Legal Issues Related To Breach Of Agreement, Misrepresentation And Consumer Protection

Enforcing terms of an agreement

A tribe of South American people live in forests, and its members have never seen modern civilisation in their life. This tribe is controlled by elders who made the rules in the tribes which favour everyone. Generally, these rules are proposed by the elders, and they are implemented based on what the group agrees, thus, it was an informal process. Now the tribe is developing a constitution in order to make rules regarding protection of members from violence and make the whole process formal. The constitution provides rights to each member based on which they are protected from violent acts of other members. The members who use violence are punished by imprisonment for a period based on the seriousness of their crimes. Furthermore, the tribe also punished the members by imposing fines on the parties by taking their belongings or land.

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The purpose of these rules is to formalise the process of holding people liable for their violent actions against other tribe members. This constitution complies with the three-part legal system developed by Herbert Lionel Adolphus Hart. Firstly, the Rule of Recognition provides that the law should be certain and their validity should be clear. The constitution which held tribe members liable for their actions is applied over the whole tribe. All the members know about these regulations, and they are aware regarding the punishments for different violent crimes. The rule of change principle also applies to the constitution because a process is given in the tribe to change the policies of the constitution based on majority votes. The rule of adjudication is present as well because the judgement is given by specific members who did not have an interest in the case and rely on principles of natural justice.

The English Criminal Law which applies in England considered the crimes as wrongs against the whole society rather than only the private individuals. The legal system provides that the state is responsible for controlling, managing and preventing crimes to bring justice in the country. The main objective of the legal system in England is to prevent crimes rather than punishing the criminals. The penalties which imposed by the courts in a person who found guilty of criminal offense include custodial sentences, fines, discharges and life imprisonment. The Criminal Justice Act governs the sentencing decisions made by the courts. The sentencing and fines are based on the seriousness of the crimes committed by the person. Hart’s three-part legal system applies to the legal framework in England. For example, the rule of recognition applies because all the rules are clear because they are included in the constitution and legislation.

Fraudulent misrepresentation and insurance claims

The rule of change also applies because the process of amending, replacing, deleting and adding the laws are clearly defined in the legal system of England. The rule of adjudication applies as well because criminal matters are handled by criminals courts which are divided based on geographic locations and seriousness of punishments. In comparison with Australia, the policies are similar because most of the policies are adopted from the English legal system. The Crimes Act imposes various penalties for criminal acts such as imprisonment, fines, community sentences, discharge and life imprisonments. Hart’s three-part legal system applies in Australia as well. The rule of recognition applies because rules are mentioned in the constitution and legislation. The rules of changes are included in the constitution. The rule of adjudication is clearly defined as well which applies based on geographic locations and seriousness of crimes.

The lease documents created between parties are not treated differently from other commercial documents. The rent payable in a contract of lease is an essential term in a contract which is considered as consideration for such contract. In case the party breached this term, then the contract for lease can be terminated by the landlord. Furthermore, a contract binds its parties into the terms of the contract based on which each party can hold each other liable for violating the terms of the contract and demand for damages. A contracting party can claim for damages in case the contracting party breaches any terms of the contract.

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In Gumland Property Holdings Pty Ltd. V Duffy Bros Fruit Market (Campbelltown) Pty Ltd  case, Transit Management Pty Ltd (Transit) gave its shopping centre on a 15-year lease to Duffy Bros Fruit Market (Campbelltown) Pty Limited (Duffy). Due to falling short of paying the rent, Duffy entered into a contract with Transit to sub-let the property to a sub-tenant. Transit sold the property to Gumland Property Holdings Pty Ltd (Gumland) in 2001 along with the rights of the lease. The lease of sub-tenant was expired in 2002, and it decided not to exceed the lease, and it started paying only half the rent which was given under the sub-lease. Gumland filed a claim against Duffy regarding breach of the lease along with the deed and demanded payment of all arrears. The damages include arrears in rent, loss of bargain and reinstatement damages and the lease was terminated by him. Duffy argued that the payment of rent was not an essential term based on which the lease agreement cannot be terminated.

The legal system in England and Australia

Duffy also argued that Gumland could not claim the loss of bargain because its right only arises in case Duffy repudiated the contract. The High Court allowed the claim made by Gumland and awarded the damages to it which include arrears of the rent and loss of bargain damages. The court provided that the deed is not separate from the lease instead it varied the terms of the lease. Since Duffy agreed to the essential term of the lease, it is liable to pay the rent in full. The term included in the lease document regarding payment of rent is an essential term, and the lease can be terminated in case of breach of this term. The judgement of this case is relevant because it provides a compelling example regarding provisions of a leasing documents breach of which leads to legal consequences. This judgement showed that leasing documents are not treated differently from other commercial documents, thus, it is crucial that parties focus on the wording and effect of the provisions of the document.

In conclusion, the landlord has the right to demand damages in case the tenant breaches an essential term of the contract. Furthermore, the landlord can also demand the loss of bargain in case an essential term is breached, and the landlord has suffered financial loss. The remedies given by the High Court, in this case, include awarding damages of $2,096,514 to Gumland which also include the loss of bargain which was the difference between the outgoings payables and the rent. Furthermore, the court allowed Gumland to terminate the lease contract based on the breach of the tenant.

