Overview of the Constitution and Hart’s Legal Theory

Summary of the constitution: Proposal developed by elders of the tribe includes following points and these points are also incorporated in the constitution of the tribe which directly addresses the different issues faced by tribe:

1. Decision related to any case must be done on the basis of previous rulings given by authority in the similar cases.
2. Authority while taking the decision must ensure equality, which means decision taken by court for any individual or group, must be equal and free from partiality.
3. Provision related to change is also incorporated and as per this provision rules can be changed and modified.
4. Decisions taken by the authority of the tribe must be binding in nature, and for ensuring strict implementation of the decisions, authority introduce different regulations which include severe punishment in case of non-fulfillment of decision. 

1. Levels in the jurisdiction of the tribe must be made for the purpose of providing appealing authorities, which means authority is divided in three parts and each party involves 5 members. Authority at initial level first decides the case and in case parties did not agree with the decision then they can file appeal against the order on the 2^ndlevel, and so on. Decision made by third level is final and no one can challenge the decision of the third level authority.
2. Decision of the case are based on the facts and strong evidence of the case, and comments and statements made by parties are cross verified. In case any party make false statement for getting favorable decision, then such person face severe consequences for the same.
3. Rulings and reasons on the basis of which decision is given by the authority is issued publically and copies of the same will provide to the parties of dispute.

Hart’s part 3 legal systems- above stated proposal is clearly based on the three rules stated by hart and explanation regarding this is stated below:

• Rules of Recognition- this rule is considered as the foundation of the legal system. As stated by hart, legal system of the society is based on the rules and it is the most important rule on the basis of which other rules are derived. There are two types of rules in this that are primary rule and secondary rule. Primary rule stated the behavior of the person in the society and secondary defines the base through which primary are created. Tribe considers this rule in different points such as point 2 and 6 defines the behavior of person in society.
• Rules of Change- there must be rule which permits the change in the existing primary rule for the purpose of ensuring elimination and modification in the primary rule as per requirement. Point 3 and 5 recognize his rule.
• Rules of adjudication- both individuals and institutions have power to decide whether any person or group broke the primary rule, and it includes both procedure and person who is adjudicated. Tribe considers this rule while framing the constitution.

Australian legal system and hart’s rule- legal system of Australia recognize all three rules of the hart’s theory that re rule of recognition, rule of change, and rule of adjudication. However, Australian legal also accepts the theory of other experts and use different theories including Hart’s theory to frame their legal system this can be understood through example, Australian legal system incorporate rule of recognition in their legal system and this can be seen at various places such as Parliament has power to frame laws and pass legislation in association with the other authorities.

Whether it is possible for the Berry to challenge the validity of the contract in context of declarations made by the Angelo before entering into the contract? 

Rights and obligations of the parties in lieu of contract entered into the parties are resolute with the help of the contract terms. While evaluating the terms of the contract, it is necessary that parties to the contract must consider both pre-contractual terms and post contractual conduct, as these terms can result in both non-contractual rights and obligations. Generally, if any party made false pre-contractual statements will result in breach of section 18 of the Australian Consumer Law.

It can be difficult for the parties to classify those statements either oral or written made by parties before entering into the contract, such as one party induced the another party to purchase the second hand computer by making the statement that such computer originally manufactured in the year 2012. What are the consequences if these statements turn out to be false? Whether these statements can be considered as the terms which give rise to the contractual breach or misrepresentations under which party is able to get both contractual and non-contractual remedies. It must be noted that it is necessary to categorize these terms because it will directly impact the provided remedies. Usually, Pre-contractual statements are classified as terms of contract.

For the purpose of framing the terms of contract it is necessary that parties to the contract must intended to be promissory in nature. For ensuring the intention to create legal relations between the parties, it is important to determine it objectively. Thoughts of the reasonable person in similar situation would consider as the circumstances. This can be understood through case law Ellul and Ellul v Oakes, (1972) 3 SASR 377, Supreme Court of South Australia. In This case, Court adopts the position of Oscar Chess Ltd v Williams and Dick Bentley Products Ltd v Harold Smith (Motors) Ltd in which Lord Denning held:

Consequences of Misrepresentation in Contract

In case representation is made by one party at the time of negotiations of the contract for inducing the other party of the contract to act on   the basis of that representation, and actually induced the other party to act on the same by signing the agreement. It can be considered prima facie evidence for concluding that such representation was intended as warranty under the contract. It is not compulsory to specially speak such term as collateral, and sufficient grounds were present that parties to contract intended to act upon the same.

Pre-contractual misrepresentation provides remedies under both common law and statutory law in regards of Competition and Consumer Act 2010. Section 18 of ACL states that, any person who is engaged in trade or commerce must not take any action which is misleading or deceptive in nature. A misrepresentation is considered as false statement related to fact which is made by one party to another party while it is not considered as the term of the contract but it induce the another party to enter into the contract. Consequences of actionable misrepresentation makes the contract voidable, provide right to the innocent party to cancel the contract, or claim damages. Following are the two characteristics of the misrepresentation:

• Materiality- misrepresentation made by party must be material in nature.
• Reliance- another party must rely on the misrepresentation. 

