Case of John’s Supermarket: AFS Grocery Wholesalers Co Pty Ltd
The issue in this case is that AFS Grocery wholesale Co Pty Ltd sends a consignment of products worth 45,000 dollars to a client called the John’s Supermarket on the placement of order by the manager of the supermarket. The owner however claims that the wholesaler have to take back their products and charge the owner John Miley with no consideration because they should not have taken order from the Manager of the supermarket. Now the AFC grocery wholesale co Pty ltd want to know if they have any legal right to obtain the payment for the goods of 45000 dollar for the delivery of the product.
The rule applied in this case is the Contract Law and the subsection is the law of agency and the case of Watteau v Fenwick [1893] 1 QB 346: V & L, 19.20, 19.44 (Rogers, 2004).
Legal relationship is a part of contract law which states that the intention of the creation of contract is one of the most essential components of contract. The evidence of the existence of the legal relationship can be found on the exchange of consideration.
Contractual Remedies are the damages that can be charged by the side that is being claimed to be the victim from the actor.
In this case the AFC Grocery Wholesalers Co Pty Ltd can use the concept of agency from the contract law to defend their act of taking the order from the manager of the John’s supermarket. There are several clauses under the concept of agency as par the contract law. There are several clauses for deciding the agency.
Agency is a person who can work on behalf of the principle to form a contract. The principle in this case is John Miley and the agency can be the manager of the organisation that is Linda. AFC Grocery Wholesale Pty Ltd can claim that they have considered Linda to be the agency of John Miley because of the fact that she is the manager of the organisation and at the same time she has placed an order on behalf of the owner of the organisation. There are several methods that has been suggested in the contract law regarding the recognition of a person as an agency, the law suggest that there might or might not be any written contract to authorise a person as an agency (Vermeesch and Lindgren, 1990). The several methods that can be considered as a proof of providing a person with agency involves by expression, cases where the conduct of the person implies the fact that agency has been given, in case there is no express contract that suggests that the agency has not been given which is the occurrence of estoppels and legal operation (Mason, 2016). By placing the order by Linda as the manager of the supermarket ‘estoppels’ can be claimed to have occurred. Secondly the placing of the order on behalf of the owner of the organisation shows a conduct on the part of the owner that the agency has been given to manager. So the AFC Grocery Wholesaler Pty Ltd can cite these legislations as a reason for making an assumption that Linda holds the agency on behalf of John Miley. As there is no written contract that is required to prove agency so the act of the person suggested of the existence of an agency thus the wholesaler is not legally wrong in delivering the product.
Legal Rule of Contract Law
Linda can also claim to be the agent because the business was entrusted to her for most of the time. There has been an emergency because there was competition in the market. Thirdly the principal in this case owner that is John has not left Linda with a contact which fulfils the clause that there was no communication possible at the time of taking the decision. The act of Linda was also in the motive of serving the best interest of the owner of the business which is also a clause of the clause of agency of necessity. The doctrine of ‘estoppels’ is also applicable in this case because there was inaction on the part of the owner which has been the key reason of the manager of the organisation to act on behalf of the owner. This doctrine is applicable in this case because she was the manager of the organisation and hence her having the agency can be assumed by the Wholesaler Company. The case of Watteau v Fenwick [1893] 1 QB 346: V & L, 19.20, 19.44 also suggest that the owner is going to be liable in case a manager of the organisation has purchased on behalf of the owner (Amucheazi, 2018). In case there is no express message that has been given by the owner to nullify the agency than the inability of the supplier to recognise the agent cannot be considered as the fault of the supplier.
Apart from that the delivery has been done by the company and hence as par the sales of good act the owner of the organisation is liable to make payment as soon as the delivery of the goods has been done. So the AFC Grocery Wholesalers Co Pty Ltd can make a claim for the payment of the products that has been delivered to the seller.
Conclusion
In conclusion it can be said that the AFC Grocery Wholesalers Co Pty Ltd has the right to charge for the payment from the owner of the organisation because of two chief claws of the contract law’s law of agency. First is the doctrine of estoppels which makes the position of the manager as a position that can be assumed to be holding the right of agency and second is the fact that there is no need of a written contract to exist proving the right of agency as par the Australian contract law.
The contractual remedies that can be charged in this case are the payment of 45,000 as a consideration for the formation of legal relationship between John’s Supermarket and AFC Wholesalers Pty Ltd.
