Question
Whether or not there was a breach of contract on part of Betty, for refusing to transfer the house to Jennifer
Applicable Law
When a contract it forms, it depicts that a promise has been exchanged, where one side promises payment of consideration and the other party carries out the task promised. To form a contract, it is essential that it has the essentials of a legal binding contract. These elements are offer, acceptance, consideration, intention, clarity and capacity. With regards to the consideration element of contract, it has to be sufficient; though, it does not have to be adequate. In other words, it can be anything, which the parties mutually decide. However, such consideration needs to have an economic value.
Due to the condition precedent, in the famous case law of Chappell & Co Ltd v Nestle Co Ltd, the court accepted the three wrappers as valid consideration. In the case of Forward v. Armstead, father had promised to give the plantation to the plaintiff in case he relocated from North Carolina to Alabama. In this case, this was held as a valid consideration and this promise was enforceable.
Application of Law
In the given case study, Betty made an offer to Jennifer to relocate to Mount Gambier and the consideration was mutually decided as the transfer of house, if the offer was accepted. By accepting the offer, Jennifer moved to Mount Gambier. On the basis of Chappell & Co Ltd v Nestle Co Ltd, as this house has economic value, it has an economic value in the eyes of law. The intent is clear from Jennifer moving and Betty making the offer. The terms of the contract were very clear. And there is nothing to suggest that the parties did not have the contracting capacity. Hence, a contract was formed in this case. Further, on the basis of Forward v. Armstead, it can further be stated that this contract would be enforceable. And by refusing to transfer the house, Betty would breach the drawn contract.
Conclusion
To conclude, Jennifer can make a successful claim for the breach of contract on part of Betty by refusing to transfer the house to Jennifer.
Contract Law
Legal Issue
Whether the acceptance was received by Sanche or not?
Applicable Law
Acceptance is one of the crucial elements in any contract. When an offer is made, it is crucial that the same is accepted by the party to which the offer was made. If the offer is changed is any manner while the acceptance is being communicated, it is deemed as counter offer. A prime example of this was seen in the matter of Hyde v. Wrench. Once this happens, the original offer expires and cannot be accepted at a future time. The offer once made, can only be revoked, before the same is accepted.
It is critical that the acceptance is communicated. As per the general rule, the time at which the acceptance is received by the offeror, would be deemed as the time of acceptance. However, an exception to this rule can be seen in the postal rules of acceptance. As per the postal rules, the date on which the letter is posted is deemed as the date of acceptance. Further, under these rules, the receding date of the communication of acceptance remains irrelevant. This is because the postal office is considered to be the offering party’s agent. Upholding the validity of postal rules, the contract was held to enforceable in the matter of Adams v. Lindsell. The postal rules of acceptance also extend to emails pursuant to the Electronic Transactions Act, 1999 (Cth), section 14.
What is involved
Application of Law
In the given case study, an offer was made on February 01st 2015 by Sanche to Richard for the sale of 1974 Holden Monaro for a consideration of $60,000. This offer had to be accepted by February 03rd 2015. As this offer sent through post, the date of offer would be February 01st 2015 instead of the receiving date of February 03rd 2015. On this offer of Sanche, Richard made a counter offer, on the basis of Hyde v. Wrench, through calling Sanche and leaving a message on Sanche’s phone that he would be willing to purchase the model at $55,000. Due to this, the original offer would expire. However, before the counter offer was communicated, Sanche sent acceptance through email on February 03rd 2015. This would be deemed as the date of acceptance. And as the counter offer was only communicated on February 04th 2015 when the offer had already been accepted so the counter offer would not stand.
Conclusion
To conclude, a contract was formed due to offer and acceptance through post. And owing to the delay in communication of counter offer, it would be deemed as revoked through acceptance.
The Law of Agency
Legal Issue
Whether or not Kevin is under an obligation to sell the furniture to Theresa?
Applicable Law
The relationship between an agent and a principal is dictated through agency law in Australia. Owing to this law, the principal is held accountable for all the deeds done by the agent, to the third party. This is because the agent has been given the authority to act on behalf of the principal. The agents have either actual authority or ostensible authority. Under actual authority, the agent is expressly given the authority to perform a particular task. In ostensible authority, due to the actions or other mode undertaken by the principal, it appears to the third party that the agent has the authority to do something it is known as ostensible authority. In both these cases, the principal is liable, as the third party is not aware of the presence or absence of such authority.
A noteworthy case law in this matter is that of Hely-Hutchinson v Brayhead Ltd. In this case, legal action was started by the plaintiff due to the failure of the defendant in completing the takeover deal, due to which, the plaintiff had to bear losses. The plaintiff held two positions in the company, i.e., of MD and CEO and had made the guarantee for repayment of money. When the plaintiff was asked to pay up, he refused citing the lack of authority for providing the guarantee. The authority was held to be present by the court and the defendant had to honor the guarantee, owing to the fact that it was made by his agent
Application of Law
In the given case study, Ravi is the agent of Kevin, who has been given express and actual authority to sell the furniture. Even though he had been instructed to sell the table at $7,000, after the same was advertised, Ravi sold it to Theresa for $6,500. This fact was not known to Theresa that Ravi was not supposed to sell the table below $7,000. On the basis of Hely-Hutchinson v Brayhead Ltd, as the act was done by his agent, Kevin would be under an obligation to finish the sale and give the table to Theresa for Hely-Hutchinson v Brayhead Ltd
Answer
Conclusion
Hence, due to the operation of agency law, Kevin is under an obligation to sell the furniture to Theresa.
