LST2BSL Introduction To Business Law And Ethics

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LST2BSL Introduction To Business Law And Ethics

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LST2BSL Introduction To Business Law And Ethics

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Course Code: LST2BSL
University: La Trobe University

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Country: Australia

Question:

Evelyn owns and runs an electronics hire business, Electric Blues. When Weitao hires a projector from Electric Blues, he is asked to sign a document containing the details of the projector and the duration for which he will be hiring it. At the bottom of the page there is a note in small print: “If any damage is caused to the item being hired, the customer is liable to pay a $1000 replacement fee.”
Weitao checks the details at the top of the document but doesn’t bother to read the smaller print at the bottom. He signs it and takes the projector home.
While using the projector Weitao accidentally scratches its casing. While returning the projector to the store the following week, he offers to pay to have the casing fixed. Evelyn insists that Weitao owes her $1000 to replace the entire projector.

Is Weitao bound by the note in small print about the $1000 replacement fees?

Evelyn is carrying out some improvements to the layout and décor of her store. She hires Warren topaint the internal walls of the store. Warren accepts the job, but says that the painting will take a full day to complete, and then a full day to dry. Evelyn agrees. Over the next five weeks, every time that Warren calls Evelyn to suggest a date for the painting, she says that she can’t close the store that week, due to important deliveries arriving or customer delays. She also refuses to suggest a future date for Warren to complete the painting. Warren is upset. He complains that Evelyn is making it impossible for him to get the benefit of their contract, and that this is something all contractual parties must do.

Is Warren correct?

Ambreena comes into the store and speaks with Evelyn. ‘I need a tablet that I can use to complete an important project while I am travelling overseas.’
‘No problem,’ says Evelyn. ‘This tablet here is nice and light, so good for travelling. In my view it also has a lot of storage space compared with most tablets nowadays.’ Ambreena rents the tablet to take overseas. When she tries to install the apps needed to complete her project, she finds that the storage space on the tablet is actually quite limited.

Is it a term of Ambreena’s hire agreement that the tablet has more storage space than most tablets on the market?

Jake comes to hire a laptop from Evelyn’s store. After choosing a laptop, filling out the paperwork, and taking the laptop home, Jake realises that there is no charger cable in the laptop bag. He calls the store and speaks to Evelyn. ‘Well, you never said you needed a charger as well,’ says Evelyn. ‘It will cost you extra if you want to hire the charger too.’ Jake says that he never thought to ask for the charger, as he assumed it would be included.

Is there an implied term in Jake’s hire agreement, that a charger will be provided with the laptop being hired?

Answer:

When any contract is formulated then there are several terms that are made part of the contract. Exclusion Clause is one of the significant term that is normally made part of the contract. An exclusion term is a term which has the capability to Limit or exclude the liability of one of the party. There are few essential requirements that must be present in order to make an exclusion clause valid:

An exclusion clause must be made part of the contract mutually by the parties;
if the clause is made part of the contract by a party individually, then, it is necessary that reasonable efforts must be taken to bring the clause within the notice of the other party;

if the exclusion clause is made part of the written contract signed by the parties, then, the clause is valid irrespective whether the clause is read or not;

it is necessary that the clause must be made part of the contract before the contractual relationship is established by the party..