The issue in this case is the fact that if there is a expression that has been given by the owner of John’s Supermarket John Miley to the manager of the organisation Linda prohibiting her from purchasing on behalf of the organisation. Even than if the manager makes a purchase on behalf of the owner than is the owner liable to pay the supplier.
Application of Contract Law to the Case
The rules that are going to be applicable in this case are the contract law, clause law of agency, sub clause termination of agency and legal relationship.
There are five methods in which renunciation of the agency can be done. First of all if the principal in this case the owner of the organisation renounces the authority of the agent expressly than the agency of the agent can be nullified. Secondly in case the agent or the principal has died lost sanity of mind or have been officially bankrupt than the agency is going to be terminated. In the third case if the legality is supervened for example if the owner has formed an alliance with the enemy of the organisation than any agency rights provided by the principal is going to be terminated as well. Fourthly if the employment is contractual for a certain period of time than the end of the employment is automatically going to terminate the agency. Fifth and the last point is when the person has completed the task assigned to them or in case it is not possible for the person to continue the task anymore because of destruction of the subject matter for which the assignment was allotted (Mason, 2016).
The advice for the AFS grocery wholesalers Co Pty Ltd is going to significantly differ in case there is an expressed denial by the owner of the John supermarket to the manager for making any purchase on behalf of the organisation because express denial is considered as a clause for the termination of agency. So in case John has terminated the agency of the manager Linda than it is illegal on the part of the AFC Grocery Supermarket Co Pty Ltd to supply the product to the company. In such case they are also not likely to be able to make a claim for the payment from the owner of the organisation because the contract that is formed by the supplier and manager is likely to be considered as illegal in nature. The legal relationship is not to be formed in this case because the valid party has not consented to the formation of the contract.
In this situation it would have been advised to the suppliers to return their product as there is no liability of the owner to make the payment to the supplier legally.
Conclusion
In conclusion it can be said that the law is going to be in favour of the employer if there is nothing mentioned by the owner to the manager of the John’s supermarket then the supplier that is the AFC Grocery wholesaler Co Pty Ltd will have the right to charge the payment for the supply. But in case there is a express renunciation of authority by the owner of the John’s Supermarket to the Manager of the organisation than the contract formed by the supplier and the manager is going to be considered as void and hence there is no payment that is going to be received by the supplier from the owner of John’s supermarket as the agency is going to be considered as terminated.
Case of Bruno and Moreslybo Pty Ltd
In this case the issue is regarding the legality of the termination of contract. Bruno who have migrated from Italy along with his wife and purchased a farm by investing 220,000 dollar was mentally devastated when his wife left him to go back to Italy. In the meantime Bruno has been involved in high level of alcohol consumption. During that period Moreslybo Pty Ltd a company that is involved in property development approached Bruno regarding the purchase of the farm that was owned by Bruno. Slybo the Managing director of the organisation personally suggested Bruno regarding the selling of the farm and moving back to Italy. As a result a contract was formed between Moreslybo Pty Ltd and Bruno in which the property which was purchased at 220,000 dollar has been decided to be sold at 160,000 dollar. Later Bruno’s wives returned back to him and ask him to abandon the contract and stay in Australia; as a result Bruno wants to abandon the contract with Moreslybo Pty Ltd.
Australian Consumer Law 2010 and its Section 20, Section 21 and Section 22. The ‘Unfair’ contract term is also going to be involved in this case.
Section 20, 21 and 22 of the Australian consumer law is regard unconscionable conduct. The unconscionable conduct is when there is a “special disadvantage” of a party involved in the contract. The advantaged party is aware of the disadvantage and takes advantage of the weaker party it is considered as an unconscionable act. Section 21 specifies the involvement of the contract in regards to the acquisition of any good or service. Section 22 states the factors that are to be considered while an action is considered as ‘unconscionable’ (Turner, 2001). These factors involve the ability to bargain by the parties involved in the contract, if one party is complying with conditions that are unnecessary, if undue influence is done against one of the party, just compensation is being given and industries codes are being complied.
