Establishing a Valid Contract and Prohibition of Misleading Conduct
Discuss about the Boundaries of Australian Property Law.
- Is there a valid contract between Annie and Desert Island Discs?
- What is the implication of the sign “you can choose for out pleasure for ever” at the counter?
- On which grounds can Annie take legal recourse to recover the money paid for the discs?
- Display of goods for sale amounts to an invitation to treat(Ewan & Qiao, 2015).
- Conduct that is misleading or deceptive or likely to mislead or deceive is prohibited by law(Latimer, 2012).
- A person must not, in the course of business, make a false or misleading representation on goods or services (CCH Austalia Ltd, 2011; Latimer, 2012).
- ‘No refund’ signs are generally illegal.
In order to determine liability in legal actions arising from a contractual agreement, it is essential, first and foremost to establish whether there is a valid contract. Essentially, courts have taken displays in shops as an invitation to treat as opposed to an offer as illustrated in Fisher v Bell [1961] 1 QB 394 where the display of goods at a shop window with the price attached was considered as an invitation to treat and not an offer. The offer manifests at the cashier’s desk or till once the customer presents the goods for payment. This position is illustrated in the infamous case of Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401. In this case, the defendants organised their goods on a shelfs in a self-service format. According to pharmaceutical regulations, sale of drugs had to occur under the supervision of a registered pharmacist. In the given case, the pharmacist supervised transactions at the cash desk but not at the shelves where customers picked the drugs. The court shelf that the sale took place at the cash desk and as such the defendants were not in breach of statutory duty as the display on shelves was an invitation to treat.
Additionally, s 18 of the Australian Consumer Law 2010 (Cth) prohibits and individual or a corporation from engaging in misleading or deceptive conduct in the course of trade. Section 29 further expands the obligations of a trader by stating that false or misleading representations on goods and services are prohibited. These include representations reflecting on the quality, value, composition, price, characteristics, uses and even testimonials on commodities that may influence the buyer unduly to purchase the commodity. ACCC v Audi Australia Pty Ltd (2007) FCA 1990 illustrates a case where an advertisement reflecting the purchase price misleading. In this case, it was stated that the buyer can opt to rescind the contract or make a claim for damages based in the grounds of misleading representation. However, if they proceed with the contract after discovering the misrepresentation they are bound to perform it. Further, a seller who believes that the misrepresentation was innocent, that it they believed it to be true and relayed it as such can claim their innocence as a defence.
According to ss 23 and 24 the Australian Consumer Law 2010, the court may consider certain terms of a contract as unfair if they cause certain detriment to a party, lead to an imbalance in party rights and obligations and a not reasonably necessary to protect the interests of the advantaged party. Unfair terms are void and if the contract cannot operate without the unfair term then the contract in itself becomes void. In, the court discussed the validity of ‘no refund’ policies based in the aforementioned provisions of the Act. The consumer stood to suffer a detriment due to the defendant’s reliance on the clause. The court also held that in determining fairness, transparency is essential and where there is ambiguity then the term is unfair.
Consideration of Unfair Terms
The rules highlighted above first and foremost guarantee that a valid contract exits between Annie and Desert Island Discs. The advertisement displayed at the shop window is construed as an invitation to treat. By presenting the goods at the shop cash desk, Annie made an offer which was accepted when the cashier rang them up for payment. As such, a valid contract exists which places certain obligations on both parties. Among these is the obligation to not to engage in misleading conduct which includes false misrepresentation of goods and services. The advertisement stated that the albums which normally sold for $12.99 each were now selling at $2.99 a piece. It also expressly stated that the offer was on Beyoncé songs and albums. However, Annie was charged $12.99 per album and found that most of the songs were covers and despite the discs having different titles, three contained the same songs. This can be argued as a misrepresentation on price, value and composition. She paid a higher price than displayed on the advertisement. The advertisement stated the songs and albums were Beyoncé’s placing a certain expectation on value and quality; they were also differently titled as such she expected different content in each.
Further, the shop Desert Island Discs argued that the sign meant that Annie could not seek recourse from them; however, as illustrated in the discussion above, the sign above the counter is unfair on the grounds that it created an imbalance of interests and it was ambiguous. It is therefore void.
Conclusion: Annie can seek recourse on the grounds of misleading conduct, false or misleading representation and unfair terms.
In the case study provided, Desert Island Discs argued that the content of the advertisement was as a result of a mistake form the advertising agency; it was of no fault of their own. As discussed above, In the case of misleading conduct, where a seller is convinced that the representation was true, they can raise a defence of innocence. Desert Island Discs can therefore argue that they believed the advertisement reflected the correct price which they charged Annie accordingly and that by leaving the store upon payment, Annie had accepted the price paid as the correct terms of the contract.
- Based on the co-ownership of title, what is the extent of Dodo’s liability for Pina’s actions?
- Is the mortgage still enforceable despite the forged signature?
- The liability of a co-owner on encumbrances over is dependent on the nature of the co-ownership relationship; joint tenancy or tenancy in common(Hepburn, 2013).
