Category: Contract Law

The Facts of the Case

Mrs. Lastics daughter was having a wedding in May. In preparation for the wedding, Mrs. Lastic agreed to hire Mr. Johnsons vintage, white R. Royce as a bridal car. She engaged Mrs. Kay to take the photos. Further, she hired Mr. Leslie to do the catering for the reception. Mr. Johnson sold the R. Royce to Mildred a week before the wedding on the condition that she will make sure that its available for hire to Mrs. Lastic for the wedding. The day before the wedding when Mrs. Mildred was contacted denied Mrs. Lastic the knowledge of availing the car for hire. This forced Mrs. Lastic to hire another one for the wedding at a higher cost. On the day of the wedding, the photos did not come out properly because Mrs. Kays camera kept jamming. Lucy, Mrs. Lastic, and many other guests became violently sick and ill after consuming a contaminated chicken by salmonella which Mr. Johnson did not know. Lucy vowed to sue all who ruined her wedding.

Definition

A contract is a legally binding agreement between two persons with clearly spelled obligations. Some contracts or agreements can be valid but cannot be enforced such as domestic arrangements, asocial invitations, and a promise to marry someone. According to Lawnix (2008, p. 209) and Flaherty, Phillips, Baker, Girard, and Wilton (1999, p. 89), the laws that give rise to various types of contracts include the constitution, the statutes, and international treaties, regulations from administrative agencies or court rulings on disputes. For any agreement to be described as a valid contract, it must have the following an offer and acceptance, consideration, legal, the parties must have an intention of creating a legal relationship and there must be consent from both parties wrote Slorach and Ellis (2006, p.89-98).

According to Berryman et al (2006, p.144) contracts are always written, however, any oral contract that does not have any documentation will be binding if the parties to the contract intended to create a binding contract. In the landmark case of Severson v. Elberon Elevator, Inc., [Iowa Supreme Court, (1977) 250 N.W. 2d 417], where there was an oral contract between the plaintiff and the defendant but it was not performed. The defendant argued that the agreement of the transaction only had the elements of preliminary negotiations and was not a contract. The principles of contract law suggest that An oral contract may come into existence even though the parties intend to reduce it to writing at a later date quoted from Kelly, Holmes, and Hayward (2005, p. 781). This was held in Severson v. Elberon Elevator, Inc.

Identify Legal Issues

Can an undisclosed principal successfully sue for breach of contract? Can Mrs. Lastic successfully sue for the breach of contract against Mildred? Can Johnson sue Mildred for damages for the loss incurred? Can she successfully sue Mr. Johnson for breach of contract? Can she successfully recover any damages for breach of contract? What kind of damage should she be compensated for? What monetary compensation should she receive in respect of damage which is not too remote? Can she successfully sue for damages for poor performance by Mrs. Kay? Can she sue Mr. Leslie for damages for the supply of contaminated food?

Analysis

Mrs. Lastic is an agent to Lucy. But in this case, she did not disclose her principle in any agreement. Therefore this means that Lucy is only the third party to the contract. In this case, she has no right to sue since the agent had contracted in terms that implied that she was the principal herself. The rule in the privity of contract is that one can not sue or be sued to a contract in which he is not a party. Although Lucy can claim to enforce legal rights based on the reforms which resulted in the CONTRACTS (RIGHTS OF PARTIES) ACT 1999 (Contracts Act, 1999).

Mrs. Lastic cannot sue Mildred for a breach of contract because Mildred is the third part and she has no obligation to Mrs. Lastic.

However, Johnson can claim damages from Mildred for the loss incurred. Before the sale of the car, there was an implied condition that he will only sell at the price agreed if she ensured that it will be available for hire to Mrs. Lastic for Lucys wedding. This condition was violated by Mildred breaching the contract of sale. John can sue her for exemplary damages for the loss he has incurred from the breach of contract. This type of damages is awarded to punish the promise-breaker and prevent others from committing the same breaches. But at the same time, Johnson may not succeed in a claim for damages because he did not mitigate his loss. From the facts of the case, Johnson did not hire another vehicle for Lucys wedding but kept quiet. The law requires that where a breach of contract occurs, the plaintiff should make all reasonable efforts to minimize his loss and he can not be entitled to recover those damages he could have easily eliminated if he tried.

In BRACE v CALDER, (1863) B was wrongfully dismissed from his service but was immediately offered employment on his previous terms. B declined re-employment and sued for wrongful dismissal. It was held that although the dismissal was irregular and was technically a breach of contract, B was entitled to the nominal challenges only (Berryman, Gillen, Berryman, Farquhar, McPherson, Gillen, and Woodman, 2006, p.145).

Therefore the court will only award him damages that it will feel arose naturally from the breach.

There was a genuine contract between Mr. Johnson and Mrs. Lastic. This is because there was an offer and acceptance which was supported by a consideration agreed upon. The agreement was that he was to avail the car for hire at Lucys wedding but he sold the car before the wedding. The car was the subject matter to the contract and therefore selling it amounted to a breach of contract. Mrs. Lastic can sue for damages or treat the contract as subsisting or discharged. From the facts of the case above, she affirmed the breach by treating the contract as subsisting and completing her part without Mr. Johnsons cooperation. She incurred a cost that was higher than that of the contract. Mrs. Lastic is entitled to claim the whole sum due under this contract. This arose under the decided case is quoted from Lum and Yeo (2005, p. 201);

White and Carter (Councils) V Mcgregor (1961)

P agreed to advertise Ds business for three years on plates attached to litter bins. D repudiated the contract on the same day that it was made. P nevertheless manufactured and displayed the plates as originally agreed, and claimed the full amount due under the contract. A majority of the House of Lords upheld the claim, their reason being that the repudiation does not, of itself, bring the contract to an end. Its effect is to give the innocent part a choice of whether or not to determine the contract. If he chooses to affirm the contract it remains in full effect( Gower and Davies, 2006, p. 58 and Redfern, 2004).

However if Mrs. Lastic treats this as an anticipatory breach, she can elect to treat the contract as discharged and sue for damages at once.

In HOCHSTER v DE LA TOUR (1853) D agreed to employ P as a courier for three months commencing on 1st June. Before this date D told P that his service will not be required. This was an anticipatory breach of contract, and it entitled P to sue for damages immediately quoted from Booth (1996, p.78)

Mrs. Lastic can sue Mr. John for the damages because of a breach of contract. Damage is not too remote if it is such as may be fairly and reasonably be considered either as arising naturally, i.e. according to the usual course of things from the breach of itself or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach (Macdonald and Koffman, 2007). In determining damages the courts follow a rule which was laid down in HADLY v BAXENDALE, (1854)

H, a mill owner, delivered a broken crankshaft to the defendants, who were common carriers and they promised delivery on the following day to the maker for using it as a sample. The defendants took several days to make delivery with the result that the mill remained idle longer than it would have been had delivery been made as promised. The plaintiff claimed damages for loss of profits arising from extra delay. The plaintiff did not make known to the defendant that the delay will result in a loss of profits. It was held that the defendants were not liable to pay H damages for loss of profits. The loss did not arise naturally and the defendants were not aware that H did not have a spare crankshaft quoted from Sealy, (2000, p. 136)

From the above rule, a loss suffered by the plaintiff who arose naturally from his breach renders the defendant liable. In PINNOCK v LEWIS (1923) the seller of poisonous cattle food was held liable for the loss of the cattle to which it was fed. This loss arose naturally from his breach ( Slawson, 1996, p. 312).

Mrs. Lastic in recovering damages, the general rule is that she recovers the actual loss. But from the facts of the case at hand, she incurred an extra cost in hiring a different car. As such the court in assessing the number of damages to be recovered may consider the inconvenience suffered. This was seen in

JARVIS v SWAN TOURS (1973) P paid $63 for a two-week winter sports holiday. It differed vastly from what was advertised. There was very little atmosphere, the hotel staff did not speak English, and in the second week, he was the guest in the hotel. P recovered $125 damages for his upset and annoyance due to having his holiday spoilt quoted from Chandran (2000, p. 245).

Mrs. Kay was engaged to produce photos. She had an obligation to Mrs. Lastic to do anything possible and produce photos. There were no expressed terms to the contract that specifically described how she was to perform her duties or on what type of camera to use to produce the photos. Therefore she was expected to use the best machines and knowledge to produce photos properly. She will not defend herself that the poor performance was due to a faulty machine because she could have taken the necessary steps to have an alternative if it breaks and prevent the frustration. Mrs. Lastic can sue her for the breach of contract since she had failed to perform. The parties to the contract did not provide that it was to terminate on its becoming impossible or on the happening of a specified event. This means that Mrs. Kay may defend herself by bringing the doctrine of frustration that a supervening event occurred which destroyed the very foundation of the contract and it was beyond contemplation. According to Chen-Wishart (2007, p. 1999), supervening impossibility will discharge the contract if its proved that there was a destruction of the subject matter. This arose in the decided case of

TAYLOR v CALDWELL, (1863) in this case a, music hall was agreed to be let out for a series of concerts on certain days. The hall was destroyed by fire before the date of the first concert. The contract was held to have become void and the owner of the hall was absolved from liability to let the hall as promised quoted from Brillinger (2006, p. 186)

In this case, Mrs. Kay may be released from liability if she succeeds to prove the doctrine of frustration.

