Simple OHS Company v Workplace Safety Australia Pty Ltd (Research Paper Sample)

Legal opinion
Name
Institution
Simple OHS Company v Workplace Safety Australia Pty Ltd
Legal Opinion
A Brief set of Facts
The dispute at hand arose from the following series of facts. On 23 September 2013, an agreement was entered into between Workplace Safety Australia Pty Limited and Simple OHS Solutions Pty Ltd. The subject of the agreement was that, Simple was tasked to be the distributor of OHS compliance software license in Victoria and Tasmania. Under the said agreement, there clause 5.4 schedule 1 and 2 required Simple company to provide at least fifteen new customers every month for the 6 month duration failure to which would leave the option of termination at the behest of the supplier.
However, in light of this agreement, prior to execution of the agreement, Ms. Shelley, an official representative of Workplace Safety Australia Ltd suggested to MS. Marini, a correspondent from Simple Company that she understood that in the startup process it would be hard to meet sales targets and that WSA would not expect them to meet the obligation in the initial stages of the agreement. Despite there being no finite time attached to this statement, on 26th March 2014, WSA sent a letter of termination to Simple Company.
Whether Simple can rely on MS. Shelley’s Statement
Oral Contract
For the oral statements or negotiations to form a cornerstone of this suit, they have to be admissible in court. Under Common law, the general rule is that once a contract has been reduced into writing, then oral evidence cannot be admitted to add, alter or make a contradiction to the written document. Therefore, the only terms of then contract permissible are those within the four corners of the document. However, this rule is not absolute. It could be circumvented if it is proven that the following circumstances apply.[Whincup, M. H. Contract law and practice: The English system, with Scottish, Commonwealth, and Continental comparisons. (Kluwer Law International, 2006) 162.] [McKendrick, E. Contract law: Text, cases, and materials. (Oxford University Press, 2010) 227.]
1 If not all the terms have been reduced to writing as agreed by the two parties
2 When the validity of the contract has been challenged. This happens if there is presence of vitiating elements of a contract such as misrepresentation, fraud, illegality, mistake or lack of consideration
3 If the contract is silent on a concept for which oral evidence would suitably fill the gap. In this case oral evidence may not contradict whatever is in written form but instead supplement it.
4 In contracts where there is no condition subsequent
5 If the courts would like to know more information about the meaning of various usages.
From the above concept, it would be plausible to invoke argument (1) and (2) to support the admission of the oral conversation between Ms. Shelley and Ms. Marini. This is because, Simple Company can safely argue that the option of not enforcing the clause at the start of the contract was inadvertently omitted from the final document even though it merited being included. In the second sense, as we shall see later, the existence of this contract will be put into question considering that it can be successfully argued that the contract was only entered into pursuant to a misrepresentation by Workplace Safety Australia Company.
In as much as Simple Company concedes that it never met the sales targets for a period of six months, it further contests the actions of Workplace Safety Australia to terminate the contract. In a bid to establish whether Simple OHS Solutions might have a legitimate claim in court to support their actions a number of issues have to be evaluated.
Agency Relationship
The substratum of any suit filed by Simple Company will always be the conversation that took place on August 10th 2013. Whether or not the oral statements made by Ms. Shelley to Ms. Marini are representative of the Company’s position depends on the how best the plaintiff invokes the principle of agency because the defence is likely to dispute the fact that that conversation was binding to the company.
An agent is a person who affects the legal position of another called the principal in transactions with a third party. By express agreement, being an employee of the company, Ms. Shelley is an agent of Workplace Safety Australia. What would be greatly contested however is whether the agent had the requisite authority to transact on behalf of the company. In absence of any actual authority to offer a waiver of application of the sales target clause, it would be hard rely on the statements made by the agent in court.[Chitty, J., & Beale, H. G. Chitty on contracts (Sweet & Maxwell, 2012) 321]
But the plaintiff might rely on the doctrine of apparent or ostensible authority. This concept applies to protect third parties from unscrupulous representations by persons perceived as agents. It may even arise where there has never been an agency relationship but the principle has conducted himself in a manner suggesting that the agent has authority to transact on its behalf. In the case of Spiro v Lintern it was expressed that with respect to ostensible authority, authority can apply retrospectively. Therefore, because the plaintiff honestly relied on statements of Ms. Shelley knowing that she was an agent of Workplace Safety Australia, with full authority to negotiate, these statements merit to be relied upon in a court of law.[[1973]3 AELR 139.]
