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HA2022 Business Law

Executive summary

The Australian contract law has no provision recognizing that good faith is necessary while negotiating a contract. However, in the presence of an express condition to negotiate the contract in good faith, the court has decided that the parties are obliged to negotiate the contract in good faith. The first circumstance deals with the provision of good faith while negotiating a contract. The second circumstance deals with breach of duty of care. A person is entitled to recover damages in case he has suffered an injury due to the negligent actions of another person.

Part-A

Issue

In this particular case, Lee an imitation jewellery dealer has sold her business to Peter who also deals in imitation jewellery. Lee has sold her business to Peter on condition that Lee will not sell, manufacture and import any real or imitation jewellery anywhere in Australia for a period of two years but Lee has established a retail jewellery shop in Cairns after one year (Abbott, Pendlebury and Wardman, 2013). The question is whether or not Peter can enforce the covenant against Lee.

Rule

If one party fails to fulfill the contractual obligations then it is known as a breach of contract. A breach of contract happens when a party fails to fulfill the contract on time, does not perform the contract in accordance with the terms and conditions of the contractor does not perform the contract at all. In the Australian contract law, there is no express provision regarding the use of good faith when negotiating a contract. An Australian court has ruled that an express contractual condition to negotiate in good faith is enforceable by law (Baker, 2019). The express condition must be drafted carefully so as to assign a meaning to the clause. Under selected circumstances, the law can impose an obligation to act in good faith while negotiating a contract. Legislature prohibits deceptive and misleading conduct while negotiating a contract. The consumer law of Australia prohibits deceptive and misleading conduct on the part of a person who is engaged in some kind of trade or commerce. The above-mentioned laws apply to all irrespective of the types of supplies or contract value. In contract disputes often parties have claimed that they were induced to enter into the contract through insufficient disclosure of necessary information at the time of negotiation. In a contract, if the parties wish to inflict good faith obligation then the parties should draft the contract accordingly.

 The parties to the contract must pay attention to the discharge of good faith obligation. The consumer and competition act 2010 has imposed a number of restrictions in order to prevent a party to a contract from engaging in any anticompetitive conduct (Eldridge, 2019). The restrictions imposed upon contract must be checked with competition law risks of Australia that deals with a restriction on selling with the third party. Upon the occurrence of a breach of contract parties will try to enforce the contract on its terms or will try to recover the money lost due to financial harm caused by the breach of contract. If the amount involved is less than the parties can resolve their grievances in small claims court. The parties may choose a mediator or an arbitrator to review their contract dispute rather than going to a formal court to file a lawsuit. The out of court option to settle a dispute is known as alternative dispute resolution. The most common remedy granted by a court of law is financial damages to make good to the party who has suffered loss and to put him in the position where he would have been in case the contract has been performed. In the case of Mackay v Dick, the doctrine of good faith has been implied by the Australian legal system (Fraser JA, 2019).

Application

 The most generally pursued remedy is damages and damages may be awarded by any court of law or adjudicator. Equitable remedies like specific performance or injunction can be awarded by the court. When a court orders specific performance of a contract, a party is compelled to perform the specific obligation stated in the contract like delivery of services or products. An injunction order of the court restrains a party from performing future breach of contract. Punitive or exemplary damages are not awarded by the court for a breach of contract. Australian courts are efficient in dealing with disputes related to the contract. There are a set of procedural rules that encourage alternative dispute resolution and in some cases, there is a compulsory requirement to mediate. The court system can sometimes be expensive (Emerson, 2016). When a breach of conduct is done by an individual the court may grant a remedy to the other party in the form of damages, specific performance of the contract and restitution. Payment of damages is the most common form of remedy granted to the party other than the one breaching the contract.

In specific performance the court orders the party breaching the contract to specifically perform the contract according to the terms and conditions laid down in the contract to do goods to the party who has faced loss because of the breach of contract. In restitution, the party who has breached the contract is ordered to put the non-breaching party in the same place where he had been prior to the breach of the contract. In the above-mentioned case, Lee has committed a breach of contract by violating the express terms of the contract. Lee while selling the business to Peter has said that she will not carry out the same kind of business in Australia for two years but after a year she has started the same kind of business in Australia. Peter can sue Lee for damages caused by such a breach of contract as it has adversely affected the business of Peter. He can even settle the matter out court through alternative dispute resolution. However, no punitive damages are awarded in case of breach of contract in Australia.

