Example Of Court Can Apply These Principles-Myassignmenthelp.Com

Question: Discuss About The Example Of Court Can Apply These Principles? Answer: Introducation In contract law or tort law, a party may include an exclusion clause in the contract document. This a term mainly seeks to limit or exclude that party's liabilities for the damages that may arise in case a breach of contract occurs (Poole, 2014). For example, a term may state that no party will that will claim for liability in case any of the contracting parties breached the contract. This paper will be looking at the application of these terms and how the court regulates their applications. Qantas Airlines Ltd Vs Airbus Corporation Ltd Qantas Airlines Ltd signs a contract with Airbus Corporation Ltd for Airbus to build a new aeroplane, but Airbus fails to meet all the terms but relies of a limitation clause stating that their liability is capped at $ 300 000. The main issue here is a challenge an exclusion clause specifying the amount payable when the breach of contract occurs. In particular, its a question whether such clause will apply even where the breach goes to the root of the contract. Coming back to the question, can the exclusion clause then meet its purpose of shielding the party from the claims? Well, many legal minds have had different opinions on this matter including the ruling of (Photo Production Ltd v Securicor Transport Ltd, 1980) which allowed the application of the clause but set some conditions. In summary McKendrick (2012) states that the application relies on the seriousness of the breach. So if the violation gave rise to more serious consequences, the court would likely dismiss the clause. Despite that ruling, many courts in the twentieth and twentieth-first centuries acquire their rationale from (The Unfair Contract Terms Act [UCTA], 1977) and act that work for the protection of consumers rights. The UCTA 1977 terms apply only to those liabilities occurring in the course of business as well as those occurring towards other businesses (Zulhafiz, 2015). It also governs specific cases of unfair terms such as penalty clauses that charge beyond the lim it. In general, the court usually applies the UCTA in the principles of reasonableness test. The reasonable test usually puts the burden of demonstrating the rationale of the exemption clause on the person seeking to use it (Zulhafiz, 2015). For a clause to be reasonable, it must demonstrate that its terms are fair and reasonable (Zulhafiz, 2015). By this, the act requires the terms to take into account that the innocent party was aware of all the circumstances. Secondly, by being reasonable, both parties should have known and contemplated for the existence of the clause when they were making the contract (Zulhafiz, 2015). Third, the court will also take into account other factors like insurance or the option of the other party to seeking advice. For example, the clause failed in (Smith v Bush, 1989) where the defendant relied on a clause exempting him to take liabilities of his negligence. In addition to UCTA principles, there are also principles of common law on the validity of the exclusion clause. For example, the first rule requires the incorporation of an exclusion clause in the contract (Trakic, 2015). The second rule requires the proof that the breaching party gave a reasonable notice of the exclusive clause to the innocent party. Thirdly, the court may also allow the application of the exclusion clause through the evidence of the previous dealings (Trakic, 2015). Another principle that guides the application of exclusion clause in common law is the customs of the trade. Lastly, the exclusion clause must cover the claimed loss. There are various cases which have marked the application of these rules. For instance, in (George Mitchell v Finney Lock Seeds, 1983), The defendants were sellers of seeds, and the claimants were farmers. The claimant contracted with the defendant to supply them with 30 lbs cabbage seeds worth 201. The seeds were defective, and they caused the claimant a loss of over 60,000. The defendants were then relying on the limitation clause that limited their liability for replacing the seeds. The court overturned the clause terming it as unreasonable. The court stated that the losses resulted from the breach of contract so the defendant could not rely on the clause. Another application similar to this case in this paper is the ruling of (St Albans City and District Council v International Computers Ltd, 1996). The claimant entered into a contract with the defendant firm who was a supplier of computer software. The contract needed the defendant to