Legal Analysis Of Business Law Cases

Identifying legal issues in dispute

The relevant rules contained in the constitution to provide protection to tribe members from incidents of violence are as follows.

• The council of elders would have the responsibility of providing suitable punishment for the different acts of violence.
• There would be a list of violent crimes and their associated punishments which would be highlighted in the constitution so as to ensure consistency.
• The rules regarding punishment for violent activities can be altered but the same would have to be ratified by majority of the members of council of elders.

The key question is to explain as to why the above rules have been contained in the constitution. In order to answer the same, these rules would have to critical analysed in light of Hart’s legal system.  As these rules are placed in constitution, hence there would not be any uncertainty with regards to the underlying source and hence rule of recognition would be fulfilled. The placing of these rule sin the constitution provides them with a legal validity and ensures that the tribe as a whole adheres to these rules.

Further, there is a mechanism for changing the rules in regards to the punishment for various crimes involving violent conduct. This ensures that the rules have greater legitimacy since they would reflect the mind-set of the people at different times. Also, the relevant changes to plug any loopholes can also be brought in a systematic manner. Besides, for situation when the social pressure would not work and punishment would be requires, the same is contained in the constitution which ensures that there is underlying consistency in the imposition of punishments for various crimes of violence.

The Australian criminal penalty system would be compared with the prevalent system in India and analysis of the two systems would be carried out in the backdrop of Hart’s legal system.

With regards to India, punishments in the below mentioned form may be given for criminal offences.

• Death Penalty- In this, the convict is hanged till death though this is given only in case of heinous crimes. The relevant sections of IPC (Indian Penal Code) are Section 302,303.
• Life Imprisonment – In this, the convict remains in prison for the complete duration of natural life.
• Imprisonment – In this, the convict remains in prison only for a particular time frame which has been decided by the court considering the crime conducted and other relevant factors. Rigorous form would involve hard labour on part of convict while no such requirement for simple imprisonment.
• Property Forfeiture– This involves forfeiting property and is common when frauds or crimes of financial nature are conducted.
• Financial Fines – This involves levying of monetary penalties and is often used along with other punishments.

Australia in sharp contrast has abolished the practice of giving death as penalty but the other options discussed in case of India do exist. Besides, there are additional options in the form of community service along with home detention.

The basis for criminal offence punishments in the above two countries primarily  lies in specific legislation and thereby complying with rules of recognition resulting in having the desired legal sanctity. Additionally, these legislations can be changed by the parliament through a definite process and thereby rules of change are also incorporated for each country’s criminal punishment system. Besides, in both nations, judiciary exists for adjudicating on the various criminal cases so as to hand relevant punishments.

The central issue was to outline if failure in payment of rent shortfall by lessee i.e. Duffy Bros led to violation of term of contract or merely violated the deed.  This formed the key in determining if the terminating the lease by lessor i.e. Gumland Property was appropriate or not. Further, the suitable damages provided to the lessor for damage caused due to termination of lease also needed determination.

Explaining principles of law and relevant rules

With regards to contracts, if the term of a given contract is breached, it provides a right to the innocent party to terminate the contract and demand the damages suffered. In case of lease agreements, these damages would involve the following.

• Any outstanding rent adjusted for time due by incremental interest
• Bargain losses owing to the loss suffered for cancellation of lease for the remaining period
• Reinstatement charges would refer to the charges incurred by the lessor for enacting new lease agreement.

Additionally, considering the involvement of property, the Conveyancing Act, 1919 (NSW) was applicable to the given situation. One of the significant clauses is s.117 which highlighted the reversion in respect of rent and associated benefits in context of lessees’ covenants.

In accordance with the appropriate case facts, one fifth space of a large shopping complex was leased to Duffy Bros (lessee) by Transit Management Pty Ltd (lessor). The lease commenced in 1993 and was to continue for 15 years. However, the lessee defaulted on the agreed outgoings and rent in 1999 on account of deterioration in business climate. Additionally, a deed was signed in order to reduce the rent coupled with making provisions for sub-leasing by Duffy Bros. A part of the area on lease available to Duffy Bros was leasd indirectly to Woolworths in 2001. Meanwhile, the shopping complex was sold to Gumland Property Holdings from the original owner in 2001. As a result, Gumland Property assumed the position of lessor in all the outstanding contracts. The sub-lease expired in 2002 post which Woolworths did not intend to continue but continued to use the possession while paying only half of the agreed rent. Since the shortfall on the rent paid by Woolworths was not paid by the lesser, hence Gumland Property terminated the original lease with Duffy Bros.  There was a demand on the part of Gumland Property that the court should award not only the shortfall in rent with interest but also reinstatement expenses coupled with bargain damages for the period of contract that was still pending.

The NSW Supreme Court ruled in Gumland Property’s favour and thereby provided compensation to the tune of $2.095,514 which included reinstatement expenses, bargain damages along with interest adjusted shortfall in rent. An appeal was made by the lessee in the Court of Appeal where the compensation awarded was significantly lessened to $362,232 on the pretext that the deed had been breached and not the contract. Thus, only interest adjusted shortfall in rent was taken into consideration. However, an appeal was then made to High Court where the NSW Supreme Court decision was hinted at being correct. Further, it was brought to notice that the deed was indeed a variation of original lease and cannot be considered as a addendum to the original lease. Thus, the breach of deed terms leads to violation of terms of lease contract thereby allowing the lessor to terminate the lease.