Conclusion

The above mention case is a clear case of breach of contract as Lee has violated the terms of the contract. Peter has suffered due to this breach of contract by Lee and hence is entitled to claim damages from Lee. Peter is entitled to maintain a lawsuit in a court owing to the violation of the contract. He also has an option of settling the matter out court through the help of an alternative dispute resolution system.

Part-B

Issue

In this particular case, an officer-in-charge of a fire station has ordered a jack to be carried by another vehicle other than the one used for carrying the jack because that specially designed jack carrying vehicle was out to handle an emergency situation. The jack was being carried to the site of the minor accident by the only available vehicle in the fire station and on the way the driver has applied brakes at an intersection which caused the jack to slip off and injure one fire officer (Gibson, 2017). The question is whether the officer-in-charge is guilty of breach of his duty of care or not.

Rule

The plaintiff in order to win a negligence suit has to prove four elements which include the presence of duty, breach of duty, cause of such breach and harm caused due to such breach. If all these four elements remain then a suit of negligence will prevail. Negligence is a failure to exercise the care which a man with ordinary diligence will do (Gotocourt, 2019). Claims can arise in negligence when any person has suffered injury and that person believes that he has suffered that injury owing to the negligence of another person and that another person is responsible for the injury suffered by him. A person cannot be said to have breached a duty unless the risk of harm was foreseeable, the risk was significant and a reasonable person, if we're in his place, would have taken necessary precautions to prevent that risk. Obvious risk includes the risk that is a matter of ordinary knowledge. Even if the risk has an extremely low probability of occurring then also the risk will be counted under obvious risk. A risk if not physically observable, prominent or conspicuous then also the risk will be counted under obvious risk.

The risk will not be considered an obvious risk if the risk is created by the failure to operate, replace, maintain or care for a thing unless such failure is itself counted under obvious risk. The civil liabilities act, 1936 is used in Australia to access the negligence and liability faced by an individual owing to the negligent act on his part (Kendrick, 2017). A person can claim damages in a suit for negligence. A claim for restitution can also be made where the defendant is under a duty to compensate the plaintiff to such extent as to place him in the same position where he was before the commission of the negligent act. There is a legal obligation to take reasonable care to avoid any reasonably foreseeable harm. However, people working under an emergency situation without expecting payments are exempted from the civil liabilities if only their act is not reckless. The court in deciding whether a duty of care is breached or not will first take into consideration the amount of care needed in that particular situation. The standard of care is the care which a reasonable person would have taken provided he is under the same situation.

The court will also determine the fact that whether the breach of duty has caused the injury or not. Any claim for damages arising from injury must be filed within three years from the date of such injury. A time limit of six years is provided if the injury has caused any economic loss or property damage (Lawhandbook, 2019). The civil liabilities act provides that an apology made by or on behalf of that person in respect of the matter concerned does not constitute an express or implied admission of fault in respect to that matter and is not relevant in determining the liability of the person in that concerned matter. In the case of D’Arcy v corporation of the synod of the diocese of Brisbane the doctrine of negligence and workplace injury has been applied by the Australian legal system and the plaintiff was awarded damages as compensation.

 

Application

In this case, the officer-in-charge is guilty of negligence as he has sent the jack in a vehicle not designed to carry the jack. The jack slipped off when the brake was applied to the vehicle and caused injury to a fire officer. In this situation, the officer-in-charge was aware of the risk as specify vehicles are designed for carrying jack (Legislation, 2019). A reasonable man would have never sent the jack in a vehicle not meant for transporting jack. He was under a duty to exercise reasonable care and diligence but he has failed to exercise that care and diligence and as a result of which the fire officer gets injured. Necessary precautions must have been taken by the officer-in-charge to avert the accident but he has failed to do so. The officer-in-charge is guilty of breaching the reasonable duty of care that he was supposed to take. The fire officer who got injured due to the negligent act of the officer-in-charge can sue him for damages (Mendelson, 2014). However, the fire officer is required to claim the damages within three years from the date of occurrence of the accident due to negligence.

Conclusion

The above mention case is a clear case of breach of duty by the officer-in-charge of the fire station. The fire officer has suffered injury because of the negligence on the part of the officer-in-charge. Thus the fire officer is entitled to sue the officer-in-charge because of the injury caused to him by the negligence of the officer-in-charge. The officer-in-charge was negligent in performing his duty as the risk was foreseeable.

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