Void Contract and Fraudulent Actions

Discuss about the Business Law for Business Structures.

Bill and Jill are the siblings having bought a Fine Food Café named Sydney cbd café in the year from Dodgy Pty Ltd. They had entered into a contract of sale where it was mentioned that the since last 5 years the weekly taking is around $10000. But it was not honest declaration. This has been stated dishonestly by the seller. It was also mentioned that the weekly revenue of the café is approximately $3,000 and the seller would not be in charge of the business of the café after the transfer of the ownership of the safe to the hands of Jull and Bill.  Bill and Jill commenced their new venture and after several months they realized that the amount of the business from the café per week is around $2000. This amount has been less than their incurred cost for the business of the café. This is an area where the fraudulent actions are being noticed to have taken place in the contract which goes beyond the norms of the Contract Act (libguides, 2016).

As per the Contract Act a contract is an agreement where there must be an offer that a party to the contract keeps in front of the other party and the later accepts with consent. The offer and acceptance are the base of the Contract Act. There should be a consideration which is discerned by the eyes of law. A valid contract is the one which includes the consent of both the parties involved and the clear disclosure of the matter that is important for the particular contract.  The parties to the contract must possess the ability to enter into the contract. There should be legal consideration and good faith (australian contract act, 2016).

In the case study it is seen that Bill and Jill had entered in to a void contract which is also voidable and hence according to the Contract Act this type of contract could not enforced legally. It is unable to permit any right to an individual and it could not obligate any individual. Though the agreement between Bill and Jill and the seller is a valid one but it is not possible for them to perform on some grounds where some of the facts have been stated wrongly which goes beyond the Contract Act making the contract a void one (accc, 2016). In the contract the amount of the business of the café is wrongly stated and that is why this particular contract is to be taken as a void agreement or a void contract. (australianlaw, 2016).In the contract it was also mentioned that the seller will not be in the charge of the business of café in Sydney cbd café after 1^st July that is after the transfer of the ownership from the seller to the buyers and he also states some of the contents that are not exactly needed for this particular (artslaw, 2016). The important point is that he had fraudulently stated the amounts of the business and unnecessary declaration makes the contract voidable one (guides, 2016).

Sole Proprietorship and Advertisement

The contract is not a valid contract and hence both the buyers and the seller are not into any legal obligation. But Bill and Jill could sue Dodgy Pty Ltd for misrepresenting some facts that has been done intentionally. The contract could be terminated and the sellers could be sued on the ground of breach of important terms of the contract.

The person who is referred to in the case study is Hugh. He is into a pizza business. Hugh utilizes the services of the UberEats in order to deliver the pizzas in and around the city of Sydney. The business was proving to be a profitable venture. But, in order to achieve increased profitability, he curtailed the cost for UberEats services and requested his son to lend his car for the purpose of the delivery of the pizzas. The habit of earning more profits turned into greed as Hugh planned to cut down on the cost even more by using old and expired cheese in place of fresh cheese in the pizzas. The advertisement that was being stated to the public delivered the promise that all the fresh ingredients were used in making the pizzas including the cheese that was claimed to have been received directly from the firm. The situation turned out to be so much worse that the customers started to fall sick after eating the stale cheese and the unhealthy ingredients in the pizzas and it even led to the death of a customer.

Hugh runs Homeslice Pizza business. Hugh is the sole trader of the pizza business. He could recruit employees if needed. It is very simple and easier for an individual to start a sole trader or sole entrepreneurship business and the capital investment is also comparatively reasonable. This kind of business is simple to start and easy and convenient to continue. The sole trader enjoys the entire profit and also incurs the entire loss (business, 2016).  The burden of the capital investment is vested upon the shoulders of a single person in this type of business. So the sole trader always tries to reduce the costs of the business in order to enjoy the enhanced profit margin. (Hughes, 2016).

To enhance the sales volume the sole trader has to arrange for the advanced and effective marketing and advertisement strategies. The trader has to generate the demands for his products. The advertisement plays an important role in this type of business. The message that the business owners of the marketing departments make to reach the target segment is the advertisement. The companies could promote the offerings either through the oral communication or through written messages. The verbal and oral communication along with the audio visual effects is the important elements of the advertisements. The companies try to establish the loyalty of the company brand name to the target segment in order to establish a strong brand image (schweizer, 2016). The main aim of the companies behind the formulation of strong medium for advertisement is to earn goodwill and to reach as much target as they desire.