Mr. Leslie was engaged to do the catering at the reception by Mrs. Lastic. The food which he provided to the people who attended the wedding was contaminated because they fall sick after consuming it. Mr. Leslie had an obligation to supply food that was in good condition and fit for consumption. For him to claim that he did not know is not enough to relieve him from liability. In the contract of sale, there is an implied condition as to quality and fitness for the goods supplied. In this, the seller is not under a duty to disclose the defects attaching to the goods which he sells since the buyer is expected to look after his interest. But there is an exception to this rule of caveat emptor which states that where the buyer makes known to the seller the particular purpose for which he is buying the goods, and the seller specializes in the sale of those goods, then there is an implied condition that the goods should be reasonably fit for that purpose. In PRIEST v LAST, (1903) P asked for a hot water bottle and enquired whether it could stand boiling water. The defendant told him that it would stand hot water, but not boiling water. The bottle burst and caused injury to the wife of the plaintiff. It was held that the bottle was not fit for the purpose it was acquired for, and the seller was liable (Sealy, 1971, p. 340). Mrs. Lastic can therefore repudiate the contract and claim damages from Mr. Leslie.

Advice

From the analysis of the legal issues above I can advise each of them as follows:

Lucy

She is a third party to the contract and therefore she cannot sue anybody who failed her wedding. My advice is for her to seek legal redress based on any reforms to the privity of contracts to third parties. The CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 specifically will help in this case. The Act, even if it maintains privity it gives the third parties in certain circumstances the right to sue the contractor. The two circumstances that are stated in section 1 of the act are: where the contract expressly so provides; and where the term of the contract purports to give a benefit to the third party and, upon a proper construction of the contract, the parties did not intend that it is not enforceable by the third party. I believe she will succeed because she was the only one to benefit from each contract. If she succeeds, she will sue all those who failed her wedding.

Mrs.lastic

Mrs. Lastic has the right to sue Mr. Johnson for the breach of contract and claim damages. She can also sue Mrs. Kay for poor performance and at the same repudiate the contract with Mr. Leslie and claim damages. If the defendants so wish to have an outside court settlement, she should accept because this will reduce the time between when the breach occurred and recovering damages by a court hearing.

Mr. John

He breached the contract between himself and Mrs. Lastic and as such is liable to pay damages. My advice to him is to seek an outside court settlement with Mrs. Lastic. This will enable him to avoid extra expenses and save time.

Mildred

She should pay the damages because she intentionally denied the condition and she should not benefit from the price of the car without adhering to the agreement.

Mrs.kay

She was responsible to take the necessary steps to take wedding photos which she failed. She should avoid being sued for a breach of contract and seek a settlement with the aggrieved party.

Mr. Leslie

He supplied food that was not fit for consumption because everybody who consumed became sick. I will advise him to seek out of court settlement because he loses a lot of customers if they get to learn that he has court cases. He should also promise to improve in the future.

List of References

Berryman, J, Gillen, W, Berryman, Farquhar, G, McPherson, M, Gillen, M, Woodman, F, 2006. The Law of Trusts: A Contextual Approach, Emond Montgomery Publication.

Booth, C.D., 1996. Hong Kong commercial law: current issues and developments. Hong Kong: Hong Kong University Press.

Brillinger, R, 2006. Canadian Business Law. Emond Montgomery Publication.

Chandran R, 2000. Introduction to Business Law in Singapore. New York: McGraw Hill.

Chen-Wishart, M., 2007. Contract Law, Oxford: Oxford University Press.

Contracts (Rights of Third Parties) Act 1999.

Flaherty, D, Phillips, J, Baker, G, Girard, P, & Wilton, C, 1999. Essays in the History of Canadian Law: In Honour of R.C.B. Risk. Toronto: University of Toronto Press.

Gower, L, & Davies, P, 2006. Principles of Modern Company Law. New York: Sweet and Maxwell.

Kelly, D, Holmes, A, & Hayward, R, 2005. Business law. Cavendish: Routledge.

Lawnix, 2008. Lefkowitz vs. Great Minneapolis Surplus Store Case Brief: Lefkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689 (1957). Web.

Lum, K, & Yeo, V 2005. Contract law. New Jersey: Butterworths Macdonald, E, & Koffman, L, 2007. The Law of Contract, Oxford: Oxford University Press.

Redfern, A, 2004. Law and practice of international commercial arbitration. New York: Sweet & Maxwell.

Sealy, L, 1971. Cases and materials in company law. CUP Archive (Cambridge).

Sealy, L, C, 2000. Jordans Cases and materials in Company law, London: Butterworths Heinemann.

Slawson, W, D 1996. Binding promises: the late 20th century reformation of contract law, New Jersey: Princeton University Press.

Slorach, J, S, & Ellis, J 2006, Business Law LPC Guide; Oxford: Oxford OUP.

Introduction

Business owners have to create a contract to outline the authorities and responsibilities of each individual of the entity. Usually, this is done within the legal documents of the business organization. The particular position of each owner plays a role in the size of control and authority that they have within a business. Further, if a business does not have a contract, its structure can suffer from a lack of efficiency. There are four main types of companies, such as sole proprietorship, partnerships, corporations, and an LLC. Business entities have unique rules of contract creation and negotiation, as well as contract liability and the ability to sell a business.

Contract Creation and Negotiation

First, a sole proprietorship is the most basic form of business entity. It includes only one person, exemplifying personal entrepreneurship. Understanding that a particular individual activity is a business is possible through analyzing whether one is engaged in an activity that intends to bring in some profit. Even though it is a business, there is no need for any formal documentation or contract (Gordon, 2016). With that being said, employment is possible; however, the contract will not include the rights to any possible ownership of a company from an employee (Gordon, 2016). As was mentioned above, contracting is very simple in this type of business, because a business includes only one member; it is relatively risk-free and quickly approved.

Moreover, US law sees partnerships more as a collection of individuals than a single legal entity. Therefore, this practice means that all business assets are thought of as owned by one or more partners rather than the partnership entity (Ricks, 2017). For this type of business, a contract or a legal agreement is preferred, although not required. The aspects of the agreement are the name of the partnership, the allocation of ownership interests, partnership entitlements, responsibility management, possible new partners, the continuity of the contract, and potential disputes (Gordon, 2016). Therefore, although the company might include only two people, it is still a much more complicated process in comparison to the sole proprietorship.

Furthermore, unlike the entities mentioned above, a corporation is the most serious and legally organized body. The legal contract exists in the corporation as an agreement between the stakeholders, executives, and directors. Moreover, forming a corporation requires a corporate charter. Once this legal item is obtained, a board of directors must be developed, which then acts to validate various corporate actions and create bylaws (Gordon, 2016). Additionally, there are statutory-close corporations that tend to be smaller and have restrictions of scale, for example, shareholder count (Gordon, 2016). Thus, corporations have the most complicated contracting system, as it is the largest of the business entities possible.

Lastly, an LLC is formed when an individual (not a corporate entity) files an organizations articles. LLCs have relaxed maintenance requirements and must update their records on any significant changes in the LLCs operation (Gordon, 2016). Ownership and equity of LLCs are held by membership, which functions similar to shareholding. Members receive a share of the LLCs profits. LLCs function under an operating agreement, analogous to the bylaws of a corporation. Overall, an LLC is not required to have an operating agreement, but it is highly recommended.

Contract Liability

Firstly, sole proprietorship lacks liability protection, which is usually included in most other types of common business entities. Therefore, the main obstacle in being a sole proprietor is that one is personally liable for their employees actions. Specifically, the liability lies for Any contract obligations or torts committed as part of the business activity (Gordon, 2016, p. 39). Moreover, a general partnership is very similar to a sole proprietorship in terms of liability, as each partner is liable for the businesss obligations or debts (Simkovic, 2018). Furthermore, unlike the above-mentioned entities, a corporation provides personal liability protection (Gordon, 2016). This protection means that officers and directors of the company are not personally accountable for any action taken within the company. However, a stakeholder can sue members if they decide that individual steps are damaging the companys reputation (Gordon, 2016). Lastly, LLC, in the name, implies limited liability for the members. Thus, LLC protects individual owners and members of the company.

The Ability to Sell a Business

To begin with, a sole proprietor cannot sell a business because it is individual entrepreneurship. The necessary equipment, the property can be sold to someone else. However, this person would have to start their sole proprietorship. Moreover, the partnership contract can include the steps necessary to add another partner, the resignation of one of the partners, etc. (Gordon, 2016). Additionally, without the buy-sell agreement, each partner can sell the interests they own in the business. Moreover, the owners of the corporations own a certain number of shares. Therefore, if one wants to sell the company, it will only be possible within the number of shares that this individual holds (Gordon, 2016). Lastly, LLC also can be sold as its members can sell their interests of the membership that should be described in the contract.

