Legal dispute between Winnie and Eva - Law Assignment
Table of Contents
Introduction................................................................................................................................ 3
Issue........................................................................................................................................... 3
Legal Rights of Winnie.............................................................................................................. 3
Formation of the Contract...................................................................................................... 4
Validity of the Contract Terms.............................................................................................. 5
Vitiating Factors of the Contract........................................................................................... 7
Consequences of Breaching the Contract.............................................................................. 9
Conclusion............................................................................................................................... 11
References................................................................................................................................ 12
Introduction
The current assignment is related to the Australian Consumer Law. The given case discusses around the contract that took place between Winnie, a fashion designer and Eva, an event planner. As per the given case, Winnie had to plan her wedding for which she entered into a contract with Eva. The contract between them concluded on 13th September 2015 and included a number of clauses which clearly defined the roles and responsibilities of Emerald Reef Hotel with respect to the big event of Winnie. In this contract between Eva and Winnie there were some hidden activities from both side like Winnie did not explain about the fashion show for her dress at her wedding to generate profit and Eva did not mention that the band suggested is her son. However, at the day of the wedding, nothing went well for Winnie as a tropical hurricane struck and nothing went the way it was planned. Winnie felt that she had the right to sue Eva for the damages that took place. In this regard, the relevant laws related to the formation of the contract, validity of the contract terms, the factors that vitiated the contract and the damages and remedies that are available to Winnie have been discussed in the current assignment. In addition, the consequences with respect to the breach of contract are also a part of this assignment.
A contract took place between Winnie and Eva according to which Eva was responsible for managing the wedding event of Winnie. Six clauses defining the role and responsibility of the Emerald Reef Hotel where the event was supposed to take place were a part of the contract. In addition to this, Eva also verbally told Winnie that at some occasions, tropical storms result in upsetting the events that take place at the Emerald Reef Hotel. Also, Eva recommended a band namely ‘The Trolls’ to Winnie; however, she did not tell Winnie that the members of the band were actually his son and his friends. Moreover, the Asian Finger Feast that was ordered by Winnie turned out to be frozen food sourced from a supermarket. Another issue that has been highlighted in the given case is that Winnie being a fashion designer had planned to showcase her new range wedding dresses at her wedding; nevertheless, she never mentioned this to Eva. The contract details are followed as below.
Rule
The Australian Contract Law is inclusive of the formation of the contracts that take place between two or more parties1.A contract is a promise that legally binds the parties involved to follow the conditions that are a part of the contract. In this regard, the breach of contracts is likely to result in a number of negative consequences as per the agreed terms and conditions[1]. The formation of contracts as per Contract Law is based on the agreement of the involved parties with respect to the clauses of the agreement. This agreement has no information about the hidden agenda by both the parties. Consideration is another essential element of the contract formation as per the Australian Contract Law. Apart from this, intention, capacity and formalities are important elements that are a part of the formation of contracts[2].
The primary discussion and clauses are considered as initial agreement between the parties. As held in the case of Smith V Hughes2, an agreement on the part of the both the parties resulted in the formation of a contract despite the differences in the intentions of the buyer and the seller. The different subjective intentions of Smith and Hughes were ignored by the court of law as it was held that a valid contract between both the parties existed[3].
Application
The Australian Contract Law is applied to the case of Winnie and Eva for form a valid contract. The clauses also included the zero liability of the hotel in case of any harm or damage caused. As per mutual clause Winnie was asked to pay 50% in advance and remaining 50% one week prior to the event.
For a contract to be existent one of the parties makes an offer and the other party usually accepts this offer3. Once this acceptance takes place, it becomes binding for the involved parties to follow the rules and clauses that are a part of the contract[4]. In a similar way, the contract between Winnie and Eva took place at the time when the offer made by Eva on the behalf of the Emerald Reef Hotel was accepted by Winnie. At first meet itself, the contract turned into certain legal obligations4. As held in the case of Clarke v Dunraven4, the entry in the race of the terms of Yacht Racing Association (YRA) meant that the competitors had entered into a contract with one another based on these terms. The terms of YRA included that in case of damage to the yacht of any participant as a consequence of carelessness, the negligent was liable to pay for the damages[5].
Conclusion
Based on the above rule and application under the Australian Contract Law, it is evident that contract was formed between Winnie and Eva which made it obligatory for both of them to follow the clauses that were included in this agreement.
