Contract Law

Issue

In this paper, the issue to be discussed is whether Kelly is eligible to retrieve compensation for violation of contract from Grace.

Rule

Generally, a contract is violated when the parties of a contract failed to perform their duties under the terms and conditions agreed by them. However, there are certain conditions when even after not obeying the terms and conditions of a contract, the contract has not been violated. There are certain contracts, where the exclusion clause is usually applied to restrict the responsibility for contract violation. Therefore, various terms were used in the contractual agreement to reduce the contractual responsibility which includes ‘exemption clause’ or ‘limitation clause’ or the ‘disclaimer clause’. There are other provisions available in common law to protect an individual’s rights and interests from arbitrary exemption clauses (Andrews 2015). Besides, the following conditions must be met by an effective exclusion clause, such as:

• It is vital to include the exemption clause in the agreement of contract;
• The clauses need to be simple and transparent; and
• The rules of Australian Consumer Law (ACL) must not be violated by the exemption clauses (McKendrick and Liu 2015).

The Australian Consumer Law does not enforce an unequal, oppressive or restrictive exemption provision. An exemption clause needs to be shown either through an actual notice or positive notice when the contract is formed. In some cases, the receipts and tickets may include an exclusion clause. After a contract is signed, a person is obliged to comply with all terms and conditions. The signatories are believed to have read all the terms and conditions of the contract and, upon signing, the reading or not is immaterial. The party that relied on the exclusion clause must prove that sufficient action has been taken to notify the other party of the exclusion clause (Abbasi and Bazrpach 2016). 

In Thornton vs. Shoe Lane Parking Ltd [1971] QB 163 a notice was printed on the ticket at the parking entrance excluded from the automatic barrier claimed that the owners were not to be responsible for customer injuries. The exclusion provision was considered to be not included in the agreement because the contract was established when the vehicle was driving the machine at the car park entrance (Not at the moment of issuance of the ticket). The court held that to be an appropriate disclaimer, the warning will be displayed on the parking entrance before the driver drives his car into the car parking area.

Analysis

In this scenario, to repair the leather shoes, Kelly kept those shoes in the shoe repairing shop of Grace. A receipt has been received by Kelly for signing the same. The signature has been made by Kelly without reading the terms of the receipt properly. Grace’s shop has been visited by Kelly again after two days to take the delivery of the shoes. Nonetheless, it has been confessed by Grace that the shoes were badly damaged due to her incompetence while she fixed them. It was her duty of taking care of those shoes but she failed to perform her duties. However, damages for the same has been claimed by Kelly but Grace claimed that she was not liable for any compensations in compliance with the clause written in the receipt. It is a fact that the terms and conditions mentioned in the receipt have not been read by Kelly, but the same has been signed by him and it is also meaningless, whether or not he has read it. 

Partnership Business under Partnership Act, 1892 (NSW)

Here, by applying the rule of Thornton vs. Shoe Lane Parking Ltd case, it can be said that as the receipt was made available to Kelly by Grace at the moment the contract was entered into, Kelly would not have the right to seek compensations, and the agreement has been signed him indicating that he read the terms and conditions correctly.

Conclusion

Therefore, from the above discussion, it can be concluded that Kelly is not eligible to retrieve compensation for violation of contract from Grace.

Issue

In this paper, the issue to be argued is whether Rebecca is in any way responsible to perform her duties towards her business and business partner Joel. 

Rule

The partnership businesses, which are incorporated in Australia, are governed by the provisions of the Partnership Act, 1892 (NSW). Under section 1 of this Act, the relationship between two or more persons with the shared purpose of earning profits from a business entity is called a partnership business (Na 2016).

However, like a company, a partnership firm is not regarded to have a distinct legal entity which is described under section 4 of the above-mentioned Act and for this reason all partners shall be kept in the personal possession of the partnership’s debts. Many scholars are considered this problem as the main problem of a partnership firm. Even without following strict procedures, a partnership business can be formed. However, a formal arrangement helps to avoid future conflicts (Cohen 2017). 

Under section 44(a) of the said Act, the loss is retrieved from income, resources and assets of the partnership as well as the partners’ interest, such as the portion of revenues, if any damage suffered by the partnership company is incurred. As the partners are held jointly responsible, thus for the full sum of the outstanding a third party will sue a single partner, so that the partner can have to redeem his shares to the other parties. 

Partners are collectively responsible for exceptionally good faith. This trustworthiness obligation stems from the heart of the relationship and the fact that each partner represents each other. As per this Act:

• Section 28 states that the partnership transactions must be the responsibility of the partners;
• Section 29 states that partners shall reveal the benefits of the company and shall not make any hidden revenues;
• Section 30 states that, unless otherwise agreed, the partners shall not compete with the company.

Apart from that, under the law of agency:

• Partners are prohibited to produce hidden profits at partnership cost;
• Partners shall prevent conflicts of interest; and
• The use of sensitive information by partners is forbidden (Zhang 2018).

In Christie vs. Harcourt [1973] 2 NZLR 139 case it had been stated by the court that for the good of the company, partners must preclude conflicts of interest.

In the well-known case of Bentley vs. Craven [1853] 52 ER 29 the court held that at the cost of the partnership company, the partners are prohibited to make a hidden profit.

Loss Recovery and Liability in Partnership Business

On the other hand, an individual employed by partners of a partnership business is regarded to be an employee of that business. The Tort Law imposes liability on an employer without a personal obligation on his/her part if the employee is responsible for the offence when performing his/her duties even outside the office places. This rule is considered to be a vicarious liability (Gray 2018).  