Conclusion

All in all, different types of common business entities offer various contracting options. Sole proprietorship, partnership, corporations, and LLC all have their specific procedure for contract creation. The contract includes the number of individuals involved, the possible process of resigning, the percentage of interest or shares, and more. Moreover, sole proprietorship and partnership do not provide liability protection, whereas corporations and LLC do. Lastly, it is possible to sell most of the business entities; usually, it means selling the interests or shares rather than the entirety of the company.

References

Gordon, J. (2016). Business entities for entrepreneurs & managers. TheBusinessProfessor.

Ricks, M. (2017). Organizational law as commitment device. Vanderbilt Law Review, 70(6), 13031352.

Simkovic, M. (2018). Limited liability and the known unknown. SSRN Electronic Journal, 68, 1- 275.

Issue

Will Charlie prevail against Best Bargain Stores after he was denied a General Electric Smart Front Load Washer for $1.00 that was advertised?

Rule of Law

Advertisements made to the public normally do not amount to an offer but are considered as an invitation to create an offer. However, if the advertisement is specific and directly promises a reward when a person fulfills some terms, it constitutes an offer. An offer can be revoked any time before it is accepted as it was in Routledge v. Grant (1828). In unilateral contracts, there is no pressure put on the party performing the action.

Analysis

The ruling in Gunthing v. Lynn (1831) reveals that a contract cannot exist when the offer is evidently unclear (Beale et al. 17). Best Bargain Stores clearly published an advertisement where they indicated that they would be rewarding customers with General Electric Smart Front Load Washer on a first-come basis. The stores advertisement presented an offer and promised a reward for anyone who fulfils the terms. Charlie will prevail in this case against Best Bargain Stores since he realized all the conditions inherent in the advertisement. The case of Charlie v. Best Bargain Stores is an instance of a unilateral contract. The store promised a $1 price to the first customers that came that Saturday morning before 9 is.

In a unilateral contract, the offeror promises a reward when the offeree fulfils an act and the right to communicate acceptance is surrendered. Best Bargain Stores advertisement was an offer to enter into a unilateral contract, and one of its terms was not to bring it along during the purchase. There was no need or space to negotiate since the offeror and the offeree were clear on what their contractual responsibilities were. Thus, if the offeree fulfills all the specific terms of the advertisement, he or she is legally entitled to the reward indicated. In Routledge v. Grant (1828), the offeror revoked his offer before the time he had set for the offeree elapsed (Beale et al. 23).

In unilateral contracts, there is no pressure put on the party performing the action. In the case in question, Best Bargain Stores revoked the offer when Charlie had already commenced the performance. He completed his part of the bargain of $1.00 bill, which signified acceptance. Furthermore, an intention to withdraw an advertisement does not constitute withdrawal in itself. For revocation to take effect, the offeree has to receive it. The advertisement that Best Bargain Stores published was to the public, and similar publicity has to be assigned to the revocation as to the advert. When the same publicity is provided to the revocation as to the offer, it is terminated irrespective of whether someone saw it or not. The major task is to determine when acceptance happened so that the offeree knows when he or she is needed to complete the contract and due for the reward.

Conclusion

Best Bargain Stores is liable since they made an offer that was accepted by the offeree, which constituted a valid contract.

Work Cited

Beale, Hugh, et al. Cases, Materials and Text on Contract Law. Bloomsbury Publishing, 2019.

CIF contracts are one of the most popular trade agreements between a buyer and a seller in the sphere of international trade when sea carriage is used. CIF is a shortened form for cost, insurance, and freight. As a rule, the cost of goods depends on freight and insurance. As a rule, CIF contracts are attractive to either seller or buyer. A seller gets an opportunity to charge a high price for extra services (shipment and insurance), and a buyer is not bothered with such questions as finding shipping space and insurance (such issues are difficult to decide because of unawareness of local business). According to the CIF contract, both the seller and the buyer, have certain obligations and need to meet all of them.

The seller has to (1) ship goods according to the description, (2) arrange the carriage of goods according to the conditions discussed with the buyer, (3) check the quality of goods and mark all of them, (4) create an invoice, and (5) present all these documents to the buyer. (Cheng, 1990)

The buyer, in his/her turn, need to (1) notice to the seller (about the desirable timedeliveryiver), (2) inform the buyer about the desirable insurance, (3) accept all transport documents, (4) pay the cost of goods, and, finally, (5) pay other costs (duties, taxes, inspection, etc.) (Gillies and Moens, 1998)

Carr mentions that the seller bears all risks (goods damage or loss) until the goods are in the port of shipment and have not yet passed the ships rail, and the buyer bears all risks (goods damage and loss) from the time when the ship has passed the ships rail. (2005, pp. 106)

According to this theoretical data and the validity of this electronic document, CIF, the buyer has the right to ask for compensation from the sellers side because of unmarked laptops if in the description, presented by the seller, is mentioned that all laptops, themselves, are marked Made in China, and the buyer was informed about it. Such compensation is obligatory according to the Sale of Goods Act of 1979. Even more, the buyer may break down the contract because of a discrepancy between the condition of goods in the description and the condition of goods in reality.

In the case of the instability of the hardware in 80 laptops that was discovered because of damp patches, the seller is not responsible here. According to the duties of the seller, he/she does not bear any risk soon after the ship leaves the port of the shipment. If the seller did not know anything about the possible damage of the goods at the time of its shipment, the buyer has no right to ask for any kind of compensation. This is why the risk of damage to the laptops, in this case, is borne by the buyer.

It is necessary to admit, that the delivery of the goods was delayed for one day. If the shipment and arrival of the goodoccurrs in the settled time, and the delivery was delayed because of force-majeure, the seller is not responsible for this delay and has not to pay any compensation.

One of the possible methods in order to dispute the problem that happens to the buyer, Ben, and the seller, Sam, is the following. The buyer should pay for all the laptops, but it is also necessary to ask for compensation because of the wrong description of the condition of the products during the shipment. This compensation needs to be paid by the seller. If the delay was the sellers fault, the buyer should get compensation as well.

References

Carr, I. and Stone, P 2005, International Trade Law. Routledge Cavendish.

Ch,eng, C. J. and Cheng, J 1990, Basic Documents on International Trade Law. BRILL.

Gillies, P. and Moens, G 1998, International Trade and Business: Law, Policy, and Ethics. Routledge.

Since the penalty rule was for the first time formed in the Englsih contract law it has caused controversy. Some have argued against it and believed it should be abolished as it is believed it provides no suffiecient justification. However, its supporters believe the rule shoud be kept because it politically and economically will benefit them.

The aim of this essay is to discuss why the opponents of the penalty rule believe the penalty rule is a controversial issue to the modern law of contract. Which in summary, they believe that parties do not have the freedom to agree to contractual solutions that have a punitive, than just entirely compensatory. This means that contracting parties are banned by the penalty

Whilst contracting parties are in principle free to agree in advance what their obligations will be following a breach of contract (and even to prescribe a measure of damages that will fall due in such circumstances; a so-called ‘liquidated damages clause’), the penalty rule prohibits them from doing so where the consequences that are to be imposed on the prospective defaulter are disproportionate to any legitimate interest that the innocent party has in protecting itself against that particular breach. [6]

The modern version of the rule has been in existence for more than 100 years, [7] but it has been heavily criticised by judicial [8] and academic commentators. [9] In attempts to justify the rule’s existence, commentators have not only constructed arguments using legal theory, but have also drawn upon a variety of other disciplines, including ethics, politics, psychology and economics

as recently noted by the UK Supreme Court, the penalty rule ‘is common to almost all major systems of law, at any rate in the western world’ and ‘…is included in influential attempts to codify the law of contracts internationally’. [12]

Main argument:

As noted above, most of the literature that opposes the penalty rule starts from the premise that contracting parties should be free to decide for themselves what the terms of their agreement will be, and it is fair to say that this principle has a long history in English law. [15]

the starting point is that contractual rules should give legal effect to the obligations that the parties themselves create. It has also been argued that too much intervention by the courts risks uncertainty for contracting parties, which in itself has potential implications for justice [18] and for the economy. [19]

One way in which supporters of the rule have sought to justify its existence from the perspective of legal theory, is its compatibility with the compensatory principle. [20] This is the well-established idea that contractual damages should have the effect of putting the innocent party in the position that they would have been in if the contract had been properly performed (awarding the ‘expectation interest’) [21] or alternatively, and less commonly, of restoring that party to the position they were in prior to formation of the contract (awarding the ‘reliance interest’), [22] provided that this would not facilitate recovery of losses that would have been incurred even if the contract had been properly performed. [23] In other words, in the vast majority of cases damages should be calculated with reference to the claimant’s ‘loss’ (however defined) and perform a restorative function, rather than with reference to the defendant’s wrongdoing; in English law punitive/exemplary damages will not typically be awarded for a breach of contract. [24]

Nevertheless, however well-established or well-justified the compensatory principle might be, it does not of itself provide a complete justification for the penalty rule. In fact, many of Fuller and Purdue’s own arguments that justify the compensatory principle could be used as ammunition against the penalty rule. Similarly, the compensatory principle is not the only restriction that the law imposes on the recoverability of loss. For example, losses which do not strictly arise as a direct result of the breach, [26] which are too remote [27] or which are properly attributable to the innocent party’s failure to mitigate, [28] will not be recoverable at all. However, in the interests of party autonomy parties are permitted to contract out of each of these rules and/or, less controversially, to limit the damages that are recoverable following a breach. [29] Given the extensive freedom that parties have to contractually adjust the extent of their liability in other respects, the compensatory principle alone cannot explain why intervention is justified when it comes to clauses which prescribe the measure of damages payable.

