Case Study 1
Whether the transaction taken by Lance with Lynton has any legal effect against herbal products business? If yes, then whether Lance can be made accountable to make good the losses that are suffered by the other two partners of the firm?
In Australia, two or more than two persons, can form a partnership provided it is carried out with common intention, to carry out business of continue nature and with reason to earn profits (Smith v Anderson (1880). There is no concept called separate legal entity, thus, the partners are agents of the firm and have the capacity to bind the firm with their acts and omissions (Lang v James Morrison & Co Ltd (1911)). (Egert G, 2007)
The actions of the partners are governed by the authority that they assume by becoming the partners of the firm. Normally, the authorities are of two kinds; first, Actual authority is when the firm itself provides an authority to the partner to act or omit any action. It can be express, when, the firm provides the authority in written or oral form, or, implied, when the authority is provided by any conduct or statements of the firm (Australia and new zealand bank, ltd. V. Ateliers de constructions electriques de charleroi. [1966]); secondly, ostensible authority, when the firm has overtly acted in such a manner so that an outsider can assume that the partner with whom he is dealing has some kind of authority to bind the firm, provided the outsider himself is acting with full care and honesty, then, it is an ostensible authority [Lloyd v Grace, Smith & Co [1912]. (Bowen R, 2017)
The partners also have duties which they must perform. Some of the duties are: (Small Business Law, 2017)
- Not to make secret profits;
- To act within his authority;
- If any loss is caused because of the actions of the partners then he must compensate the firm and the other partners for the same.
- A partner must always act in fiduciary manner;
- The actions of the partner must be supported with care and diligence.
- Must act with total fairness and honesty.
Now, there are three partners in herbal products business. the purchasing limit of the partners is set out to be $20,000, however, Lance (one of the partners) has purchased ute @ $25,000, which is in excess of his authorized limit.
Now, normally, since Lance has over exceeded his actual authority provided by the firm then such transaction has no authority. But, if it is presumed that Mighty Motors Pty Ltd are under the assumption that Lance has the authority to bind the firm for transactions till $25,000 and has no reason to believe otherwise, then, by applying the rule of ostensible authority, the actions of Lance are binding on the herbal business and they must compensate Lynton (Mighty Motors Pty Ltd).
Also, Lance must comply with his partnership duties, specifically to act with care and diligence and must not act intentionally to bring any loss to the firm. But, he acted carelessly and thus the other partners have full right to claim the losses from Lance.
Conclusion
Mighty Motors Pty Ltd can hold the herbal business for the transaction of $ 25,000 by considering the transaction of Lance valid under ostensible authority. Also, Lance must compensate the other partners for his wrongful actions.
- Whether the advertisement by Xiaojing is valid in nature? If not, what remedies can be availed by consumers against Xiaojing?
- Can Saqlaim repudiate the contract entered by him?
One of the most promising areas of law that is enacted in Australia for the welfare of the consumers is the Australian Consumer Law. There are various provisions that are framed:
- Every person who is dealing with the consumer should act not in any misleading or deceptive manner (Australian Competition and Consumer Commission v TPG Internet Pty Ltd[2013] ). (Section 18 of the Law). (Paterson JM & Wong, 2014)
- Section 20 of the Law deals with the actions that are unconscionable. If any actions is unconscionable in nature that it is not valid in law. Normally, a transaction is unconscionable when one party is dominant and another is weaker and the dominant party takes undue advantage of the weaker party’s position (Commercial Bank of Australia v Amadio[1983]). The party is considered weak because he is facing disabilities in the form of illiteracy, age, sex, education, assistance, intoxication, infirmity, health etc. (Vout P, 2013)
- No person dealing with consumer must make any representation which is false and which deals with the quality or standard of the product so sold. This is guided under section 29 of the Law.
- Section 33 and section 34 of the Law submits that no information that results in misleading about the nature, characteristics, process, quantity or suitability of the article is not permitted in law (Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 4)[2015] )
Case Study 2
The contravention of section 18, 29, 33 and section 34 entitled the plaintiff consumer to see injunction, compensation or damages in the form of remedies.
A specific kind of moisturizer is sell by Xiaojing which claims that its slow done the ageing effect which was not a true statement. Normally, when any consumer purchases the product from any seller then such a seller must make sure that no product must be sold by stating any misleading or deceptive statement. Also, no claim must be made regarding the quality or character of the product which is untrue. Thus, when Xiaojing made the stamens which are untrue, then, it is violating section 18, 33 and section 34 of the Law.