In the present case, Angelo makes different pre-contractual statements in regards of turnover of the statement, competitors, expenses of the business, and also about crowd. However, after signing the contract Barry found all these statements false. In this case, Angelo breach section 18 of the ACL as he makes different misrepresentation under this scenario, and this can be judge on the basis of two factors:

Materiality- misrepresentation made by party must be material in nature, which means it must induced the reasonable person to enter into the contract. This can be understood through case law Museprime Properties v Adhill Properties [1990] 36 EG 114. In this case, Court stated that any misrepresentation which induce the another party to enter into the contract then such misrepresentation is considered as the material misrepresentation. In the present case, Angelo induces the Barry to enter into the contract on the basis of his misrepresentation. Therefore, misrepresentations made by Angelo are material in nature.

Reliance- misrepresentee must rely on the misrepresentation made by misrepresentator. Barry relies on the misrepresentation made by Angelo.

However, contract between the parties is affected by misrepresentation of facts made by Angelo, because of which contract is not binding.

Materiality and Reliance Factors

Conclusion:

In this Angelo made misrepresentation to enter the Barry into the contract of purchase of business, and breach section 18 of the ACL. Therefore, Barry can challenge the validity of the contract.

What possible actions are available to Barry in context of breach of contract?

If any person relied on the misrepresentation made by another party to enter into the contract then such person has right take action under breach of contract, and following are the available actions:

• Rescission
• Damages

Rescission: Rescission stands for setting aside the contract, and this remedy is available in all the cases of misrepresentation. The main aim of this remedy is to put the parties back in original form, which means in similar form when contract is not made between the parties. The injured party can cancel the contract by providing notice to the representator. However, this remedy is not always available as any act shows repudiation. This can be understood through case law Car & Universal Finance v Caldwell [1965] 1 QB 525.

In case person wants to cancel the contract on the basis of the misrepresentation, then such person takes action frequently at the time person discovered misrepresentation. Right to cancel the contract lost if:

• Person acted in unfair manner.
• Person is aware about the misrepresentation, but takes any such action which shows that person wants to continue the contract.

It is not possible to restore the other party in the original position if any person cancels the contract by informing the other party and returning the goods in well condition. If other party wants to accept this notification, then such contract comes to an end. In case other party does not accept the same then they can apply to the Court. However, Court has power to validate the contract of sale even though consumer already cancels the contract Under the Misrepresentation Act 1972.

Damages: Damages are considered as the alternative remedy to rescission and under this party can sue the other party for loss. In this injured party has right to claim for damages in regards of fraudulent misrepresentation under the tort of Deceit. The main objective of this remedy is to restore the victim to the original position. This can be understood through case law Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158. In this case, Court held that the test of remoteness under deceit law is that the injured party can recover all the direct loss bear by the party under the fraudulent misrepresentation, instead of foreseeability.

Court consider different factors for determining whether the statement was misrepresentation and whether person relied on the same or not while entering into the contract, and whether person bear some loss. Seller is not liable to pay damages if he/she proved any of the fact:

• That seller had reasonable grounds to believe that they made true statement.
• Statement is made by any other person and such person does not have knowledge that statement was not true.  

In the present case, Angelo made fraudulent misrepresentation to the Barry and Barry relied on the same for the purpose of entering to the contract. In this case, Barry can take action under breach of contract and following actions are available to Barry:

Barry can cancel the contract because contract is based on the fraudulent misrepresentation. However, in this case, Angelo cannot ignore this remedy because he knows that statement made by him is fraudulent. Barry can set aside the contract because he acted in fair manner and does not aware about the misrepresentation.

Barry can also claim for damages and sue the Angelo for fraudulent statement made by him to induce the Barry to enter into the contract.

As stated, Court consider different factors for determining whether the statement was misrepresentation and whether person relied on the same or not while entering into the contract, and whether person bear some loss. In this all these factors are present as statement made by Angelo are false and Barry relied on this statement. However, Angelo is also liable to pay damages because he fails to prove that:

• That he had reasonable grounds to believe that they made true statement.
• Statement is made by any other person and such person does not have knowledge that statement was not true. 

Conclusion:

Barry can choose one of these two options for breach of contract that is rescission and damages.   

Website

OCW, Paper 1: An Analysis of Hart’s Theory of Primary and Secondary Rules, < https://ocw.mit.edu/courses/linguistics-and-philosophy/24-235j-philosophy-of-law-spring-2012/assignments/MIT24_235JS12_Hartrules.pdf>, Accessed on 1^st May 2018. 

Lumb, R, fundamental law and the processes of Constitutional change in Australia, < https://classic.austlii.edu.au/au/journals/FedLawRw/1978/12.pdf>, Accessed on 1^st May 2018. 

ACL, Terms of contract, < https://www.australiancontractlaw.com/law/scope-terms.html#pre>, Accessed on 1^st May 2018. 

ACL, Ellul and Ellul v Oakes, (1972) 3 SASR 377, < https://www.australiancontractlaw.com/cases/ellul.html>, accessed on 1^st may 2018. 

ACL, Misleading or Deceptive conduct, < https://www.australiancontractlaw.com/law/avoidance-misleading.html>, accessed on 1^st may 2018. 

Law handbook, Misrepresentation, < https://www.lawhandbook.sa.gov.au/ch10s02s10.php>, accessed on 1^st May 2018. 

Case laws

Ellul and Ellul v Oakes, (1972) 3 SASR 377, Supreme Court of South Australia. 

Oscar Chess Ltd v Williams and Dick Bentley Products Ltd v Harold Smith (Motors) Ltd. 

Car & Universal Finance v Caldwell [1965] 1 QB 525. 

Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158. 

Museprime Properties v Adhill Properties [1990] 36 EG 114. 

Statute

Competition and Consumer Act 2010.