Since a watertight justification could not be found within legal theory alone, supporters have also turned elsewhere in search of compelling arguments for retaining the penalty rule. Arguably the most obvious place to turn to next was ethics. Fried argued that the (intrinsically moral) concept of ‘promise’ is ‘the moral basis of contract law’. [30] Building on the classical ‘will theory’, Fried contended that, when a contractual promise is made, there is a self-imposed moral obligation to honour that promise, and principles of contract law should, so far as possible, fit with this idea. [31] Indeed, contract lawyers will be well familiar with the maxim ex turpi causa non oritur actio, which in a range of circumstances can prevent a party from receiving a contractual remedy where there has been illegal or otherwise immoral conduct. [32] Ethics is therefore embedded within contract law. Query then: could there be a moral reason for retaining the penalty rule? For many, if left unregulated, penalty clauses typically produce a result that ‘conflict[s] with our intuitive understanding of justice’, [33] and thus intervention is needed to prevent this result.

A liquidated damages/penalty clause is typically, by its nature, very clear: it prescribes specifically the consequences that a party will suffer if it fails to comply with its contractual obligations. Putting aside (for obvious reasons) the question of enforceability, such a clause is potentially able to provide contracting parties with a level of clarity and certainty that far exceeds any understanding that they might have about common law damages. As such, whenever such a clause has been included in a written contract then, absent any vitiating factors (e.g. duress, misrepresentation, undue influence or unconscionability) one might assume that the parties understood and voluntarily accepted the effect of the clause (or were at least careless in that regard), particularly in the case of individually negotiated contracts. Yet, as the law stands, where the rule against penalties is invoked a promisor is potentially able to escape paying the very sum that they promised to pay in the very circumstances they promised to pay it.

There already exists legislation to provide consumers with protection against unfair contractual terms [40] which ensures that a vulnerable and inexperienced consumer is not unwittingly caught out by an excessive or disproportionate liquidated damages clause, and neither the European nor domestic legislature has so far considered it necessary to extend the same level of protection to small businesses or those contracting on another’s standard terms. [41]

The Supreme Court of England and Wales was recently asked to consider the legitimacy and utility of the penalty rule in the conjoined appeals of Cavendish v Makdessi and ParkingEye v Beavis. [62] The currency and complexity of the debate surrounding the rule is evident from the judgment, and it serves to highlight the pressing need for further research in this area.

In the absence of a clear justification for its departure from party autonomy, one might have expected – and indeed the appellants had hoped – that the Supreme Court might abolish the rule altogether. Yet, citing the rule’s long history, [63] the court declined to do so and instead decided to adopt a legislative role and rewrite the penalty rule, albeit in a form that was rather more limited in scope. Lord Neuberger PSC and Lord Sumption JSC (with whom Lord Carnwath JSC agreed) decreed that the penalty rule would henceforth only be infringed only where:

‘…the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter.’ [64]

In the particular appeals before the court, none of the clauses under scrutiny were deemed to infringe this new version of the penalty rule; Mr Makdessi, a wealthy businessman who had sold a large proportion of his shares in a group of companies, lost out on up to $44m due to having breached certain restrictive covenants in the sale agreement, and Mr Beavis was required to pay an £85 parking ticket issued by ParkingEye, for overstaying in a privately owned and managed car park.

Although these cases represent two ends of the spectrum, they do have something important in common. In both cases the court was strongly of the view that the contractual provisions were sensible, legitimate and not overly punitive, and that there were key pragmatic reasons for permitting such clauses to stand. In that sense, the fact that the clauses in question were able to withstand the new version of the penalty rule may be seen as positive – the court arrived at the ‘right’ outcome in both of these cases. Yet the basis for and implications of the decision are less satisfactory. A severely restricted version of the penalty rule may be more palatable to its opponents, but cannot dispose of the argument that the rule itself is without any underpinning justification.

Conclusion:

The penalty rule is arguably one of the most contentious doctrines in contract law today. Whether or not the departure from party autonomy that it entails can be justified remains a hotly contested issue and law and policy makers across the western world are faced with decisions about whether to extend or restrict the rule. It is clear from the decision in ParkingEye, that law ‘makers’ are torn between the fact that the doctrine appears to be unjustified, and an inherent conviction about its legitimacy.

In summary, it appears that some would support a penalty rule which ensured contractual provisions did not subvert the compensatory principle.

However, others would not support the existing penalty rule; what matters is not so much whether the obligation in question is primary or secondary, but whether it is necessary and/or whether there is any oppression either at the point of contract formation or in its application.

The present formulation of the penalty rule appears to prioritise certainty and commercial pragmatism. Whilst these are laudable aims, it seems likely that it will be recommended that… of the penalty rule would be willing to sacrifice these aims to some extent, in favour of an approach that ensures: (1) a restorative approach; (2) that freedom from oppression in each individual case is not compromised; and (3) that parties have regard to the likely impact on each other and on society more generally, when agreeing damages clauses, or indeed any other clauses.

It isn’t suggested that it would be appropriate for law and policy reform to blindly follow a… However, when determining the future of the penalty rule and of the law more generally, it is submitted that there is still significant merit in having regard to what has happened previously and how it has impacted the law now and then. Law and policy makers can then decide whether or not those principles represent the views and the rights of people, and thereby ensure that law and policy is developed in a way that is informed, democratic and socially useful.

Sports law is plainly described as a fusion of laws that apply to professional sportsperson and the sports they play. It is not just one legal matter with broadly relevant rules. Sports law affects a wide array of topics, including contract law, administrative law, competition law, intellectual property law, defamation law and employment law. The people that are committed to this dispute regarding if sports law can be a true area of law take up one of three points. The first being that sports law does not exist. The second being, they believe that sport law may not be a true field of law as of yet, but that it may develop into one in the future and the final point is that sport law is its own separate field of law. In this essay I will discuss these three points along with the relationship the six law disciplines have with sport to try and conclude whether there is such a thing as sports law. The next section of this essay will be a more in-depth analysis about these three positions and the relationship of sport and the six law disciplines.

The first position of this debate is the more classic notion that sport law does not exist. Instead they believe it is the ‘application to sport situations of disciplines such as contract law, administrative law (disciplinary procedures), competition law, intellectual property law, defamation and employment law…’ (Woodhouse, 1996). They say that sports law is nothing more than normal law being enforced in the sporting world. Hence the study of sport law does not suggest the study of an exclusively different body rules that are separated from the common legal conceptions. All in all, they maintain that sports law merely just involves the use of legal principles to the sporting world.

The second position of this debate is the middle ground. Sport law may not be a true field of law as of yet, but that it may develop into one in the future. ‘Professor Shropshire concludes that the body of sports-only law has not reached a point of maturation such that a ‘unique substantive corpus’ exists that can be categorized as sports law’ (Timothy Davis, 2001). They deliberate that it is in a transformative process. It is believed by Professor Carter that the growth of sports law will better form the developing field of study and that this will eventually convert sports law to a well-known area of law.

The final position of this debate is that sports law is its own separate field of law. Law is defined as a system of guidelines that give order to human behaviour and provide forcible sanctions. Taking the meaning of law into account we can determine that because sport is a global activity, ‘it is in the responsibility of the state and its legal system to provide special norms to govern this issue. In addition, the state’s role is to enable and support the realization of the social functions of sport, which are possible only if the system has special pre-defined rules and laws for sports and sporting activities that enjoy protection by the state’ (Lazar Nanev,2013).

The first of the six law disciplines I will talk about is contract law ‘All sports business deals that require rights and employment can only be effective with the inclusion of contracts and subsequently contract law’ (Cox, Schuster and Costello, 2007). In order to defend the rights of sporting bodies, clubs and players contract law must be made use of. It retains tremendous importance and relevance in relation to player and team contracts, media coverage rights, endorsement contracts, scholarship agreements and doping offences (Davis, 2001). Contracts are seen and are certainly legitimate even at the unprofessional level. Therefore, with the purpose of fulfilling their roles all sporting organisations need contracted workers.

The next law discipline I will talk about is the administrative law. Administrative law is applied to sport very frequently, occupying a sizeable position in its legislation. It impacts individuals and teams in sport to a considerable extent through bans, suspensions, and disqualification (Cox, Schuster and Costello, 2007). A couple of the many examples of the involvement of administrative law would be with Mike Tyson and Lance Armstrong. These two athletes stood at the top of their respective sports for a number of years by cheating and acting in corrupt ways. Without the use of Administrative law case like those could not have be corrected in the proper way and a level playing field in sport would probably not exist.

