University Law Assessment 1: Legal Systems and Contractual Disputes

This report, titled "Assessment 1," delves into the intricacies of legal systems and contract law. Part A examines Herbert Hart's three-part legal system, comparing its application in the United States and Australia, focusing on rules of recognition, change, and adjudication. Part B, a detailed report, analyzes a contract dispute between Barry and Angelo concerning the sale of a business. It addresses the issues of misrepresentation, evaluating whether Barry can successfully claim misrepresentation under common law and the Australian Consumer Law (ACL), and if he can rescind the contract. The report further examines potential remedies, including penalties under the ACL. Finally, the report investigates whether Barry can claim a breach of contract, even if rescission is unsuccessful, outlining available remedies like damages and equitable relief. The report provides a thorough legal analysis, citing relevant case law and statutory provisions to support its conclusions.

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Question Answers
May 1
2018
Questions revolving around case study Assessment 1

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Table of Contents
PART A: 1(B)..................................................................................................................................3
PART B (REPORT)........................................................................................................................5
INTRODUCTION.......................................................................................................................5
QUESTION 2..............................................................................................................................5
QUESTION 3..............................................................................................................................9
PART C.........................................................................................................................................11

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PART A: 1(B)
The laws which form the base of any nation are what form its legal system. The legal system also
covers the process which has to be followed when the meaning of the law has to be analysed,
along with its enforceability is to be determined. The legal system provides the manner in which
the things would be, the rights and obligations, and also the other aspects required to have a
proper system in the nation. There are different aspects covered under the legal system, which
includes features of doctrine of separation, classifications of law, sources of law, and so on1. It is
important that once a law is formed, it is constantly adopted, is properly recognized and is
adopted by all. Herbert Lionel Adolphus Hart, a renowned legal philosopher, presented these
three topics through rules of change, rules of recognition and rules of adjudication2. These rules
help in making the legal system better. The 3 part legal system given by Hart has been applied in
a range of nations, which includes Australia and USA. The following parts cover the manner in
which these rules are applicable in USA, and how they compare with Australia.
The rules of recognition provide that the laws which have been formed are properly recognized.
In the United States, the Constitution is deemed as the supreme law; as a result of this
constitution, the rules of recognition apply in the nation. The Constitution of US helps in
removing the uncertainties3. The US Constitution brings through it the doctrine of separation of
powers, the classification of law and also ensures that the rules of change are properly included
in the legal system of the nation. So, the legislation once drawn in the nation is not stringent and
can be changed where the authority deems it necessary to do so, based on the process stated in
1 Richard Chisholm, Garth Nettheim and Helen Chisholm, Understanding Law: An Introduction to Australia's Legal
System (LexisNexis Butterworths, 8th ed, 2012)
2 Herbert Lionel Adolphus Hart and Joseph Raz, The Concept of Law (Oxford University Press, 3rd ed, 2012)
3 Beau Steenken and Tina Brooks, Sources of American Law: An Introduction to Legal Research (CALI eLangdell
Press, 2017)

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the US Constitution4. The legal system of US also has a proper hierarchy system which allows
for the doctrine of precedent to be applicable in the nation. As a result of this, the rules of
adjudication also apply in US. So, the matters are taken step by step from lower to higher courts,
to resolve the issue. And the decisions given by the higher courts apply on the lower courts,
where the facts of the case are similar5.
If the legal system of US is compared with that of Australia, based on the 3 part legal system
given by Hart, one could notice a lot of similarity between the applicability of this system. For
instance, as is the case in Australia, the legal system of US also covers a doctrine of separation,
whereby the powers are divided into three classes of judiciary, executive and legislature. Apart
from this, there is a commonality in adopting a hierarchy structure in the judiciary, where one
court sits at the top. In Australia, High Court of Australia is the highest court, whilst in US, it is
the Supreme Court. The doctrine of precedent applies commonly6. The laws of both the nations
are open to be amended, modified, repealed, or replaced, based on the procedure laid down in the
Constitution of the respective nations. Further, the Constitution of the respective nations is
deemed as the highest law of land in both the nations. Yet, even the constitution can be amended,
after following a proper procedure. There are different basis of law being classified in the US
and Australia, which includes criminal and civil law, procedural and substantive law, and private
and public law. There is also a proper system of Parliament, MPs, Cabinets and the other bodies;
there is a proper procedure to form the law, and its helping regulations, rules, and other
documents7.
4 Edward Allan Farnsworth and Steve Sheppard, An Introduction to the Legal System of the United States (Oxford
University Press, 4th ed, 2010)
5 Margaret Z. Johns and Rex R. Perschbacher, The United States Legal System: An Introduction (Carolina Academic
Press, 4th ed, 2016)
6 John Carvan, Understanding the Australian Legal System (Thomson Reuters (Professional) Australia Limited, 7th
ed, 2015)
7 Rosalind Dixon and George Williams, The High Court, the Constitution and Australian Politics (Cambridge
University Press, 2015)