Application of law
Evelyn  is the owner of ‘Electric Blue’. Weitio hires a projector. A document was signed by them which contains a clause at the bottom of the page which submit that if any damage is caused to the item being hired, the customer is liable to pay $1000 as replacement fee.
Now, the clause that was mentioned in small prints is a kind of exclusion clause that was made part of the contract individually by Electric Blue. As per Parker v.The South Eastern Railway Co, it is necessary that the clause must be brought to the notice of Weitio in order to make the clause valid in law.
However the document was signed and the exclusion Clause is binding even if no reasonable actions are taken by Electric Blue. Also the clause was made part of the contract before the same is signed by the parties.
So, the clause has full validity in law it does not make any difference whether Weitio has read the exclusion clause or not.
Conclusion
Weitio is liable to pay $1000 as the exclusion clause is valid as it was made part of the document before the signing of the parties.
Whether Warren can sue Evelyn for the breach of the contractual obligations?
Relevant law 
When any contract is formulated, then, it is obligatory on the parties to comply with the terms of the contract. However when one of the parties does not perform its part of the responsibilities, then, such party is considered to be in violation of the terms and the aggrieved party has the right to sue the defaulting party for damages.
The quantum of damages depends upon the kind of breach that is incurred by the defaulting party that is material breach  or immaterial breach. A material breach is a major breach which is incurred by the defaulting party and which seriously hamper the very essence of the contract as a whole and defeat the very purpose for which the contract is established amid the parties. When a material breach is incurred then it results in the non performance of the contract. The aggrieved party has the right to sue for the damages and terminate the contract.
Application of law 
Evelyn higher Warren to paint the walls of the store.  Warren accepts the offer Warren specifies that the painting of wall will take two days to which Evelyn agrees.
So, there is a valid contract amid the parties, however, for the next five weeks Evelyn submits to Warren that she can’t close the store and refuses to suggest a future date where Warren can complete the painting.
This attitude of Evelyn depicts that she is not willing to comply his contractual obligations and thus prohibiting Warren to comply with his part of the contractual obligations. So, the act of Evelyn is material breach which has rendered the contract impossible to perform.
A material breach is incurred by Evelyn rendering the contract impossible to perform and so Warren can cancel the contract and sue for damages.
Issue 
Is it a term of Ambreena’s hire agreement that the tablet has more storage space than most tablets on the market?
Relevant law
When any contract is formulated then the parties must comply with their rights and obligations. The terms can be distinguished as Express and implied terms. Express terms are terms which are mutually decided. Many a times, before formation of the contract the parties enter into negotiations. Such negotiations can be made part of the contract as terms and at times such pre contractual statement are considered as mere presentation. The negotiations that are exchanged amid the parties which are promissory in nature then they are constituted as term irrespective of the fact whether the contract is in written form or not (ellul v ellul.  The parties when does not intend the representation as part of the contract then such negotiation is representations and has no contractual effect.
Application of law
Ambrina visit the store of Evelyn and submit that she is in the need of a tab tablet that she can use to complete an important project while overseas. Considering the requirements of Ambrina, Evelyn submit that there is a tablet which is nice, light and is also good for travelling and has lot of storage space. So, before a contract is established, there are few negotiations that are entered amid the two. These negotiations are considered as part of the contract provided the parties intent to consider them promissory in nature.
It is submitted that Ambrina intend that the tablet must have a lot of space when compared to other tablets. Evelyn was also giving his view that the tablet has a storage space and she also intends that the statement made by her is promissory in nature. So, the negotiation that is made before the formation of the contract are representations which are intended to be promissory and thus must be considered as term. But, later it was found that a tablet storage is low.so, express term was violated by Evelyn.
Conclusion
So, the term must be made part of contract and is binding.
Is there an Implied term in Jake Hire Agreement that a charger will be provided with the laptop being hired?
Relevant law 
In contract, there are two types of terms that are normally found, express terms and implied terms. Implied terms are the terms which are made part of the contract by implication for instance, law, custom, trade. The implied terms are made part of the contract in order to give full effect to the intention of the parties. There are few rules which are established in order to consider whether a term must be considered as an implied term or not:

It must be equitable and reasonable;
It must be made part of the contract in order to give business efficiency;

To gave true meaning to theintention of the party;

It must not conflict with the express provisions of the contract.

In the leading case of Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur (Australia) Ltdit was held that where in the implications amid parties of the contract are considered to be implied terms or not is a question of fact. A custom is considered to be part of the contract provided the custom is so well known that everybody who is entering into such kind of contract must reasonably presume that such term ought to be made part of the contract and is rightly established in Hornley v Tilley.
Application of law
Jake visit Evelyn store and choose a laptop. He comply with the paperwork and while taking the laptop home he realizes that there is no charger cable in the laptop bag. He calls Evelyn and he submitted that he never said that there will be a charger and if he needs it now then it will cost him extra.It is submitted that in the sale of goods, the goods supplied  must fit for the purpose. However, the laptop that was provided to him was without charger and this is not fit for the purpose which is intended to be purchased.  The usual custom is that whenever a product is provided then it must be provided with all the accessories. Since the laptop that was purchased was without charger hence  the product was not adequate.
So, it is an implied term that the charger must be provided along with the laptop
Conclusion
The term that a charger will be provided with the laptop being is an implied term.
Reference List
Sainsbury, M. ‘Moral Rights and Their Application in Australia’  2003, Federation Press.
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur (Australia) Ltd (1986) 160 CLR 226 
Ellul and Ellul v Oakes (1972) 3 SASR 377.
Hornley v Tilley [1925] HCA 13.
Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31
Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1 QB 433.
Parker v.The South Eastern Railway Co (1877) 2 CPD 416
Online Material
Heffey et.al.Contract commentary and Material, 8TH ED 1998 (LBC Information Services) file:///C:/Users/Administrator/Desktop/130911-contract-back%20of%20the%20receipt/TERMS%20-%20IDENTIFICATION%20OF%20THE%20TERMS.htm.
Julie Clarke, Australian Contract Law, 2018
Legal Match, ‘Material Breach of Contract’ (2018) https://www.legalmatch.com/law-library/article/material-breach-of-contract.html.

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