Analysis of Australian Commercial Law: Cases, Contracts, and Remedies

This report provides an analysis of key aspects of Australian Commercial Law, addressing topics such as dispute resolution, contract formation, and remedies for breach of contract and misrepresentation. Part A examines Professor Hart's three-tier legal theory within the context of a proposed tribal constitution, highlighting the incorporation of rules of recognition, change, and adjudication. Part B analyzes a case involving misrepresentation, evaluating the elements required to establish fraudulent misrepresentation and the available remedies. Part C focuses on legal remedies for breach of contract, particularly concerning the Sale of Goods Act 1954, and the implied terms related to the quality and safety of goods. The report utilizes case law to illustrate legal principles and their application in commercial scenarios, covering issues such as the sale of a business with misrepresented facts and the provision of defective goods, emphasizing the importance of free consent and contractual obligations.

Running head: AUSTRALIAN COMMERCIAL LAW
Australian Commercial law
Name of the Student
Name of the University
Author Note

1AUSTRALIAN COMMERCIAL LAW
Table of Contents
Part A...............................................................................................................................................2
1 (a)..............................................................................................................................................2
Answer 2..........................................................................................................................................4
Answer 3..........................................................................................................................................7
Part C.............................................................................................................................................10
References......................................................................................................................................14

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Part A
1 (a)
There have been several issues arising from the different dispute settlement approaches
adopted by the elder members of the tribe. A new constitution has been proposed to ensure that
such issues are resolved. The Constitution aims at assuring that the decision making process
involves the use of legal reasoning while determining any issue instead of any other ground to
resolve such issues. On the facts here, it has been stated that the decisions taken by the decision
makers of the tribe is often contradicting amongst themselves. In order to address this issue, the
constitution proposes to introduce provisions that will ensure that decisions must be same for all
the issues that are identical and that the decision maker maintains this consistency throughout the
decision-making procedure. The proposed Constitution purports to incorporate provisions that
will ensure that the issues are determined impartially and with fairness unlike the situation that is
described in the scenario where the eldest members are often biased in regards to the family
members.
Further, the new proposed Constitution also purports to incorporate secondary rules to
determine issues arising due to the existing primary rules. An Executive Body shall be
established as per the Constitutional provisions that shall be empowered to decide whether the
decision taken by the decision makers of the tribe is genuine. The proposed constitutional
provisions shall permit amendments of rules periodically based on the changing needs and
circumstances of the society. Further, in order to determine the genuineness of the decision taken
by the eldest members of the tribe based on the evidences adduced in each case, a judges panel

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shall be formed. Thus, the Executive body shall enforce the decisions whereas the judges’ panel
shall determine whether the decisions are based on the evidence adduced for each case.
The proposed Constitutional provisions demonstrate Professor Hart’s three-tier legal
theory. This is inferred from the fact that the new constitutional provisions has incorporated the
rule of recognition in terms of secondary rules that aims at determining issues emerging from the
primary rules. The provisions also included the rule of change theory which is evident from the
provisions permitting timely modifications in the existing rules as per the changing requirement
of the community1. Additionally, the proposed Constitutional provisions also ensure that such
changes are in compliance with the Constitutional provisions itself. The establishment of the
Executive body and the panel of judges to enforce the decisions of the decision makers and to
ensure that they are determining issues impartially epitomize the significance of the Hart’s legal
theory.
The incorporation of the rule of recognition and the rule of change implies that the
secondary rules shall recognize the issues emerging from the primary rules and will make
necessary modifications, which shall be enforced by the Executive body and panel of judges to
ensure its compliance with the Constitutional provisions. This establishes the Hart’s theory
regarding the presence of a close connection between the rule of change and rule of recognition
within the legal system of a country. The formation of the panel of judge incorporates the
provisions of adjudication into the proposed constitution that was introduced to the tribe
members. The main purpose to establish a judge panel is to make sure that the eldest members of
the tribe who are the decision-makers determine the issues based o its evidence and impartially
without violating the existing statutory rules.
1 Sachs, Stephen E. "Originalism as a Theory of Legal Change." Harv. JL & Pub. Pol'y 38 (2015): 817.

