Sources of law in the UK and Australia
PART A
Question 1(a)
The foreign legal system that has been shortlisted for the purposes of the given task belongs to the United Kingdom. The various aspects of law in relation to Hart’s 3 part legal system are highlighted below.
- Rule of recognition
In order for the rule of recognition to exist, the underlying legal system must identify clear and identifiable sources of law. This is clearly apparent for the UK legal system where there are mainly three key sources of law, One of these is the statute law which essentially would encompass the laws made through legislation by the requisite parliament or other bodies. In the absence of a written constitution, common law plays a significant role as it highlights the key principles as identified in cases from the past but these principles are relevant today. Considering that till recently, UK was part o the European Union, thus, the legal system is also influenced by corresponding laws enacted in the EU especially related to human and labour rights.
In this context, the existing legal system in Australia is quite comparable. The most noticeable difference would be in relation to the source of law where for UK, constitution does not serve as a source of law which is unlike the system in Australia where constitution has significant importance and the highest courts do not allow formation of any law which contravenes with the constitution
- Rule of Change
In UK, there are defined ways in which the old laws may be repealing while the new ones can be formed. The process of rule making is based on the various conventions which has been established over the years. Additionally, the UK legal system also allows the people to participate in the process of changing laws through the petition system which ensures that the laws made tend to be representative of the aspirations of the people. Further, considering that there is no written constitution, hence under UK system , the Parliament has unfettered powers to bring change subject to judicial review.
A similar observation is made for Australian legal system where there is defined power to change laws and repeal old laws which is vested in the parliament. Through legislation laws can be made and repealed. Further, the constitution also highlights the sphere of topics where the state and Federal governments can make law. Also, the power to bring changes is subject to judicial review in wake of the basic principle of the constitution.
- Rule of Adjudication
Adjudication mechanism in the UK and Australia
When laws exist, disputes would automatically follow and to resolve these a robust adjudication mechanism is required. In UK, till recently this was not only provided through courts but also through the executive and legislature since judicial powers were vested in such positions as well such as Privy Council and House of Lords. However, over the last two decade various measures have been undertaken in order to alter the same and hence adjudication power has become more concentrated in the judiciary which is imperative so as to lead to impartial adjudication of disputes.
The judicial system in Australia has been comparatively more independently and through the system of state and Federal courts tends to form a hierarchy which serves to provide an impartial adjudication mechanism. This is accompanied through administrative tribunals besides other mechanism aimed at dispute resolution.
PART B
1 Issue
The key concern is to highlight in wake of common law and statute law is Barry can declare the given contract as void based on the false representations by Angelo.
Relevant Law
In order to lure the buyer, during the pre-contractual phase, the seller makes a lot of representation. It may so happen that some of these representations may be false and such a situation is referred to as misrepresentation. This false representation may be intentional, due to mistake or arising out of negligence of seller. Fraudulent misrepresentation denotes a specific situation where the seller on purpose makes false representations so as to ink the contract with the buyer. Any contract enacted through fraudulent misrepresentation would be considered as voidable which implies that the innocent party can make it void as per will. Besides, for financial losses, the innocent party can also demand damages from the accused party.
For proving existence misrepresentation, the below mentioned two conditions need to be established based on the case facts.
The statement that the representor has misrepresented should be factual and not opinion based – This is crucial since opinions are essentially self –assessment and hence it is difficult to establish misrepresentation in such cases However, facts are irrefutable statements which can be proved beyond any doubt. Thus, for misrepresentation to occur, it is imperative that the representor must falsely state particular factual information. Besides, in cases where the representor has remained silent, misrepresentation cannot be established. Any misrepresentation owing to assumptions of the buyer would not amount to misrepresentation.
The misrepresented factual information should be important for the representee in context of the decision making whether to enter into contractual relation or not- The insertion of this condition is on account of ensuring that the misrepresented fact should be of significance to enactment of contract. Further, a crucial aspect is that the buyer if given a change to verify the representations made by seller before enactment of contract must not behave in a negligent manner. The evidence of this can be made from the decision of the honourable court in the Redgrave v Hurdcase where the negligence of the representee implied that the contract was valid.
Case study: Fraudulent misrepresentation
In addition to the common law, the Australian Consumer Law in the form of Competition and Consumer Act, 2010 could apply to the given situation. In accordance to s. 54, for any product which is sold to consumer, there is an inherent consumer guarantee that there is disclosure of any security on the same. Violation of this provides the right to the consumer to demand refund. Additionally, deceptive conduct of sellers is defined in s.(18) of ACL. It highlights the following conditions for s(18-1) to be applicable.
- Commercial nature of transaction as against domestic
- Through the conduct the potential deception of consumers is a sufficient condition and the actual deception is not mandatory
- Some reliability on deceptive advertisement is sufficient from seller’s perspective as highlighted in the verdict in Perre v Apand Pty Ltd However, the intention of deceive is not mandatory to be present.
