 2015)
24 Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
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drawn contract, resulting in Barry not being able to claim breach of contract for it. Again, there is
the same concept applying for the second issue of this case study, relating to no competitor,
resulting in Barry not being able to claim breach of contract for it as well. For the fourth issue,
the contract was absent on condition of loader. This ambiguity would result in Barry not being
able to claim breach of contract for it.
The third issue of the case study which has to be analysed in detail. The contract drawn between
Barry and Angelo clearly provided that the sale of business from Angelo to Barry included the
loader and the delivery van. Angelo did not inform Barry that the delivery van was on lease and
had actually sold it to Barry, along with the business, for a price. This resulted in Barry incurring
additional $500 expenses per month for his business, owing to the misrepresentation. This allows
Barry to raise claims of misrepresentation against Angelo and get the contract rescinded. As this
option is not available under this part, Barry can claim breach of contract against Angelo as he
promised under the contract to sell the delivery van to Barry but never did so, for the reasons of
not being the actual owner of this van. This would give Barry the option of claiming the amount
paid for the van to Angelo as damages, along with the costs for hardships caused to him, in terms
of additional expenses. So, Barry can claim damages of $15,000 from Angelo. The reason for
this amount being awarded to Barry is for putting him in the position where he would have been
without the delivery van being sold to him. This would also allow Barry to pay the additional
expenses which he now has to bear for paying lease for the van. There are fewer chances of
equitable remedies being awarded to Barry as monetary compensation is enough in this case to
put in him the pre-contractual position.
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Conclusion
Hence, Barry would be successful in getting Angelo to compensate him for breaching the
contract drawn between the two, and also for misrepresentation undertaken by Angelo. However,
for the competitor issue, loader issue and turnover issue, no breach of contract can be claimed
upon by Barry as these were not the terms of the contract drawn between him and Angelo.
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