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The proposed Constitutional provisions are similar to the provisions that are already
existing within the Australian Constitution. This is because it reflects the incorporation of three-
tier legal system that has been introduced by Professor Hart2. The Australian legal system
demonstrates consistency in its decision making process through the existing Common Law
precedents. The legal system of the nation promotes equality before law and article [51] of the
Australian Constitution upholds the supremacy of the Common law principles over the legal
statutes. This is evident from the fact that in case of any contradiction between the common law
principles and the statutory provisions, the principles of Common law shall prevail over the
latter.
Answer 2
Issue
Are there any rights available to Barry prior to the formation of contract with Angelo?
Relevant legal Principles
As per the given facts, the primary issue that must be determined is that if free consent
form an integral part to render a contract as enforceable at law, particularly, when the offeror
misrepresents facts to form a contract. Misrepresentation of facts refers to a false statement that
an offeror makes to an offeree deliberately to persuade him to enter into a contract of which such
statements does not form a fact3. This principle was established in the case of Smith v Land &
house Property Corp [1884] 28 CH D74.
2 Dworkin, Ronald. "Hart's Posthumous Reply." Harv. L. Rev. 130 (2016): 2096.
3 Feldman, Steven W. "Laws as Implied Contract Terms: The Divergent Approaches and a Proposed Solution."
(2017).
4 Smith v Land & house Property Corp [1884] 28 CH D7

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There are certain requirements that must be met in order to succeed in a claim for
misrepresentation of facts. Such requirements include:
a) Statement must be false- the aggrieved party must establish that the statement made by
the offeror is false and is related to the contract. However, such statement must not
amount to mere opinion or any future opinion5. Further, a false statement made with
respect to any future events, it shall not amount to misrepresentation and the aggrieved
person is unable to bring any legal action against such statement as was observed in Esso
Petroleum v Mardon [1976] QB 8016. Furthermore, no legal action can be brught against
any offeror if he makes any false statement with respect to any law in force as was ruled
in Solle v Butcher [1950] 1 KB 6717. Moreover, another exception to this requirement is
that where a statement made by an offeror is not false but due to certain change in the
circumstances, the fact becomes untrue; no legal action can stand against such person
provided the person has revealed the truth to the offeree.
b) Misrepresentation must be material in nature- in order to bring a claim against the
offeror for misrepresenting facts, the aggrieved person must establish that the
misrepresentation of facts was material in nature which implies that it is sufficient to
provoke the offeree to for a contract as was ruled in the Museprime Properties v Adhill
Properties [1990] 36 EG 1148.
c) Reliance on the misrepresented facts- In Horsfall v Thomas [1862] 1 H&C 909, the
aggrieved party must establish that he has believed and relied on the misrepresented
5 Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.
6 Esso Petroleum v Mardon [1976] QB 801.
7 Solle v Butcher [1950] 1 KB 671.
8 Museprime Properties v Adhill Properties [1990] 36 EG 114
9 Horsfall v Thomas [1862] 1 H&C 90

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statements that has been stated by the offeror which induced him to enter into the contract
with the offeror.
In the legal parlance, three forms of misrepresentation exists namely,
 misrepresentation by negligence;
 misrepresentation by fraud;
 innocent misrepresentation;
Generally, a claims for misrepresentation do not arise if the aggrieved party has not
relied on the false statements at the first place but such rule cannot be used as an defense in case,
the misrepresentation amounts to fraudulent misrepresentation as was held in the case of
Pearson v Dublin Corp [1907] AC 35110. A fraudulent misrepresentation arises when an offeror
deliberately induces the offeree to enter into a contract by falsely representing all the facts that is
not a part of the contract as was explained in Derry v Peek (1889) 14 App Cas 33711. However,
the remedies available to the aggrieved party include rescission of the contract at the option of
the misrepresentee or compensation for the loss suffered12.
Application
As per the facts, it is assumed that the contract between Barry and Angelo includes the
essential elements of a contract such as offer, acceptance and consideration. The presence of
these elements has led to the formation of a valid contract. In the advertisement, Barry stated that
his business did not have any competitor and that it earns almost $20000 per month. These
statements were sufficient to allure any interested party to purchase the business.
10 Pearson v Dublin Corp [1907] AC 351.
11 Derry v Peek (1889) 14 App Cas 337.
12Feldman, Steven W. "Statutes and Rules of Law as Implied Contract Terms: The Divergent Approaches and a
Proposed Solution." U. Pa. J. Bus. L. 19 (2016): 809.