Validity of the Contract Terms
Rule
The Australian Contract Law ensures the validity of a contract that takes place between two or more parties. For contract to be in effect, agreement between the parties is important. An offer is made by a party which is accepted by another party thus forming a valid contract[6]. Consideration is also another important point in contract that has been defined as the price that the promisor asks as an exchange for the promise made. Consideration is a highly important requirement for the validity of a contract[7]. It has been held in the case of Beaton v McDevitt7 that a consideration was provided by Beaton for the promise made by the respondent to transfer the property. The issue that occurred in this case was whether the consideration made by Beaton was valuable or not. The court of law upon careful analysis declared that the consideration was in fact valuable[8].
The intention for the creation of legal relations is another important requirement with respect to the validity of a contract. It has been found that for the existence of a contract, it is highly imperative for the parties involved in the contract to be ready for the creation of legal relations. In most of the cases, consideration results in the provision of evidence in this regard[9]. In the case of Rose and Frank & Co v Crompton9, Rose and Frank began9 an agreement with the complainants with respect to the provision of tissue paper. It was held by the court of law that their agreement clearly included that they did not have any intention of entering into a legal contract. Henceforth, this led to the conclusion that no valid contract was formed between them[10]. The selected area for event is considered to be highly complex as a number of statutory developments have been observed in this area[11]. Lastly, a major requirement with respect to a valid contract is the presence or absence of formalities. As a general rule of law, contracts are not required to comply with various types of formalities11. Proving contracts that are oral is considered to be a difficult task; however, the formality with respect to the presence of a written agreement does not have any effect on the validity of a contract[12].
Application
There are certain legal needs and procedures in order to have the contract law valid. These requirements are inclusive of agreement, consideration, and intention for the creation of legal relations, capacity and formalities[13]. It has been analysed that an offer was made by the Emerald Reef Hotel which was accepted by Winnie as per her own consent. This acceptance on the part of Winnie resulted in validating the terms of the contract that took place between Eva and Winnie but with few hidden agenda in their own ways. In addition to this, another factor that can be considered as evidence of the validity of the contract is that of the presence of a consideration. The consideration that was asked by the hotel in return for the services being provided to Winnie as depicted in the given case was $ 20,000. All these evidence indicate that a formal agreement was done in between two and that turned as legal contract13.
In addition to this, it has been found that the intention of the parties to form a legal relation with one another is a major requirement for the validity of a contract[14]. In a similar way, it has been analysed that the agreement that took place between Eva and Winnie bound them to enter into a legal relation. This legal relation proves that a valid contract between them took place. Also, this legal relation gives both of them the power to sue one another in the case of the breach of the terms and clauses included in the contract. It has been found by Briggs[15] that capacity and formality are also considered as major factors that prove the validity of a particular contract. Formalities such as the presence of written clauses are not imperative and do not in any way have an effect on the validity of the contract16. As per the given case, it has been found that Eva verbally stated before the initiation of the contract that a tropical storm often results in upsetting the events that take place at the Emerald Reef Hotel. However, Winnie did not pay much attention to this statement of Eva and happily agreed to the terms of the agreement. This clearly implies that the absence of written evidence regarding this scenario does not mean that the contract between Winnie and Eva was not valid.
Conclusion
As per the given incident and following with the Australian contract and consumer law, this is quite evident that there was legal bound to each other. Breaching that will go towards filing case to each other. The hidden objective by both parties was not mentioned or told to each other.
Vitiating Factors of the Contract
Rule
There are various factors that leads to breach the contract as per Australian contract and Consumer Law16. These factors are known as vitiating factors and often involve a form of unconscionable and unfair dealing on the part of one of the parties that are involved in the contract[16]. The most important factors in this regard are inclusive of mistakes, illegality, unfair terms, undue influence and deceptive or misleading conduct by the parties involved in the contracts. It has been found in s18 of the Consumer Law of Australia that a person should not engage in behaviour that is deceptive or misleading or is expected to deceive or mislead[17]. The case of Google Inc v ACCC18 is a classic example in this regard. Google was alleged to be involved in deceptive and misleading conduct. However, it was held in the court of law that the activities on the part of Google were not deceptive or misleading at all. This clearly implies that the appeal of Google was upheld[18].
