JUST2236 - Property Law Assignment

JUST2236 PROPERTY LAW

ASSIGNMENT
SEMESTER 1 2009

Name: Keith Jamieson

Student No: s3167434

 JUST2236 - Property Law Assignment

Question 1
Tom is searching the internet with a view to purchasing a used concrete mixer. He finds an
advertisement for ‘A near new concrete mixer, powerful performer. One horsepower motor,
excellent condition, less than one month’s use. $1500. Be quick.’
Tom rings the vendor and asks to see the mixer. He gets the address provided and finds it is a
retail shop. He is told that the concrete mixer has been sold, but that a more expensive
concrete mixer with an LC display is available for $2000. He is furious and tells the vendor
he must sell the actual product to him or he will be sued. The vendor ‘reluctantly’ agrees to
sell it to Tom.
Tom pays for the mixer and is given a ‘receipt’. On the back of the receipt is a lot of fine
print including the words ‘all sales are final’ and ‘all goods sold as is with no warranties of
any kind’.
Tom gets the mixer home and soon finds it hopelessly underpowered. He also finds it is an
old model, close to five years old, with worn bearings indicating heavy use. He attempts to
return the mixer but is told all sales are final and to get out of the shop as his complaints are
alarming other customers.
Explain how a court would view the legal position if asked to rule on the following
circumstances. Give examples of cases that may be relied on and arguments that may be
considered.

(a) If the vendor had refused to sell the advertised mixer to Tom and Tom had asked
the court to require the vendor to sell the mixer to him.
If this matter was taken to court the judge would rule in favour of the vendor, this is because
of the following;
In order for a contract to be valid an offer has to be made. In this circumstance the
advertisement the vendor put out was an ‘invitation to treat’, not an offer. An invitation to
treat is the expressed interest in doing business with another party; in this case placing the
advertisement. An ‘invitation to treat’ does not oblige a party to satisfy an order thus; the
vendor was not obliged to sell the concrete mixer to Tom. Although Tom phoned the vendor
and expressed interest in the concrete mixer a contract was not made, because the request of
information is not considered an offer. Many presidents have been made to back up my
judgement these are as follows;
‘Harris V Nickerson (1873)’
Harris read an advertisement for a furniture auction. After travelling some distance to attend
he found the items he wanted had been withdrawn from sale. Harris claimed damages for
breach of contract. He said the advertisement was an offer which he had accepted by
attending the auction.
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The English Court of the Queen’s Bench held that: the advertisement was an invitation to
treat. There is no guarantee that an auction sale will actually be held. Harris V Nickerson
(1873) LR 8 QB 286

(b) If Tom had asked the Court to order ‘specific performance’ of a valid contract
between himself and the vendor.
In this case the court would dismiss Toms order for ‘specific performance’ this is because of
the following;
‘Specific performance’ is an order by the courts which requires a party to perform a specific
act, usually what is stated in a contract. In practise ‘specific performance’ is restricted to
contracts that include the sale of land or a unique/ special good in which this case neither
applies. For example ‘specific performance’ is often used when damages do not adequately
compensate someone for the inability to own a particular piece of property/land.Toms
purchase of a substandard good does not allow for an order of ‘specific performance’ to be
placed because it does not meet this criteria but rather Tom could sue for damages under the
Trade Practises Act 1974.

(c) If Tom sued the vendor saying the goods were sub-standard, could the vendor
rely on the fine print on the back of the receipt? Explain which additional facts
would assist the court in forming a view.
In this circumstance the vendor would not be able to rely on the fine print on the back of the
receipt because this issue is a breach of the Trade Practises Act 1974. The Trade Practises Act
1974 is to protect consumers from unfair business practises. In this case the vendor would be
breaching section 53 of the Trade Practises Act 1974 which states business must not make
false representations, untrue factual statements or false conduct in regards to their goods or
services. Specifically it covers the standard, quality or grade of goods or services and
composition, style, model, history or previous use of goods. Each false representation is a
separate breach. An example of this is demonstrated in the following case:
‘Hartnell v Sharp 1975’
The Federal Court held that: Sharp’s claims were ‘completely and utterly false’. Justice Joske
found there had been ‘a wicked misuse of the SAA trademark’. Sharp had breached s 53(a)
and was fined $100,000. Hartnell v Sharp Corporation of Australia Pty Ltd 1975 5 ALR 493.
The Trade Practises Act 1974 states that goods should be of merchantable quality and fit for
purpose in which Toms purchased good was not thus Tom should receive a refund regardless
of the no refund policy if he took this matter further.
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(d) (i) Explain whether the law relevant to Tom’s problem is State or Federal law or
is an example of Concurrent Jurisdiction involving both.
The law relevant to Tom’s problem is both a Federal and State issue thus making it
Concurrent. Concurrent powers are powers that both the states and the federal government
may exercise simultaneously within the effect state or territory such as insurance, banking
and taxes etc. The issue Tom is faced has to do with the Trade Practises Act 1974 which is a
concurrent power. Through this act the Commonwealth regulates the conduct of Australian
companies and most types of business within Australia, but this regulation was only achieved
by the cooperation of the states and territories thus making it concurrent. An example of
Federal exclusive powers overruling state residual powers would be,
‘The Franklin River Dam Case (1983)’
A 4-3 majority of the High Court helf that; federal Parliament has exclusive power under s51
(xxix) of the Constitution to legislate in regards to foreign affairs, which includes
international treaties. Therefore, the Commonwealth had the power to pass Acts to uphold its
international commitments and this right took priority over state residual power.
Commonwealth V Tasmania (1983) 158 CLR 1