Property Law- Intellectual Property
Legal Issue
Whether Trevor can sue Declan for stealing his composition, or not?
Applicable Law
Intellectual property is considered as a property in Australia and it includes patents, trademarks, copyrights, whereby each of these is protected through governing legislations. The Copyright Act 1968 (Cth) is the act which protects the music, compositions, sound recordings and other artistic work of the composers. Through this act, the intellectual property of an individual is protected as the people are not allowed to copy the work, broadcast it, publish it, perform the same in public and even make adaptation of work. Part III of this act is explicitly protects the music work.
In the case of Volunteer Eco Students Abroad Pty Limited v Reach Out Volunteers Pty Limited, claim was brought against the defendant for copying the material even when no authority had been given to copy the material, store it or back up the material. It was held by the court that the copyright had indeed been infringed and held the defendant liable.
Application of Law
In the given case study, Trevor played his own composition in front of his friends. This composition had been sent to the distributors in Europe for being sold. Declan, after listening to the song composition of Trevor, copied nearly it and created a piece of music which sounds almost the same. This would be a breach of copyright act, as Declan stole the composition of Trevor. Had he created this piece of music, before he had heard Trevor’s material, the intellectual property rights of Trevor would not have been breached. However, as the same was done later one, it would be infringement of copyright, for which Declan would be liable. Further, on the basis of Volunteer Eco Students Abroad Pty Limited v Reach Out Volunteers Pty Limited, Declan never had the authority to copy the music, store it or play it. And yet he did that and made money off of it.
Conclusion
Hence, Trevor can sue Declan for stealing his composition owing to the infringement of copyright.
Contract Law
Legal Issue
Was the restrictive covenant valid? Whether there was a breach of contract, or not?
Applicable Law
As has been stated earlier, a contract is a binding agreement and the terms of the contract are to be upheld by the parties. If the terms of the contract are not kept or upheld, or if there is a deficiency in the performance of the contract, it is known as a breach of contract. And in such cases, the party which has been aggrieved can initiate actions against the breaching party and claim for damages, which can be divided into two forms, i.e., the equitable damages and the monetary damages. In the former, the person can apply for rescission, specific performance or injunction; and in the latter, the person can apply for monetary compensation. In the case of Addis v Gramophone, the purpose of awarding damages was given as an attempt to put the aggrieved party in such a place, where they would have been, in case the contract had been properly performed.
Restrictive covenants are a normal part of businesses, which are prominent in employment contracts or under the business sale contracts. For a restrictive covenant to have validity, it needs to be reasonable on the basis of duration and scope. The validity of such covenants also depends upon factors like confidential information of the business, protecting the interest of the business which has been sold, safeguarding the material and crucial information.
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd is one of such cases which involves sale of business by one party to the other, and where a restrictive covenant was inserted, as per which the manufacturer, who sold his business, was restricted from making guns in any part of the world and was restricted from competing in any manner with the person to whom the business was sold for a period of 25 years. This restrictive covenant was upheld as acceptable and reasonable by the court.
Application of Law
In the given case study, a restrictive covenant was inserted. This restrictive contract would be deemed as reasonable on the basis of Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd, as by opening a new business, the hairdressing business which has been sold, would be gravely affected. And this indeed happened. Further, by breaching this valid clause of the contract, Clare breached the contract and this allows Maddie to sue her for a breach of contract.
Conclusion
To conclude, due to the validity of the restrictive covenant, the contract was breached by Clare.
- Articles/ Books/ Reports
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Blum BA, Contracts: Examples & Explanations (Aspen Publishers Online, 4th ed, 2007)
Helewitz JA, Basic Contract Law for Paralegals (Aspen Publishers Online, 5th ed, 2007)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Marson J, and Ferris K, Business Law Concentrate: Law Revision and Study Guide (Oxford University Press, 3rd ed, 2016)
Neyers JW, Bronaugh R and Pitel SGA, Exploring Contract Law (Bloomsbury Publishing, 2009)
Stone R, and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
- Cases
Adams v. Lindsell (1818) 106 ER 250
Addis v Gramophone [1909] AC 488
Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87
Forward v. Armstead (1847) 12 Ala. 124
Hely-Hutchinson v Brayhead Ltd [1967] 1 QB 549
Hyde v. Wrench (1840) 3 Beav 334
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535
Volunteer Eco Students Abroad Pty Limited v Reach Out Volunteers Pty Limited [2013] FCA 731
- Legislations
Contract law
Copyright Act 1968 (Cth)
Electronic Transactions Act, 1999 (Cth)
The law of agency
- Others
Silvester S, ‘The duration of a restrictive covenant in a business sale’ (5 February 2013) <https://www.lexology.com/library/detail.aspx?g=66cc70c7-1042-4c60-bcc1-2c1b3b6e25d7>
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