Australian Commercial Law - Legal Issues and Contracts

This assignment solution addresses key concepts in Australian Commercial Law. Part A explores the application of Professor Hart's legal theory, specifically focusing on the establishment of a new constitution for a tribe, highlighting the roles of primary and secondary rules, and the importance of adjudication. Part B delves into contract law, analyzing a scenario where a buyer, Barry, enters into a contract with a seller, Angelo, for the purchase of a business. The assignment examines issues of fraudulent misrepresentation, considering the elements required to establish such a claim, and the remedies available to the aggrieved party. It further explores the principles of the Sale of Goods Act, particularly the implied terms, and whether Barry is entitled to claim for breach of contract. The solution applies relevant case law and statutory provisions to the facts, providing a comprehensive analysis of the legal issues involved and offering conclusions based on the analysis.

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

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Table of Contents
Part A...............................................................................................................................................2
Part B...............................................................................................................................................4
Answer 2......................................................................................................................................4
Answer 3......................................................................................................................................7
References......................................................................................................................................11

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Part A
1(a)
A proposal for a new Constitution has been made in order to address the issues arising
amongst the tribe members from their distinct dispute settlement procedures. The fundamental
rule that has been proposed to be incorporated within the new Constitution is to ensure that the
legal decision-making procedure is used more in order to resolve the issues compared to the
other dispute settlement mechanisms. In the given scenario, it is observed that the decision taken
by the eldest members of the tribe is contradictory to the former decisions taken by the elders of
the tribe. The new Constitution that has been proposed must ensure that all the decisions taken
by the elders shall be considered as consistent where the facts of the every case are identical. The
facts of the scenario also stated that the elders are often bias while determining issues especially
when their family members are involved in that issues. The new proposed Constitution
guarantees to fill up these lacunae as it purports to introduce rules regarding equal treatment and
determining issues impartially.
Further, the new proposed Constitution aims at introducing secondary rules to address the
issues arising from primary rules. In order to ensure that the tribe members who participate in the
decision-making process comply with such rules, the statutory provisions within the Constitution
to establish an Executive body which will enforce the rules. It shall also include provisions that
will permit amendment of rules from time to time based on the needs of the society. Since the
eldest members of the tribe are responsible to take decisions to resolve any issues, a panel of
judges shall be established who would be empowered to determine the veracity of the decisions
made by such tribe members based on the evidence adduced with respect to the disputes.

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The proposed Constitution that has been introduced to resolve the disputes reflects the
presence of the tier-system devised by Professor Hart in his legal theory1. This is evident as the
proposed Constitution has incorporate the Hart’s rule of recognition in the form of the secondary
rules, which purports to address the issues arising from the primary rules. The Constitution also
stipulated provisions that incorporate the rule of change in the form modification of the rules as
per the needs and changing circumstances of the society. Moreover, such modifications are
required to be in conformity with the Constitution. Further, the provisions related to rules of
change in the Constitution has led to the necessity to establish an Executive Body to enforce the
decision of the decision-maker in the society and are empowered to make their own decisions
while exercising their powers to settle the disputes. As Hart points out, there must be a close
connection between the rules of change and the rules of recognition.
The provision related to the rules of adjudication has been incorporated within the
Constitution that has been proposed before the tribe members2. This is evident from the
provisions set out in the proposed, which proposes to establish a judge panel only to ensure that
the decision-makers of the tribes do not contravene the rules and act in accordance to the rules.
The judges shall determine veracity of their decision-making based on the evidence adduced.
Similar to the provisions proposed to be incorporated in the Constitution for the tribe
members, the legal framework of Australia also incorporates the three-tier legal system devised
by professor Hart. The provision in regards to the consistency in the decision-making is present
within Australian legal framework as the decisions are made in compliance with the common
law through precedents. The legal system of the nation considers every person as equal in the
eyes of law. The Common Law principles are used to rectify the issues or any lacuna present
1 Wacks, Raymond. Understanding jurisprudence: An introduction to legal theory. Oxford University Press, 2017.
2 Campbell, Tom D. The legal theory of ethical positivism. Routledge, 2016.