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PART B (REPORT)
INTRODUCTION
A contract is a binding document, which creates certain rights and obligations for the parties to
such contract. There are different factors which revolve around contract, in terms of formation of
contract, vitiating factors, and breach of contract. This report aims to highlight the applicability
of these three concepts, with regards to the contract which was created between Barry and
Angelo for the sale of business, based on certain terms. The first issue is related to presence of
misrepresentation under contract law and Australian Consumer Law and the second issue is
related to breach of contract under common law.
QUESTION 2
I: Issue
Can Barry be successful in claiming misrepresentation before the court and can be he be
successful in getting the contract rescinded based on the misrepresentation being present? Does
Barry have any rights under the Australian Consumer Law to safeguard his position for
misrepresentation?
R: Rule
Before analysing the vitiating factors being present in a contract, there is a need to analyse the
terms of the contract. Such terms, which are carried on during the negotiations phase of the
contract, are not binding in the eyes of law, as these are considered as invitation to treat.
Invitation to treat is something which comes before the offer is made, and is not necessary to be
present in every case8. It is important to make differentiation between what exactly has been
8 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)

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made, i.e. whether it is an offer or an invitation to treat, and this can be done by analysing the
statement which has been made. For instance, Partridge v Crittenden9 is a leading example of an
advertisement being considered as an invitation to treat in general. So, the things or the terms
covered under the advertisement cannot be claimed upon under the contract law, in general.
Once the offer has been made, the contract is formed, where all the remaining elements of
contract are established to be present.
Upon a contract being formed, the terms covered under it become binding. However, there are
cases where the court would allow a party from not following the contractual terms. This is
mostly given as a remedy where the contractor is rescinded. This remedy is given in cases of
misrepresentation. In simple words, the statement which is made to induce a party in getting into
the contract, where this is a false statement relating to a fact or law, it would be deemed as
misrepresentation10. Bisset v Wilkinson11 is a leading case which clarifies that this false statement
has to be one of fact or law, and a claim of misrepresentation would not be upheld where this
statement is one of opinion or covers a certain advice. This does not mean that a person cannot
be made liable for the false opinion given by them in every case. Where it can be shown, as was
done in Smith v Land & House Property Corp12, that the person making the false statement, held
such a position, which allowed them to know the truth behind the made statement of opinion,
they would be held liable. Remedy for misrepresentation is available only when the aggrieved
party has relied on the false statement of fact being made, as was established in Horsfall v
Thomas13.
9 (1968) 2 All ER 421
10 Linda Mulcahy, Contract Law in Perspective (Routledge, 5th, 2008)
11 [1927] AC 177
12 (1884) 28 Ch D 7
13 [1862] 1 H&C 90

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The provisions of misrepresentation are also provided in the statutory law, and this is the law
meant for protecting the consumers. Competition and Consumer Act, 201014 is a substantial
legislation in this regard, which covers the provisions against misrepresentation under one of its
schedules, which is otherwise known as the Australian Consumer Law15. There is a strict
prohibition on false and misleading representation under section 29 of the Australian Consumer
Law16. Where any advertisement makes false or misleading representation, the advertising party
can be made liable under this legislation. Section 35 places prohibition on bait advertising17. In
The Jewellery Group Pty Ltd v Australian Competition & Consumer Commission18, Charles
Tyrwhitt had to pay penalty for false advertisement regarding the price, which misled the
consumers into purchasing their product19.
A: Application
This case has Angelo giving up an advertisement. There is a need to analyse if this advertisement
was an invitation to treat or offer. Partridge v Crittenden dictates that this would be deemed as
an invitation to treat, as it covers certain terms being advertised. These terms require certain
steps to be undertaken and for an offer to be made, as the advertisement is not clear in itself
regarding all the aspects of contract, making it an invitation to treat. This means that whatever is
stated in the advertisement, would not be binding on Angelo.
Coming to misrepresentation, Barry had been told by Angelo that the business incurred a certain
sum of money as expenses. But due to Angelo hiding material fact regarding the delivery van, he
14 Competition and Consumer Act, 2010 (Cth)
15 Competition and Consumer Act 2010, sch 2
16 Australian Consumer Law, s29
17 Australian Consumer Law, s35
18 [2013] FCAFC 144
19 Bobby Wan, Have you been deceived by comparison advertising? (23 September 2016)
<http://www.chamberlains.com.au/have-you-been-deceived-by-comparison-advertising/>