administer their software collection for the claimant. However, the defendant software comprised of an error that caused the claimant a loss of 1.3 million. When the claim went to the court, the defendant raised a defense in reliance on a limitation clause that limited the liabilities to 100,000. The court termed the limitation clause as unreasonable. The court stated that the limited sum was very low considering that defendant could get a backup indemnity from his insurance of 50 million. Considering these facts and rules, it is true that Airbus will rely on their limitation clause which capped the liability at $ 300 000. However, as we have seen, this limitation will not succeed by the unreasonable test. First of all, the damages are too low considering that there is evidence that Qantas makes an average of $ 800 000 profit per day while using such an aircraft. Following the above analysis, the limitation clause will fail. Gemma works for Frank as a salesperson. Gemma lies to Frank to lower the price so that his Niece can buy it. Frank loses a profit from a potential customer who would have bought it at the actual price. The main issue in this question is about fraudulent misrepresentation on an employee who was supposed to act in good faith. In a sole trader business, the owner does not have many regulations, disclosures, requirements for public accountability or government rules that govern the conduct of companies. However, (Stone, 2014) states that the general government obligations for a business exist such as respecting the employment laws. Similarly, their employees have to comply with the general requirement of employees such as the duty to act in good faith. In the cases of where one person into a contract induces the other into the contract through a fraudulent misrepresentation, the other party has the right to seek a remedy of rescission, claim for damages or both. Also, the ruling of (Standard Chartered Bank v Pakistan Shipping Corp, 2002) set it clear that an individual who makes a fraudulent misrepresentation or who acts deceitfully will be personally liable in tort notwithstanding the fact that he is acting as an agent, officer, or entity. A simple definition of fraud in a commercial setting is a statement of opinion where the speaker knows it is false. The false statement can be for a past, present or future event. In proving that there is a fraudulent misrepresentation, the following elements must be available. For one there must be a false statement aimed at deceiving the other party (Klass, 2010). The guilty party must have had the knowledge of the falsity of that statements (Clarkson, Miller, Cross Clarkson, 2015). The Statements intended to lure the victim into surrendering something that would be of value to the innocent party. Lastly, the innocent party got injured. If the named elements exist, then there would be evidence of a fraudulent misrepresentation and the innocent party may seek the following remedies. For one, the claimant may seek to rescind the contract (Riches, Allen Keenan, 2009). This one is an equitable remedy where the court orders the parties to set aside the contract and go back to the position they were before the contract. Second is a claim for the damages or losses (Riches, Allen Keenan, 2009). Here the innocent party receives a financial award to compensate for the incurred losses. Notably, the compensation means to return the injured party to the position it would have been had the fraud not happened. The innocent party also gets the compensation for all losses flowing from the fraud. An application of this rule is found in the case for (Smith New Court Securities Ltd v Scrimgeour VickersLtd, 1996). The defendant's broker induced the claimant to purchase shares at 82p per square when in the market value was 72p per square. A massive fraud also happened with the company where the claimant bought shares lowering the rates further. The claimant subsequently traded the shares for prices for prices that ranged between 30p per square to 49p. The claimant then made a loss of 11.3M. The court allowed the claimant to recover the entire loss flowing from the fraud. Frank would be entitled to recover the extra profit that he would have got had the fraud not happened. He would also have the right to suspend Gemma for now working in good faith. Question 2 (b) Frank V Bob Frank suspends Bob, but Bob enters into a Contract with Angela and defrauds her before he leaves from the business. The main issue here is a question of the authority or the power of an agent to bind his principal with the third party and shift the liabilities to the principal. An employer (principal) can