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within the statutory provisions as in case of contradiction between the Common laws and
statutory laws, the principles of Common law shall supersede the statutory provisions. This is a
statutory obligation as set out under Article [51] of the Constitution, which requires the statutory
laws to comply with the common law, else they are rendered as invalid.
Part B
Answer 2
Issue
Is Barry entitled to certain rights before entering into a contract with Angelo?
Rule
In the given scenario, it is important to determine the importance of the free consent prior
to the formation of a contract, particularly, when the person making an offer by misrepresenting
the facts. In Smith v Land & House Property Corp. (1884) 28 Ch D 73, the court has defined
misrepresentation as a false statement that is not a part of the contract and is made by offeror to
offeree for inducing the offeree to enter into the contract with the offeror. Further, in Esso
Petroleum v Mardon [1976] QB 8014, the court pointed out an exception when the
misrepresentation of a statement shall not entitle the innocent party to undertake action against
the party making such misrepresentation. If a false statement is made with respect to any future
event, the statement shall not amount to misrepresentation of facts and neither will it give rise to
any legal action against the person making such false statement provided such terms forms an
essential terms of the contract.
3 Smith v Land & House Property Corp. (1884) 28 Ch D 7
4 Esso Petroleum v Mardon [1976] QB 801

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Furthermore, in order to succeed in making a claim for misrepresentation, it is important
that the false statement made is related to the facts instead of being an opinion of the offeror with
respect to his future intention. This requirement was upheld by the court in the Bisset v
Wilkinson’s case [1927] AC 1775.
Furthermore, it was stated in Solle v Butcher [1950] 1 KB 671, the court bars any action
that is undertaken with respect to the existence of a law. Further, it is also said that if a statement
that was otherwise, but for changes in circumstances, it became a false statement, the person who
is aware of such change must inform the innocent party about the same, else such statement is
likely to give rise to misrepresentation claims. Further, in Museprime Properties v Adhill
Properties [1990] 36 EG 1146, the court stated that such misrepresentation must be significant to
the extent that it induces an innocent party to enter into the contract.
Furthermore, a misrepresentation claim can be brought only when the aggrieved person
has relied on the misrepresentation of facts prior to the formation of a contract. In order to
succeed with a claim of fraudulent misrepresentation, the aggrieved person shall have to
establish that the party making such misrepresentation was aware of the facts being false but
presented them as honest facts only to induce the aggrieved party to enter into the contract. In
Derry v Peek [1889] 14 App Case 3377, the court held that on establishment of the fact that the
aggrieved party was induced to enter into a contract by deliberately providing false statements, it
shall amount to fraudulent misrepresentation. It further stated the aggrieved party should be
entitled to remedies in the form of termination of the contract as well as indemnification of the
loss that he suffered due to the formation of a contract on misrepresentation grounds.
5 Bisset v Wilkinson’s case [1927] AC 177.
6 Museprime Properties v Adhill Properties [1990] 36 EG 114.
7 Derry v Peek [1889] 14 App Case 337.

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Application
On the facts here, the contract entered between Barry and Angelo regarding purchase of
Angelo’s vegetable and fruit shops, satisfied the essential elements of a contract such as offer,
acceptance and consideration, which makes a contract enforceable in law. Prior to the formation
of the contract, Angelo stated in his sale advertisement that the business do not have any
competitors and that the turnover of the business for each month is $20000. Nevertheless,
subsequent to the formation of the contract Barry realized that these facts about the competition
and monthly turnover were false stated only to induce him to enter into the contract with him,
which amounts to fraudulent misrepresentation.
In regards to the requirement that a statement must be material to induce an innocent
party to form a contract, the statement made by Angelo was reasonably of material nature as it
induced Barry to purchase the shop. Hence, the requirement set out in Museprime case is
established. Further, the other requirement of reliance was also established because Barry relied
upon the misrepresentations that were made by Angelo in his advertisement which cause Barry
to purchase the shop.
Further, it can be clearly assumed that Angelo was aware of these facts and even then, he
falsely stated them only to induce the innocent party like Barry to enter into the contract. This
satisfies the third requirement to establish occurrence of fraudulent misrepresentation. Hence,
under such circumstances, Barry has a right to terminate the contract as well as compensate for
all damages that he has suffered due to the contract.
Conclusion

