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Advanced Commercial Law - Scenario 1

The issue arising out of this situation is that there has been an occurrence of one of the natural phenomenon which is coral bleaching and due to which the reefs around the Cooktown have been turned into a wasteland. Thus, Ariana who is one of the parties to contract does not want to go on the cruise for her trip. And whether the second party to the contract which is Marine Paradise Expeditions Pty Ltd. (MPE) decides to not to carry out its performance due to this natural calamity and can keep the deposits with itself.

A contract is made in between the two or more parties who have agreed and are willing to perform with respect to the contract terms and conditions. The terms and conditions must be read thoroughly and it is believed that parties have given their full consent and are willing to obligate according to the contract. The interpretation of the all the clauses or terms and conditions in the contract should be the same for both the parties and they must agree upon that (Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson, 2019)[1]. The parties set their legal rules and terms in the contract with respect to every possible foreseen event. And whenever a situation arises in which the conditions does not favor the performance of the contract without a fault of either party or is being incapable of being performed due to an unforeseen event, results into the frustration of the contract.

As mentioned in the situation, Ariana and MPE entered into a contract offering the package for a tour of various reefs and islands off Cook town, Queensland. Both Ariana and MPE were conscience of their intentions and agreed on the same terms and conditions by signing the contract. Ariana did not read the standard terms and conditions properly and proceeded with signing the contract and going for a tour on a cruise with her mom. She paid the entire amount while booking the tickets. The standard terms mentioned at the back of the tickets clearly stated the clauses regarding the termination of the contract. The clause 2 of the contract stated that Marine Paradise Pty Ltd may elect to cancel the cruise due to a naturally occurring phenomenon such as rough seas, storms or cyclones. If Marine Paradise Pty Ltd cancels a cruise under this section, Marine Paradise Pty Ltd is entitled to retain the deposit paid by the Client. And clause 3 states out the facts that only Marine Paradise Pty Ltd reserves the right to terminate the contract at any time at their discretion. If this clause is invoked the customer shall be entitled to a full refund of any payments less 10% administration fee. These two clauses sum up the whole situation regarding the termination of the contract by any party or frustration of the contract because of any natural phenomenon.

Henceforth, due to coral bleaching if Ariana decides to avoid the contract by not going on the cruise then she cannot claim for the money back because the other party, i.e., MPE is performing the obligations of the contract on its given time duration. And alternatively if MPE decides to terminate the contract because of the natural calamity of coral bleaching, then according to the clause 2 in the contract, it can retain the deposits as per given by other parties. The contractual terms are being acknowledged by both the parties and signed by them. Even though Ariana did not read the standard terms, but she is bound to accept them after signing the contract in her full conscience.

Advanced Commercial Law - Scenario 2

In this situation Ariana and her mom Taylor went on that trip and were disappointed with some of the conditions that were offered by the MPE. Ariana wants to sue damages for the breach of contract. What would be the impact of clause 4 of the standard terms on thefor outcome If Ariana becomes successful in suing MPE for the breach of contract?

A contract is made and constituted for the performance of both the parties according to its obligations. The exclusion clause and limitation clause are also included while making of the contract. An exclusion clause is a clause in which the parties seek to exclude all such kind of liability that may occur due to breach of the contract. And a limitation clause is a clause in which one of the parties to the contract seeks to limit his liability that may occur due to certain breaches of the contract. The Material Breach is said to be the most severe type of breach that occurs while performance of the contract (Forklift Engineering Australia Pty Ltd v Powerlift (Nissan) Pty Ltd, 2000)[2]. This type of breach of contract occurs when one of the obligation or key elements of the contract are not performed, undertaken or provided as agreed according to the terms of the contract. A party can claim damages for this breach by giving and providing the reasonable evidences with respect to the breach of contract.

Henceforth provided in this situation, assuming that coral bleaching did not occur in the reef and Ariana and her mother Taylor went on the trip. After going there, they realized that as being mentioned and provided in the contract, viewing gallery had a very small windows, each set about 5 meters apart in a tiny corridor of the cruise. It was very hard to access that area at most important viewing times due to the large number of elderly passengers on board. These circumstances made Ariana and her mother Taylor very disappointed. According to this situation, Ariana has the right to sue them for the breach of the contract and claim for the damages with respect to not providing the specific key elements as being agreed in the contract. The contract specifically has the clause 4 regarding if any of these situations arises, which clearly states that

It has been concluded that the court while considering the nature of the damages, must also look into the clauses that were being entered in to the contract with respect to the limitation clauses and exclusion clauses. It must decide upon the clause 4 of the contract wherein which it contains, in advance, the amount of any damages of a liability which is likely to be occurred on the part of MPE while performing any obligation would be $100.