There are certain ways mistake happens and in such a case, a contract may be vitiated due to the presence of a mistake[19]. The case of Petelin v Cullen20 can be considered as an example of the vitiating factor of mistake. As per this case, Petelin signed a contract; however, he could not read what was written in the contract. It was thus held that the contract had to be vitiated as there was a mistake and Petelin did not actually know what was included in the contract[20].
According to s23 in Australian Consumer Law, it has been found that a term that is a part of a contract is said to be void in two main conditions. These conditions are inclusive of the unfairness of the term and the formation of a standard contract. In addition to this, illegality is also considered as a major factor that results in the vitiation of a contract. Illegality is considered to be a complex area when it comes to the Australian Contract Law[21].
Application
The vitiating factors are found to result in the avoidance of contracts that are otherwise considered to be valid. The key factor in this regard is the deceptive and misleading conduct on the part of a particular contract[22]. As per the given case, the terms of the contract that took place between Eva and Winnie were clear enough and Winnie happily agreed on these terms clearly understanding each one of them. The hidden intentions to generate profit at this event was biggest mistake and kind of misleading information. Other than this, it has been analysed that the Emerald Reef Hotel had not provided any kind of deceptive or misleading information to Winnie. This means that the vitiating factor of misleading or deceptive conduct is partially applicable in the given case.
According to the given case of Winnie and Eva, it has been understood that none of these vitiating factors can be applied to the contract that took place between these two parties. The reason for this is that the terms of the contract were fair, clear and clearly understood by both the parties. This is evident from the fact the Winnie paid 50% of the total amount at the time of making the contract as stated in one of the clauses.
Conclusion
The hidden agenda or misleading information by both of the parties are not liable for any kind of legal case to each other. Since, all terms were explained to Winnie by hotel, in that case Hotel is not liable for any lose for Winnie. Winnie can file case and also Eva too to each other for misleading information. The only breach of contract was provided food was not per at the hotel.
Consequences of Breaching the Contract
Rule
The breach of contract happens with various causes. The most prominent consequences in this regard are fines and pecuniary penalties[23]. As per case Hadley v Baxendale, the consequential of damages may be compensated. The breaching party is liable for all the loses that is according to contract not because of any hidden agenda24. However, significant proofs for the crimes are required for the imposition of fines. In addition to this, the pecuniary penalties can be defined as the monetary fines that are both applied and collected by the civil courts. The court however takes into regard a number of factors before actually imposing fines and pecuniary penalties25.
Application
In this case since the party of Winnie spoiled and she has to suffer losses as well. Winnie can go to sue Eva tor refund $20,000 to recover the damage under damage breach condition s230-250 according to Hadley v Baxendale case24. Winnie cannot go for any kind of loss for her dresses or loss in profits (expected to be $50,000) because there was no contract either in written or verbal with Eva. The hotel is not responsible for any damage as per the agreement.
Conclusion
It is evident that there are certain legal rights of Winnie to sue to Eva in order to get her compensation for spoiling the party and for the provided food. The reason for this is that the verbal and written terms of the contract were clear and Winnie agreed to these terms without any coercion and at her own will. Also, the contract also clearly stated that in case of any problem, the selected menu could be replaced as per the hotel’s discretion. Henceforth, it can be concluded that the contract between Eva and Winnie was valid. However, Eva had provided misleading information with respect to the musical band that was selected for performing at the event. This means that Winnie had the legal rights to file a suit against Eva with respect to this particular aspect.
References
ACL, (2016). Beaton v McDivitt, [Online]. Available at <http://www.australiancontractlaw.com/cases/beaton.html> [Accessed on 22nd September 2016].
ACL, (2016a). Google Inc v ACCC, [Online]. Available at <http://www.australiancontractlaw.com/cases/google.html> [Accessed on 22nd September 2016].
ACL, (2016b). Petelin v Cullen, [Online]. Available at <http://www.australiancontractlaw.com/cases/petelin.html> [Accessed on 22nd September 2016].
ACL, (2016c). Rose and Frank & Co v Crompton, [Online]. Available at <http://www.australiancontractlaw.com/cases/rose.html> [Accessed on 22nd September 2016].
Briggs, A. (2013). The conflict of laws. OUP Oxford.
Burns, F. (2011). Mortgages, seniors and the common law contractual doctrine of mental incapacity in Australia. International journal of law and psychiatry, 34(2), 79-93.
Corones, S. G. (2013). The Australian consumer law. Thomson Reuters, Lawbook Co..