Misleading Customers and Consumer Law

Hugh is the sole trader and owner of Homeslice Pizza. The products have been liked by the customers and this has enhanced the profit margin of Hugh. Hugh then thinks of easy delivery of the products in order to run cost effectively so as to enhance the profit and to reduce the cost of the delivery. He started to use UberEats to deliver the pizzas at the doorstep of the customers in Sydney with utmost convenience. Hugh possesses the reasonability for making the profit maximization and for that he has to decrease some of the costs. Then with the intention of cutting costs he started to use the contaminated ingredients for the manufacturing of the pizzas. His products were previously popular for hygiene and freshness. He promoted the fresh ingredients in his advertisements and used to follow the same in the initial stage. Then with the intention to reduce the costs and to maximize the profit margin he had started to follow the unethical ways of preparing the pizzas and that ultimately affected the reputation of the business. It was even noticed that the consumers of pizzas of his company started to fall sick and even some one died. The advertisement was misleading the consumers. The consumers those who would depend on the advertisement would be severely affected and this would not fetch Hugh profit or goodwill for his business. His business is also in stake because his misleading messages and unfair means of earning and maximizing profits (intui, 2016).

The law states that any customer that is unsatisfied with the products or services offered by a business in any sector has the right to claim for damages from the company. As per the section 268 of the ACL, any kind of service should not be taken by the customers if they have the knowledge of any unfair means adopted by the service provider or in case they are being sold inferior products those are not as per the agreed terms of the company. In the scenario where a customer is claiming for any damage, the company might ask him for the proof of such damage that has been caused to the buyer (accc, 2016). The best option is to write a letter to the service provider detailing therein all the details of the products purchased and the damages in detail. If the service provider is reluctant to respond to this and take necessary actions, then the customer has all the right to register a case in the court of law against the company for suing the company and claiming just compensation. The matter now remains in the hands of the court. If the court finds enough evidences that the product or service was unfit for consumption and against the terms of the company, then it will obligate the company to pay the required amount of compensation to the unsatisfied customer (consumer law, 2016).

The case being referred to here contains an offence that has been committed by Hugh as he misled the customers by providing false information about the ingredients of the pizzas being manufactured. This led to grave situation of many customers falling sick and one even dying from the consumption of the stale cheese and other ingredients used in the pizzas. The dissatisfied and agitated customers have the right to appear in front of the business owner, Hugh and ask for compensations. They can also write letters to Hugh stating the details of the damages faced and hope for a positive response from him. If Hugh is reluctant then the customers should move to the court of law and register a case against the company. The time limit for filing such complaint against the company in the court is three years from the date of caused damage. The onus is on the court to look after the issue and if the company is found guilty, then issue a compensation notice to the owner Hugh to compensate all the affected customers.

References:

accc, 2016. a guide to unfair contract terms law. [Online] Available at: www.accc.gov.au/system/files/A guide to unfair contract terms law.

accc, 2016. Accc Consumer Rights. [Online] Available at: www.accc.gov.au › Consumers.

artslaw, 2016. Sample agreement. [Online] Available at: www.artslaw.com.au/legal/sample-agreements.

australian contract act, 2016. australian contract law. [Online] Available at: www.australiancontractlaw.com.

australianlaw, 2016. Australian Contract Law. [Online] Available at: https://austcontractlaw.wordpress.com.

business, 2016. Business Structures. [Online] Available at: www.business.gov.au › Plan & Start › Start your business.

consumer law, 2016. Australian Consumer Law. [Online] Available at: consumerlaw.gov.au.

guides, 2016. Commerial law. [Online] Available at: guides.lib.monash.edu/commercial-law/contract-law.

Hughes, T., 2016. Types of business. [Online] Available at: wordconstructions.com.au/articles/business/bustype.html.

intui, 2016. Choosing a Business Structure in Australia. [Online] Available at: www.intuit.com.au/./choose-right-business-structure-australia.

libguides, 2016. Contract Law Legisation. [Online] Available at: libguides.acu.edu.au/c.php?g=234001&p=1553409.

schweizer, 2016. Business Structures In Australia. [Online] Available at: www.schweizer.com.au/articles/Business_Structures_in_Australia.