Commercial Law M 2023 Problem-Solving Exercise Answers

QUESTION 1: Formation of Contract

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Lease contract

A tenancy agreement used called a lease to a residential tenancy agreement. it provides a contract between the rental provider and the renter. Tenancy agreement comes under the law of “Under NSW tenancy law”, “the Residential Tenancies Act 1995”, and “the Residential Tenancies Act 1997 (VIC)” (Gov.au, 2023). The tenancy act in Australia consists of three legal elements that are “exclusive possession, the premises and a certain term”. 

Exclusive Possession:

Exclusive occupancy signifies that the tenant has the privilege to ban all other individuals from the area the tenant is renting. This privilege even permits the tenants to ban the owner from the speculations, in that the owner is honestly allowed to document (Gov.au, 2023). Samples of cases in which the owner has the privilege to join the speculations, despite the tenant's ownership of exclusive guardianship, contain entering to view the conditions of the premises, for premises repair, for lease terminations due to failure of the paying rent or breach of other lease obligations. 

The Premises

The tenant has the right to possess the premises exclusively, it is very essential that the lease was described with clarity and includes information about the writing content that is included in or excluded from the speculations (Gov.au, 2023). Usually, the premises is described through several different methods that are as follows-

• It describes as a floor of the building, a room and the entire building. 
• As a kiosk or shop within a shopping centre
• According to the folio addresser of the premises or land.
• Through attaching the premises plan to the lease
• Through referencing other inclusion such as car parking areas or storage areas. 

Several leases will provide tenants with the right to utilise any common property of the centre or building such as garden areas and walkways. Nonetheless, this privilege does not generally extend to the tenant as it is communicated to the building or centre owner or other tenants.

Certain term:

A lease must be enforceable and valid and have a certain term. That means the lease commencement date is maintaining the clarity and appropriate definition of the landlord. However it not enough to commence for lease within the reasonable time of the lease signing. In that, the actual commenced date can be determined as the “1st January 2019, from the completion of the owner fit-out work seven days, two days from the developmental approval date from the premises is granted” (Gov.au, 2023). In case there is no date mentioned in the lease, the tenant's and owner's actions and intentions can dictate the start date. In case the tenant started occupying the premises with paying rent, it could be implied that their lease commencement date was the date the tenants seized exclusive possession. Possibilities may also indicate that the tenants and the owner planned for that lease to begin during a certain event happened, such as during the existing tenant of the premises moves out, building g construction is completed, and all parties sign that lease (Sandanayake, et al. 2020). Along with that the lease durations also be cleared and appropriately defined. It can be defined as the month's number or numbers from the lease commencement date. In addition, it also includes any options that help to renew the lease for the further lease term. 

Rent:

Tenants may have to expend rent to the owner in dealings for the privilege to utilise and settle their space. This rent payment is not an essential legal element of the leads due to the tenants and the owner can agree to a rent-free lease. Although, in case the tenant and owner agree that rent should be paid, tenants are required to make sure that stays are clearly agreed on the owner demanding amounts. In case the tenants cannot agree with the owners providing the actual amount it reflects the lease is invalid. 

A lease can be created in case the owner provides the tenants with the right to exclusive premises possess for a certain term. For that, there is necessary to ensure that the tenants are able to ban others from the premises as well as landlord (Gov.au, 2023). The lease will include a commencement date, lease durations, and payment amount and be absolutely described. 

In the case of Allan's car manufacturing industry and Ben, Allan has to pay the rent as per their lease agreement. In this case, in case Allan refuses to pay the rent for that Allan can be issued with a breach of duty notice that provides them 14 days to pay the rent owed. In case the payment does not pay in the scheduled time Allan can be issued with the second time breaching duty notice that provides them another 14 days to pay. Still, in case Allan refuses to pay the rent then the landlord Ben can serve a notice to vacate the site within 14 days. 