The next law discipline I will talk about is competition law. Without the competition law the quality of sporting organisations and businesses as a whole would not have been able to improve so much over the years. Competition law demands that there is fair, free and effective competition within the sporting marketplace (Cox, Schuster and Costello, 2007). This also affects the economy in a good way and without the competitive nature of sport many fans would become disinterested in it which would also impact the marketplace of sport.

The following law discipline I will discuss is intellectual property law. This is a very important law for a lot of business. In all industries of competition, competitors always seek to gain the higher ground over their rivals even if it means stealing or cheating. Therefore, the patenting, trademarking and safeguarding of exclusive plans, designs, products and concepts are important for all businesses in the sporting industry. An example of this would be when Golf legend Jack Nicklaus has sued PowerPro Sports LLC, alleging that they are unlawfully using his likeness and trademarks without his permission to promote a product (Joseph M. Hanna, 2020). If the intellectual property law is not used as it should, it could lead to fraud and unfair use of someone else’s hard work. Intellectual property law also protects the image rights of sportspeople through the tort of passing off as the potential to generate revenue through one’s image is realised (Cox, Schuster and Costello, 2007).

The following law discipline I will discuss is the law of defamation. The law of defamation is important because it protects and defends the image and status of a person. This is especially valuable for professional athletes who have become celebrities and influencers in their own right. The media would seek to involve these athletes in their news articles that are more for views and entertainment of the public so they may not always be entirely true. There are a multitude of defamation cases in sport, a prime example of a sports defamation case would be when the west Indies batsman Chris Gale was awarded 300000 Australian dollars in damages because of false allegations made by Australian publisher Fairfax media. They falsely accused him of exposing himself to a female massage therapist and it was found that the publication was motivated by malice. (Amanda Meade/ The Guardian, 2017). The law of defamation saves the reputation of people like that and help prevent any sporting body or the media from making a remark no matter how small as it may still prove to be fatal to a person’s life.

The final law discipline I will deliberate is the employment law. This law was made for protection of employees as sadly they can frequently be treated wrongly. Like in contract law, contracts also feature here as employer and employee are bound to contract. Discrimination is frowned upon and considered unacceptable but sadly still happens. A recent example of this would be when twenty-eight members of the world champion United States women’s soccer team significantly escalated their long-running fight with the country’s soccer federation over pay, equity and working conditions, filing a gender discrimination lawsuit (Andrew Das/ The New York times, 2019). Cases like this one are handled under the employment law and fair treatment has been won many times thanks to the use of this law. Its clear that the employment law is imperative when dealing with sporting bodies. Employment law in sport looks to protect athletes, coaches, and the employees of sports organisations from unfair and unreasonable practices (O’Leary, 2012).

It seems to be quite clear that all law disciplines that I have discussed with examples can be applied to sport. In fact, without these disciplines there would be no legislation in sport. Sport would lose all its justice and fairness that these law disciplines give it. The mixture of these disciplines is what forms sport and law, without them their probably wouldn’t be an argument for sports law. Any legal matter seems to come under the shade of already current law, and this seems like it will be the case for the foreseeable future. Out of the three positions of the sports law that was examined earlier in this paper it would look like the traditional view of Mr. Woodhouse saying ‘I have often said there is no such thing as sports law. Instead it is the application to sport situations of disciplines such as contract law, administrative law (disciplinary procedures), competition law, intellectual property law, defamation and employment law’ is the correct conclusion.

Question 1:

Issue:

The key issue is whether is Nick has a binding contract with Frank. Will Nick still able to claim the money?

Rule:

As a contract law in Australia is embodied in common law which defines the Contract law as an agreement between two or more parties which were stated in “Topic 2 Agreement – Offer in Contract I ”. In order to recognise as a contract, there are 4 element you must be follow:

• Offer: a promise by one party to provide something in exchange for something of value from the other party.
• Acceptance: agreement to the offer.
• Consideration: agree to provide something of legally recognisable value to the other.
• Intention: the willingness of all parties to an agreement to be legally bound by that agreement.

It will not recognise as a contract if one of the elements is not included. Contract is always start with offer. Offer can be made in writing, verbally or may be inferred by the party’s conduct. Although offer made in verbally sometimes are not offer such as:

• Negotiate: conduct between parties before an agreement is made.
• Request for information: help person to decide whether or not to enter into an agreement.
• Advertisement: made to the world at large, but court usually do not consider advertisement to be offer.

Application:

Frank has made an offered $1000 with Nick if he abstains from alcohol for one month starting from 1st of July because of his concern of his nephew health which lead Frank offers was more likely negotiate where he become concern about his nephew health.

Nick has concerned his health before Frank has made an offer, so Nick has joined membership of AA group and sign document with AA group that is one of the conditions for membership to abstain from alcohol.

Nick leads himself to have contract with AA group instead of Frank under the contract law which he has meet all the elements in the contract elements. In that case, both of Nick and AA group has binding contract together under Contract Law in Australia.

Furthermore, he didn’t show that he intent to accept the offer or consider the offer which he stated in case study that “He admits this was more out of concern for his health and the promise to the AA group than any thought of financial reward”.

The similar case occurs

Conclusion:

In conclusion, Nick has no binding contract with Frank because there is no agreement between both parties and under Contract Law in Australia is embodied in common law it doesn’t recognise as a contract because of the elements of the contract is missing. Also, Frank is more likely negotiate with Nick rather offer him, so Nick won’t be able to claim the money.

Question 2:

A. Issue:

Whether can he return the stone to Hugh and claim his money back although there was no discussion, both Donald and Hugh believed it was a rough diamond.

Rule:

Under contract law in Australia is embodied in common law, form of contract can be made in writing, orally or by conduct. Therefore, in the element of the contract, acceptance can be defined into types:

• Express acceptance
• Implied acceptance

Which under the “Topic 1 Introduction to contracts and Topic 3 Agreement – Acceptance in Contract I”.

Application:

Hugh has a stand with the sign “For Sale: Mixed Gemstones at Marked Prices” this was demand as invitation to treats.

Donald was a looking for a stone that suitable for setting in a ring and he has selected stone priced $450 and purchased it from Hugh which a contract between Donald and Hugh has made under the form of Contract “Contract by conduct”.

Although there was no discussion between Hugh and Donald, the stone was later discovering as topaz, this was considered as implied acceptance which the offeree conducts, or actions convey acceptance with no verbal communicating the acceptance is required under Contract Law of Australia.

As similar case happens “Brambles Holdings Ltd v Bathust City Council [2001] NSWCA 61” which the case is demanded as implied acceptance by conduct throughout the action of Bramble wasting liquid at the rate specified in the September letter of offer, and when view objectively. The conduct is respondent could only conclude that the agreement had been accepted on the part of the appellant and was to be acted on by them.

Conclusion:

In conclusion, Donald has no right and legal implication to claim his money back under Contract Law. Donald rights and legal was stated as implied acceptance in this case because there was no communicate or discussion involve in the case.

B. Issue:

Will Donald be able to return the stone and claim his money back, if Donald believe the stone was a rough Diamond but did not discuss his belief with Hugh, who knew it was a topaz.

Rule:

Under the Contract law of Australia, contract by conduct define as form from the actions of the parties and it still follow the element of the contract.

One of the elements, acceptance can express differently throughout the action involve. Importantly, acceptance can determine for agreement between 2 parties. Acceptance can be implied or expressed. This was stated in “Topic 1 Introduction to contracts and Topic 2 Agreement – offers in Contract I”.

Application:

Under this case, it quite similar to case above which Donald believe the stone was a rough diamond but he didn’t discuss his believe with Hugh about it which lead Donald accept the contract with no other term or under any circumstance under the element of the contract.

On the other hand, Hugh, who knew it was topaz doesn’t realise Donald was looking for rough diamond which Donald doesn’t discuss his belief with him. Furthermore, Donald believe and did not discuss will lead him to an implied acceptance which no communicate, and contract is by conduct.

Conclusion:

In conclusion, Donald has no right and legal implication to claim his money back and return the stone according the Contract Law of Australia embodied in Common law which he has no discussion

C. Issue:

Will Donald be able to claim his money back if Donald told Hugh he was pleased to find a diamond. Hugh did not correct him.

Rule:

Under the Rule of Contract Law of Australia, Invalid contract can be Misrepresentation. Misrepresentation can have 3 different types:

• Fraudulent misrepresentation
• Negligent misrepresentation
• Innocent representation

This was stated in “Topic 2 Invalid Contracts in Contract II under Misrepresentation”.

Application:

Donald told hugh that he was pleased to find a diamond.

Hugh did not correct him and let Donald choose a stone which later identified as topaz. In Invalid Contract stated that Fraudulent misrepresentation is a statement where offeror deliver a false statement to offeree so Hugh know that the stone was topaz when he sell that stone to Donald at the same time when Hugh know Donald was looking for rough Diamond.

Conclusion:

In conclusion, Donald has right and legal implication to claim his money and return the stone which mean the purchaser would be entitled to restitution for any money they have paid.

D. Issue:

Will Donald be able to claim his money back and return the stone to Hugh if Hugh was innocent misrepresentation?