(d) (ii) Which Court or Tribunal would be most appropriate for Tom to seek
redress?
The most appropriate place for Tom to seek redress is the Victorian Civil and Administrative
Tribunal (VCAT) this is because;
VCAT covers a wide range of matters within Australia, settling disputes in virtually every
area of business life such as anti-discrimination, guardianship and administration, land
valuation, freedom of information held by government bodies, state taxation and transport
accidents. But in relation to Tom’s case a key feature is that VCAT covers any dispute
relating to the supply or possible supple of goods or service. As well as conventional
consumer versus trader claims, it will hear claims by any type of business against consumer
or other businesses. This matter will not taken any higher than VCAT because the damages
put forward by Tom is of less than $5000 dollars, thus not allowing the case to be processed
in the Magistrates court. The only way this matter will be taken higher is on appeal, where
the matter will be put forward to a judge at the Supreme Court. An alternative to VCAT that
Tom could use could b the Australian Competition and Consumer Commission (ACCC), who
are responsible for administering and enforcing legal matters that directly affect the Trade
Practises Act 1974.
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Question 2
Briefly explain the meaning of the following terms and give examples to show you
understand where the terms might be used in the context of contract law.
(a) Nominal Damages
Awarding a plaintiff with minimal money damages due to an action that has occurred against
the plaintiff where the plaintiff has not suffered any substantial injuries or loss for which
he/she must be compensated. The amount awarded varies according to the circumstances but
can be as little as $1. This is used to reflect a legal recognition that the plaintiff's rights were
violated through a defendant's breach of duty or wrongful conduct.
Example: a movie star was awarded $1 in a lawsuit he had brought against a news reporter
for writing that the movie star had been drunk during a dinner at a public event. The movie
star was freed from any question of guilt, but the jury could not find that his reputation was
tarnished because of this report.

(b) Liquidated Damages

Awarding a plaintiff with an amount of money agreed upon by both defendant and plaintiff
prior to breaching or backing out of a contract, which is stipulated within the original
contract. Sometimes the liquidated damages are the amount of a deposit or a down payment;
it can also be based on a formula such as 10% of the contracted amount. It is used to
compensate the plaintiff for any money lost with the breach of contract. The compensation
cannot exceed the plaintiff’s actual loss, if so this is seen as a penalty and therefore
unenforceable.
Example: a construction company accepts a tender to construct a set of apartment blocks and
in the contract the owner states that 'any work done over the deadline of the construction will
accompany a fee of $2,000 a day to compensate the loss of money made from tenants.' The
construction took 2 weeks longer then stipulated within the contract thus the plaintiff was
awarded $2,000 a day for 2 weeks. This was seen as an appropriate compensation by the
judge for the loss of 2 weeks rent.

(c) Unliquidated Damages

Awarding a plaintiff with an amount of money for breaching or backing out of a contract
which has not been agreed upon prior to the breach. This amount is difficult to estimate, thus
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the plaintiff must present proof of the loss suffered by the breach and the court then
determines the appropriate amount awarded.
Example: A contract was made between a courier and motorbike shop owner where the
courier was to delivery parts on a particular date. These parts were not delivered till 3 days
later then set out in the contract. The shop owner then sued the courier for the loss of money
he would of made for the sale of 3 new motorbikes. This was dismissed by the judge upon
evidence that only 2 motorbikes were effected directly by the lateness of the courier. Thus the
plantiff was only awarded damages of the loss of 2 motorbikes.