In Dubai Aluminium Co Ltd vs. Salaam [2002] 3 WLR 1913 case the court was of the view that when there is harm or injury takes place due to the negligent behaviour of the employee, the employer is held liable to pay damages.

Analysis

In this case, Rebecca and Joel started flowers selling partnership in this specific sense, where the truck was supplied by Rebecca and the start-up capital was given by Joel. A small warehouse was also leased by them to run the company. They agreed to split their company income in 50:50 ratio. They have also engaged an employee, namely Matthew, for distribution purposes, to fulfil the responsibilities correctly.

In the meantime, Joel attempts to sell rare orchids to make income from the expenses of the partnership company without informing Rebecca. One day, traffic rules had been broken by Matthews when making deliveries, as Rebecca forced him to deliver in good time. Therefore Matthews experienced an accident, hit a vehicle, and the vehicle was damaged seriously. The amount of the loss is $5000. Matthews is supposed to take care of it but he struggled to do so because of the strain on delivery. Rebecca also started another sales business of flowers for weddings without disclosing the fact to Joel, since their partnership business did not supply flowers in wedding ceremonies. 

Thus, as a partner of the business, Rebecca has some future responsibilities towards the company, its co-owner Joel and her employee Matthews. She has the responsibility of trusting Joel and also the obligation to perform these tasks with the utmost good faith. 

By applying the rule of the well-known case Bentley vs. Craven, Rebecca is prohibited to earn secret revenues at the cost of the partnership business. 

By applying the rule of Christie vs. Harcourt case, for the good of the company Rebecca needs to prevent potential conflicts of interest, so it has to notify Joel of its new venture.

Finally, by applying the rule of Dubai Aluminium Co Ltd vs. Salaam case, Rebecca is accountable to pay $5000 as compensations as her employee Mathews is responsible for the damage. 

Legal Requirements for Forming and Operating Partnership

Conclusion

Therefore, it can be concluded that Rebecca has many possible liabilities for Joel and her partnership business.

In this particular case, Jeremiah has a big tree in front of the plot, which is needed to be demolished until the block is divided. He declared he would sell the tree for $500 if anyone managed to remove it before 10 March 2018. He gives his email-id number in the commercial advertisement. 

According to Taylor and Taylor (2019), a mutual obligation between two or more entities or organizations can be carried out under the common law of contract. The following basic elements need to be met to establish a legal contract which can be enforced by law. The basic elements include:

• Offer or proposal;
• Acceptance;
• Intention to make a legal relationship; and 

In the famous case of RTS Flexible Systems Ltd vs. Molkerei Alois Muller Gmbh & Co KG [2010] UKSC 14, the court stated that an appropriate offer needs to be communicated to the offeror by the offeree explicitly to form a lawful contract. Such an offer also needs to be complete, precise and perfect along with the important terms and conditions of the contract. Most importantly, an offer must be in a condition to be accepted. In Tinn vs. Hoffman [1873] 29 LT 271 case court held that an original offer can be cancelled due to a counteroffer or negotiation. 

An offer must be accepted without additional conditions and after accepting an offer by the offeree it becomes a legal contract. Acceptance needs to be complete, precise and sure (Cartwright 2016). In the well-known case of Brodgen vs. Metropolitan Railway Company [1877] 2 App. Cas. 666 the court held that acceptance by written, verbal, post, electronic mail, internet or any other appropriate means shall also be communicated by the offeree to the offeror. Simple silence is not an acknowledgement by statute. 

Besides offer and acceptance, the intention is also vital to forming a legal contract. In Balfour vs. Balfour [1919] 2 KB 571 case the court ruled that it is not possible to form a legal contract without the intention of the parties. 

In the landmark case of White vs. Bluett [1853] 23 LJ Ex 36 the court concluded that a satisfactory consideration must be paid to create a valid contract. 

In case of instantaneous communication, such as telephone or message communication, and acceptance takes place when the message of acceptance has been received by the offeror which is established in the case of Entores vs. Milles Far East Corp [1955] 2 QB 327.

In this scenario, there is a possibility of cancelling the original offer by the counteroffer as described in Tinn vs. Hoffman case but according to the RTS Flexible Systems Ltd vs. Molkerei Alois Muller Gmbh & Co KG case, the offer and acceptance must be communicated appropriately to create a binding contract. 

In this case, Jeremiah cannot reply Bianca as she did not wait to hear it, so by applying the rule of Brogden vs. Metropolitan Railway Company case it can be observed that a binding contract cannot be formed because no acceptance has been communicated. 

In this scenario, after forming a lawful contract, the same has been terminated by Mason by an email. Hence, by applying the rule of Balfour vs. Balfour case it can be held that due to the absence of intention, no enforceable contract has been created. 

In this case, a binding contract can be formed between Jeremiah and Stephanie by applying the rule of Entores vs. Milles Far East Corp case according to which under the concept of instantaneous communication, immediately after receiving the message by the offeror, and acceptance occurs.

References

Abbasi, A. and Bazrpach, H., 2016. Distinction between exception clause and exemption clause. International Journal of Humanities and Cultural Studies (IJHCS)? ISSN 2356-5926, pp.1903-1917.

Andrews, N., 2015. Contract law. Cambridge University Press.

Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil lawyer. Bloomsbury Publishing.

Cohen, E., 2017. CSR for HR: A necessary partnership for advancing responsible business practices. Routledge.

Gray, A., 2018. Vicarious liability: critique and reform. Bloomsbury Publishing.

McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International Higher Education.

Na, N., 2016. The United Nations and business: A partnership recovered. Springer.

Zhang, C., 2018. The limits of fiduciary duties in business organizations: the evidence from limited partnerships in the US and UK. European Company Law, 15(3), pp.83-89.