When a party made a false statement regarding a fact or law in order to induce another party to enter into a legal contract, it is called misrepresentation. Thus, misrepresentation is referred to an untrue statement or omission of information based on which a party forms a legal relationship with another party. In case of misrepresentation, the contract becomes voidable which can be set aside by the innocent party based on his/her discretion. Fraudulent misrepresentation is referred to a civil tort in which a party made a false statement to another party in order to induce him into signing a contract. Based on fraudulent misrepresentation, the innocent party has the right to set aside the contract since it becomes voidable. Furthermore, the innocent party can demand damages from the defendant based on fraudulent misrepresentation. The elements of fraudulent misrepresentation include the party marking the statement knows that it is untrue, the objective is to induce another party to sign the contract, and other party suffered a substantial loss due to reliance on such statement. The Australian Consumer Law provides provisions regarding the protection of consumers from fraudulent misrepresentation by corporations. Section 18 of the Competition and Consumer Act 2010 provides provisions regarding misleading or deceptive conduct. The law provides that a person is prohibited from engaging into any trade or practice which is misleading or deceptive or is likely to be misleading or deceptive.

In Kalabakas v Chubb Insurance Company of Australia case, the provision of fraudulent misrepresentation was applied by the court. In this case, Mr and Mrs Newlands entered into a contract with Ratcliff Building Group (RBG) in order to build a dwelling to lock up stage. The design specifications were given by CBG Consulting Engineers Pty Ltd (CBG). Later it was found out that there are problems with structural beams of the property and Newlands received damages of $400,000 from CBG and RBG regarding such issues. Such property was purchased by Mr Kalabakas, and he insured the company by answering various questions of the insurance agent. Later, the property was destroyed by fire, and the insurance company rejected the claim based on fraudulent misrepresentation and non-disclosure. Mr Kalabakas filed a suit against the insurance company for breach of contract. The court provided that Mr Kalabakas made false claims regarding completion of the construction of the property, and he also knew about the settlement between Newlands and RBG and CBG. He also knew that there are serious structural defects in the property relating to dwelling, and he had not retained the structural engineer to remedy those defects. The court provided that based on fraudulent misrepresentation and non-disclosure, the insurance company did not have to pay the claim money to Mr Kalabakas.

In conclusion, if the party made a fraudulent misrepresentation and did not disclose proper information regarding the structural soundness of the property, then the insurance company can terminate the insurance contract and eliminate its duty to pay the insurance claim. The remedies given by the court is that the insurance contract becomes voidable and the insurance company was able to set aside the contract. The insurance company avoided its liability to pay a sum of $1.721 to Mr Kalabakas based on the principle of fraudulent misrepresentation.

A contract is a binding agreement which formed between parties to bind them in the terms of the contract. It creates a legal relationship between parties based on which they can legally enforce each other to comply with the terms of the contract. In case any of the contracting parties violate its terms, the innocent party can hold them liable for the breach of contract and demand performance of the terms of the contract or damages. Certain elements are required to be fulfilled by the parties in order to form a valid contract between them. Firstly, an offer must be given by a party to another which has the power to bind the offeror into its terms right after it is accepted by the offeree as given in Harvey v Facey case. The offer must be accepted by the offeree without changing its terms. In case the terms of the offer are changed by the offeree, then it forms a counter offer after which the original offer cannot be accepted by the offeree as given in Hyde v Wrench case.

Furthermore, consideration must be given in the agreement which is referred as the bargain for the contract; it must have a certain value in the eyes of the law. Moreover, the parties to the contract must have the capacity to form a legal relationship between each other. Parties such as minor, insolvent and unsound mind person are not competent to form a contract on their own. Lastly, the parties to the contract must have the intention to form a valid contract with each other. In social and domestic contracts, parties did not have an intention to form a legal obligation based on which their terms are not enforceable by the court as given in the case of Balfour v Balfour. Presence of these elements forms a valid contract between parties which is enforceable by the law. There are different remedies available for the parties in case the party breaches the contractual terms. The remedies include injunctions, specific performance, damages, rescission, and repudiation.

In the given case study, a contract is formed between Lisa and Pedro to purchase the business of Lisa. One of the terms of the contract is that Lisa will not start any business relating to the sale of imported French jewellery anywhere in Australia. This restriction is imposed on Lisa for a period of two years. All the elements of the contract are presence in this case based on which it is a valid contract, and both the parties are bind by its terms. After one year of selling her business, Lisa started a new retail business in Cairns, Queensland regarding selling of French jewellery. Based on the terms of the contract, Lisa cannot start this business until two years have elapsed since the contract is formed between her and Pedro. Thus, Pedro has the right to legally enforce Lisa to shut down her business as per the terms of their contract.

Conclusion

In conclusion, Pedro has the right to enforce Lisa to shut down her business as per the term of the contract formed between them. Pedro can apply for the remedy of specific performance in this case in which the court can order Lisa to comply with the terms of the contract and close her new business.