QUESTION 2: Terms of Contract

Under the Australian tort law, there are no judicial distinctions between gross negligence and negligence in common law, in this aspect; the term negligence term defines as the parity failure to do their duty, particularly of care owed to another party to the care standard legally required. It is not relevant that a person's conduct may involve a complete departure from the standard of care required. Onetime a negligent violation is specified, the defendant is responsible whether the careless conduct amounts to slight gross or some other degree of negligence (Gov.au, 2023). Hence, in civil court proceedings, the standard hypothesis is that no difference can be viewed between “negligence and gross negligence” and redundancy is described by “the prefix gross”.

Gross negligence as an exclusionary term in the contract 

An exclusionary word in an agreement serves to ban or restrict a party's responsibility in certain circumstances. However the view is that there are no differences can notice between gross negligence and negligence within tort law, the tort law's outside can be developed on the concept oif gross negligence. Specifically, the use of the concept of gross negligence as an exclusionary term has become increasingly common. Australian courts are increasingly willing to provide exclusion clauses with their simple purpose and are the potential to discover a different definition for “gross negligence” during incorporation in an agreement or contract as an outcome of the negotiation procedure. On the other aspect, negligence is to be considered in case the damage must be caused through duty breach and become the cause of actions is the set of the proper facts that provide rise towards a legally enforceable claim. 

A duty of care acts as a legal duty that is owned by one person to another person. In that, duty care means the responsibility that needs to take to avoid causing any type of foreseeable harm to the other person. However, it is not something that every individual can owe to every other person (Gov.au, 2023). There must be a relationship between the two parties that are the regarding the proximity or intimacy sufficient to provide the rise to a duty of care. In this aspect, an individual can owe a duty for care towards another person, that determines the exact role of duties that are owed by that p[person. In determining this aspect the court will monitor the care standard. That act as a benchmark of the person's behaviour in a particular situation. The duty standard in that the payable relies on the different circumstances of the individual cases and the nature of the relationship will be in the circle of the questions. As per the “ Civil Liability Act 2002” In case any person or organisation can fail to provide its duty properly to any person who can damage or injured by their taken action they are accused of duty violations (Gov.au, 2023). To prove negligence a plaintiff needs to represent four elements. In those elements, the first element stated that they have to establish that the defendant owed a duty to the plaintiff. The second element reveals that the plaintiff must be demonstrated that the defendant violated the duty of care and the third one is the plaintiff must need to prove that the defendant's conduct caused the injury. In Queensland, there are 3 years of the time to claim damages that arises due to the organisation or person's negligence of duty. 

Case law: 

The exclusive clause operation in a commercial contract relies on the intentions of both parties (Porat, 2019). The intent is defined by determining the clause according to its biological and normal meaning and providing expected importance to the context in which the clause occurs, including the character and entity of the contract. 

In the case of “ABC Electrical Engineering Company Limited” Vs “XYZ Storage Company Limited (XYZ)” the high court held that they pursued the answers on the basis of “Did the individual sued, owe a responsibility of care to the injured person that is the applicant?”, “
Was the duty of care breached by the tortfeasor?”, “Is there any damage or injury that can happen to the applicants?” and “Was the damage can be done internationally due to the duty of care breaches?”. On this basis, of the question, the case fulfils all of these factors that help to prove a claim for the negligence of XYZ Company. In that aspect, ABC Company can term it as a duty breach that defines a failure to perform. Further, they can claim for paying compensatory damages to the XYZ Company. 

QUESTION 3: Matters Affecting Enforceability of Contract

According to Australian commercial law, the seller, as well as the buyer, needs to provide trustful and authentic information to one another. Consumer law rescues small businesses as well as customers against unjust terms in traditional contracts. In that asp[ect seller should provide a contract that provides all the necessary information about their business. while the buyers need to accept the contract by signing the written contract or through some actions such as an online contract by clicking I agree (Harkin et al. 2022). In the written contracts there are some terms and conditions that set out the responsibilities and rights of each party. In that terms and conditions, the customers or buyers have the right to expect certain things during their buying services or products. Consumer law also can be applied in this aspect that provides the basic rights that are called consumer guarantees. 

