There are two major issues that are found in the situation given:
This decision was reiterated in the case of Henthorn v Fraser. The facts of Henthorn v Fraser are similar to those of the given situation and it may be held that the revocation of offer was communicated to Terry a day after he had already posted his acceptance to the previous offer. An argument may be made from the other party that the letter quoting the price of the gold bars was an invitation to offer and not an offer for sale, but it can be proved as the letter dated 27 January sent by Susan to Terry, contains the expression that she would sell the gold bars to Terry for a specific price. Thus, the intention to enter a legal relationship are clear from the words used by Susan. In the case Tallerman & Co Pty ltd v Nathan's Merchandise (Victoria) Pty Ltd, the scope of the postal rule was narrowed down and it was held that a valid offer and acceptance could only be completed when the offeror was made aware of the acceptance by the offeree. In the given situation, the acceptance to the offer was posted on 3rd of February, while the revocation letter was received on 4th of February. Thus, the revocation would not be valid as it was communicated to the offeree after the acceptance letter had been posted. Susan did have the option of conveying the revocation before the acceptance was posted or even received by Terry. She could have called him to inform him of the revocation of offer.
Since Susan refrained from the use of faster communication methods available, the contract for sale of gold bars between Terry and Susan shall be considered as a valid contract and the subsequent contract for the sale of the gold bars shall be void ab initio.
The case of Gibbons v Wright lays down a test for capacity to be applied on the party claiming to be under the influence of an intoxicant. The law does not lay down a standard test for sanity to enter into contracts, thus, the only test available would be if the party to the contract was capable of understanding what he was entering into at the time the contract was entered into.
The case of Blomley v Ryan, it was held by the High Court of Australia that a party would not be excused from performing a contract just due to ‘mere drunkenness’. Only if a contract was entered into which put the party in serious disadvantage would the claim of intoxication be accepted. The fact that Terry does not remember meeting Kevin at the supermarket is proof of the fact that very drunk and did not know the nature of his acts.
In the given situation, the drop in value of the shares of the company mentioned in the advice given by Terry was due to a scandal of Insider Trading. No financial adviser would be able to foresee a scandal of insider trading even if he/she was not under the influence of alcohol.
Kevin would not be able to succeed in his claim for negligence as Terry would be eligible to claim the defence of intoxication and as a financial advisor, Terry could not have reasonably foreseen the scandal of the Ziro Ltd company and advised Kevin against the investment.
It is mandatory that the party must have believed the misrepresented fact and the contract must have been induced of the same misrepresented fact for the party to claim any remedies in a Court of Law. In the given situation, the turnover of the café, the liquor license and the capacity to hold patrons were major misrepresented facts based on which the contract of sale was induced. In a case, Horsfall v Thomas, the contract was not induced based on the misrepresented facts, and thus, a claim to rescind the contract was not entertained by the court. Section 18 specifically prohibits conduct that may be misleading or deceptive while entering a contract. Renzo shall be liable under the section for entering into a contract by making misleading statements and misrepresenting facts.
In the case of Smith v Land & House Property Corp, a differentiation was made between statement of facts by the owner of the establishment and opinions of the owner. In the given situation, the statement made by Renzo should be considered as a statement of fact and not his opinion as he stated the same as a truthful fact. In the case of Edgington v Fitzmaurice, it was held that any false statement made by a party which influences the other party to go forward with the transaction based on the statement made shall be considered as misleading or deceptive statement. In the case of With v O’Flanagan, the worth of the property purchased was falsely represented to be higher at the time of contract. Subsequently, the price further went down due to the act of the purchased. It was held that the failure of the seller to disclose the real turn-over of the property would be considered as misrepresentation. In the case of Redgrave v Hurd, it was held that a party cannot claim that due-diligence could have brought out the true facts against misrepresentation. In the contract between Florence and Renzo, it may be claimed by Renzo that he had indicated the liquor license which could have been checked by Florence to discover that it had expired. But, keeping in mind the above-mentioned precedent, absolutely no false statements must be made by the seller.
The contract between Florence and Renzo is flawed and Florence can claim remedies against the acts of Renzo and render him liable in she chooses to.
Florence shall be under an obligation to pay GLO only an amount which remains after deductions of damages from the total invoice amount sent by GLO.
Florence can either claim damages that have been suffered by her due to the misrepresentation of facts made by Renzo, or she can choose to rescind the contract entered between Renzo and herself. In Car & Universal Finance v Caldwell, the innocent party was allowed to rescind the contract as it was induced on misrepresented statements. In Doyle v Olby (Ironmongers) Ltd and East v Maurer, the guilty party had to pay damages to the innocent party to make up the losses suffered due to the misrepresented statements.