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The statements made by Angelo regarding his business turnover and the absence of
competitor of his business were false and despite being aware of it, he represented the same to
Barry inducing him to enter into the contract. He is liable for committing fraudulent
misrepresentation and liable for damages to Barry.
Answer 3
Issue
Whether Barry is entitled to claim for breach of contract
Rules
The Sale of Goods Act 1954 is a statute that governs the disputes regarding the sale of
goods in Australia. This law is applicable to any goods that are purchased within the country. As
per section [19] of the SoGA, the suppliers are obligated to provide quality goods to the
consumers even in the absence of any sale agreement with respect to the goods8. This is known
as implied terms, which are considered fundamental and must be complied with in order to
render a contract as valid. It is implied that suppliers will provide quality goods to the buyer that
is also fit for its purpose. Unlike the express terms, the implied terms are considered as
obligations that shall be performed by the suppliers obviously and need not be mentioned in the
contract9.
In the Moorcock [1889] 14 PD 6410 case, the court held that an implied term is important
enough to enable the parties to carry out the contractual obligations. The other way in which
implied terms are considered as important ad incorporated within the contract is through customs
8 Sale of Goods Act 1954 at section [19].
9 Bridge, Michael G. The International Sale of Goods. Oxford University Press, 2017.
10 Moorcock [1889] 14 PD 64.

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and operations of law within the commercial industry. However, in the event of non-compliance
with the implied terms of a contract, the aggrieved party is entitled to several remedies stipulated
under the statutory provisions as well as under the Common law principles11.
Amongst all the remedies, the most common of the include specific performance of the
contract, rescission of the contract, indemnification of the damages and injunction. In the case of
Addis v Gramophone [1909] AC 48812, the court established the legal principle that any person
who suffers injury due to breach of the contact shall be entitled to remedies against the breaching
party in either of the above-mentioned forms. These remedies will place the parties to the
original position that they were in, prior to the breach of the contract.
Application
Barry and Angelo had entered into a contract to purchase the shop of Angelo, which
included a van and a loader. After purchasing of the shop, Barry found the loader to be disputed
and the Van was taken on lease. Additionally, to continue with the van, Barry shall have to incur
expenses by paying to the person who has given the van on lease to Angelo. The business
turnover was comparatively too less than what was stated by Angelo in his advertisement.
Angelo stipulated that the business turnover was $20000 per month whereas Barry later found
that it was only $13000 per month.
These statements made by Angelo amounts to fraudulent misrepresentation, which
entitles Barry to several remedies, like compensation or specific performance or rescission of the
contract13. Further, it is an implied term that the supplier shall provide goods of acceptable
quality and that it should be fit for the purpose for which it was purchased. Now, the loader and
11 Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014
12 Addis v Gramophone [1909] AC 488.
13 Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014.

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the van was purchased to conduct business but the loader was damaged and required to be
replaced otherwise it cannot be used for its purpose. In the absence of such implied terms, the
contract shall not be able to be carried out.
Now, as per Moorcock’s case, the fitness and quality of goods shall be used as an implied
term of the contract in this case, which is necessary and obvious for continuing with the contract.
The significance of the implied terms is also promoted under section [19] of the SoGA14.
Therefore, the function of the loader was to load goods to the van but since it was damaged, it
cannot be said that it serve its purpose. In addition, extra expenses were required to be incurred
to fix the loader. Under these circumstances, Barry may claim to indemnify for incurring such
additional expenses to fix the loader as was stated under Addis v Gramophones case.
Here, it can be stated that Angelo was aware that the business turnover was less, the
loader was damaged, the van was taken on lease as well as the business had competitors. he
deliberately made such statements in the advertisement which induced Barry to enter into the
contract with him. This clearly amounts to fraudulent misrepresentation wherein Angelo falsely
misrepresented the facts before Barry with the knowledge of the facts being false.
Conclusion
Therefore, it can be stated that Barry is legally entitled to claim damages for the
additional expenses that he had to incur to fix the loader and payment of the lease for the van. In
addition, he may either claim compensation or withdraw the contract for the breach of the
contract.
14 Sale of Goods Act 1954 at section [19].

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References
Addis v Gramophone [1909] AC 488
Bisset v Wilkinson’s case [1927] AC 177.
Bridge, Michael G. The International Sale of Goods. Oxford University Press, 2017.
Campbell, Tom D. The legal theory of ethical positivism. Routledge, 2016.
Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014
Derry v Peek [1889] 14 App Case 337
Esso Petroleum v Mardon [1976] QB 801
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases
and materials. Wolters Kluwer Law & Business, 2016.
Moorcock [1889] 14 PD 64
Museprime Properties v Adhill Properties [1990] 36 EG 114
Sale of Goods Act 1954 at section [19]
Smith v Land & House Property Corp. (1884) 28 Ch D 7
Wacks, Raymond. Understanding jurisprudence: An introduction to legal theory. Oxford
University Press, 2017.

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