Misrepresentation Act 1971: Australian Commercial and Contract Laws (Case Study Sample)

AUSTRALIAN COMMERCIAL AND CONTRACT LAWS
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Issues
There are two issues raised in this case study. They are misrepresentations.
1st Issue - Can Jevan successfully sue Mick for damages, or can he rely upon the
severe damage caused by the white ants on the office premises at 55 Main Street to defeat Mick through a rescission?
2nd Issue – The Loss of Revenue of $120,000 for the Local Jam Manufacturer
First Issue
Can Jevan successfully sue Mick for damages, or can he rely upon the severe damage caused by the white ants on the office premises at 55 Main Street to defeat Mick through a rescission?
"The issue raised by this question is whether or not the parties intended to be legally bound by their agreement. The law of contract requires that, in order for a binding contract to exist, there must be such intention, together with an offer, acceptance, and consideration. The existence of purpose is tested by using two established presumptions. First, if the contract is commercial in nature, there is a presumption that they intended to be legally bound as depicted by (Edwards v Skyways Ltd.).
According to the Misrepresentation Act 1971, Section 2(1), it provides that, ‘Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.’
The provision does not require the representee to establish a duty of care and reverses the burden of proof. Once a party has proved that there has been a misrepresentation that induced him to enter into the contract, the person making the misrepresentation will be liable for damages unless he proves he had reasonable grounds to believe and did believe that the facts represented were true. This burden may be difficult to discharge as shown in the Howard Marine & Dredging Co v Ogden & Sons case of [1978] QB 574.
Remedies
Recent case-law has shown that the remedies available are as those available in fraud unless the representor discharges the burden of proof. In particular, damages will be based in the tort of deceit rather than the tort of negligence. An innocent misrepresentation under the Common Law requires a remedy of rescission as provided by the Misrepresentation Act (1971) (SA). In this, a discretionary remedy entails damages that may be awarded in lieu of rescission (see 7(3)). With negligent misrepresentations, the discretionary remedy involves the award of damages in lieu of rescission.
Also, the representee should illustrate that the representor had a duty of care that was breached. Further, only the Common Law provides for remedies for fraudulent misrepresentation remedies. The Law outlines rescission as the remedy in equity. Indeed, it is discretionary. A tort of deceit embeds any action for damages.
Second Issue
The Loss of Revenue of $120,000 for the Local Jam Manufacturer
The presumption can be rebutted by clear evidence of an opposite intention as of the case of Rose & Frank v Crompton. Conversely, with social or domestic agreements, the presumption is that no intention to be legally bound attaches to the arrangement. It immensely draws from the Balfour v Balfour case. Again, this presumption can be rebutted by clear contrary evidence from the incident between Merritt v Merritt. By applying the law to the facts, this study presents that the agreement has commercial elements so that the presumptions do not provide us with an answer.
However, this dilemma arose in the case of Todd v Nichol, when the court decided on similar facts, that, despite the fact that these parties had previously contracted, thus suggesting a commercial agreement, the fact that they relinquished property interests was evidence that they intended to be legally bound. The conclusion, therefore, is that, by relying on Todd v Nichol, Jevan can prove all the elements of a contract and can sue Mick of his rescission to enforce those rights as against Mick. Such an action would have excellent prospects of success.
Rescission
Any innocent party(s) right to rescind a contract emerges from a particular type of breach of contract by a defaulter. For this study, the innocent party refers to the party that seeks to rescind the contract (offeree of Jevan) and the defaulter as the other party to the contract (offerer of Mick). The Common Law rights to terminate a contract emerge in one or more ways. Such as; occurrence of a breach of a condition of the contract, serious breach of an intermediate term of the contract, hidden terms during the negotiation, or a conduct that depicts the defaulter as unwilling or unable to abide by the contract (Graw 2015).
In this case, the innocent/ offeree/ Jevan has contractual rights to rescind based on two fronts. One, he may rescind through terminating the contract entirely, or terminating the engagement with Mick. Lastly, Jevan has the right ground to rescind the contract between him and Mick. There is a reasonable ground to sue Mick for misrepresentation and breach of contract as noted through the various elements aforementioned above. Also, Jevan stands a chance to receive successful compensation for damages from the misrepresentation by Mick.
Question 2
Incorporate Your Business – How and Why
Keira and Macy are partners in a business that operates a shoe shop. They intend to increase their business. Thus, there is a need for more funding. A friend advised them to pursue a corporation for an enhanced funding and business growth. A corporation is a body. The term incorporation emerges from Latin corpus, depicting body. Also, it is a legal entity in the eyes of the law. A corporation has ability and capacity to sue, purchase, sell, contract, and be taxed. Further, a corporation shields its owners from corporate debts, obligations, and personal liabilities. Indeed, with only a single incorporator, a company could be established by just completing an application for a charter with relevant state department (Ciro and Symes 2008). Once, the application is filled, the incorporator(s) may record such facts as the intentions of the corporation, incorporations addresses and names amount and types of capital stock that the company will be allowed to issue, and privileges and rights of the holders of each class of stock.
Further, it is commonplace that in a business, one’s ownership interest may quickly be sold, given away, or transferred to other individuals such as family members (Fitzpatrick 2011). Any slight change of ownership of partnerships or proprietorships requires re-entitlement, drawing new deeds, and other administrative practices and procedures. Nonetheless, corporations have it that the individual owners’ rights and privileges are depicted by the shares of stocks they hold. The ease of transfer or sale of ownership rests with each stock certificate. Relatively, the corporation offers the ability to raise investment capital. An organization elicits and attracts new investors into a corporate body. It may be due to the limited liability and the transferability of shares quite quickly. The company offers an ability to transfer shares directly to such new investors, or even avail public offerings. Moreover, corporations offer a chance to establish tax benefits under particular events. However, they may be vulnerable to ‘double-taxation’ on profits.
Demerits of Incorporating
With Corporations, there are numerous annual meetings and need owners and managers to uphold certain formalities. Also, it may be more expensive to establish and incorporate unlike with partnerships and sole proprietorships (Fitzpatrick 2011). Lastly, corporations are dependent on periodic filings with the annual and state fees.
The Process of Incorporating
The interested party(s) need to contact initially the relevant state office and register their corporation. They should also consider visiting the website http://asic.gov.au/. They should request for forms, instructions, fee schedules on business firms. For the case of Keira and Macy could file for a corporation in the absence of an attorney’s indulgence through using books and software that will; guide them along. However, failing to integrate an attorney may require more time to accomplish.
Apparently, one may also miss a few details and particulars. Alternatively, Keira and Macy may seek the services of an incorporation service company. Subsequently, they will obtain articles or certificates of incorporation (Fitzpatrick 2011). At this stage, they will have to present their proposed name of the corporation, the purpose of the corporation, names and addresses of the incorporating parties, and location of the company office. Significantly, at this stage a set of bylaws will be required and are expected to guide the corporation will operate. They will cover such elements as the corporation’s organization, responsibilities and roles, directors and shareholders, an arrangement of shareholders’ meetings.
Applicable Costs
Such costs will entail expenses on application and filing fees, books and software, and attorneys if they are integrated into the process. In case the two file for a corporation in the absence of an attorney, then they will have saved almost $500-$1000. On application for:
a) registration of a company under section 11...