Applying the relevant law to the facts

Conclusion

From the above discussion, the legal right of lessor for lease termination on deed term breach was upheld and accordingly the compensation package to lessor included not only rent adjusted rent shortfall but also reinstatement charges (for new lease) and bargain losses(for loss on pending lease duration).

For the case highlighting deceptive conduct and fraudulent misrepresentation, the selected case is Nationwide News Pty Ltd v Australian Competition and Consumer Commission.

The central issue was to identify whether there was a violation of s. 18 of ACL through the advertisement that Nationwide News has used for advertising free mobile phone. Also, the given case facts need to be analysed to highlight the presence of key elements of fraudulent misrepresentation on part of representor i.e. Nationwide News.

In the pre-contractual negotiation, the seller tends to make representations to the buyer for luring him/her into contract execution. Some of these representations may not be true and hence would be termed as misrepresentations. While there are different forms of misrepresentation possible, one of these is the fraudulent misrepresentation. There are three main conditions that need to be met for fraudulent misrepresentation which were highlighted in Derry v Peek and are listed below.

• The misrepresentation should be factual in nature.
• The representor must be aware that the fact misrepresented is indeed false.
• The misrepresentation of factual information takes place with the objective of securing a contractual agreement.

Besides, the common law, in case of transactions where one of the parties is consumer (s.3 Australia Consumer Law), the statutory provisions of ACL would apply. As per s. 3, the consumer would be an entity who would make a purchase of less than $ 40,000 and the same is meant for private or domestic use and thus non-commercial use.  In accordance with s. 18(1), it is imperative that parties that deal in commerce and trade must not use deceptive advertisement. The actual deception of customers need not be established since mere potential of deception is enough for breach of the clause.

An offer was promoted by Nationwide News Pty Ltd whereby it was advertised through various media that consumers can get a mobile phone for free.  However, in reality for availing this device the customers would have to enter into a 15 month network contract costing $2,294.90. The ACCC acting on behalf of consumers highlighted that when such a huge amount of money had to be paid, then the word free should not have been used since it amounted to deception and misrepresentation. The advertiser on its part advocated that the advertisement did state that conditions do apply for availing the offer but still it was not conceivable that any reasonable consumer would have assume that such a quantum sum would have to be paid for mobile phone purchase. Infact, the use of free word was intentional and deliberate so as to ensure that customers are attracted and end up making a purchase.  Therefore, it was concluded that the conduct of the advertiser has been in breach with the statutory provisions of ACL.

Determining damages and remedies

The given case can also be viewed in the light of the common law. Fraudulent misrepresentation has been carried out by the company because of the following reasons.

• There was falsification of a factual statement regarding mobile being free.
• The representor knew that the statement was false i.e. the mobile was not free.
• The false representation was done in order to lure the customers to buy the mobile phone

As a remedy, the customers who entered into the contact without being told about the associated liability would have the right to terminate the contract and recover damages.

The court ruled that statutory provisions of ACL had been breached through the deceptive advertisement and hence a fine to the extent of $ 120,000 was levied on Nationwide News.

The central concern in the scenario presented is whether the restraint of trade clause would be legally enforceable or not. The ability of Pedro to take action against Lisa would be dependent on the enforceability of this clause.

In order to safeguard the legitimate business interests, the purchasers of business often insert restraint of trade clause as part of the agreement of sale. This clause tends to impose temporal and geographical restrictions on the seller with regards to opening a competing business and thereby have adverse impact on the earnings of the buyer. In order for such classes to be upheld in court, it is essential that they must not be unduly restrictive and must be reasonable as apparent from the commentary in Adamson v New South Wales Rugby League Ltd case. Further, it is noteworthy that the reasonableness of the constraints imposed is dependent on the underlying circumstances.

In certain cases, the court has upheld temporal restrictions to the extent of four years which is apparent from the verdict in the Southern Cross Computer Systems Pty Ltd v Palmer case related to an IT specialist. With regards to sale of business, the geographical restraint applied can consider the business expansions of the purchased business in the future. This is indicated in the verdict of McAllister v Cardinal case. However, if the geographical limitations imposed are not aimed at protection of business interest, then such clause can be quashed and held as void in light of the decision in Idameneo (No. 123) Pty Ltd v Dr Teresa Angel-Honnibal.

Lisa and Pedro have businesses dealing with sale of imported French jewellery. Their businesses are based in Melbourne. Petro decides to buy Lisa’s business and inserts a restraint clause in the sale of agreement. The temporal restriction is for 2 years while the geographical restriction corresponds to complete Australian territory. Now, Lisa is setting up the same business in Cairns which is about 2900 km from Melbourne and Pedro has issues regarding the breach of the restraint clause.

With regards to the current restraint clause, the temporal restriction does not pose any issue but the geographical restriction does. It is known that Pedro has business in Melbourne and even considering the future business expansion that Pedro may pursue, the business might spread to other cities in Victoria or possibly neighbouring states.  Considering this, it seems unfair that the geographical limitation should extend all across Australia. It is clear that opening the same business at such a far distance from Melbourne would not in any way harm, the business interests of Pedro. The two businesses would not have overlapping customers who would be catered. Therefore, the restraint clause in this case is overly restrictive due to which it would be considered legally void.

Conclusion

Since the restraint clause is void owing to overly restrictive geographical limitation, hence Pedro cannot stop Lisa from setting a business in Cairns.