Rule:

Under the Rule of Contract Law of Australia, Invalid Contract can be misrepresentation. Misrepresentation have 3 difference types:

• Fraudulent misrepresentation
• Negligent misrepresentation
• Innocent representation

This was stated in “Topic 2 Invalid Contract in Contract II under misrepresentation”.

Application:

Under this case, Donald was looking for rough diamond.

Hugh was the club’s expert on diamonds. Hugh was offered the stone to Donald which he assumes that it was a diamond as he honestly believed it to be. Donald has purchased the stone and discover later as a topaz. This lead Hugh become an innocent misrepresentation under the condition that he offer to Donald which make a statement that he genuinely believes to be true but in fact, is incorrect.

As similar case happen Whittington v Seale-Hayne (1900) 82 LT 49, Plantiff entitled to rescind on the basis of an innocent misrepresentation as well as a refund of rate and an indemnity on repairs that he had made as these were obligations created by the taking of the lease.

Conclusion:

In conclusion, Hugh misrepresent and offered the stone to Donald which was discovering later as a topaz can be defined as innocent misrepresentation. Also, Donald has right and legal implication to claim his money back and return the stone which represent in ACL s18.

Reference:

1. Gibson, A 2019, Commercial and Enterprise law: law of contract, Pearson, NSW, pp. 212.
2. Gibson, A 2019, Commercial and Enterprise law: law of contracts, Pearson, NSW, pp. 239.
3. Gibson, A 2019, Commercial and Enterprise law: law of Contracts, Pearson, NSW, pp. 227.
4. Gibson, A 2019, Commercial and enterprise law: law of contracts, Pearson, NSW, pp. 326.

Explain the role of government in law-making and how statutory and common law is applied in the justice court.

The parliament of the UK is the one who make a law. Parliament have 3 chamber in which include House of Common, House of Lord and Monarch. In a first place, a bill is propose new law or existing law and come from government, opposite party, civil service groups etc. The types of bill is public, private, government and private member’s bills (Parliment, 2014).

In first stage, government proposal called green paper to present government idea and future policies, published in public discussion for interest groups. When fine new is govern, white paper is published. When confirm the bill cabinet ministers decide to go a forward and cabinet ministers introduce the bill into the House Common. This is a first reading and purely formal stage and there is no debate on the bill (Parliment, 2014).

In a second reading, debate on the main principle of the bill and government ministers will open the debate by setting out the case for the bill and explain it provision. At the end of the debate house will vote on the bill and if the vote is lost by the government cannot be proceed any more.

Committee stage is a line-by-line consideration of the detail bill. This process carried out by specially convened committee of MPs. In a report stage, discus only amendments. Third reading is the general discussion of the bill and no amendment is possible in this stage (Parliment, 2014).

Last stage, both house must agree on the text of a bill before it can be become an act. This mean that a bill move backward and forward between the two houses once both house agree. A bill that both house passed the law and goes the Monarch royal assent (Parliment, 2014).

Statute law, refers to law that has been created by Parliament in the form of legislation. When Statutory Law applied in Court, some kind of thing they did not understand in the Statute Law they will look at interpretation. The rule that there are using golden rule, betrayal rule class rule and striatal rule. Even applied these rules and court want more clarification court will see the process of the constitution and use extended material.

The ‘common law’ means the substantive law and procedural rules that have been created by the judges through the decisions in the cases they have heard which develop over period of years. Over the years equitable principle started applying big part of developing common law and give fair and just. For example, entire body of contract law base on a common law. Under the Contract Law, Adams v Lindsell (1818) 106 ER 250 the defendant wrote to the claimant offering to sell them a few wool and requesting a reply ‘within the course of post’. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. but, because of the delay the defendant’s had assumed the claimant become no longer interested in the wool and sold it directly to a third party. The claimant sued for breach of contract. Equitable principle applies and court say post is the agreed form of verbal exchange among the parties and the letter of acceptance is correctly addressed and includes the proper postage stamp. The acceptance then becomes effective when the letter is posted (Sarah Riches & Vida Allen, 2009).

Evaluate the effectiveness of the legal system in terms of recent reform and developments.

Employment Act 2002, brought to know the person before they got an employment what are the disciplinary and dismissal procedures in that company and ask to give a copy to employment before employment begin. It introduces new provisions concerning ‘family-friendly’ working, the decision of individual disputes on the workplace, equal treatment for fixed-term employees and other matters. This feature summarizes its most important necessities and the timetable for their implementation, and looks at organization and trade union perspectives of the new law.

TUBE act 2006, when transferring the company, owner of the company did not pay employee salary and did not inform about the owner of the company is change and what will happen the employees when the ownership change. Sometimes new ownership also do not know these thing when they handover the company. Cause of these dirty thing TUBE Act 2006 came. In this Act, transferor have to give information to the new operator in written or readily accessible form in regard to the identities of those employee who are transferring and their employment rights and liabilities. Employees got chance to agree or not in that variation. The main aim of this act is ensure that, in connection with the transfer and employment is protected.

Some organization hired employees based on age, gender and religious. Some employee less salary causes of the sex or disability but they worked same hour and complete works same as others. Equality Act 2010 brought the solution these problem and brings 116 separate piece of legislation into one single Act. This Act protects individual from unfair treatment and promotes fair and more equal society (commision, 2019). This will impact on business various ways depend on the situation.

Using specific examples illustrate how company, employment and contract law has a potential impact upon business

Employment, Company and Contract law impact many ways in many situations. Under the employment law have a discrimination act. as a business if hiring and recruiting employee to a company is important to know the direct and indirect discriminations. Company should not be preference specific gender, race or age. According to this Act these are now illegal and impact on the business. Another important thing under the employment law is Health and Safety Act. Environmental law will impact business operation, agencies must discover environmental and friendly ways of disposing of waste in order to not make a contribution to pollutants. They can be determined negligible. This impacts the health and safety of workforce employees and the general public. Employees or the public can litigate for negligence if they can proof that their loss or damages was due to the enterprise poor health practices. This can impact the business reputation (Goodwill) profit margin and much less confidence from stakeholders within the business (JAMES, 2016).

Under the Company Law have a Consumer Protection Act. The Act requires the trader to ensure that the written terms in a consumer contract are transparent and prominent. For a term to be “transparent” it must be in plain and intelligible language and be legible. A term is “prominent” if it is brought to the consumer’s attention before they enter into the contract. And the contract terms must fair. For example, most businesses that make products offer a warranty, which is a promise to buyers. A warranty explains what the manufacturer will do if the product is faulty. If they are not treat the way they written in the warranty will lead to impact on business (Muckle, 2015).

Contract law impacts corporations due to the fact all agencies are either offering a service or they’re offering a product which means that they have to purchase, they have to resell, or they have to render services. For each and every one of these transactions, a contract should be in place. That contract states whether those services are being purchased or offered at the precise price and what the terms and conditions are. For example, two parties are agree to supply some product with specification and with time limitations. Supplier supply the product to given period but some specification are differ to the contract they agreed and did not accept product. This will impact on the business (getsmarter, 2016).

Select two business problems. For each problem case presented you must apply and justify a legal solution to the problem.

Problem 1

John and Marry are two employee of Hotel A and two are receptionist. The responsibility, working hours, qualification and skill level are same. After couple months, Marry noticed John gets more money base on her salary. When Marry talk to John regarding this issue, she knows salary was same but service charge was less than john. When she talk Human Resource Department, they told her service charge was given base on work that employees were given. HR department believe that man were more worked than the women.

In this situation, the problem is sex or gender discrimination. According to the GOV.UK (2019) it is direct sex discrimination to treat someone less favorably because of their sex than someone of the other sex would be treated in the same circumstances. Famous case Coleman v Skysail Ltd (1981) are related to this case. In this case, better to get help from mediator to solve the problem because in this process have less formalities and less cost. Even this process marry did not get fair solution marry can appeal an Employment Tribunal with the evidence against Hotel A. Equality Act 2010 says if someone treat less favorably because of their sex than someone of the other sex would be treated in the same circumstances is illegal.

Problem 2

Mr. Joseph and Wooden Company made a written contract to made 100 chairs (Black) within the week. But after week also Wooden Company cannot deliver Mr. Joseph chair. After 1 day, Wooden Company delivered chair but Mr. Joseph noticed 10 chair was miss and the color also not black.