Cvjetanovic, M. (2013). Consumer Sovereignty: The Australian Experience. Monash University Law Review, 252, 254.
Helveston, M. N., and Jacobs, M. S. (2014). The Incoherent Role of Bargaining Power in Contract Law. Wake Forest Law Review, Forthcoming.
Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.
Marshall, B. A. (2012). Reconsidering the proper law of the contract. Melbourne Journal of International Law, 13, 505-539.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).
Paterson, J. M. (2013). Developments in consumer protection law in Australia. Legaldate, 25(2), 2.
Poole, J. (2016). Textbook on contract law. Oxford University Press.
Sims, A. (2012). Unfair Contract Terms: A New Dawn in Australia and New Zealand. Monash UL Rev., 39, 739.
Spigelman, J. (2011). Contractual Interpretation: A Comparative Perspective. Australian Law Journal, 85, 412.
Svantesson, D., and Clarke, R. (2013). Trade Practices Act: A Hard Act to Follow: Online Consumers and the New Australian Consumer Law Landscape, The. James Cook UL Rev., 20, 85.
Tasneem, F. (2011). The Legal Issues of Electronic Contracts in Australia. International Journal of Management and Business Research, 1(2), 85-92.
Turner, C. (2013). Unlocking contract law. Routledge.
Willmott, L., Christensen, S., Butler, D., and Dixon, B. (2013). Contract law. Oxford University Press.
Thomas A. Diamond and Howard Foss, Consequential Damages for Commercial Loss: An Alternative to Hadley v. Baxendale, 63 Fordham L. Rev. 665 (1994).
[1] Corones, S. G. (2013). The Australian consumer law. Thomson Reuters, Lawbook Co..
[2] Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.
[3] McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).
[4] Willmott, L., Christensen, S., Butler, D., and Dixon, B. (2013). Contract law. Oxford University Press.
[5] Poole, J. (2016). Textbook on contract law. Oxford University Press.
[6] Turner, C. (2013). Unlocking contract law. Routledge.
[7] Helveston, M. N., and Jacobs, M. S. (2014). The Incoherent Role of Bargaining Power in Contract Law. Wake Forest Law Review, Forthcoming.
[8] ACL, (2016). Beaton v McDivitt, [Online]. Available at <http://www.australiancontractlaw.com/cases/beaton.html> [Accessed on 22nd September 2016].
[9] Spigelman, J. (2011). Contractual Interpretation: A Comparative Perspective. Australian Law Journal, 85, 412.
[10] ACL, (2016c). Rose and Frank & Co v Crompton, [Online]. Available at <http://www.australiancontractlaw.com/cases/rose.html> [Accessed on 22nd September 2016].
[11] Paterson, J. M. (2013). Developments in consumer protection law in Australia. Legaldate, 25(2), 2.
[12] Burns, F. (2011). Mortgages, seniors and the common law contractual doctrine of mental incapacity in Australia. International journal of law and psychiatry, 34(2), 79-93.
[13] Ibid 8
[14] Ibid 10
[15] Briggs, A. (2013). The conflict of laws. OUP Oxford.
[16] Sims, A. (2012). Unfair Contract Terms: A New Dawn in Australia and New Zealand. Monash UL Rev., 39, 739.
[17] Marshall, B. A. (2012). Reconsidering the proper law of the contract. Melbourne Journal of International Law, 13, 505-539.
[18] ACL, (2016a). Google Inc v ACCC, [Online]. Available at < http://www.australiancontractlaw.com/cases/google.html > [Accessed on 22nd September 2016].
[19] Ibid 13
[20] ACL, (2016b). Petelin v Cullen, [Online]. Available at <http://www.australiancontractlaw.com/cases/petelin.html> [Accessed on 22nd September 2016].
[21] Svantesson, D., and Clarke, R. (2013). Trade Practices Act: A Hard Act to Follow: Online Consumers and the New Australian Consumer Law Landscape, The. James Cook UL Rev., 20, 85.
[22] Ibid 17
[23] Tasneem, F. (2011). The Legal Issues of Electronic Contracts in Australia. International Journal of Management and Business Research, 1(2), 85-92.
24 Thomas A. Diamond and Howard Foss, Consequential Damages for Commercial Loss: An Alternative to Hadley v. Baxendale, 63 Fordham L. Rev. 665 (1994)
25Cvjetanovic, M. (2013). Consumer Sovereignty: The Australian Experience. Monash University Law Review, 252, 254.