Whether termination of the contract was unlawful
There are a number of issues in the facts of this case that clearly affect WSA’s right to repudiate the contract. Here is an evaluation of the legal principles which can be argued out to challenge the actions of the company.
Misrepresentation
A misrepresentation is a statement which induces a person to enter into a contract misleadingly. The strongest ground upon which Simple Company can have a legitimate claim is insisting that they entered into the agreement only because they relied on the representation of Ms. Shelley. For a suit in misrepresentation to succeed, the representation in question must have been made by the party who is being sued or by his agents and the recipient of that representation must have relied upon it such that it induced him to enter the contract. All that has to be proven is the propensity of the representee to have relied upon the statements and the fact that it indeed relied on the statements and entered into the contract. The burden of proof of proof always lies on the person alleging misrepresentation.[Edgington v Fitzmaurice (1885) 29 Ch D 459.]
Ideally, the norm is that misrepresentation is always invoked by the defendant to escape liability in a suit. However, in this situation the plaintiff is relying upon it to found an action against the representor of that statement. Since the contract has already been rescinded, the remedies available to the plaintiff are limited. Therefore, the plaintiff can implore the court to quash the rescission of the contract by the defence if indeed it had performed a substantial amount of the contract. The contract can thus be reinstated and obligations will still subsist. However, if this is not possible, Simple Company is at liberty to institute an independent suit claiming damages in an action for deceit as illustrated in the case of Derry v Peek. The company can also sustain a common law for negligence in common law if it can prove that there existed a duty of care between it and the representor.[(1889) LR 14 App Cas 337.]
The import of the principle of misrepresentation implies that the party complicit of misrepresentation cannot have the liberty to repudiate the contract. The aggrieved party is the one which may choose to end the contract. Therefore, if the plaintiff proves successfully that indeed WSA Company misrepresented the terms of the contract, the court will definitely rule that it had no right to terminate the contract.
Promissory Estoppel
Another line of argument that is open to Simple OHS Company in dispute of termination is that of Promissory Estoppel. Promissory estoppel requires that if a person makes an unequivocal promise which he expects the promisee to rely on and then later changes the position due to reliance on the promise, then that injustice can only be averted by enforcing the promise. The principle was first brought out in the case of Olson v Synergistic Technologies Business Systems Inc. in which the Chancery court of Equity introduced the underlying requirements that have to be met for it to be invoked. Owing to this decision, the principle was received with much trepidation because of the controversy it created through introducing an obligation on a person on the basis of a promise and in a relationship in which consideration is not involved.[628 NW2d 142 (Minn 2001).]
However, the current yardstick of ascertaining the existence of promissory estoppel was precisely set out in the case of Hughes v. Metropolitan Railway Co. In this case, Lord Cairns stated the requirements that would occasion a promisor being estopped. First, there has to have existed a contractual relationship between the two. Then, the promisor must make it clear that he will not enforce his legal rights. Owing to this promise, the promise must prove reliance upon it. Finally, the court has to be satisfied that it would be inequitable for the promisor to go back from his promise. The position in Hughes was further reaffirmed by Lord Denning in Central London Property Trust Ltd V High Trees House Ltd, when he tried to find an amicable solution to part payment of a debt. This decision was a deviation from the earlier stance taken by Foakes v Beer.[(1887)2 Appeal Cases.] [Between the promisor and promise.] [But this promise must not be express. It may be implied.] [[1947]KB 130.] [[1884]UKHL...