- Unless sufficient inferences can be drawn illustrating an intention to be bound to the loan agreement(van den Heuvel v Perpetual Trustees Victoria Ltd, 2010), forged mortgages are essentially void (Perpetual Trustees Victoria v English, [2010]).
Co-ownership of property is recognised both at common law and equity under two principle forms; joint tenancy and tenancy in common (Esmaeili & Grigg, 2016). Joint tenancy refers to where “each co-owner holds a part of an entire estate but not a separate proportionate share” (Hepburn, 2013, p. 412). As such, each co-owner is not regarded as holding a specific share but has interest in the whole of the property. In Wright v Gibbons (1949) 78 CLR 313, Latham CJ recognised and summarised this concept citing that “the interests of each joint tenant in the land held are always the same in respect of possession, interest, title and time”. As such, there is no distinction between the interests of one co-owner and those of another. Tenancy in common on the other hand refers to a scenario where each tenant has a separate and individual title; there is no unity of interest title or time (Nullagine Investments Pty Ltd v Western Australian Club Inc, 1993). The property in itself may not be physically divided but the interests of each co-owner are divided in shares.
Case Law and Legislation Relevant to Co-ownership of Property
The concept of co-ownership is recognised in statute as provided for in the Transfer of Land Act (Vic) 1958 and the Property Law Act (Vic) 1958. According to s 30(2) of the Transfer of Land Act, the law presumes joint tenancy and tenancy in common where two or more persons are registered as joint proprietors. Section 28A of the Property Law Act on the other hand recognises a co-owner as a joint tenant or a tenant in common either at law or in equity. The act goes further to consider the liability of co-owners, stating that a co-owner is generally liable to account to other co-owners the extent due from their just and proportionate share in the property. In joint tenancy, co-owners are usually held joint and severally liable for any encumbrances to the property. As such, where a co-owner mortgages the property, all other co-owners are responsible for the repayments and the default of one party places liability on all other co-owners (MacLeod, 2017).
Further, on the issue of forgery, in Perpetual Trustees Victoria v English & Anor [2010] NSWCA 32, the court sought to clarify the principles to be applied where a co-owner forges another’s signature to secure a mortgage. According to the court in this case, the validity of the mortgage was dependent in the language of the Secured Agreement. In this particular case, the agreement contained a clause that stated that the offer was considered accepted only of all the persona to whom it was made, in this case being all the co-owners, has duly signed the agreement. The security in question was co-owner by a husband and wife and the husband had forged his wife’s signature to secure the mortgage. In essence, as the wife had not signed the mortgage, it was void as acceptance was not concluded. The court stated that where a registered mortgage instrument fails to secure an obligation from the mortgagor due to its being void ab initio, the mortgagee is unlikely to enforce obligations against an innocent co-owner.
In Van den Heuvel v Perpetual Trustees Victoria Ltd (2010) NSWCA 171, there was no express clause requiring all co-owner to sign in this case as with the English ([2010]) case. The court in this case however upheld the mortgage agreement was valid; it drew inferences form the husband’s conduct and the history of the mortgage industry to determine whether there was an intention to be legally bound.
According to the facts provided, Dodo and Pina are co-owners of the plot in Melbourne. Based on the law discussed above, liability is based in the nature of the co-ownership relationship. Where the parties are in a joint tenancy, liability is joint and several and as such, both co-owners are liable for the action and inactions if the other. Based on the principles of joint tenancy, Dodo is therefore jointly and severally liable for the mortgage as well as the council payments. However, as the signature was forged, Dodo can use this as a defence to distance himself from the responsibility accruing from Pina’s actions.
Conclusion: Dodo is jointly and severally liable for any encumbrances on the property due to the nature of the co-ownership. He can however challenge his liability on the mortgage payments based on the forgery by Pina.
References
ACCC v Audi Australia Pty Ltd (FCA 1990 (2007) ).
Australian Consumer Law 2010 (Cth).
CCH Austalia Ltd. (2011). Australian Competition and Consumer Legislation. Sydney: CCH Australia.
Esmaeili, H., & Grigg, B. (2016). The Boundaries of Australian Propety Law. Cambridge: Cambridge University Press.
Ewan, M., & Qiao, L. (2015). Contract Law: Australian Edition. Palgrave Macmillan.
Ferme & Ors v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 (FCCA 2384 [2015]).
Hepburn, S. (2013). Principles of Property Law. London: Routledge.
Latimer, P. (2012). Australian Business Law. Sydney: CCH Australia Ltd.
MacLeod, N. (2017). Property co-ownership, it’s a team effort – Why two (or more) owners are better than one. Retrieved from RP Emery Legal Kits: https://www.rpemery.com.au/articles/fundementals-house-coownership.html
Nullagine Investments Pty Ltd v Western Australian Club Inc (177 CLR 635 1993).
Perpetual Trustees Victoria v English (NSWCA 32 [2010]).
Property Law Act (Vic) 1958.
Transfer of Land Act (Vic) 1958.
van den Heuvel v Perpetual Trustees Victoria Ltd (NSWCA 171 2010).
Wright v Gibbons (1949) 78 CLR 313 (78 CLR 313 (1949)).
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