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Now, as mentioned to bring a legal action against Angelo for misrepresenting the facts
and committing fraudulent misrepresentation, Barry must establish the above mentioned
elements. Firstly, in regards to the falsely misrepresenting of facts, Barry may state that both the
statements made by Angelo with respect to the business were false. After the business was
purchased it was found out that Angelo has misrepresented the facts related to the business and
that both the statements were false. There were competitors of the business within the same
shopping village and the monthly income was not more than $13000. In addition, Angelo was
himself aware of the condition of his business, in spite of which he falsely represented the facts
that were false only to induce Barry to enter into a contract with him to purchase the shop.
Secondly, in regards to material nature of such statements, it can be stated that the
statements were materially related to the contract and was not merely any opinion. Thirdly, in
regards to the reliance of the aggrieved party upon the false statements of Angelo, they were
sufficient to induce him to form a contract.
Conclusion
Hence, based on the decision in Derry v Peek, Angelo has committed fraudulent
misrepresentation against Barry. Therefore, he is liable to pay compensation to Barry or Barry
may withdraw the contract rendering it voidable.
Answer 3
Issue
What are legal remedies available to Barry for contravention of the contract by Angelo?
Relevant legal principles

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The issues arising from goods and services within Australia are governed by the Sale of
Goods Act 1954. The statute imposes obligations upon the sellers to supply goods of acceptable
quality and those that are safe under section 19 of the statute13. The guarantee to supply good
quality goods amounts to implied term, which forms an integral part of any contract. Implied
terms are those terms, which is obvious that it should be complied with and there is no need to
expressly mentioned about the terms within the contract. The significance of an implied term has
been recognized by the court in the Moorcock case [1889] where it was ruled that implied terms
are essential to perform the contractual obligations.
Besides the statutory provisions, the Common law principles also identify the importance
of implied terms within a contract. In case of breach of implied terms, the aggrieved party is
entitled to compensation for the loss, injunction and rescission of the contract. The court in Addis
v Gramophone [1909] AC 488 14ruled that any person violating the contractual terms should be
entitled to remedies in the form of damages or rescission of the contract.
Application
Barry formed a contract with Angelo to purchase his business shop that also included a
loader and a van. Subsequently, Barry realized that Angelo falsely misrepresented all the facts
about the business, which had induced Barry to purchase the business. The statements included
absence of competitor of the business and monthly income of the business being $20000. Later,
it was found that the business had competitor and the monthly income was much less than
Angelo stated.
13 Sale of Goods Act 1954 at section [19]
14 Addis v Gramophone [1909] AC 488.

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These amounted to fraudulent misrepresentation for which Barry is entitled to seek
damages for the loss he suffered due to the contract or he may withdraw the contract. However,
besides making false statements regarding the competition and monthly income of the business,
Angelo also provided a loader and a van, which was part of the business as the loader was used
to load vegetables in the van. Now, the loader was damaged and required replacement whereas
the van did not belong to Angelo and was only given to him on lease.
Now, as per section [19] of the SoGA, the seller is entitled to provide goods of acceptable
quality, but, here, the loader was damaged and in addition, Angelo had to incur expenses to fix
the loader. Further, he had to pay an amount of $500 to the person who had given the van on
lease, thus, amounted to contravention of the statutory provision of the SoGA.
The significance of implied terms has been recognized in the Moorcock case where the
court held that breach of implied terms should attract penalty in the form of rescission of the
contract or compensation for the loss suffered by the aggrieved party. Here, Angelo stated that
the loader as fine but it was found to be damaged which amounts to an infringement of the
implied term. This is because, the loader was an important part of the business as it was used to
load vegetables into the van and a damaged loader is a breach of the obligation imposed upon the
seller under the Sale of Goods Act 195415.
Furthermore, the van also did not belong to Angelo and was only provided to him on
lease. He did not make any disclosure about the van or the loader apart from making false
statements regarding the monthly turnover of the business and the absence of competitor. Under
both the circumstances, Angelo was aware of the statements to be false, in spite he deliberately
misrepresented them to induce Barry to enter into the contract with him to purchase his business.
15 Sale of Goods Act 1954.

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Conclusion
Based on the decision given in Addis v Gramophones case, it can be inferred that Angelo
has committed fraudulent misrepresentation and a violation of a contract by failing to comply
with the implied terms under section [19] of the Sale of Goods Act 1954.
Part C
Script
 Hello Mr. Barry, I am () and I would like to provide certain necessary information with
respect to the contract that you have entered into with Mr. Angelo.
 The contract that is formed between You and Mr. Angelo, has all the essential elements
of a contract that is necessary to render it as valid and enforceable in the court of law. It
has a valid offer, acceptance and consideration to purchase the vegetable shop of Mr.
Angelo.
 I am also aware of the fact that the agreement between you and Mr. Angelo includes a
provision where it is clearly stated that he do not have any competitor in his vegetable
business.
 I am also familiar with the fact that Mr. Angelo has stated that the monthly turnover of
his business is $20000 in his advertisement for sale of his vegetable shop business.
 Nevertheless, after purchasing the business, you found out that the statements made
regarding the competitor and monthly turnover of the business was false and
misrepresented by Mr. Angelo. You realized that the turnover was only $13000 per
month and there was a competitor within the same place.