Above case is clearly contract violation case. Moreover Mr. Joseph have not received the exact thing his ordered therefore the company is also violating consumers’ right. According to the Consumer right Act 2015, Mr. Joseph have every right to query about goods sales contract, transfer contracts as well as the quality and quantity of the goods. In this case, Mr. Joseph ordered black 100 chairs while he received 90 chairs (not black) and after one day (Cuniberti, 2014). According to the 29 (1) and (2) of CRA the goods quality and time of shipping are the responsibility of trader. Moreover in accordance to 3(a) and 3(b) of CRA the conditional sales contract is absolutely violated right here. For the delivery of the products the 28(3) defines that goods should be exact as according to contract and overdue delivery can cause penalty according to 28(6) of consumer right act 2015. Finally the quality of the goods is not satisfactory. Consequently you could take the help of S9 of CRA 2015 which defines the term satisfactory quality as described in the sales agreement between the customer and trader. In this example the color in the contract turned into black which isn’t same after delivery. So Mr. Joseph standards have not met according to the sales contract. Therefore strive 19(6) section of CRA 2015 which gives Mr. Joseph have the right to reject products when they are not as per the prior agreement (Mike Holcombe & Florentin Ipate, 2012)

For above two selected business problems apply an alternative solution in reference to the legal framework of Sri Lanka

Problem 1

According with the constitution, there cannot be any discrimination on the grounds of race, religion, language, caste, sex, political opinion, place of birth or any individual of such grounds. There is no special provision in constitution or labor laws to prevent discrimination in employment associated matters. Laws also prohibit discrimination against disabled humans in subjects of employment as well as employees involved in union activities (Wage Indicator Foundation, 2019).

Constitution of Sri Lanka offers each person the right to apply to the Supreme Court in respect of violations of fundamental rights by way of the state (executive action). It is not clear whether individuals can achieve redressed with recognize to discrimination by the private sector employers (Wage Indicator Foundation, 2019). So according to this Marry can appeal to the Supreme Court against Hotel A.

Problem 2

Above case is clearly contract violation case. Moreover Mr. Joseph have not received the exact thing his ordered therefore the company is also violating consumers’ right. According to the Unfair Contract Term Act 4(1) and (2), Mr. Joseph have every right to query about goods sales contract, transfer contracts as well as the quality and quantity of the goods. According to the Contract Term Act 4(1) say between parties to a contract where one of the parties deals as consumer or on the other’s written standard terms of business. In this case, Mr. Joseph ordered black 100 chairs while he received 90 chairs (not black) and after one day. According to the 4 (2) As against that party the other cannot by reference to any contract term— except in so far as (many of the cases mentioned in this subsection) the contract term satisfies the requirement of reasonableness (Black Hall Publishing, 2017). Mr. Joseph can complain a compensation against the Wooden Company in a court.

Compare and contrast the effectiveness of these recommendation

In both country fundament right are protected. In UK, gender discrimination define by law Equality Act 2010 but Sri Lanka constitution define the discrimination and so old. Equality Act more describe than the Sri Lankan Constitution. According to Sri Lankan Constitution people can appeal Supreme Court in first instance while UK first complain in the Tribunal or Magistrate Court.

However, in a second case both country very similar descriptions and both country have very recent Acts. In a contract violation cases Sri Lankan use Contract term Act while UK use Consumer Protection Act. In both Acts detail the how contract violation are.

Conclusion

Though the business law assignment, briefly discuss the legal system and important to be aware the law to business owner and responsible people to do business. The key legislation on business is Company, Employment and Contract Law and these law potentially impact on the business.

1. Identify the areas of law that are relevant to the chosen media report, and explain how they are relevant to the matters outlined in the report.

This media report is based on the article from 31/07/2019 by Robyn Ironside “Widow sues CASA over Tiger Moth pilot’s fatal crash”

Tort Law

The main aspect of this article is that a pilot and passenger lost their lives as a result of a wrongful decision made when the Civil Aviation Safety Authority (CASA) approved unsafe parts for their plane; this falls under tort law. This law is extremely relevant to the widow’s case as the law of torts allows the ‘victim’ to recover damages from the person (or in this case organization) who has committed the tort (Graw, Stephen, David Parker, Keturah Whitford, Elfriede Sangkuhl, and Christina Do. Understanding Business Law. 3rd ed. 2017). It is stated in the article that the Civil Aviation Safety Authority approved the “safety critical” part of the aircraft that failed (Robyn Ironside), further enhancing that this incident falls under tort law.

Administrative law

CASA is an administrative agency as it is a government-run body that has the authority to carry out the implementation of an act (or set of acts) of their country’s parliament (Joseph Vining 1992). The way CASA carries out and implements these laws and acts are relevant to administrative law. The purpose of this agency is to regulate Australian aviation safety and the operation of Australian aircraft overseas (CASA 1995). CASA explains in their “Who we are” section of their website that their role is described in the Civil Aviation Act 1988. Section 3A, paragraph 1 of the Civil Aviation Act 1988 states, “ The main object of this Act is to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents”. There is clearly an administrative legal issue within this article, as CASA has not enforced the Civil Aviation Act by allowing unsafe aviation parts to be improperly assessed and passed as usable.

Contract Law

It is explained in the article that CASA had a hired engineer who approved the replacement tie rods. This falls under employment contract law the engineer had an employment contract that would have stated his job role. The contract would also allow the engineer to not be directly charged for the incident as it is stated that they were operating within a “CASA approved system” (Robyn Ironside). The engineer’s job obligations and CASA’S employment obligations (e.g. having systems in place to prevent employee accidents) within their contract allowed the engineer to have rights when incidents such as this one occur.

Corporation’s law

CASA as a company has to follow the rules and guidelines of the corporation’s law. This law enforces the obligation that companies, including CASA, have to work within the law. The article explains that CASA claims to follow the Civil Aviation Act 1995 which is a set of guidelines aviation companies have to work within to ensure the safety and wellbeing of those they are responsible for.

2. The law serves a number of different functions. It:

Ensures reasonable predictability in daily life;

As an employee, contracts ensure reasonable predictability within a working environment. Employee contracts are legally binding contract that allows employees to know their job obligations and rights. As an employer, these contracts give the reassurance that their staff will work within their stated guidelines and whatever else the job may entail. Therefore, contract law provides great reasonable predictability in day-to-day working life.

The article mentions an engineer who was hired by CASA to complete the role of (in this case) checking parts for aviation purposes. This contract allowed the engineer to have a formal guideline formed by their employer (CASA) to follow, which will ensure that the rights of the engineer are protected as long as the employee follows the contract, as they did.

Encourages and discourages certain conduct;

The law provides a guideline for how people and companies are expected and legally supposed to act. In regards to CASA, corporate law enforces that their mistake in approving unsafe aviation parts results in them being sued by the widow of the pilot. CASA being sued is an example of what would discourage certain conduct; in this case, it discourages wrongful approving and negligence when it comes to safety precautions.

This is also an example of encouraging certain conduct, as the law allows and encourages people to fight for what they believe is fair in order to get justice. In this case, the widow sues CASA for the negligence that caused her husband’s death.

Grants rights and powers to individuals and groups of people;

Administrative law governs the actions and decisions made of government decision-makers. Administrative law also allows individuals the right to appeal these decisions. The approved system that CASA was using during the time of the ‘Rae’ incident to assess aviation parts was proved to be inefficient and dangerous as it did not take into account other aspects that could hinder the part’s reliability (ATSB 2013). Administrative law would then allow Mrs. Rae to appeal for a new system to be set in place that would guarantee a safer inspection and assessment of aviation parts, which gives future pilots and passengers a more assured right of safety.

Imposes obligations on individuals/organizations to meet their legal responsibility; • Allows for the enforcement of recognized rights and duties; and

The law of tort enforces these rights and duties. Tort law is defined as “acts or omissions by a tortfeasor that are not authorized by law and infringe another’s private or public rights” (Graw, Stephen, David Parker, Keturah Whitford, Elfriede Sangkuhl, and Christina Do. Understanding Business Law. 3rd ed. 2017). In the case of CASA, tort law recognizes that negligence on their behalf caused the death of Jimmy Rae (the pilot). Tort law enforces the widow’s rights to impose the obligation that CASA owes Mrs. Rae for the suffering they have caused her.

Provides remedies when an injustice has been done.

Tort law provides remedies for the individual or individuals that have suffered, by allowing the victim to receive payment or another form of remedy by the tortfeasor. When Jimmy Rae died as a result of CASA’s negligence, his widow then had the right to sue CASA as a result of her grief.

3. By reference to the legal issues contained in the chosen media report, explain why it was important for the relevant party/parties to know the law in the circumstances? How did, or could, the party/parties have applied the law to their advantage?

The Civil Aviation Safety Authority may have been acting within their approved systems at the time, however, it became apparent that these systems were not living up the standards of the Civil Aviation Act 1988, which is what they had assumed they were following. Although it wasn’t up to the standards, it was technically legally approved. If this corporation wasn’t following its legally approved system at the time then this incident would have been considered a criminal offense. As a result of their system, despite it not being the ultimate way to assess parts, it was approved and following the correct guidelines.

Through understanding their rights and obligations as a government organization, CASA was able to assure the court that they had done everything within their guidelines at the time and what was expected of them, to prevent incidents such as this.

Unfortunately however a death occurred as a result of a poorly approved system and this also gave the widow of the pilot the right to sue, as she had at least a basic understating of the law. The widow of the pilot applied tort law to her advantage when taking CASA to court. She understood her rights as someone who is suffering as a result of a negligent act and this allowed her to sue CASA.

4. How do the media influence public perceptions about the law and its administration? How might public pressure impact legislators and judges in establishing the law?

The media has the ability to present certain information to put across a specific argument. This can be quite difficult, as you never truly know if you are seeing the full story or just what they want you to see.

