Limitation Of Liability Binding Airlines

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Limitation Of Liability Binding Airlines

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Questions:

Whether Frank Is Bound By The Sale Of Dishwasher By Gemma To Frances?
Whether Frank Is Bound By The Contract That Is Established By Bob On His Behalf With Angela?

Answers:
Introducation

In Australia, in order to formulate a valid contract, there are few contract elements which must be comply with by the parties to the contract and is held in (Smith v Hughes , 1871). There must be presence of offer, the offer must be accepted, the offer and acceptance must be supported by consideration, the parties must be major and of sound mind and they must have legal intention to be bound by the contract. Once all the contract elements are furnished then there is a valid contract that can be formed amid the parties. (McKendrick & Liu, 2015)
When a valid contract is made, then, the parties are under obligation to fulfill the terms that are made part of the written and is held in (The Moorcock, 1889) . The contract terms can be segregated as express terms and implied terms. The express terms are those terms which are mutually decided by the parties and are expressly made part of the contract before the contract is incorporated. But, the implied terms are those terms which are not made part of the contract by the parties mutually, but, they are made part of the contract under the implication of custom, usage, trade, law, etc and is held in (Heimann v Commonwealth, 1938). (Sainsbury, 2003)
The express terms can be further classified into two heads, that is conditions and warranties and this segregation depends upon how they affect the nature of the contract. A condition is a contract term which is so important in any contract that it forms the heart and soul of such contract and is held in (Poussard v. Spiers, 1876). If a condition in the contract is not comply with then the very essence of the contract lapses and the contract losses its sanctity. The aggrieved party has every right to cancel the contract and seek damages from the defaulting party. But, a warranty is the terms which are not the core to the contract but they are additional to the conditions, they are required for the functioning of the contract but they cannot be considered as the heart and soul of the contract and is held in (Bettini v. Gye, 1876). If a warranty is violated then the essence of the contract is not shattered and the aggrieved party can only sue the defaulting party for damages and the contract cannot be cancelled. (Latimer, 2012)

Another important term which is normally found in any contract is an exclusion term. An exclusion clause is the clause that is made part of the contract by which the liability of one party is limited or excluded provided there is breach of a contract term by such defaulting party and is held in (L’Estrange v Graucob, 1934). However, an exclusion clause is valid provided the same is made part of the contract mutually by the parties. If one party is relying on an exclusion clause without bringing the same within the knowledge of the other party then such clause has no validly in law. Reasonable efforts must be made by the relying party to bring the clause within the notion of the other party to make the clause valid and effective upon both the parties and is held in (Causer v. Browne, 1952). (Vermeesch & Lindgren, 1971)
Yes, Qantas Airlines can sue Airbus Corporation Ltd for breach of contract by providing 34 channels instead of 36 channels, however, the breach is not of a term which is a ‘condition’ by nature but is a ‘warranty’ by nature.
As per the contract Airbus Corporation Ltd has to build a new aero plane and has to send it to Qantas Airlines Ltd. there were 545 terms in the contract which were mutually decided by the parties. One of the term to the contract (term 56) was that the plane must be able to travel 10 000 km at 800 km per hour. This is the very essential term to the contract as the speed for which the airplane is purchased plays a very important role and is the core to the contract. This term is the condition to the contract but this term is not violated by Airbus Corporation Ltd (Poussard v. Spiers, 1876).
Also, as per Term 455, Airbus Corporation Ltd has to provide 36 channels of entertainment to passengers but in reality it provided 34 channels. Now, this term is not core to the contract for which the contract was actually made. Further, the defect was a temporary one as the software can be re-configured within a week. Thus, this term is a warranty (Bettini v. Gye, 1876).
So, Qantas Airlines can sue Airbus Corporation Ltd for breach of a warranty and can seek damages from the company.
The Limitation of Liability clause is not binding on Qantas Airlines. The clause was incorporated after the contract was signed by the parties. Airbus has included the clause unilaterally without bringing the same within the knowledge of Qantas Airlines. As per (Causer v. Browne, 1952), it is necessary that reasonable efforts must be made by Airbus to bring the clause within the knowledge of Qantas Airlines in order to make the clause effective.