There are certain situations where the contract can be considered as null or void. In the formation of contract there are certain conditions that are to be fulfilled by the parties entering the contract. It is mentioned in the contractual capacity section under the contract law that there are certain prerequisites for a person to enter into a contract. One of the prerequisite for entering a contract involves the fact that the person entering the contract is not under the influence of alcohol during the formation of contract. It is also of importance that if one party is aware of a mental distress of the other person during the formation of contract than the formation of contract can be considered to be voidable. The formation of contract in such cases are called ‘void ab initio’ that is it is considered to be void at the time of the formation of the contract because the basic requirements for the formation of the contract has not been met at the time of the formation of the contract (Kolivos and Kuperman, 2012). The agreements that are made on a written contract have also some basic rules, for example it is to be ensured that the person who has entered the contract has been able to understand the meaning of the contract (McKendrick, 2014). In this case Bruno can avail these legislations for defending his situation.
Legal Rights of Bruno under Contract Law
First of all Bruno has been under the influence of alcohol during the time his wife left him and the contract that he formed with Slybo who is the managing director of the company Moreslybo Pty Ltd. Secondly Slybo was aware of the condition in which Bruno was because Bruno has shared his condition to Slybo. Slybo made suggestion to Bruno to go back to Italy which can also be considered to be an illegal action. Bruno also decided to make the contract with a much less amount than what was given to him. He had purchased the farm on 220 000 dollar but was ready to sell it in 160,000 dollar which also suggests that he was not in mental sound condition to make the decision. Bruno can also negate the contract because of the fact that Bruno is not much educated so the written contract that was made by him can also be considered as voidable because he can claim that he has not been able to understand the written contract that was signed by him. These are the chief legislative remedies that can be used by Bruno. The inability of understanding the terms and conditions of the contract can also be reflected in the fact that he has made a contract that is going to cause him financial losses. Again the contract can be revoked before the execution of the contract terms (Paterson, 2009). The decision made by Bruno to revoke his contract was before the sale of his property was concluded. So at that time he also had the legal right to stop the contract from being executed. The actions of the managing director of Moreslybo Pty Ltd can be considered as unconscionable under Section 20 to 22 of Australian Consumer Law 2010 because of the fact that Bruno had limited amount of education which can be made as a reason for him to be unable to understand the written contract as a proof the loss that has been done by Bruno in selling the farm can be cited, Bruno was suffering from prolonged depression and excessive consumption of alcohol which can also be considered as causing mental incapacity of the person entering the contract, the fact that the other person that is Moreslybo Pty Ltd’s managing director has been aware of the mental incapacity of Bruno and the fact that he had given an act of illegal suggestions that was done to influence the second party of the bilateral contract can also be cited as a reason for considering the contract to be void and lastly the fact that Bruno wanted to get out of the contract before the sale of the property has been concluded can also be considered as a positive aspect for ensuring that the contract is made voidable (Schwenzer et al., 2012).
Conclusion
In conclusion it can be said that there are certain conditions that are considered for making a contract. Some contract can be considered as voidable at the time of the formation and can be revoked even after the contract has been signed or executed. These conditions involve the infirm mental condition or technically mental incapacity, secondly the inability to comprehend the clause of the contract can also be considered as a reason for nullifying the contract. Moreover there is a certain time for to revocation of few contracts. A contract can be revoked before its execution. In this case the less educated farmer Bruno has been influenced to make the sale during the time he was mentally incapacitated because of prolonged depression and influence of alcohol to purchase a farm in return of inadequate consideration. Thus the inability to comprehend the contract, making suggestions or influence for personal gain and desire for revocation before the completion of the sale is going to be considered as the chief issues that can be cited by Bruno to make the contract void.
Reference list
Amucheazi, C., 2018. A Critical Analysis of Usual Authority in Agency Contracts. Business Law Review, 39(1), pp.2-8.
Kolivos, E. and Kuperman, A., 2012. Consumer law: Web of lies-legal implications of astroturfing. Keeping good companies, 64(1), p.38.
Mason, K., 2016. Mason and Carter’s restitution law in Australia. LexisNexis Butterworths.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Paterson, J., 2009. The Australian Unfair Contract Terms Law: The Rise of Substantive Unfairness as a Ground for Review of Standard Form Consumer Contracts. Melb. UL Rev., 33, p.934.
Rogers, K.M., 2004. A Case harshly treated? Watteau v Fenwick re-evaluated. Hertfordshire law Journal.
Schwenzer, I., Hachem, P. and Kee, C., 2012. Global sales and contract law. Oxford University Press.
Turner, C., 2001. Australian commercial law. LBC Information Services.
Vermeesch, R.B. and Lindgren, K.E., 1990. Business law of Australia. Butterworths.
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