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expenses were raised. This was done to induce Barry into the contract as a higher expense base
would have made Barry rethink of Angelo’s offer. This expense can be deemed as opinion by
Bisset v Wilkinson though the chances of this being upheld is very less. This is due to
applicability of Smith v Land & House Property Corp as Angelo was in a position to know the
real expenses of business and to know that the delivery van carried a lease with it. This would
make the claims of Barry regarding misrepresentation against Angelo a high chance of success
based on this knowledge.
Coming to the statutory law of ACL, the advertisement would have applicability of section 29
and 35 on it. As was found in The Jewellery Group Pty Ltd v Australian Competition &
Consumer Commission here also there was a lie regarding turnover of the business in the
advertisement. The real turnover was way less than the claimed upon turnover in the
advertisement. Furthermore, there were claims of no competitor and business making certain
revenue, which were untrue. These were just to bait Barry and to mislead him regarding the
business. Thus, penalty provisions would become applicable on Angelo.
C: Conclusion
From this discussion, it can be concluded that Barry would be successfully able to claim
remedies under the common law and the statutory law, for the misrepresentation undertaken by
Angelo. Further, penalty provisions for misrepresentation based on provisions of ACL would
also apply on Angelo.
QUESTION 3
I: Issue

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Can Barry be successful in claiming breach of contract before the court where he is not
successful in getting the contract rescinded?
R: Rule
As has been touched upon in the introduction segment of this report, the terms of the contract are
to be fulfilled properly. Where this is not done, the aggrieved party gets the option of claiming a
breach of contract for the contractual obligations not having been undertaken by the breaching
party. When the contract is breached, the aggrieved party can claim remedies by going to the
court20. There are different types of remedies which are available and these include monetary
compensation being paid as damages, or equitable remedies being awarded like injunction,
specific performance, rescission, and repudiation. The damages are awarded, as per the statement
made by judges in Addis v Gramophone21, to put the aggrieved party in the pre contractual
position.
Usually for breach of contract, only monetary compensation is provided to the aggrieved party.
However, where the court concludes that damages are not sufficient to remedy the aggrieved
party, they award equitable damages which take the forms stated above. The specific
performance order is given by courts where the aggrieved party is asked specifically to do
something or to perform the obligation covered under the contract. Injunction does just the
opposite and stops the individual from doing something. Rescission and repudiation allows the
aggrieved party to not perform the obligations covered under the contract. At times, when the
parties are not able to get the contract rescinded under misrepresentation, they can claim
damages for it, and also for the breach of contract, if any takes place22.
20 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
21 [1909] AC 488
22 Jill Poole, Casebook on Contract Law (Oxford University Press 2016)

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A: Application
The four issues given are quite detailed and have to be dealt with separately. The first issue is
regarding the claims of turnover in the advertisement proving to be false in reality. As has been
explained in the previous section, the claims regarding advertisements were covered in
advertisement which was an invitation to treat. This means that the terms covered in
advertisement are not binding and are not a part of the contract. As these are not a part of the
contract, breach of contract cannot be claimed for a lower turnover.
Moving on to the second issue, the claims in the advertisement were for no competitors. Again,
based on the justification given for first claim, this claim would also be denied as the
advertisement term would be deemed as an invitation to treat. So, even this term was not a part
of the contract. This means that a breach of contract cannot be claimed for a competitor being
present.
Moving on to the third issue; the contract between Angelo and Barry provided that the delivery
van was being sold to Barry, along with the business, by Angelo. Angelo did not provide that this
delivery van was on lease and actually sold it to Barry. As a claim for lease on delivery van was
later established, it would be deemed as a breach of contract on part of Angelo as he never sold
the van to Barry, since he never owned one. This would allow Barry to claim damages for
breach, in terms of monetary compensation. Equitable remedies are not needed here, as monetary
compensation would put Barry in pre contractual position, where he could purchase the delivery
van or pay expenses for it from the amount recovered as damages.

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Moving to the last claim, the contract was silent on condition of loader. Without anything being
promised for loader condition in the contract, a claim cannot be made for breach of contract due
to improper condition of the loader.
C: Conclusion
From this discussion, it can be concluded that Barry will be successful in claiming breach of
contract before the court where he is not successful in getting the contract rescinded.
PART C
Given in the video