The people who get sucked into media and the power of its persuasion are the very same people who choose our lawmakers; the general public. The public has a say in who runs our country and who is in parliament. Media and public pressure/influence can have great effects on our establishment of law because those people in parliament voting for certain laws to be passed or not, are also human, and they can be just as easily deceived by false or minimal information.

The media’s strong influence can very easily change our perception on what is right or wrong on a subject, person, place, etc, and that can sometimes be a dangerous game. No matter who you are or how powerful someone is in the legal system, influence will always have a huge part to play in opinion.

Cordelia Wainwright

This case is a case of negligent misrepresentation because the finance officer made the statement without knowledge of the capacity because he had not gone to the building to ascertain the facts of what he was saying; he had made the statements without reasonable grounds to believe on what he is saying. In such a case, the innocent party has a right to damages for misrepresentation if he suffers a loss. in law it is upon the maker of the statement to prove that he actually had reasonable ground to believe in the statement he made. The facts of this case are similar to the facts of the case of Naughton v o’ Callaghan (1990) (Abbort K Pendlebury N & Wardman K, p. 142).

In this case P purchased a racehorse (Fondu) for 26,000 guineas on the basis of a negligent misrepresentation by D as to its pedigree. at the time, if the pedigree had not been misrepresentation, it would have been worth about 23,500 guineas. the misrepresentation was discovered two years later, during which time Fondu had been raced very unsuccessfully and was worth about £ 1,500. P claimed the difference between the purchase prices of 26,000 guineas. Normally the courts would award the difference between the value of the goods as represented and the actual value at the time of sale. However P, succeeded since there were reasons for departing from the usual position (Abbort K Pendlebury N & Wardman K., p. 142).

From the facts of the case above I will advice Baron finance company that IFM will actually recover because the finance officer negligently misrepresented facts. He made statements without checking its truthfulness. IFM will only recover the difference between the loss and the sales value.

Dazza Chav case

In this case, there is fraudulent misrepresentation on the part of Steve Forest. Steve misrepresented the facts knowing very well that the person he is representing as having been employed had not been employed. However, Dazza Chav also relied on his judgment in increasing the amount of the investment because he had not met or heard about Baroness Von sass. If Dazza Chav discovered earlier about the misrepresentation then the contract could have been set aside. There is a case with similar;

Smith v Chadwick, 1884

A prospectus contained a statement that a certain man was on the board of directors of the company. Plaintiff admitted that he was not influenced by this statement while purchasing share. it was held by the court that the plaintiff could not rely on the misstatement and his action should fail (Hussein A, p. 162).

From the above case, with similar facts I can conclude that Baron finance company will not be held liable. If Dazza Chav decides to take a legal action it is bound to fail because at firs instance he was not aware of the person who they were talking about in the contract and relied on personal judgment to make a decision. Whether there was misrepresentation, it is immaterial at this point because the person who was misled relied on his own judgment as he had no information relating to the person who was quoted as having been hired. If he had relied on the information fully, then it could have been different case that is the Baron finance company would be held relied. This was held in the case of REDGRAVE V HURD 188.The facts of the case were as follows;

The plaintiff in the negotiations of the sale of his business to H represented that his income from the business was £ 300 a year, and produced some papers in support of it. H relied on R’s statement and bought the business without examining the papers. if he had examined tem, he would have discovered that the plaintiffs statement was false. It was held that as H had relied on the plaintiff’s statement was false and he could rescind the contract and it was no defense to say that he had the means of discovering the untruth (Hussein A, p. 162).

Gosia Business Strategy analysts

In this case, there was mistake but the facts were correct during the time the statement was made. They became untrue in the subsequent negotiations, the investor did not read the material facts of the report and the company failed to disclosed such kind of information therefore the contract became voidable at the discretion of the investor. The statements made in this case were actually innocent misrepresentation because they literally true but had a misleading impression. In the case of White v O’Flanagan (1936). The facts of the case were as follows:

W was induced to buy F’s medical practice on the representation that it was worth £ 2,000 a year. The representation was made in January, but the contract was completed in May. In the meantime, due to F’s illness his contract could be avoided owing to F’s failure to disclose the substantial reduction in his practice (Hussein A, p. 163).

Relying on the facts of the case above, I would advice Baron finance company that the contract was likely to be avoided at the discretion of the investor, however, since the investor has already invested and lost quite substantial amount of money damages will be recovered. Therefore the remedy available is action for damages, for the loss incurred and will be recovered. The fact that they relied on the information provided by the company stated that it was in excellent condition is enough to make them incur damages for the loss incurred.

Squire finance case

This case represents fraudulent misrepresentation where the party issuing the bond knew very well that the bonds were to be used for a different purpose and issued by a different company not Baron finance company. They have misrepresented the facts that the finance raised would be used on Baron Finance and they ended up using it on squire finance. In this case, Baron Finance will be held liable for damages incurred by the Bond takers. This is because the statement was made by Baron Company knowing that is untrue and that is why it arises to an action. A case with similar material facts of R V KYLSANT (1932).

A company issued prospectus, offering debentures for subscription and stated that the company had paid dividends every year for several years. The statement gave the impression that the company had made trading profits during those years, whereas in fact the company had incurred substantial losses and the dividends had been paid out of secret reserves. No disclosure was made of these trading losses. Held that the prospectus was false and the defendant was liable for misrepresentation ( Abbort K Pendlebury N & Wardman K, p. 140).

From the facts of the case above, the company will be held responsible because the company’s information about Baron finance company had a greater misrepresentation since it distorted the true statement about where the money was going to be used.

Irine Insurance case

The cases of insurance are supposed to be of utmost Good faith and there should be no misrepresentation or omission of any material facts thus they must be disclosed when making the contract. It is the duty of Ophelia chapette to disclose the facts of the £1,500 that had gone missing. But he did not disclose this information. In insurance, the insured person is assumed to be having knowledge of the facts likely to influence the insurer in deciding whether or not he should accept the risk. It is therefore reasonable that Ophelia Chapette should have made a frank and true discloser of all material facts known to him for the purpose of enabling Irine insurance to give a free consent. The case below had similar facts

Aveson v Kinnard, 1806

IN This case, the insurer escaped his liability to pay under a life insurance policy where the insured had stated in the proposal form that she was in good health, but had in fact privately mentioned to a close friend of her that she did not expect to live (Hussein A.,165).

In this case, the insurance will reject to pay for the loss because all the information that was supposed to be given to the insurance was not given during the contract time. The company became economical with information as they failed to disclose the disappearance of £1500 from petty cash. In another case of utmost Good faith, a company failed to disclose all the information that was required and the insurance was given rescission of the contract. The facts of the case were as follows;

LONDON ASSURANCE v MANSEL (18790 d FAILED TO disclose that several insurance companies had declined proposals to insure his life. this was held to be a material factor which should have been disclosed. rescission of the contract was therefore granted (Abbort K Pendlebury N & Wardman K 299-300).

All contracts that are misrepresented are voidable and this type of contract i.e. insurance contract is voidable on part of the insurance company. However since something has occurred before discovery of the truth, the Irine insurance will not accept the claim nor will they return the premium. My advice to the Baron finance company is that they are going to fail in lodging a claim.

Tarquin Farquarson

This case is a misrepresentation case where there is lapse of time. If the facts are misrepresented, lapse of time will not stop rescission on part of the affected party,if he has learnt the truth. Lapse of time will only work if he discovered the truth and moves on for some time. This is because time starts to be counted from the time when one learns the truth. In the case presented here there are so many parties involved Baron had bought the property from Cravat property on the ground that is was registered under England’s National trust. If Baron finance company had sold this property immediately without knowing that it was not actually used for luxury weekends and it was not registered under National trust then they will be able to recover damages from Cravat properties. The following is a case with similar facts;

Leaf v International galleries (1950)

P was induced to buy a painting by an innocent misrepresentation that it was by John constable. Five years later he discovered the truth and immediately claimed rescission. He could not therefore have affirmed the contract but his claim was held to be barred by lapse of time (Abbort K Pendlebury N & Wardman K., 143).

From the above case, it can be noted that lapse of time will not be applicable to this case, because Baron learnt of the fact that there was a misrepresentation eight years later. Britney Cidercan bought this premises and discovered immediately that they were not registered as stated, they can recover damages from Tarquin Farquaharson who will in return recovered the damages from Baron if they had not had information about being registered under National trust.

Conclusion

From the above six cases, various issues of misrepresentation has been covered. Negligent presentation has been covered in the first case. Fraudulent misrepresentation with personal judgment is in the second case. The third case presents fraudulent misrepresentation with subsequent changes in the material facts. The fourth case is a case of fraudulent misrepresentation with full knowledge. The fifth case is contract of utmost Good faith and the last case deals with lapse of time and misrepresentation.

References

1. Abbort K Pendlebury N & Wardman K (2007) Business law, 8th edition Thomson learning pp 140 to 144, 299
2. Hussein A. (2005); General principles and commercial law of Kenya. Business education series East Africa Educational publishers pp 162 to 165.