take the liabilities of an agent whom he has terminated his contract. This is due to the power of apparent authority. If the principal fails to notify the third party of the termination of the agency relationship, the court considers it reasonable for a third party to believe that the agent had power as he previously did (Mann, Roberts Smith, 2012). Following this, the principal will have to become responsible for the agents misconduct. The only exception is in the cases of a death of the principal or his incompetence (Beatty, Samuelson Bredeson, 2013). Such cases will withdraw the need for a notification. The reason is that once the principal dies, the agents authority retires back to the principal estate. One application of this rule was in (Racing UK Ltd v Doncaster Racecourse Ltd and Doncaster Metropolitan Borough Council, 2005). Doncaster Racecourse Ltd (DR Ltd) managed Doncaster Racecourse on behalf of Doncaster Council (DC). Without informing DC, DR Ltd entered into a contract with Racing UK Ltd. DC was by then negotiating a different deal only to learn that the contract had been made with Racing UK Ltd. The council sought to deny the contract alleging that DR Ltd executive, Mr. Sanderson had no rights. However, in the past, all Mr. Sanderson had been handling negotiations. Therefore, Racing UK Ltd trusted that DR Ltd was acting in its agency authority on behalf of the DC. The court refused to repudiate the contract. It said that the contract was binding between DC(principal) and UK Racing Ltd (third party) since the previous dealings showed that Mr. Sanderson had the authority. Conclusion There is nothing Frank can do except to either rescind the contract with Angela and pay for anticipatory breach of repudiation. Else, he can execute the contract and give Angela the machines. The contract between Bob and Angela was as binding as if Angela made it with Frank. If Frank wanted to avoid the contract, he would have notified all customers including Angela that Bob is no longer his employee and he has terminated his agency relationship. To sum it up, the paper aimed to discuss the power of the exclusion clause. Before the enactment of UCTA IN 1977, many parties enjoyed the shield of the exclusion clause though different courts tried as much as possible to work against it where it seemed to deny justice to one party. The other issue that this paper discussed was the issue of fraudulent misrepresentation in commercial contexts. In the cases of fraud, the innocent party has the right to either rescind the contract, claim for losses or both. Where an innocent party claim for the losses, they include even those that flowed from the fraud. Lastly, the paper discussed the issue of agency. Here the paper concluded that the only way a principal can escape the liabilities is by notify the third parties whenever the principal terminates the contract of an agent. References Poole, J. (2014). Casebook on contract law (12th ed.). Oxford: Oxford University Press. McKendrick, E. (2012). Contract law (5th ed.). Oxford: Oxford University Press. Stone, R. (2014). Text, Cases and Materials on Contract Law (2nd ed.). Abingdon, Oxon [UK]: Routledge. Clarkson, K., Miller, R., Cross, F., Clarkson, K. (2015). Business law. Text and Cases (13th ed.). Cengage Learning. Klass, G. (2010). Contract law in the USA (2nd ed.). Alphen aan den Rijn: Kluwer Law International. Riches, S., Allen, V., Keenan, D. (2009). Keenan and Riches' business law (9th ed.). Harlow, England: Pearson/Longman. Mann, R., Roberts, B., Smith, L. (2012). Smith Roberson's business law (15th ed.). Mason, OH: South-Western Cengage Learning. Zulhafiz, W. (2015). Unfair Contract Terms Act 1977: does it provide a good model in regulating risk allocation provisions in oilfield contracts in Malaysia?. International Journal Of Trade And Global Markets, 8(1), 3. https://dx.doi.org/10.1504/ijtgm.2015.067969 Trakic, A. (2015). Statutory protection of Malaysian consumers against unfair contract terms. Common Law World Review, 44(3), 203-221. https://dx.doi.org/10.1177/1473779515600142 Cases Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 The Unfair Contract Terms Act [UCTA], (1977) Smith v Eric Bush [1990] 1 AC 831 George Mitchell v Finney Lock Seeds [1983] QB 28 St Albans City and DC v International Computers Ltd [1996] EWCA Civ 1296 Standard Chartered Bank v Pakistan Shipping Corp [2002] UKHL 43 Smith New Court Securities v Scrimgeour Vickers [1996] 4 All ER 769 Smith New Court Ltd v Scrimgeour Vickers Ltd [1996] UKHL 3 Smith v Eric Bush [1990] 1 AC 831 Racing UK Ltd v Doncaster Racecourse Ltd and Doncaster Metropolitan District Council [2005] EWCA Civ 999