Avanced Commercial Law - Scenario 3

The issue arises in this situation the departure date of the cruise is coming and that the MPE, one of a party to the contract, is avoiding the performance of the contract on that decided time. Can MPE do this act with respect to rely on the clause 3 of the standard terms written in the contract.

When a contract is being made and entered, there are terms which are expressed, by both the parties whether in writing or not, for their performance or the obligation imposed in the contract. Some of the terms exist which are not necessarily excluded from the clauses of the contract, are known as implied terms and they also create a legal obligation on the parties to perform such obligations. The implied terms gives the full and foremost effect to the presumed conscience or intentions of the parties to the contract (Astley v Austrust Limited, 2000)[3]. These terms must not contradict with the expressed terms of the contract. The contract must be incorporated with those terms and conditions which are reasonable and equitable that are to accepted and obliged by both the parties and if one party tries to avoid such performance, it may result into a breach or termination of a contract.

In the situation, the happening of coral bleaching did not happen. The departure of the cruise would be on time as being entered in the contract. Some other people namely Johnny Deep and Amble Herad have made an offer to MPE to charter it for the corona isolation period. The time duration during which they want to charter it is coinciding with the time of the trip of Ariana and Taylor. Hence, MPE in this situation does not want to refuse Deep/Herald offer and is thinking to activate the clause 3 of the standard terms of the contract which states that MPE have the right terminate the contract at any time at their discretion. If this clause is invoked the customer shall be entitled to a full refund of any payments less 10% administration fee.

It has been concluded, after keeping the above facts into consideration, that there are some legal obligations that have been implied on the MPE to perform its performance even though the clause 3 states that it can terminate the contract at any time. The MPE cannot avoid the performance for its own beneficial terms and cannot frustrate the contract. MPE cannot enter into a contract with different person having the same consideration and whose performance is to be done in the same duration of time with respect to the previous contract. It cannot overlap the contracts and frustrate one of them to achieve the beneficial goals for its own good.

Advanced Commercial Law - Scenario 4

Here in this situation, Ariana has made some transactions, for her own use, on the cruise which she is responsible for paying it to the MPE according to the contract but she refuses to do that. Thus, we have to conclude if Taylor, Ariana’s mother, is contractually obliged or bound to pay that amount to MPE with respect to clause 1 of the standard terms of the contract.

In a general rule, when two parties comes together to enter and constitute a contract, they tend to decide to perform the obligations on a consideration. To form a contract, there must be consideration. It is termed as a price which is asked by the promisor in return of his performance of the promise in the contract. It creates a legal boundation on the parties. Thus, the promise must provide and give the consideration, in terms of money or any kind, for the promise that have been completed and performed by the other party according to the contract. The next rule implies in this situation is the rule of Privity Of Contract (Tweddle v Atkinson, 1861)[4], wherein which only the parties to a contract have those right and obligations that are being decided in the contract. The contract may provide benefits to the third party or where the third party relies upon the completion of the contract. Thus, as being given under this rule, doctrine of privity applies only to the contractual parties and their rights. And if the contract made by two parties gives rise to the non-contractual rights and obligations over a third party, then it is possible for the contract to be enforced against or in favor of that third party.

In this situation, the cruise started off the trip with some conjunctions and the customers who ere there on the cruise were not happy of that condition. The cruise provided a poor reef display and basic view amenities even though they had mentioned in the contract to provide a great experience regarding the trip. On the cruise, Ariana went to the Blue Bar on the last evening of their trip and drew up a bill of $2,000. She swiped her Cabin Card at the blue bar to record the transactions of this bill. MPE tries to request payment of $2,000 from Ariana who afterwards refused to pay due to her bad experiences on the cruise. And, MPE asked Taylor, Ariana’s mother to pay the bill of $2,000 for the services provided at the cruise. Even though Taylor is not a party to the contract but it creates the non-contractual obligations on the Taylor which binds her into the contract.

Through all these facts provided, the conclusion had been drawn that Taylor would be obliged to pay for the services which Ariana took at the blue bar on the cruise. According to Clause 1 of the standard terms of the contract, it has been clearly stated that the All passengers, whether a party to this contract or not, agree that they are jointly and severally liable for any extra charges incurred on the cruise that are legitimately attributed to the passengers’ Cabin number. The privity of contract clearly builds an obligation the Taylor, who is not a part to the contract, as she has also benefited from the performance of the contract. Hence, Taylor is bound to make a payment of $2,000 to the MPE, the other party of the contract.

Reference List for Advanced Commercial Law

[1] Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson [2019] WASCA 114

[2] Forklift Engineering Australia Pty Ltd v Powerlift (Nissan) Pty Ltd [2000] VSC 443

[3]Astley v Austrust Limited [2002] 197 CLR 1; [1999] HCA 6 (4 March 1999)

[4] Tweddle v Atkinson [1861] 1 B & S 393; 121 ER 762; [1861-1873] All ER Rep 36

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