However, no such efforts were made by Airbus.
Thus, the cap of $ 300 000 is not valid and Qantas can sue Airbus for the loss of profits, that is $ 800 000 profit per day for one week, so, $ 5600000.
Thus, Qantas Airlines can sue Airbus Corporation Ltd for breach of a warranty and can seek damages from the company. But, the liability clause is not valid and Qantas Airlines can sue Airbus Corporation Ltd for damages which may extent above $ 300 000
When any person employs another person then it is the duty of the employed person to act as per the directions of his employer. The employer and employee works on the principle of agency wherein the employee is the agent of the employer and he acts as per the wishes and wills of the employer. The agent when undertake any tasks on behalf of the principal ,then, his acts and omissions will only bind the principal provided the same are carried out within the authority that is gained by him trough the principal. In law, the authorities that can be possessed by an agent can be divided into three categories, that is, an actual authority which can be express or implied and an apparent authority or ostensible authority. (Pont, 2008)
An actual authority is the authority that is delegated by the principal to his agent expressly or impliedly. An express actual authority is an authority which is delegated by the principal to his agent under express terms either orally or in written form. There is some of expression that is asserted by the principal which establishes that the agent does possess some kind of authority from his principal (Watteau v Fenwick, 1893). An implied actual authority is an authority which is possessed by an agent from his principal impliedly, that is by conduct. There is some kind of implication which demonstrates that the agent possesses authority from the principal and it is obligatory that the agent must act within the authority so delegated upon him.
An apparent authority is also called as an ostensible authority according to which an agent possess authority to carry out the tasks on behalf of his principal provided the power is delegated by the principal to an agent by doing some kind of overt act which made the third party to believe that the agent does have the requisite authority to bind the principal. There is no express or implied authority that is delegated by the principal but the authority is apparent (Freeman & Lockyer v Buckhurst Park Properties, 1964).
However, if the third party is aware that the agent does not possess any authority then any contract established by such an agent is non-binding in nature. But, if the third party is acting in good faith then the contract is binding upon the principal provided there is some overt act which is undertaken by the principal which depicts that the agent does posses some kind of authority to bind the principal.es and freezers. It is submitted that Gemma was appointed by Frank as a salesperson.

One day, Gemma was visited by Tom who showed his interest to buy the dishwasher @ $350. However, Gemma is aware that his niece might need the dishwasher so he promises Frances that he will sell the dishwasher to her @ $ 300. In order to sell the dishwasher to Frances, Gemma misguides Frank that the dishwasher will never be dole @ $350. On hearing this Frank authorizes Gemma for the sale of dishwasher @ $ 300.
It is submitted that Gemma was expressly authorized by Frank to sell the dishwasher @ $300 but this authority is gained by Gemma by making a misrepresentation to Frank.
Under the express authority gained by Gemma, he sold the dishwasher to Frances @ $ 300. The contract that is made by Gemma with Frances on behalf of Frank is a valid contract and Frank is bound by the sale as the sole was concluded by Gemma within the authority that is delegated to him by Frank.
So, the sale is binding but Frank can sue Gemma for the profit of $50 (Bentley v Craven, 1853).
Yes, Frank is bound by the contract that is established by Bob on his behalf with Angela.
It is submitted that Frank has also appointed Bob for selling of large quantities of washing machines to commercial laundries. Bob is in negotiations with Angela who is aware that Bob is the agent of Frank for the sale if washing machines.
Without any knowledge to Angela, Frank fired Bob as he usually later for work and many a times come drunk. The cessation of the employment of Bob is not within the knowledge of Angela nor is any overt act undertaken by Frank to let Angela aware that Bob is no longer associated with him.
Thus, Frank by not making any kind of declaration that Bob is not associated with him for any kind of future dealing has resulting in debating a kind of ostensible authority and if Angela deals with Bob in good faith and without any knowledge of Bob termination, then, the contract that is undertaken by Bob with Angela is binding on Frank.
Now, Bob sold 10 washing machines to Angela @ 1000 each. Angela is not aware of the termination of Bob and she made an electronic transfer. Bon took the money and disappears overseas with it.
It is submitted that the act of Bob is carried out within the ostensible authority and the contract amid Bob and Angela is binding upon Frank.

Conclusion
It is submitted that the sale by Gemma of the dishwasher to Frances on behalf of Frank is a valid sale as the sale was undertaken by Gemma within his implied authority. Though Frank can later sue Gemma for breaching his duties as an agent, that is, to act with honesty and care and diligence and can claim the profit of $ 50 from Gemma.
Also, the contract that is made amid Bob and Angela is binding upon Frank as the contract is made by Bob within his ostensible authority provided Angela is not aware of the termination of the services of Bob.

References
Bentley v Craven (1853).
Bettini v. Gye (1876).
Causer v. Browne (1952).
Freeman & Lockyer v Buckhurst Park Properties (1964).
Heimann v Commonwealth (1938).
L’Estrange v Graucob (1934).
Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.
McKendrick, E., & Liu, Q. (2015). Contract Law: Australian Edition. Palgrave Macmillan.
Pont, G. (2008). Law of Agency. LexisNexis Butterworths.
Poussard v. Spiers (1876).
Sainsbury, M. (2003). Moral Rights and Their Application in Australia. Federation Press.
Smith v Hughes (1871).
The Moorcock (1889).
Vermeesch, & Lindgren. (1971). Business law of Australia. Butterworths.
Watteau v Fenwick (1893).

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