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 I would like to notify you that the statements that were falsely made by Mr. Angelo
amounted to fraudulent misrepresentation and he has induced you to enter into a contract
with him by misrepresenting the facts about his business.
 The conduct of Mr. Angelo amounted to fraudulent misrepresentation on two grounds.
Firstly, the statement that was published in the advertisement was a material statement
that has provoked you to enter into the contract with him; Secondly, you entered into the
contract relying on the statements that were made by Mr. Angelo regarding the business;
 These two grounds shall be sufficient for the court to assume that Mr. Angelo mad such
statements only to induce you to purchase his business;
 The court will also assume that the Mr. Angelo himself was aware of the facts to be
untrue but presented them in a manner that would induce any person to enter into a
contract with him to purchase his business, in the same way as you have been tempted to
enter into the contract;
 The fact that Angelo was aware that he has a competitor and that the turnover of the
business was less than what he falsely stated in the advertisement, establishes his
intention to make fraudulent misrepresentation and holds him liable for the loss suffered
by you due to the contract;
 Nevertheless, under such circumstances, you are entitled to certain legal remedies such as
rescission of the contract which implies that you can withdraw or terminate the contract
and relieve yourself of the contractual obligations;
 The other remedy available to you is to claim damages for the loss that you had suffered
due to the contract as it is one of the consequences of committing fraudulent
misrepresentation;

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 However, the other option that is available to you against Mr. Angelo is to bring legal
action against him instead of rescinding or withdrawing the contract on the ground of
breach of promise;
 This option is available owing to the fact that you had entered into the contract with
Angelo where he promised you a van and the loader that will be provided along with the
shop;
 Nevertheless, after purchasing of the shop, you found out that the van was given to
Angelo on lease and that the loader was damaged which required to be replaced. Hence,
instead of obtaining benefits from the loader and the van, you had to incur additional
expense of $500 as a payment to the person who had given the van on lease.
 Further, Angelo had stated that the expenses incurred on the business have enhanced
from $8000 per month to $8500 per month.
 Therefore, you become entitled to claim damages for all the additional expenses that you
have incurred on the business including the charges for fixing the van against Mr.
Angelo.
 I would like to inform you that when goods are purchased, it becomes implied term for
the supplier of the goods to provide goods of reasonable quality which must be fit for the
purpose for which they have been bought;
 Implied terms are terms that are not expressly mentioned in the contract but are equally
important to perform the contractual obligations. For instance, it is obvious that goods
provided by the supplier must be of good quality and need not be mentioned separately in
the contract;

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 If such important terms are not mentioned within, an agreement it may becomes difficult
to carry out the contractual obligations.
 Thus, in your case, the court shall decide in your favor as the loader that was provided to
you along with the business, was not fit for its purpose and was damaged for which you
had to incur additional expenses. This is because quality and fitness of the goods was an
implied contractual term that was necessary to perform the contract;
 Under such circumstances, you are entitled to claim compensation for the expenses that
you have incurred for repairing the loader as well as for the additional payment that you
have been making with respect to the van to person who had given it on lease. You may
also withdraw the contract that yoy have entered into with Mr. Angelo.

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References
Addis v Gramophone [1909] AC 488
Davies, Paul S. "CONTRACT FORMATION AND IMPLIED TERMS." The Cambridge Law
Journal 77.1 (2018): 22-25.
Derry v Peek (1889) 14 App Cas 337
Dworkin, Ronald. "Hart's Posthumous Reply." Harv. L. Rev. 130 (2016): 2096.
Esso Petroleum v Mardon [1976] QB 801
Feldman, Steven W. "Laws as Implied Contract Terms: The Divergent Approaches and a
Proposed Solution." (2017).
Feldman, Steven W. "Statutes and Rules of Law as Implied Contract Terms: The Divergent
Approaches and a Proposed Solution." U. Pa. J. Bus. L. 19 (2016): 809.
Horsfall v Thomas [1862] 1 H&C 90
Museprime Properties v Adhill Properties [1990] 36 EG 114
Pearson v Dublin Corp [1907] AC 351
Sachs, Stephen E. "Originalism as a Theory of Legal Change." Harv. JL & Pub. Pol'y 38 (2015):
817.
Sale of Goods Act 1954 at section [19]
Smith v Land & house Property Corp [1884] 28 CH D7

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Solle v Butcher [1950] 1 KB 671
Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.
Willett, Chris. Fairness in consumer contracts: The case of unfair terms. Routledge, 2016.