Any data or information provided by a business about the products or services must be accurate, based on reasonable grounds and trustful. It also includes the price information, image or description of the product of their offer. , claim about the benefits, values, qualities and performances of the provided services and products. 

Australian commercial law includes rules and regulations in conducting business processes and advertisement activities to develop sales and revenue of the organisation. This law includes misleading or deceptive conduct in the business processes due to claiming and representing false impressions regarding products, price, value, quality and offers of the organization. This false information includes a crime according to the consumer law of Australia (Amigud and Dawson, 2019). This law does not consider the intention of business in occurring misleading as this only focuses on whether the statements affect the beliefs and through of customers or not. This law can be applied without considering any loss occurring in the business. The maximum penalty that can consider in this type of offence is approx $500,000 for any particular (Fairtrading.nsw.gov.au, 2023). The organisation can consider charging $10 million or three times of profits. In addition, the corporates can face a penalty of 10% of their annual turnover in aspects of the preceding year. A list of misleading claims and conducts can be in terms of testimonials, fake reviews, unfounded promises and predictions, vague claims, wild exaggeration, bait advertising, offering prizes, rebates and free items, disclosing failure, misleading of nature of products and services, false representation of employment non-transparent payment and misconduct payment process. This also considers falsification in the sale and interest generation of organisational and unconscionable conduct in the business process (Fairtrading.nsw.gov.au, 2023). This misleading can consider misleading advertisement and this breaches different activities such as the violation of consumer rights and legal regulations in the country. The consumer protection act can provide the right consumer to launch complaints against any type of misconduct that occur in the marketing process of the organisation (Wiseman et al. 2019). The misconduct can occur in terms of false advertisement and wrong product availability in aspects of the product description.
Following the justification, it can exemplify that, misleading or vaguer information in the country authorized to penalise the business organisation by following “Australian commercial law” Kefford and Weeks, 2020(). Based on the rules and regulation civil law and commercial law encompasses corporation law and security of the country followed by influential collateral security and penalized authority. On the other hand, the “The Australian Act of Commercial and contract law” played an influential role that bargaining between different parties in choosing accumulated justification. 

The statutory prohibition of misleading and deceptive conduct now came under the Australian contract law Section 18. That describes that An individual must not engage in conducting misleading or deceptive in a trade or commerce. Various remedies are available, including damages and contract avoidance or modification, in that a breach of Article 18 is established. Section 18 only acts on their misleading in commerce or trade (Australiancontractlaw.info, 2023). The connection to “trade or commerce” bans personal sales entirely however captures most commercial activities. Section 18 forbids a corporation including a person, bringing on a company or commerce, from engaging in manners that are dishonest r deceptive or likely to deceive or mislead. It is a positive commitment; Ignorance of the truth of the message is not a justification (Sum, 2020). The trial commonly involved considering whether the conduct violates this responsibility is that it conducts or is qualified of guiding an organisation or an individual into wrong. Where something is widely advertised to the public (eg in mass advertising) whether something is deluding or misleading is evaluated concerning whether the conduct would have deceived or tricked an organisation or a reasonable person (Gov.au, 2023). Again, where a connection is made to a class of persons an appropriate member of that class will be indicated. 

In the case of Yul Vs Zig, it has been noticed that Zig is misleading Yul by providing wrong information about the product. Hence Yul can appeal in the Australian high court for compensation or can put charges according to the section 18 violations. Further, they can accuse Zig's organisations according to the “Competition and Consumer Act 2010 and the Australian Consumer Law”.breaches. That helps to provide penalties pecuniary and attract fines. For this, several factors are taken into account in the determinant penalty level or appropriate fine. 