- The losses for the buyer are real and not potential.
Application
For the situation presented and considering the pre-contractual representations made by Angelo, it is evident that he has presented false information especially pertaining to the financial performance of the business. Considering that Barry was impressed by the financial numbers of the business, it is logical to conclude that this has been done intentionally by Angelo to ensure that the deal goes through. Further, the false information has also allowed Angelo to obtain a higher valuation for the business than it actually deserved based on the actual financial performance. If Angelo would have represented the financial performance correctly, then the consideration for the contract would have been considerably less than $ 200,000. Further, Barry was not negligent since Angelo had not provided any evidence in the form of books of the business so as to independently verify the representations. Hence, there is presence of fraudulent representation in the given case which would result in the contract being voidable on the behest of Barry.
In terms of ACL, it is apparent that for the truck, the incumbent lease was not disclosed which is violation of the implied consumer guarantee and therefore Angelo would have to refund the amount of $15,000 that is claimed for the truck. Additionally, the various conditions related to s,18(1) are also satisfied and hence Angelo has engaged in deceptive advertisement and thus there is a right to refund available to the consumer since the contract to buy emerged from the misleading representation. Additionally, damages incurred owing to the purchase could also be recovered by Barry.
Conclusion
The discussion carried out above reflects that the contract is voidable due to fraudulent misrepresentation being present due to conduct of Angelo. Also, remedies under ACL would be available in terms of refund for van along with the business. Besides, Angelo can demand compensation for damages suffered on account of purchase of business.
3). Issue
Legal concepts related to misrepresentation
Taking into consideration that the nullification of contract cannot be done on account misrepresentation, the major issue is to highlight if under the given situation, a breach of contract would be apparent based on the representations made by Angelo.
Relevant Rule
In order for a contract to be discharged, it is apparent that the various contractual terms must be adhered to by the contracting parties. Some of these referred to as express terms are captured in the written contract or oral agreement between contracting parties. However, based on the underlying representations that seller made before the contract was executed, certain implied terms would be derived. These have the same applicability as the express terms. Further, this differentiation between representations and terms is imperative as the latter have legal enforceability which is missing in the former.
To distinguish between a term and representation, there are various aspects that ought ot be considered. One of these aspects is the extent of expertise and knowledge that the representor possesses with regards to the representations made. The general understanding is that the higher the expert knowledge, the higher would be the possibility of the representations related to the product being categorised as terms. The evidence in this regards can be obtained from decision in the Perre v Apand Pty Ltd case. One possible explanation of the importance given to the above aspect is because in such cases, the buyer tends to rely a great deal on the expertise of the representor.
Another aspect worth considering is the significance of the representation from the point of view of the representee. The higher the importance given to the representation, the greater are the chances of the representation being considered as the term of contract. In order to elaborate the same, the decision pronounced in the Bannerman v White case assumes significance. In this case, the plaintiff has clearly highlighted that hops need to have undergone sulphur treatment failing which he would not buy them. This statement clearly reflected that sulphur treatment for the buyer was so pivotal that it could influence the decision to enter into contract or not. Hence, the court considered this as an implicit term for this contract and since the seller had provided hops without sulphur treatment, hence the contract was breached.
An additional aspect relates to parole evidence rule as per which the representations which ought to be contractual terms are usually captured in the written contract while those not so relevant or mere representations continue to remain in oral form. However, this must be used in conjunction along with other parameters.
Application
As per the applicable rule highlighted above, it needs to identify as to which representations in accordance with different factors outlined above can be classified as terms of the contract in the given case. Based on the details provided, it becomes clear that Barry was clearly quite impressed with the financial performance and therefore called Angelo to discuss the other aspects of the business. Further, in order to ascertain the fair value of any business, a key factor that is considered is the periodic profits made by the business. Hence, it would be appropriate to consider the representations regarding the monthly expense and monthly revenue as terms as violation of the same could have impacted the outcome of the contract. Besides, the representation made by Angel also become more pivotal in this case since Barry does not have any experience with the given business and hence he is relying on the expertise that Angelo possesses with regards to his business. Also, in wake of the actual values of monthly revenue and expense, it might have been possible that Barry would not buy the business and may consider his employment salary to be higher.
Also, besides the implicit terms identified above, there are two express terms that are highlighted in the written contract inked between the two parties. While the van value has been stated as $ 15,000 but in actuality the van is on lease and also the associated payments are pending. Thus, clearly, the value of $15,000 is incorrect and hence there is violation of the express same. A similar conclusion can also be drawn for the leader where also the value expressed does not capture the true value of loader. Thus, owing to the breach of the contractual terms, it is apparent that the contract has been breached.
Conclusion
Thus, it is apparent that the contract has been breached owing to breach of the terms (both implicit and express) related to the contract involving business sale. Thus, damages can be demanded from Angelo from Barry.
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