LAWS20058 - Australian Commercial Law: Case Study on Contract Issues

This case study delves into issues of contract validity and breach under Australian Commercial Law, specifically addressing misrepresentation under common and statutory law. The scenario involves an advertisement by Angelo and its implications for Barry, who relied on Angelo's statements about the business. The analysis covers whether the advertisement constitutes an invitation to treat or an offer, and examines potential claims of misrepresentation based on Angelo's statements about the business's expenses and profitability. The study also considers potential breaches of contract related to the sale of a leased delivery van and a faulty loader. The conclusion determines Angelo's potential liability for misrepresentation and breach, along with possible remedies for Barry, including contract rescission and damages. Desklib offers similar solved assignments and resources for students.

AUSTRALIAN
COMMERCIAL LAW
(Student Details: )

Introduction of issues
◦ The first part of the case study highlights the issue of validity of the contract being
challenged, based on the statements made by Angelo under the common law and
the statutory law.
◦ This issue is predominantly related to the validity of advertisement which Barry
read, and the possibility of claims of misrepresentation under common and
statutory law being raised.
◦ The possible remedy here is of getting the contract rescinded.
◦ The other aspect of this case is related to the alternative situation, where Barry is
unable to get the contract rescinded.
◦ In such a case, the question on whether Barry can claim a breach of contract
against Angelo or not, is answered.

Advertisement
◦ The advertisements which are put in newspapers are considered as invitation to treat.
◦ In Partridge v Crittenden (1968) 2 All ER 421, the court held conviction of defendant
by deeming the advert as invitation to treat.
◦ However, where advertisements cover unilateral offer, which can be merely accepted
by performing the act placed in the advertisement, they are deemed as an offer.
◦ The leading example of this is Carlill v Carbolic Smoke Ball co [1893] 1 QB 256.
◦ In the present case study, an advertisement had been placed in the newspaper by
Angelo. This advertisement covered an advert of the business claimed to be
profitable, having no competitors and some other details.
◦ Based on Partridge v Crittenden, this would be deemed as an invitation to treat. Thus,
the terms covered under this advertisement are not binding and cannot be claimed
upon by Barry.

Misrepresentation: Common
Law
◦ Misrepresentation.: contract becomes voidable and can be set aside by the represnetee.
◦ The remedies of misrepresentation revolve around damages and recession.
◦ Upon being asked about the expenses of the business, Angelo informed Barry that these
were $8,000.
◦ Applying Bisset v Wilkinson, Angelo can claim this to be an opinion.
◦ However, Barry can counter this case by relying on Smith v Land & House Property Corp,
as it can be shown that Angelo was in a position to know if this opinion was true or not.
◦ So, Angelo lied to Barry just to force him to get into this sale contract.
◦ Again, Angelo can cite the case of Attwood v Small and provide that Barry had checked out
the shopping centre, which means that the statement made by him cannot be claimed to
be a misrepresentation.
◦ However, when Barry conducted his research, the statements of Angelo seemed true, resulting in
misrepresentation being upheld.

Misrepresentation: Statutory
Law
◦ Under section 29 of the ACL, it is deemed as an offence to make false or misleading
representations regarding services or goods.
◦ These include the false statements being made regarding history, price, grade,
quality, etc.
◦ For instance, in ACCC v Cadbury Schweppes Pty Ltd [2004] FCA 516, misleading
representation was upheld regarding claims of fruit extracts being covered
advertised when it was not present in the product.
◦ Statutory law would also make Angelo liable based on ACCC v Cadbury Schweppes
Pty Ltd [2004] FCA 516, as misleading representation were made by Angelo
regarding the earnings of business.

Breach of Contract
◦ First issue: Not possible due to advertisement being invitation to treat.
◦ Next issue: Discarded on same basis.
◦ Third issue: It was covered under the contract that the sale of business included the sale of
plant and equipment, i.e. of delivery van and loader. It was no where stated that the van had
been on lease. This resulted in additional expenses. In case where rescission order is not
given by the court to Barry as remedy for misrepresentation, he can claim breach of contract
on this basis and get damages awarded to them. Here, Barry can claim damages as lump
sum payment of $15,000 charged from him under the contract for the delivery van, apart
from claiming damages for the additional costs he has to bear as a result of the undertaken
misrepresentation on part of Angelo.
◦ Last issue: Nothing was stated in the contract drawn between Barry and Angelo regarding
the condition of loader. Due to this ambiguity regarding its working condition, it would be
difficult to claim damages in terms of cost of replacing the loader, from Angelo, as breach of
contract.

Conclusion of claims
◦ Thus, based on misrepresentation under the common law and misleading
representation under the statutory law, Angelo can be made liable by Barry and the
latter can claim remedies against Angelo in the court of law.
◦ This includes getting the contract rescinded.
◦ Also, it can be concluded that Barry can make a claim of breach of contract against
Angelo regarding the delivery van.