Thus, the two remedies that Florence can claim against Renzo are- Rescinding of the contract that was entered into by both the parties based on statements that turned out to be false, or to claim the damages suffered by Florence due to the misrepresented statements made by Renzo
A remedy for claim of direct damages suffered due to the breach of contract may be made by Florence against GLO. These damages may include the expenses incurred by Florence to re-do the work that was originally included in the contract as well as the losses suffered in business by her due to the extra time taken to complete the work agreed upon by GLO. The test of direct damages has been discussed in the case of Hadley v Baxendale. The method used to calculate the damages suffered has been provided in Robinson v Harman. The purpose of awarding damages by the Court has been states and discussed in the case of Anglia TV v Reed.
The fact that Justine had to keep her business establishment closed to re-do the work of the Construction company has only caused further loss in business.
Justine may not pay the invoice sent to her by Leeroy at the moment. She should move to the Court to claim damages and once damages have been awarded, she can set-off the amount from the invoice and pay the remaining amount to Leeroy.
Another option for Justine would be to claim the remedy of Specific Performance of Contract. Usually, this remedy is awarded by the courts when monetary damages cannot repair the breach that has been done, the party guilty of breach is ordered to perform its obligations as specified in the contract. In this particular given situation, the losses have already been incurred by Justine and her motel has been shut till changes fulfilling the criteria set by the regulations of the State are not fulfilled. To hire another company to re-do all the work that has been wrongly done by Leeroy’s company would cost almost the same amount as that which has already been spent. Thus, the court may order Leeroy for Specific Performance and ask them to re-do all the previously given work using the materials that were shown in the samples to Justice and fulfil all the required regulations.
In Ryledar v Euphoric, the concept of rectification has been introduced. This concept is very similar to that of Specific Performance, the only difference between the two being in Rectification, the guilty party is asked to make changes and rectify the items due to which there has been a breach of contract.
The remedies available to Justine pay for all the extra expenses incurred as well as the loss due to her business being shut down. She can choose to go forward with any of them.
Sherwin, E. L. . Law and Equity in Contract Enforcement. Md. L. Rev., 50, 253.
Smith, H. E. . The Equitable Dimension of Contract. Suffolk UL Rev., 45, 897.
Veytia, H. . Requirement of Justice and Equity in Contracts. Tul. L. Rev., 69, 1191.
Adams v Lindsell  1 B & Ald 681
Anglia TV v Reed  1 QB 60
Blomley v Ryan  HCA 81; (1956) 99 CLR 362
Car & Universal Finance v Caldwell  1 QB 525
Doyle v Olby (Ironmongers) Ltd  2 QB 158
Dunlop Pneumatic Tyre Co Limited v New Garage & Motor Co Limited  A.C 79
East v Maurer  2 All ER 733
Edgington v Fitzmaurice  29 Ch D 459
Gibbons v Wright  91 CLR 423
Hadley v Baxendale  EWHC J70;  9 Exch. 341
Harvey v Facey  UKPC 1,  AC 552
Henthorn v Fraser  2 Ch 27
Horsfall v Thomas  1 H&C 90
Redgrave v Hurd  20 Ch D 1
Robinson v Harman  18LJ Ex 202
Ryledar v Euphoric  NSWCA 65
Smith v Land & House Property Corp  28 Ch D 7
Tallerman & Co Pty ltd v Nathan's Merchandise (Victoria) Pty Ltd  HCA 10
Victoria Laundry (Windsor) Ltd. Vs Newman Industrial Ltd.,  (1) ALL ER 997
With v O’Flanagan  Ch 575
 Adams v Lindsell  1 B & Ald 681
 Henthorn v Fraser  2 Ch 27
 Harvey v Facey  UKPC 1,  AC 552
 Tallerman & Co Pty ltd v Nathan's Merchandise (Victoria) Pty Ltd  HCA 10; 98 CLR 93;  ALR 1198;  ALR (CN) 1198
 Section 20 of the Australian Consumer Law, 2010
 Gibbons v Wright  91 CLR 423
 Blomley v Ryan  HCA 81; (1956) 99 CLR 362
 Horsfall v Thomas  1 H&C 90
 Section 18 of the Australian Consumer Law Act, 2010
 Smith v Land & House Property Corp  28 Ch D 7
 Edgington v Fitzmaurice  29 Ch D 459
 With v O’Flanagan  Ch 575
 Redgrave v Hurd  20 Ch D 1
 Hadley v Baxendale  EWHC J70
 Victoria Laundry (Windsor) Ltd. Vs Newman Industrial Ltd.,  (1) ALL ER 997
 Car & Universal Finance v Caldwell  1 QB 525
 Doyle v Olby (Ironmongers) Ltd  2 QB 158
 East v Maurer  2 All ER 733
 Hadley v Baxendale  9 Exch. 341
 Robinson v Harman  18LJ Ex 202
 Anglia TV v Reed  1 QB 60
 Dunlop Pneumatic Tyre Co Limited v New Garage & Motor Co Limited  A.C 79
 Ryledar v Euphoric  NSWCA 65
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