(d) Exemplary or Punitive Damages

Exemplary damages are requested and/or awarded in a lawsuit when the defendant's willful
acts were malicious, violent, oppressive, fraudulent, or grossly reckless and in most cases
illegal. These damages are awarded both as a punishment and to set a public example. On
rare occasions the plaintiff may be rewarded for the horrible nature of what she/he went
through or suffered such as emotional distress, humiliation or extreme disappointment.
Example: the local council took a young probationary driver to court over driving at high
speeds in a residential area. The young man was fined for the excessive speed and also had
his car impounded to set an example to other motorist that speeding at excessive speeds is not
only illegal but doing it in a residential is a stupid, reckless behaviour that will not be
tolerated.

(e) Promissory Estoppels

When a judge sees a case in which the defendant makes a false statement to the plaintiff to
advantage him/herself and the plaintiff relies on what was told in good faith. In order to see
that justice is done a court will treat the statement as a promise, and in a trial the judge will
stop the defendant from denying the statement, thus legally the defendant must abide by the
promise made. This process by the court is called promissory estoppel.
Example: Eric tells John a musician that Eric has a contract to make a movie and wants a
musician to make the background music for the opening credits in return for a percentage of
the profits. John produces the background music, and Eric then admits he needed the music to
try to get a movie deal which fell through and there are no profits to share. John sues and the
judge finds that Eric cannot deny a contract with John and gives John judgment for the value
of his work.
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Question 3
In the context of Contract Law explain the meaning of the following giving an example
illustrating your explanation, and showing that you understand the terminology.
(a) “The contractor and the architect agreed to novate their existing contract.”
Novating an existing contract is an agreement made by both parties to substituting an old
contract for a new one. A novation is often used when the parties find that payments or
performance cannot be made under the terms of the original agreement, or the debtor will be
forced to default or go into bankruptcy unless the debt is updated. While voluntary, a
novation is often the only way any funds can be paid thus it cancels the old agreement to
allow for certain contingencies.
Example: A contractor was unable to pay a debt owed to an architect for residential floor
plans by the deadline made in the original contract. The contractor then made an offer to the
architect of scheduled payments over a 6 month period to repay the debt. The architect agreed
to this thus novating their existing contract.

(b) “When the contract was broken an injunction was sought.”

An injunction is an order issued by a court ordering someone to do something or prohibiting
some act after a court hearing. The procedure is for someone who has been or is in danger of
being harmed, or needs some help to protect his/her rights. Injunctions can also be sort for
more trivial matters such as not being able to cut down certain trees or polluting a stream.
Example: An injunction was placed upon 2 menace teenagers who were constantly being
nuisances for a shop owner. The teenagers would make loud noises out the front of the shop
which would deter potential clients. An injunction was place on these 2 teenagers to not allow
them to be within 100 meters of the effect shop.

(c) “The parties to the contract resolved their differences by agreeing to a waiver.”
A waiver is the voluntary surrender of a known right; carrying out this action is then
supporting an assumption that a particular legal right has been taken away from the plaintiff
thus, compensating them because of this. Waivers are based on a case by case basis and
cannot be relied on or guaranteed in the future.
Example: A telephone contract is made between client and sales man on the basis that the
cost of the phone bill will only accumulate to $50 a month. After a month has past the client
receives a bill of $60 dollars because of a value pack added to the customer’s account by the
sales man without the permission of the client. The customer is very unhappy and has a legal
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right to take this further but the sales man is reluctant in taking the matter to court and agrees
in providing a waiver of $10 for the wrong doing that has been done.
(d) “The agreement was signed under a Power of Attorney.”
A power of attorney is a written document in which one person appoints another person to act
on his/her behalf, thus transferring authority to that person to perform certain acts or
functions on their behalf in which they are unable to perform. Such cases normally include
signing of contracts.
Example: An elderly woman was unable to attend the sale of her house due to being
hospitalised but yet the sale was still processed because power of attorney was granted to her
son allowing him to sign the contract.

(e) “The contract may have lacked consideration”

Consideration is something of value given by both parties to a contract that induces them to
enter into the agreement. It may consist of a promise to perform a desired act or a promise to
refrain from doing an act that one is legally entitled to do. A lack of consideration occurs
when one party is disadvantaged over the other and the desired promised performance cannot
be carried out.
Example: A contract was made between a taxi driver and a passenger in which the taxi driver
was promised $10 to arrive at a certain destination in 5 minutes. The taxi driver agreed to this
but was unable to arrive on the agreed time because of traffic. The passenger then refused to
pay the taxi driver upon arrival to his destination. The taxi driver was disadvantage in this
contract due to an unrealistic promise thus the contract lacked consideration. The taxi driver
could now file for damages.