Thus, such actions must be restrained by Xiaojing and the consumer can sue Xiaojing for making such untrue claims.
Also, when the partnership desired to sale out Ute to Saqlaim then the partnership must make sure that every detail regarding the ute must be transferred to Saqlaim. Also, the partnership is aware that Saqlaim is not able to understand the talking of Lance. The partnership made no efforts to clarify the doubts of Saqlaim. Thus, the acts of lance were totally unconscionable by taking the advantage of the weakness of Saqlaim. Thus, the actions of Lance are totally prohibited under section 20 of the Law.
Conclusion
Thus, the consumers have full right to sue Xiaojing under section 18, 33, and 34 of the law for making false misleading and deceptive claims. Also, the contract is not valid and Saqlaim can avoid the same under section 20 of the Law.
Whether the promise made by is Xiaozing is enforceable in law?
The presence of offer, acceptance, legal intention, capacity and consideration are required for any valid contract formation. The offeror and offeree must exchange promises maid them to make a valid agreement. The offeror and offeree must have legal intention and should be capable to make contract. But, any agreement can only become a contract when it supported by consideration. (Clark J, 2013)
A consideration is very essential as it converts an agreement in the contract and makes it enforceable. A consideration can be monetary or non-monetary but it is moved from the promisor to the promisee to support the acts or omissions which are undertaken by a promisee at the desire of the promisor (Coulls v Bagots Executor & Trustee Co Ltd. (1967)). Consideration can be anything of value irrespective of the fact that it is insufficient. But, it is very important to consider that consideration should always support those promises which are made in present or which is future promises. If a consideration is moved by the promisor to support any promise which has already been performed by the promisee, then, it is a kind of past consideration and in Australian law, there is no validly of past considerations. Past considerations has no relevancy and are not enforceable (Roscorla v Thomas (1842)). But, if the act done in past is promised to be remunerated by the priomisor, then, it is kind of exception and in such cases the promises can be enforced.
Felix is 20 years old and established a contract with Xiaojing at a consideration of $25 cash per bag against a task of picking lavender. An offer is made by Xiaojing which is confirmed by Felix resulting in the formation of a valid contract.
But, the promise by Xiaojing to pay $100 for the work done in past is of no value because as per Roscorla case, there is no value of any past consideration. The actions were undertaken by Felix a day before when the promise is made. So, a promise to support such past action which is made after the performance of the task has no relevancy.
Conclusion
It is thus concluded that a valid contract is made amid Felix and Xiaojing which is supported by a consideration of $25. But, the promise of $100 to be paid by Xiaojing has no relevancy as is a past consideration with n legal enforceability.
Reference List
Bowen R (2017) Agency Authority in Australia- Articles and Publications.
Clark J (2013) Australian Contract Law – Formation.
Paterson JM & Wong (2014) Fine Print Disclaimers May Not Protect Advertising from being Misleading: Australian Competition and Consumer Commission v TPG Internet Pty Ltd.
Vout P (2013) Unconscionability And Good Faith In Business Transactions – 21 OCTOBER 2013 – NATIONAL COMMERCIAL LAW SEMINAR SERIES.
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54.
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 4) [2015] FCA 1408
Australia and new zealand bank, ltd. V. Ateliers de constructions electriques de charleroi. [1966] 1 Lloyd’s Rep. 463.
Coulls v Bagots Executor & Trustee Co Ltd. (1967)).
Commercial Bank of Australia v Amadio [1983] HCA 14
Lang v James Morrison & Co Ltd (1911) 13 CLR 1.
Lloyd v Grace, Smith & Co [1912] AC 7165.
Roscorla v Thomas (1842).
Smith v Anderson (1880) 15 Ch D 247
Egert G (2007) Defining A Partnership: The Traditional Approach Versus An Innovative Departure ? Do Queensland Appeal Court Decisions Point To The Need For A Review Of The Traditional Approach To Interpretation Adopted By Australian Courts? 19.1 BOND LAW REVIEW.
Small Business Law (2017) general partnership and fiduciary duties (Online) Available at: https://business-law.lawyers.com/small-business-law/general-partnership-and-fiduciary-duties.html. (Accessed on 7th April 2017)
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