References

• Amigud, A. and Dawson, P., 2019. The law and the outlaw: is legal prohibition a viable solution to the contract cheating problem?. Assessment & Evaluation in Higher Education.
• Australiancontractlaw.info, 2023 Australian Contract Law Accessed from: https://www.australiancontractlaw.info/law/misleading-conduct#:~:text=most%20commercial%20activity.-,Misleading%20or%20deceptive%20conduct,made%20is%20not%20a%20defence. [Accessed on: 08/04/2023]
• Gov.au, 2023 An industry guide to the Australian Consumer Law Accessed from: https://www.accc.gov.au/system/files/Rental%20cars%20-%20an%20industry%20guide%20to%20the%20Australian%20Consumer%20Law.pdf [Accessed on: 08/04/2023]
• Gov.au, 2023 buying products and services Accessed from: https://www.fairtrading.nsw.gov.au/buying-products-and-services/advertising-and-pricing/misleading-or-deceptive-conduct#:~:text=Misleading%20or%20deceptive%20conduct%20is,This%20is%20against%20the%20law. [Accessed on: 08/04/2023]
• Gov.au, 2023 False claims and misleading impressions Accessed from: https://www.accc.gov.au/business/advertising-and-promotions/false-or-misleading-claims [Accessed on: 08/04/2023]
• Gov.au, 2023 Late or unpaid rent (rent arrears) Accessed from: https://www.consumer.vic.gov.au/housing/renting/rent-bond-bills-and-condition-reports/rent/late-or-unpaid-rent#:~:text=The%20site%20agreement%20covers%20the,another%2014%20days%20to%20pay. [Accessed on: 08/04/2023]
• Gov.au, 2023 Serious Invasions of Privacy in the Digital Era (ALRC Report 123) Accessed from: https://www.alrc.gov.au/publication/serious-invasions-of-privacy-in-the-digital-era-alrc-report-123/7-fault/negligence/ [Accessed on: 08/04/2023]
• Hamma-adama, M. and Kouider, T., 2019. Comparative analysis of BIM adoption efforts by developed countries as precedent for new adopter countries. Current Journal of Applied Science and Technology, 36(2).
• Harkin, D., Mann, M. and Warren, I., 2022. Consumer IoT and its under?regulation: Findings from an Australian study. Policy & Internet, 14(1), pp.96-113.
• Kefford, G. and Weeks, L., 2020. Minority party government and independent MPs: A comparative analysis of Australia and Ireland. Parliamentary Affairs, 73(1), pp.89-107.
• Porat, A., 2019. A Comparative Fault Defense in Contract Law. Michigan Law Review, pp.1397-1412.
• Royal, S., Lehoux, N. and Blanchet, P., 2021. Comparative case study research: An international analysis of nine home warranty schemes. International Journal of Building Pathology and Adaptation, (ahead-of-print).
• Sandanayake, M., Yang, W., Chhibba, N. and Vrcelj, Z., 2022. Residential building defects investigation and mitigation–a comparative review in Victoria, Australia, for understanding the way forward. Engineering, Construction and Architectural Management, 29(9), pp.3689-3711.
• Scheibner, J., Ienca, M., Kechagia, S., Troncoso-Pastoriza, J.R., Raisaro, J.L., Hubaux, J.P., Fellay, J. and Vayena, E., 2020. Data protection and ethics requirements for multisite research with health data: a comparative examination of legislative governance frameworks and the role of data protection technologies. Journal of Law and the Biosciences, 7(1), p.lsaa010.
• Sum, C.Y., 2020. The quagmire of utmost good faith in insurance law: A comparative study of Malaysian, Australian and English laws in consumer insurance contracts. In The Future of the Law of Contract (pp. 48-70). Informa Law from Routledge.
• Wiseman, L., Sanderson, J., Zhang, A. and Jakku, E., 2019. Farmers and their data: An examination of farmers’ reluctance to share their data through the lens of the laws impacting smart farming. NJAS-Wageningen Journal of Life Sciences, 90, p.100301.